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Interview with Oliver Lehmann

Advisor, author, speaker, teacher
Author of Situational Project Management
President, PMI Southern Germany Chapter

Interviewed by İpek Sahra Özgüler
Istanbul, Turkey

Oliver F. Lehmann, MSc, PMP is a project management trainer, author and speaker. He has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich and a volunteer and insider at the Project Management Institute (PMI).

Living in Munich, Bavaria, he is the President of the PMI Southern Germany Chapter and author of the book “Situational Project Management: The Dynamics of Success and Failure” (Taylor & Francis, ISBN 9781498722612).

Some consider him the father of a new business discipline, Project Business Management, which deals with the dynamics in seller-buyer relationships and in complex and often very opaque Project Supply Networks (PSNs).

 



İpek
Sahra Özgüler (Özgüler): Dear Oliver Lehmann. Please introduce yourself for PM World Journal readers.

Oliver Lehmann (Lehmann): My name is Oliver F. Lehmann. I am a trainer in project management from Munich, Germany. In addition, I write books and articles and preside over the PMI Southern Germany Chapter, a not-for-profit association with a focus on Bavaria and Baden Württemberg.

Özgüler: Everyone agrees that you have deep knowledge and experience of the project management as a Practitioner (>34 years), a Trainer (>22 years), a PMP Trainer (>16 years).

Lehmann: Thank you.

Özgüler: How do you achieve this?

Lehmann: I believe the main driver is trying to maintain intensive relations with my stakeholders. In the training business, these are training providers and customer companies as well as the students in the seminars. In my not-for-profit work, the focus of my work is on members in the chapter, particularly those who contribute as volunteers. Working with these professionals, listening to them and learning lessons from their problems and achievements is a strong driver for own improvement.

Özgüler: What is your success secret?

More…

To read entire interview, click here

 



About the Interviewer


İpek Sahra Özgüler

Istanbul, Turkey

 


İpek Sahra Özgüler
graduated from the Istanbul University with a Bachelor of Science degree in Computer Engineering and from Middle East Technical University with an MSc degree in Software Management. As a project manager, she has more than 10 years’ experience in various areas such as portfolio management, program management, project management, software management, business analysis. She became a certified PMP in January, 2012 and a certified SCRUM Master in 2014.

She has managed a variety of projects across manufacturing, defence, FMCG (Cola Cola), insurance (Euler Hermes), audit (Deloitte), telecommunication, ICT and aviation sectors and gained broader insights. In addition, she has worked as international correspondent for the PM World Journal since 2014.

İpek is based in Isanbul and can be contacted at [email protected].  Her portfolio is published at the http://ipeksahra.strikingly.com/.

To view other works by Ms. Özgüler, visit her author showcase in the PM World Library at http://pmworldlibrary.net/authors/ipek-sahra-ozguler/

 

 

A Health Check for a Portfolio with Customer-Facing Projects

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 



Summary

Project portfolio management for corporations doing customer projects to make a living has its specific challenges. Projects in crisis can impact the entire portfolio and jeopardize the existence of the company. The magic triangle on contractor-side is made of customer-happiness, profitability and liquidity.

A Project Portfolio in Need of a Turnaround

ArmyAnt, Inc.[1] is a company that performs projects for a major number of customers integrating hardware and software to complex working systems. Companies decide to buy and use their services due to ArmyAnt’s great experience from past projects and also to a thick folder with letters of reference and of gratitude from customers of previous projects.

ArmyAnt has many assets such as skilled people, know how, licenses and equipment that customers love to tap into and use them as project resources. ArmyAnt in turn loves to tap into customers’ financial assets and turned them into revenue and finally into profit. ArmyAnt was just a typical company bringing money home by performing projects for customers against payment under contract.

As any company that made its living from being a contractor for one or more customers, ArmyAnt worked inside a magic triangle of objectives, that included the happy customer, protection of the own liquidity, and profitability. Liquidity protects the presence of the organization, the happy customer as an incumbent and a reference allows it to be successful in the future, and profitability provides the resources to realize this future. The magic triangle is shown in Figure 1.

Figure 1: Profitability of customer-facing projects is one corner of the “Magic triangle” of Project business management for vendors

However, in the recent past this profit topic turned out to become more and more a problem. ArmyAnt had started almost two decades ago as a one-man-one-customer provider. Archibald Ant, the founder of the organization, began doing customer projects as a self-employed service provider for his former employer, after his boss had to run a lay-off project, which affected many jobs including Archibald’s. While the company made him redundant, his no-more boss still wanted to use his competencies and experience. The solution was to assign work to him as a contractor instead of hiring him as an employee. The costs he incurred for the organization moved from the payroll to the procurement budget, a development that was welcomed by shareholders. Archibald found that somewhat strange, because as a contractor he was rather more expensive. So he started his little business, which soon proved to be highly profitable  for him.

Despite the profit, Archibald soon noticed the risk of having only one customer: The company could end business with him at any time and such a decision would leave him without income from one day to the next. His income was fully dependent on his single client, and when they had negotiations about fees and contractual conditions of business, he learned that the company was fully aware of his dependency.

More…

To read entire article, click here

 

Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018. See author profile below.

How to cite this article: Lehmann, O. (2018). A Health Check for a Portfolio with Customer-Facing Projects; Series on Project Business Management; PM World Journal, Vol. VII, Issue XII (December).  Available online at https://pmworldjournal.net/wp-content/uploads/2018/12/pmwj77-Dec2018-Lehmann-A-Health-Check-for-Customer-Facing-Projects.pdf



About the Author 


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in June 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] All names changed.

 

 

Bringing Strangers into the Project

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“An organization’s ability to learn, and translate that learning
into action rapidly, is the ultimate competitive advantage.”
Jack Welch

Summary

Project management is changing from an internal cross-functional discipline into a cross-organizational business discipline. Project managers today must ever more tap the assets of other business entities, such as vendor companies and freelancers and turn them into project resources to develop the project performance and agility that internal resources alone can no longer deliver.

The lack of education and literature on the topic makes this transformation very difficult for the people involved and bears the risk of costly errors.

 

Delphine’s Story

In my last article[1] in the Project Business Management series in PM World Journal, I told the story of Jack Miller, who had changed job. So far, he had been doing internal projects, but his new employer was a company that generates its income through customer projects, and Jack was surprised at the vastly different requirements that he needed to meet, and for which he was not prepared at all.

Jack had a colleague and friend over many years, Delphine Smith[2], who stayed in the company, when he had to leave.

In the following months, Delphine also saw major changes happening to her work; changing from doing cross-functional projects with internal projects to cross-corporate projects with external resources. In essence, she experienced the same story but from a different standpoint and if only she had been prepared for the changes to come, she would have been able to cope with them, but she was not.

The Trend Towards Buy over Make

In previous articles in the Project Business Management series, I showed that there is an observable trend from internal projects to projects under contract. In a growing number of projects,  two or more organizations work together to achieve the project results, commonly in customer-contractor business relationships, in which the contractor does work for the customer and gets paid in return.

This development splits the project management discipline into two groups:

  • Project manager on customer side, using external resources and paying for them.
  • Project managers on contractor side, whose job it is to bring money home with projects.

Figure 1: The trend from internal, cross-functional project management to cross-organizational project business management doubles (or multiplies) project manager functions.

Figure 1 depicts this split inside the profession as a consequence of the trend towards customer projects.

The two types of project managers have to meet different requirements:

  • The first type of project managers takes over internal projects and procures the services from vendors. They must ensure that the support from the vendors is what is expected and that inside a project supply network (PSN), all parties follow a principle of “Completing over competing”, acting as partners, not as parties.
  • The second type of project managers takes over customer projects. Project Business Management for them means predominantly “bringing money home with projects” and making the customer happy.

This article will focus on the first group, the experiences of the second were the topic of the previous article in this series[3].

There are also project managers who act as “in-betweeners” in organizations such as prime contractors. Their organizations are both at the same time, contractors to customers and clients of sub-contractors.

Sitting between the tiers can be a lucrative position, but it can also be a commercial disaster. Wherever one is sitting in project business, one should remain acutely aware that project business is high risk business for all parties involved.

More…

To read entire article, click here

 

Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018. See author profile below.

How to cite this article: Lehmann, O. (2018). Bringing Strangers into the Project; Series on Project Business Management; PM World Journal, Vol. VII, Issue XI – November.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/11/pmwj76-Nov2018-Lehmann-Doing-Projects-with-Contractors2.pdf

 


 
About the Author   


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Lehmann, 2018b)

[2] Name changed

[3] (Lehmann, 2018b)

 

 

Projects as Profit Centers

Must We Go Back to Square One Again?

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 



Summary

The growing percentage of project managers in customer projects over those in internal projects is a strong reason for practitioners to follow the demand for professionals and change inside the profession.

However, they should  be aware that this change brings a number of new challenges upon them for which they may not be sufficiently prepared.

 

Jack Miller[1] had been an internal project manager for more than 15 years.

He had introduced hardware and software in the company, in which he was employed. He developed new products and services and brought major change to the organization. Being on time, on budget and delivering what was expected were among the criteria against which he was measured. Others were organizational disruptions—the projects were essentially cost centers, the profit was made by others in the company—and how well or poorly the projects integrated themselves into the functional organization.

Image 1: Project managers in internal projects (cost centers) and customer projects (profit centers) have different core tasks.

Mao Zedong once famously said, “A revolutionary must move among the people as a fish swims in the water”, and Jack, considering a project manager a kind of disruptive guerrilla, moved inside his organization with confidence and success. He furthermore changed this organization: Over the years, it had turned into a modern, effective, and highly efficient operational powerhouse, and this was to a major part owed to his work. He considered himself a man of success.

Then he had to change his job. In his next company, he was again project manager, but was assigned with managing contractual projects. The company made money by performing projects for customers, and Jack was tasked with doing one of them. For some customers, the company provided resources that had to be integrated with the customer’s own resources. In others, the customer actually farmed out  the entire project to a contractor. In some projects, his new company was just the only contractor. In others, it was part of complex Project Supply Networks (PSNs) that no one fully overlooked, understood, and managed. These PSNs were continuously changing, and a company that was a subcontractor today could later turn into the role of a prime contractor, and vice versa.

Jack took over a complete project performed directly for a customer.

Jack felt well prepared for the new project. He had enjoyed a good qualification in project management, was even certified, and had many years of experience. It came as a shock for him, that he found out that he was not well qualified for them at all. He faced many new and unexpected problems, among them:

  • The unknown customer organization: Jack’s success so far was built on his great understanding of the company and its structures. He had been employed there for years and was familiar with the people involved. He had observed their interests, desires and fears and was aware of friendships but also hostilities among employees and how these led to good and bad decisions. When he needed support, he knew where to find it. He securely navigated in the complex system of trust and distrust that any organization is.In the customer organization, to whose project he was assigned, he had no such knowledge. He had to learn through trial and error the lines of direction and communications, threatened the project by trusting the wrong people and lost time and opportunities by distrusting people, who would have been worthy of his trust. He failed to see the build-up of resistance by customer employees as much as he failed to utilize support that would have been at hand for him.

More…

To read entire article, click here

 

Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.  See author profile below.

How to cite this article: Lehmann, O. (2018). Projects as Profit Centers—Must We Go Back to Square One Again? Series on Project Business Management; PM World Journal, Volume VII, Issue X – October.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/10/pmwj75-Oct2018-Lehmann-Projects-as-Profit-Centers-series-article.pdf

 


 
About the Author


Oliver F. Lehmann

Munich, Germany

 

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016, andProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] This is the case story of a seminar attendee before he attended one of my classes. The name is changed.

 

Culture Clashes and Speed of Change in Project Environments

Can Agile Transformations Be Forced?

 

Project Business Management

SERIES ARTICLE

By Antje Lehmann-Benz

Munich, Germany

 



In May 2016, the US Department of Homeland Security started a new method of conducting their IT procurement processes. They wanted to be more agile and have less administrative overhead when finding and contracting sellers for the software they needed.

No other than a former Google employee actually helped design the new method and together with his team, they coined the new program “FLASH” (FLexible Agile Support for the Homeland). Eric Hysen wrote about the entire experience from his perspective in an insightful article on Medium.

As it turned out, FLASH really was something new and direly needed in a government office like the DHS. Like any other government institution probably all over the world, they were experiencing delays and long waiting times in their projects including procurements, due to security regulations, regulations, protocols, and last but not least, democratic processes to be followed.

Because expertise is mostly found in private companies, IT projects for government branches are usually answered with ‘buy’, not with ‘make’ decisions[1].

Procurement processes can be tedious and complicated, like in many larger organizations in the private sector as well.

In contrast to those, government institutions have an additional problem: They have to be transparent and as democratic as possible in their work. This means, if sellers are unhappy about not having been chosen after bid submission, they can file an official protest, thus forcing everyone involved to investigate and reconsider the decision.

Of course, this is actually a good thing. To a degree, it prevents companies from being chosen as contractors in projects where the decision is already made before the bidding process even starts. It is meant to ensure a fair competition. Like many aspects of democracies, it can be misused.

Companies can file protests because they think something was intransparent or unfair, as is the actual intention behind this kind of action

They can also file protests if they are incumbents, however, to gain more time and more income as active contractors until they are released from their contracts and replaced by others. Lastly, they can file protests in an attempt to get into a project this way after all, no matter what.

The FLASH program saw a number of such protests, so much so that it caused a significant slow-down of progress and ultimately, overall project cancellation. Understandably, this caused a lot of frustration in the team that had done a lot of work with the intention to turn these new procurement and software development processes into reality.

Culture Clashes And Speed Of Change As Sources Of Problems In Projects

In this case story, there are two major factors at play that cause difficulties in projects all the time:

More…

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Editor’s note: This article is one in a series based on the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), by Oliver Lehmann and published by Auerbach / Taylor & Francis in 2016.

How to cite this paper: Lehmann-Benz, A. (2018).  Culture Clashes and Speed Of Change in Project Environments: Can Agile Transformations Be Forced? PM World Journal, Volume VII, Issue IX – September.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/09/pmwj74-Sep2018-Lehmann-Benz-Culture-Clashes-and-Speed-of-Change.pdf

 



About the Author


Antje Lehmann-Benz

Munich, Germany

 

 

 

Antje Lehmann-Benz, MA, PMP, PMI-ACP, PSM is a project management and agile training professional for Oliver F. Lehmann Project Management Training, working with various training providers.  Recent experience includes:

  • Since 2017: Lecturer at the Technical University Munich, teaching Scrum Fundamentals to PhD candidates in Informatics
  • 2017: Agile training for a US military institution in Germany
  • 2018: Online PMP preparation training sessions for a global telecommunications company
  • Since 2018: Scrum trainer for a German car manufacturer
  • Since app. 2009: Project management and Scrum practitioner, consultant in the semiconductor and IoT industries (Atlassian JIRA / Confluence implementations)

She is also active as a volunteer for the Project Management Institute Southern Germany Chapter e.V. (Editor-in-chief, chapter magazine “PMI SG Live”; Director at Large for English Speaking Meetings in Munich). Active in 2016-2017 for PMI International as Subject Matter Expert regarding specific industry experience.

Magister Artium in linguistics, (M.A., LMU Munich), Antje holds the following certifications: PMI-ACP, PMI Agile Certified Practitioner (http://www.pmi.org); PSM, Professional Scrum Master (http://www.scrum.org); PMP Project Management Professional (http://www.pmi.org)

She can be contacted at [email protected]

 

[1]  Find more on the concept of make-or-buy decisions here

 

Mission Failure at LIDL

But Actually, What was the Mission?

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 



“Every mission has life-or-death moments.”
Alan Stern, Scientist at NASA


Summary

The international grocery chain Lidl wanted to replace a conglomerate of individual software solutions with a unified standard software supplied by SAP. The epic failure of the project named eLWIS is a prime example of the need to learn Situational Project Management (SitPM) and Project Business Management (PBM). Trial and error are too expensive as teachers for these disciplines.

A Mission Success First approach might have saved the project.

Project eLWIS: The Main Players

Lidl Stiftung & Co.KG is the world-largest discount supermarket chain based in Germany. Its standard retail program is basic grocery products but also special items including mobile licenses and temporary offerings of electronic items and other goods. Founded in its current form in 1973, the group has over 11,000 stores in 27 countries in Europe and the US[1]. Through the group’s focus on very cheap prices, which they achieve through a number of measures[2], it had a steady growth over the years and achieved a turnover of over € 70 billion (US$ 81.7 billion) in 2016[3].

Figure 1: A Lidl store in Munich, Germany

SAP is also a leader in its field – business software. Its turnover for the year 2018 is expected to be around € 25 billion (US$ 29 billion)[4]. With its offering of widely demanded state-of-the art solutions, such as high-performing databases and cloud services for their software, their outlook is very positive.

A third player was a Bavarian consulting company named KPS AG, a consulting company that presents a focus on Rapid Transformation®[5] of organizations, combined with software implementation. In July 2018, the company was selected for the Top 100 Innovation Award for small and medium enterprises.

Further players in the eLWIS project were Hewlett-Packard and Software AG[6]. For a project of this size, it is likely that there was a greater number of subcontractors working for the main players. These can be companies, but also freelancers, individuals, who work as self-employed contractors.

Replacing Old Software at Lidl

It is a common observation that providers of large and complex operations, distributed over a number of locations, have developed a farrago of software solutions throughout their history. Each individual software solution was developed and implemented against

  • specific requirements of a location,
  • by that time prioritized tasks,

which were often different to the requirements of other locations and to the task priorities of other places and moments .

More…

To read entire article, click here

 

Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.

How to cite this article: Lehmann, O. (2018). Mission Failure at LIDL – But Actually, What was the Mission?, PM World Journal, Volume VII, Issue VIII – August.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/08/pmwj73-Aug-2018-Lehmann-Mission-Success-series-article2.pdf

 



About the Author


Oliver F. Lehmann

Munich, Germany

 

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Lidl, 2013)

[2] (Hanbury, 2017)

[3] (Handelsblatt, 2018)

[4] (Kerkmann, 2018)

[5] The expression “Rapid Transformation” is a trademark of KPS.

[6] (Lidl, 2018)

 

 

Project Management Review Celebrates Third Anniversary

 

P/PM PUBLISHING NEWS

Strategic partnership launched, international award winners announced and symposium conducted

Reported by Yu Yanjuan in Beijing

27 July 2018 – Beijing, China – On July 26th, 2018, Project Management Review (PMR) held a special event to celebrate its third birthday. The half-day event included three parts: signing of strategic cooperation agreement with Electric Power Planning & Engineering Institute (EPPEI) in China; Awards Presentations; and a Project Management Symposium.

During the signing of strategic cooperation agreement between PMR and EPPEI, the two sides agreed to maximize their own strengths to upgrade project management competencies in the electric power industry and to promote the development of best practices in China.

In the second part, five categories of awards were presented to experts, authors and translators for their support of PMR in the past three years. For the international side, “PMR Craftsman Award” goes to David Pells and Rodney Turner for their companionship and help. “PMR Excellent Partner Award” goes to the PM World Journal (PMWJ). As an international cooperative partner, PMWJ has offered tremendous assistance to us. On the 3rd Birthday, we present PMWJ “PMR Excellent Partner Award” in hope of further productive cooperation.

“PMR Outstanding Contribution Award” goes to Stacy Goff, Reinhard Wagner, Darren Dalcher, Oliver F. Lehmann and Antonio Nieto-Rodriguez for their selfless contributions. All the awards winners will receive the digital certificates soon.

In the third part, a small project management symposium was held. Four keynote speakers shared their views on excellence and management. During the event, we also play the collection of video congratulations across the globe. The speakers in the video expressed good wishes for the future of PMR. View the video at: https://v.youku.com/v_show/id_XMzc1MzkwMTM1Mg==.html?spm=a2h3j.8428770.3416059.1  See further details of the anniversary celebration and symposium at http://www.pmreview.com.cn/english/Home/article/detail/id/205.html

Background:

On July 26th, 2015, the first issue of PMR magazine was launched. For three years, we have been devoted to providing all-dimensional multi-perspective introduction of latest domestic and international project management research advances and application cases. We are committed to promoting project management theory research and application and enhancing the competitiveness of companies. Our columns include Cover Articles, Top Interview, Foresight, Chief Viewpoint, International Perspective, Special Research, Career Pulse, PM+, etc.

Project Management Review (PMR) Magazine, sponsored by State Grid Yingda Media Investment Group, is a leading source of project management news, knowledge and information in China. The magazine provides an all-dimensional multi-perspective introduction to the latest domestic and international project management research advances and application cases. PMR pays special attention to project management accomplishments, experience and lessons learned from companies’ going international, with a focus on globalization, specialization of project management and professionalization of project managers. For more about PMR and to see the latest edition, visit http://www.pmreview.com.cn/english/

Source: PMR

 

 

Dealing with Project Supply Networks

Be a Connective Leader

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


“Like it or not; commands are out, negotiations are in.”
Jean Lipman-Blumen

Summary

Project Business Management brings together project management skills and business skills for the kind of projects that dominate today’s reality: Projects extending over corporate borders.

An aspect of both skills are leadership requirements that do no more stop at the boundaries of an organization but extend into other organizations, including clients and contractors. The ability to apply the achieving styles of the Connective Leadership Model often decide on the project success of these projects and also on the business success of the companies involved.

 

Leadership Requirements in Project Business Management

Some readers may have followed my previous articles on Project Business Management. In these articles, I describe various aspects of the art of doing project management in an environment characterized by contractual relationships between sellers and buyers, contractors and customers and other forms of business partners[1]. This series of articles follows a path from the outside, the organizations involved and the interfaces between them, to the core of the Project Business Manager discipline, from the technicalities and legal matters to the question what actually constitutes professionalism when projects span across corporations.

It began with a discussion of Situational Project Management (SitPM)[2] and a recommendation of an open typology of projects to prepare for the uniqueness and variability of the different projects along a major number of dimensions. Among these dimensions were those of predictable vs. exploratory projects, mark-1 vs. mark-n projects and many more.

One of these typological dimensions  was the dichotomy of internal projects, which are in essence costs centers, and customer projects, which are profit centers for the contractor company and opportunities to tap contractors’ assets and turn them into project resources for a customer organization. Contractors can constitute complex supply networks with many companies involved, including prime contractors and subcontractors over a number of tiers.

Figure 1: A simple two-tier project supply network (PSN) with a customer and five contractors

Figure 1 depicts a simple network with one ustomer and five contractors involved over two tiers. Each company has its own business interests, and getting to work together as one team dedicated to a common “Mission Success First” goal is a difficult task, whose mastership will make the project succeed or fail.

Discussing business aspects of projects under contract on both sides, customers and contractors, the articles led to questions of professionalism and qualification of project managers, who manage not only a project but a business relationship with customers, contractors or both, and as Figure 1 shows, the number of interfaces between the companies can grow rapidly.[3]

In this article, I intend to build a bridge to work that has been done since the 1990s by Jean Lipman-Blumen[4] under the flag of “Connective Leadership”.[5] Lipman-Blumen postulates that leaders have passed through two historical stages and are now entering a third one. Figure 2 describes, how leadership and also project management evolved and still evolve along these stages:

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Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.

How to cite this article: Lehmann, O. (2018). Dealing with Project Supply Networks (PSNs), Be a Connective Leader, PM World Journal, Volume VII, Issue VII – July.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/07/pmwj72-Jul2018-Lehmann-Connective-Leadership-in-Project-Supply-Networks.pdf



About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] A chronological list of all articles in PM World Journal can be found at https://pmworldlibrary.net/authors/oliver-f-lehmann

[2] (Lehmann, 2016)

[3] (Lehmann, 2018)

[4] Her profile can be found at the Drucker School of Management at the Claremont Graduate University ( (Drucker School of Management, n.d.)

[5] (Lipman-Blumen, 2000)

 

 

The Great Talent Gap

In Project Business Management

 

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“How merit is with luck connected,
Is to suckers all unknown.
If the philosopher’s stone was theirs,
they’d lack a philosopher for the stone.”
– Johann Wolfgang von Goethe, Faust II

Summary

A new survey confirms that Project Business Management (PBM) is a fast growing discipline in today’s reality of project management. It is nevertheless underrepresented in associations, literature, and education.

As the specific needs of project managers in customer-facing projects are so widely ignored, people have to develop their professional skills mostly based on trial and error. This is a costly approach that impacts the profitability of their employers as much as their own income.

 

Dear Project Managers, Again, We Need to Talk About Money

In my last PM World Journal article[1], I suggested that project managers should foster the skills needed to do customer projects. They should do that in a way that these projects are successes for both the paying  customers and the own organization. Ensuring monetary income from a customer project for a contractor is foremost not greed but giving the company the lifeblood for survival, growth, and development.

As a result, I had many discussions with colleagues from project management and related disciplines like governance (PMOs[2]), educators. I had also many discussions with project managers from both sides customers and contractors.

All agreed that there is a talent gap that makes it difficult for project managers to run customer projects as customer-facing profit centers. The income should reflect the responsibility of the project manager as the manager of an income stream for the own organization, but also for the deliveries and services provided to the customer, whose business success to are larger or lesser degree depends on the performanve of the project manager.

There was however not much agreement, how project managers in customer projects should be paid and whether they are currently rather overpaid or underpaid. Here are some comments:

  • “The project managers of our contractors generally come in expensive cars to meetings. They are definitively overpaid, and the companies that send them suck the blood from us.”
  • “As a PMO manager, I am governing a portfolio of customer projects. The profit that our project managers create is too small, so they should not be angry that they do not get paid very well. If they help us make more profit, we can pay them better.”
  • “I am a project manager in a project, and we are the prime contractor. I always have the feeling that the project manager on customer side is much better paid, and I have the same feeling when I meet the project managers of our many subcontractors. We are the ham in the sandwich, and as we are organizing the project but are not doing the productive work, we are expected to be cheap.”
  • “I have strong experience in several software service delivery companies and in these companies it’s very easy answer to your question – PM’s who work on customer projects have high visibility, high appreciation and high salaries.”
  • “We hire project managers for customer projects in high technology. While certification gives an indication of people’s project management skills, no certification validates the business skills needed to do projects against payments.”

There is a common saying in quality managing: “Without data, you’re just another person with an opinion.”[3] The differing opinions show that we need better data on customer projects and many other aspects of Project Business Management (PBM). That data is so far not available. I therefore decided to obtain such data in form of another small survey performed between 13 and 27 May 2018. During the two weeks, I received 325 responses. The results of the survey are published here for the first time.

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To read entire article, click here

 

How to cite this article: Lehmann, O. (2018), The Great Talent Gap in Project Business Management, PM World Journal, Volume VII, Issue VI – June. Retrieved from https://pmworldjournal.net/wp-content/uploads/2018/06/pmwj71-Jun2018-Lehmann-The-Great-Talent-Gap-series-article.pdf

Editor’s note: This is the 8th in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See full author profile at the end of this article. A list of the other articles in PM World Journal can be found at https://pmworldlibrary.net/authors/oliver-f-lehmann.


 
About the Author


Oliver F. Lehmann

Munich, Germany

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Lehmann, 2018)

[2] Project management offices

[3] (Revelle, 2004, p. 34)

 

Wideman June 2018 website updates announced

 

PM EDUCATION NEWS

1 June 2018 – Ontario, Canada – Max Wideman has announced updates to his popular project management website, www.maxwideman.com.  According to Max:

This month’s paper is a book review of Oliver F. Lehmann’s latest work: Situational Project Management – The Dynamics of Success and Failure.

Here, Oliver provides a host of examples for learning and solutions derived from worldwide case reports of large project challenges and outright failures, what went wrong and why.

These examples are backed up by the author’s personal contacts and interviews with managers and others directly involved.

~~~~~~~~~~

If you are looking for answers, guidelines or templates, check out Max’s Issacons – “Issues and Considerations” – that are presented in bullet form for quick and easy reference by project managers.

Have you seen Max’s book A Management Framework for Project, Program and Portfolio Integration?  For information or to order a copy, visit http://www.maxwideman.com/papers/framework_book/intro.htm.  Do you have a project management question? Find the answer at: http://www.maxwideman.com.

Max Wideman is one of the world’s best-known project management authorities. An engineer and professional project manager, his experience includes systems, social and environmental projects, as well as design and engineering projects. He is a Fellow of the Project Management Institute, of which he is past president and chairman and for which he led the development of the 1987 version of the Project Management Body of Knowledge. He is also a Fellow of the Institution of Civil Engineers (UK), the Engineering Institute of Canada, and the Canadian Society of Civil Engineering.

His personal web site at http://www.maxwideman.com is a source of superior project management knowledge and information. It is free to the public.

 

PMI Southern Germany Chapter Celebrates its 20th Birthday with a new President

 

PM PROFESSION NEWS

9 May 2018 – Munich, Germany – Domiciled in Munich, Bavaria, Germany, the Chapter of the Project Management Institute for the states of Bavaria and Baden-Württemberg will become 20 this year. Founded in 1998 as the PMI Munich Chapter, its outreach covers the whole of Southern Germany.

The celebrations will be done in November this year led by Jörg Glunde, PMP, the new Chapter President, who took over the position from Oliver F. Lehmann, PMP, in April 2018. Oliver presided over the Chapter for 5 years, during which the membership grew by over 40%. He said he will spend his time in future focusing on his work in Project Business Management (PBM), which deals with projects performed by often complex and international project supply networks (PSNs).

Jörg Glunde, PMP, attended the Friedrich-Alexander-Universität Erlangen-Nürnberg and has worked as a project manager for many years. He has co-authored a book on requirements engineering and volunteered at the Deutsche Gesellschaft für Informatik (German Association for Computer Science). He has been a lead volunteer at the PMI Southern Germany Chapter since 2009, managing and governing projects with volunteers. Jörg works as a project manager at Zeppelin Baumaschinen GmbH.

Jörg Glunde has been a member of the Chapter for 10 years and managed its first project management congress named PM-Summit in 2010. He has been the Chapter’s Vice President Projects since 2012 and governed a number of major chapter projects performed solely by volunteers.

For more information, contact: [email protected]

 

 

Be the Project (Business) Manager that People Think You are

And Get Paid as That!

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

Success is a lousy teacher. It seduces smart people into thinking
they can’t lose. And it’s an unreliable guide to the future”[1]
Bill Gates

Summary

The demand for Project Managers with business skills is robustly growing.  However, they face additional challenges, compared with project managers in strictly internal projects and have an increased responsibility for the well-being and the survival of the own organization. Their mindset should reflect this, but also their payment.

A Loss-Making Contractor

It was some years ago that I was hired by a software development company to give project management basics training to their staff. The company was about midsize and we had last been in contact about 15 years earlier. For the case story, let’s call the firm Mosquito, Inc. I thought it was a good feeling to be a guest at the company again, after such a long time, and do a seminar for them.

When Mosquito’s general manager booked me for the class, he requested me to plan some time at the end of the seminar to talk with him about my observations and some other issues. I agreed, knowing what this kind of request means. Managers commonly ask for such additional time, when their companies have a specific problem, or challenge, or a difficult question, hoping that I can provide a solution or an answer from my more distant position. I am booked as a trainer but, as I am there anyway, also am in addition used as a free consultant.

The specific problem became visible during the class and was a topic of repeated discussion among attendees: A troubled customer project. Mosquito had a major client, a professional association that needed to implement a new fee clearance system with its members. These members were small service companies that had to use the system to make their cost calculations more transparent to their customers. Another purpose was to make it easier for tax authorities to assess tax claims based on the services provided by these members.

The main components of the clearance system were a centralized database to which the association members had access, and an ID card the size of a credit card that was owned by the customers and allowed access to their data in the system. The implementation of the system was not a strategic decision by the association or its members, it was a new legal demand on them, and the law had a deadline imposed for the implementation of the system. The deadline was originally not too short, but a lot of time had been lost during requirements identification and clarification. These delays have made the deadline pressing. Another problem: Mosquito, the contractor was about to make a heavy loss, that could grow big enough to jeopardize the existence of the company.

The customer project had been agreed to be performed under a fixed-price contract. It was further agreed to be performed based on the “Agile Manifesto”[2], a document from 2001, which is generally considered the basis of agile approaches. Among its statements are four value assignments:

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Editor’s note: This is the 7th in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.

How to cite this article:
Lehmann, O. (2018), Be the Project (Business) Manager that People Think You are—And Get Paid as That!, PM World Journal, Volume VII, Issue 5, May 2018. https://pmworldjournal.net/wp-content/uploads/2018/05/pmwj70-May2018-Lehmann-Be-the-Project-Manager-series-article.pdf



About the Author


Oliver F. Lehmann

Munich, Germany

 

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served five years as the President of the PMI Southern Germany Chapter until April 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Gates, Myhrvold & Rinearson, 1996)

[2] (Beck, K. et al., 2001)

 

 

Let’s Talk Money

Project Business Management

By Oliver F. Lehmann

Munich, Germany

 



Summary

Based on a recent case of a defaulted project provider in the United Kingdom, the author recommends to put a stronger focus on profitability of customer projects, a topic that is rarely discussed in project management. This profit is needed to protect the performing company and also people and other organizations that depend on its health.

Customer Projects between Need and Greed

A Major Project Vendor Goes Insolvent

On January 15, 2018, the United Kingdom’s second-largest[1] construction company Carillion PLC collapsed. The company was a global major player in building, infrastructure, and services. Carillion employed 43,000 people worldwide, including 20,000 in the UK. It was reported that “the company was hit hard by cost overruns on projects” as well as delayed payments from customers[2] that turned these projects into loss-bringers. The company was a contractor in major construction projects, including the headquarter of the British GCHQ intelligence service and the Tate Modern building. It also provided ongoing services for public hospitals, road maintenance, provision of school meals and ran even prisons. The portfolio of the company was wide, the core business however was obviously construction and therefore project management.

Figure 1: The famous donut shaped Headquarter of British GCHQ intelligence service was a Carillion project (©GCHQ 2014)

According to the information that is publicly available, the company has been knocked out by a double-whammy:

–        Loss-making projects ruining the profitability of the company

–        Late payments from customers, battering its liquidity

Carillion did not make enough profit to build the reserves that would have allowed the company to cope with late payments without running into liquidity problems. At the same time, the company suffered from shortage of liquid money in customer projects, a sticky situation that commonly leads to decisions that are not made in order to support long-term profitability and ensure a happy customer, but to survive the current day and still be able to report some process at any costs.

The problem is not limited to Carillion and its customers, most of them obviously public agencies. The company’s default also hits its estimated 30,000 subcontractors[3]. One may carefully assume that about half of them worked for Carillon in projects. This gives an impression of the jobs that are at stake on top of those inside Carillion. Many of these subcontractors are waiting for payments for orders that they have fulfilled or for which they have ordered goods and booked resources that they will need to pay for, but the default of their customer Carillion will have to make them write off the majority of the invoiced amounts. Even the complete loss of their outstanding payments is something they must consider. In addition, most of them will have resources blocked for future work at Carillon, making them unavailable to gain income from other projects and are now facing idle times or lay-offs.

Many of these subcontractors may in turn have sub-subcontractors, and so on, and the loss of income from the project business at Carillon is trickling through this network of vendors distributed over various tiers. The number of jobs at stake in Carillon’s project supply network (PSN) is probably much higher than the jobs lost inside the company, and the effect on the pensions of current and former staff will also be massive.

To read entire article, click here

 

Editor’s note: This is the 4th in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.



About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Southern Germany Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

[1] (TCI, 2017a)
[2] (BBC, 2018)
[3] (Goodley, Sabbagh & Kollewe, 2018)

 

 

Freebie Projects and The Project Business Management Office (PBMO)

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 



Summary

Project business management is high risk for all parties involved. For organizations performing projects for paying customers, a very central area of uncertainty is profitability from one or more projects. A second one is liquidity, and on top of that, the customer must be satisfied. Assigning persons as Project Business Managers can help meet these goals for individual projects. For a portfolio of projects, a Project Business Management Office (PBMO) can be beneficial to ensure portfolio-wide profitability.

Freebie Projects

Case Story: A Customer Betraying High Hopes

Silk Moth Inc.1 is a JAM. The company performs a continuous portfolio of customer projects and is Just About Managing, meaning that it makes enough profit to survive the day but has no monetary resources to manage unexpected problems and crises and to grow into new capabilities and markets.

As a small publicly listed manufacturer of automotive components with roughly 1,000 employees, Silk Moth’s name stands for quality and for timeliness in delivering its products to its customers, mostly automotive manufacturers. The name also stands for effective integration of product development and production design for small components roughly up to the size of a tin can. In its development work for its customers, it follows the standard process of the industry, which predevelops innovative products to a market maturity of roughly 50% to 80%, then offers the product on the market and finishes development when a customer and with the customer a business case has been found[1].

Automotive industry is generally a high-pressure environment, and while some suppliers of automotive components and services are highly profitable there, the majority are JAMs. Profitability is a leadership task, and while most companies in automotive industry are well managed, they are also under-led.

In the specific case, the product was a new type of pump for break fluids and coolants, designed to be located around an axle. The pump uses the rotation of the axle to propel the liquids, when the car is driving and switch on an electric motor when the car and with it the axle stands still, to ensure uninterrupted and steady flow and pressure of the fluid. During a presentation on an exhibition, a customer was indeed found for the item, who was in the process to develop a new electric car, Botfly Corp., and an agreement was soon made that the final development, based on the predeveloped immature product, would be finished for the item, production design started for it, and that it would become a part of the future car model.

Such a development project is often a Freebie project. It is done by the contractor for the customer free of charge, but after its end, revenues created from the product or service that the project has created will pay back the investment for the contractor. Figure 1 describes the lifespan of a freebie project with those of internal projects and customer projects that are regularly paid by the customer during the course of the project.

Silk Moth was normally a very careful company, that would not take too many risks for a new and uncertain customer business in development. The high hopes associated with the first application of the new product and the expectations of the Botfly car to sell in high numbers and to give the company a first-class reference customer for future business development however blinded their attention to business risks. They also considered the customer strongly dependent on them and thought, this will protect the return from the investments ahead. Being driven by devoted engineers, Silk Moth never understood, how Botfly’s processes actually brought about their decisions.

 

To read entire article, click here

 

 

1  Name changed by the author

 

Editor’s note: This is the 5th in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.




About the Author

 


Oliver F. Lehmann

Munich, Germany

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Southern Germany Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] The development process is called Produkt-Entwicklungsprozess (PEP) and has been highly standardized in automotive industry to combine creativity in development with consistent technical and business practices (Moehrle, Isenmann & Phaal, 2013)

 

Leading Project Teams Across Corporate Borders

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“Confusion is the charlatan’s friend, noise its accessory”            
– Carole Cadwalladr



Summary

The majority of projects today are not performed solely by internal teams. Project work is handed over partially or in full to external vendors who can build complex Project supply networks (PSNs), and project managers need to massively improve their skills to manage such PSNs professionally. Creating a “Mission Success Culture” based on a “Completing over competing” approach is an essential element of these skills.

 

From “Simple” Procurement Management to Complex Project Supply Networks (PSNs)

Case Story: An Uncomfortable Surprise in a Project Supply Network

Tarantula SE. (1) is a European manufacturer of machines for logistics and transportation purposes that are cutting edge technology and convince with low Total cost of ownership (TCO) in combination with high productivity. Located in Netherlands, they share the marketplace with a direct US-American competitor, Scorpio Corp., which has similar products, and like Tarantula invests heavily in new technologies, new applications for already existing advanced technologies and also tries to expand into future markets. For the development of a new machine type, a strategic decision was made to outsource more than the traditional 15% to 20%, in order to speed up the implementation time for innovations, tap external resources and reduce the need for management attention. The percentage of outsourced development rose during the project to about 60%, and the expectation was that this approach would shorten the product’s Time to market by 25% to 40%.

One of the contractors hired was a Canadian company Lobster Ltd. that was awarded a contract to develop and later produce an intricate component made from carbon fiber reinforced polymer (CFRP). Lobster soon noticed that it would not be able to do the project, given the challenging specifications agreed with Tarantula, the customer, on the product. The number of companies that can make such products is small, and in the market, most companies know each other, so they talked with a third company, Bee Queen S.A. from France, who soon became the subcontractor for the business. Figure 1 depicts the relationships of the companies mentioned above.

Figure 1: The layout of the small Project supply network in the case story.

The tight deadline for the component development forced Lobster’s project manager to ask Bee Queen to start development work, while the two companies were still in negotiations particularly on the price for the product development and for successive manufacturing. The two companies had a year-long business relation, and trust into Lobster and the desire to win the long-term business on Bee Queen’s side were strong incentives for the subcontractor to accept the business risk.

During these negotiations, it became clear for Lobster that the business would not be attractive for them at all. Between the price they would get paid by Tarantula and the costs of outsourcing to Bee Queen, the achieved margin became very thin. To make things worse: While the development project at Bee Queen was progressing fast and the deadline set by Tarantula was coming nearer and nearer, Lobster’s negotiation position deteriorated further. At a given time, the company was no more be able to switch to another supplier, but the price with the subcontractor was still not fixed. The thin margin would not only have to cover Lobster’s costs of managing the relation between the customer and the subcontractor, Lobster was also bearing the risk of missing the Start of production (SOP) deadline or of non-compliance with the specifications on the product, which would lead to contractual penalty payments that they would not be able to pass on to the subcontractor. To make things worse, the project blocked management resources at Lobster Ltd. that would be spent more wisely in winning and performing new business that would provide better margins. Lobster therefore made a decision to get out of the business and let Tarantula work directly with Bee Queen S.A.

A meeting was set up with the project managers and other representatives of the three companies. Tarantula had already some knowledge that Lobster Ltd. had subcontracted parts of the development work, but has so far not been interested in more details of this business. They considered the development project in good hands and gave Lobster the freedom to perform the project in a way that would ensure meeting the deadline and the technical requirements. Tarantula assumed that the outsourcing to a trusted contractor allowed them to focus their management attention on other parts of the new machine. To ensure that progress was rely on a number of maturity reviews called “Quality gates” (2), to give assurance that the development is on schedule, which it was. The development approach is sometimes referred to as “Rainbow model”, because as depicted in colors as shown (see Figure 2), there is some faint resemblance to a rainbow. The rainbow model can replace classical phase-gate models, allowing for asynchronous development at high speed, but poses a major challenge on project management.

More….

To read entire article, click here

Author’s note 1: All names changed in this article.
Author’s note 2: The term “Quality gate” or “Q-gate” is a misnomer but is quite common in in Europe.

Editor’s note: This is the 4th in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.



About the Author


Oliver F. Lehmann

Munich, Germany

 



Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Southern Germany Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Crisis in Your Customer Project?

Try Benefit Engineering

SERIES ARTICLE

Project Business Management 3

By Oliver F. Lehmann

Munich, Germany

 


 

“Do what you do so well that they will want to see it again and bring their friends.”   
– Walt Disney

 

Summary

A traditional approach to resolve monetary problems in customer projects is “Cost engineering”. This article describes an alternative solution named “Benefit engineering”, which can be more effective and leaves a customer with increased happiness, while the contractor’s problems are resolved.

The Boon and Bane of Cost Engineering

As a trainer and writer, the author of this article has a focus on project business management (PBM), the knowledge area in project management that is dealing with networks of customers, contractors and lots of other players. These organizations and individuals are forming project supply networks (PSNs) that can become very large, complex, intransparent, and very dynamic in the organizations that constitute them and the interfaces between them.

In these discussions, the author is often confronted with questions from project managers working for contractor organizations on profitability of customer projects. It seems to people that profitability and a happy customer are mutually exclusive. A project manager in a customer project has to invest into the contract project to deliver to the customer what is desired and needed, thus impacting the satisfaction and possibly the delight of the customer. This would reduce the profit from the project. Increasing the profit in turn would improve profitability but comes with the price of a frustrated customer and possible conflicts that may finally need to be sorted out at court.

A second question, which follows the first question is commonly the issue of liquidity. As a contractor for a customer, a company often has to outlay money, work and deliverables for the customer. This will be later paid back by the customer, but depending on the billing cycles of the contractor and the payment terms and discipline of the customer, may take some weeks. During that time, the contractor’s business with the customer runs into a temporary loss situation, which can strain the company’s credit line, particularly if the company has several customer projects that require that the contractor is financing the customers’ projects in advance. Project outlays in addition come with the risk that the customer may go bankrupt and the contractor will not get them reimbursed, because the deliverables paid with them may become part of the insolvency estate or lose value when the customer project has been terminated.

Profitability and liquidity seem to oppose customer happiness. A focus on the monetary side of the project negatively influences the customer’s perception of the performance of the contractor. It gives the customer the impression that the contractor is greedy, and that this greed is diminishing the success that the customer will have from the project.

Investing in the project to accelerate work, meet deadlines independent of customer payments, and to increase the value of the deliverables for the customer reduces the margin from the project, at least when the additional costs are born by the contractor.

Figure 1 shows how a company that gets its income from customer projects calculates is profitability from

  • the revenues from the individual projects
  • the costs that are incurred by these projects
  • and by the general and administration (G&A) costs that cannot be assigned to individual projects but are incurred as overheads by the entire organization to be able to perform this project portfolio

Figure 1: Marginal costing model for a project contractor with a portfolio of 6 projects

For project contractors, the risk is high that the profit from the projects may be impacted by reduced revenues, increasing costs for the projects or increasing costs for G&A. Project business management deals with high risk business, and the causes of such disappointments in the company’s main ledger are numerous. Problems with project costs may come from poor cost estimating, unexpected rework, poor subcontracting or other incidents that drive the costs of a customer project. Revenue reductions may stem from incomplete deliverables, at least in the customer’s perception, from delayed payments that move the income into the next business year, from withheld payments by dissatisfied customers, or from projects that are terminated before the full scope has been delivered and invoiced.

More…

To read entire article (with footnotes and references), click here

 

Editor’s note: This is the third in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See author profile below.



About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Southern Germany Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected]

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Managing Portfolios and Programs in Project Business Management

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 



“Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

Charles Dickens – “David Copperfield”

 

Summary

Portfolio management and program management are two implementations of multi-project management. Their description commonly ignores commercial aspects that sit at the core of project business management (PBM). The inclusion of these aspects can help multi-project management gain more relevance for the practice in complex project supply networks (PSNs) working for paying customers.

Case Story: A Project Portfolio Needs to be Better Managed

Lucky Tapeworm, Inc. [1] is a prime contractor working mostly for corporations, doing projects at the crossing points of production hardware, production management software, and organizational development on customer side. When the author first made contact with the company, it was working on nine projects concurrently for different customers, and each of them had subcontractors, the smallest project five, the largest almost 100. Many of these subcontractors are involved in more than one of Lucky Tapeworm’s projects, which makes the business relations in the company’s entire supply network quite confusing. In addition, the company had a portfolio of seven internal projects, performed to resolve organizational problems that had accumulated over many years, and to make their business future-proof. Roughly half of the work inside these internal projects was also outsourced; the other work was done by own people. Figure 1 shows the two project portfolios and their relationship to other companies.

Figure 1: The two project portfolios of Lucky Tapeworm, Inc. The arrows point in the drection of payments.

The author’s contact with the company as a trainer and consultant began, when Lucky Tapeworm’s management asked for support to increase their hit-rates in business development for customer projects. As many other companies also do, Lucky Tapeworm, Inc., had fostered a habit of responding to all customer inquiries it received with a bid or a proposal. Less than every tenth offer finally led to a contract with a customer, which means that 90% of the offers were futile work that bound human resources but did not succeed in bringing business to the customer. To make things worse, the lucrative business commonly went to the company’s competitors, while the tedious and poorly paid customer projects that made unpredictable use of the company’s assets were too often won instead.

Another problem was the input the company needed for developing the offers from its suppliers. Second-tier sellers were given the chance to support business development and become subcontractors when the business would be won by Lucky Tapeworm, but the information from them generally came late and not with the depth and quality of material required to win the business. These sellers had made the experience too often that Lucky Tapeworm would not win the contracts for which it had quoted and that they would therefore also not get the business. Their lack of motivation to support their direct customer in its strive to become prime contractor was among the reasons that the hit rate was so low.

Lucky Tapeworm, Inc., was a classical JAM company in project business management: It was “just about managing”, and the low-value business did not enable the company to build the reserves potentially needed to cope with negative risks from a customer project turning into crisis.

Lucky Tapeworm had developed a process using templates and standardized text blocks for their offers. These helped the company to reduce the workload for the development of bids and proposals and made it possible for its proposal managers to respond to a higher number of enquiries. The disadvantage of the approach was that many enquiring buyers did not see their questions answered and their needs reflected in the offers. This was the cause of both, the low hit rate and the failure to win the worthy business. The first step to improve the business therefore was to replace the standardized offer development process with a customer-centric one. This began with a deliberate offer/no-offer decision, reducing the number of responses to enquiries and leaving more time for the development of a specific argumentation. The customers could see that their requirements were understood and gain insights as to how the contractor would meet them.

As a second step, meetings were held with the company’s suppliers to discuss the low hit-rates and how everyone could work together to improve them.

Based on these discussions, a strong “Mission Success First” culture was agreed upon, inside both the company and its supply network. On this, the company and its partners would focus the resources needed to win the contract once a decision had been made to submit a bid or proposal. Figure 2 shows the main criteria used for the offer/no-offer decision.

To read entire article, click here

 



About the Author


Oliver F. Lehmann

Munich, Germany

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Munich Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected].

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Project Supply Networks (PSNs)

SERIES ARTICLE

Project Business Management

By Oliver F. Lehmann

Munich, Germany

 



In the imperfection of all human things, we see the best arrangements degenerate. Therefore,     from time to time, where necessary, the enhancing hand must be applied, so that these      institutions meet their original purpose again.   

Frederick II, King of Prussia, called “The Great”

Summary

A general tendency can be observed in project management that more work is contracted out to vendors and service providers, leading to project supply networks (PSNs), that are growing in number, size and complexity, and that are often opaque and very dynamic. The larger a PSN grows, the more project management is shoved into the background by commercial topics. Organizations on both buyer and seller side are hardly prepared for this development, and literature, instruction, and consulting are mostly blind against it. The author recommends development of a new management discipline “Project Business Manager”, who is trained to deal with the commercial aspects of project management in these networks as much as with the technical, organizational and interpersonal aspects that are the focus of pure project management.

Case Story: A Project Contractor in Crisis

Happy Mollusk IT Services, Inc. had great plans for the year 2016. The company is a regional implementation partner for business software who follows a business model to implement solutions for customers worldwide in form of customer projects, and these projects provide the income for the organization much more than the software itself, which is mostly freeware and cannot be sold with profit, but can be implemented as part of a paid customizing and consulting service.

A forecast in late 2015 showed how the organization was planning to make profit with its services: They had six projects that would provide income (margins). The sum of the margins from the projects minus the indirect general and administrative costs (G&As) to run the organization would be the raw profit (EBIT) for the organization. The plan was to have an EBIT of about 10% from the projects by the end of 2016, as is shown in Figure 1.

Figure 1: The original business forecast of Happy Mollusk’s portfolio of customer projects; amount numbers given in US-Dollars

The payments from the customer are the most typical business model of a project contractor. Over one or more customer projects, these projects must provide revenues for the organization but will also create costs. The difference between these two numbers will be the margin from each of the projects, and when the sum of the margins exceeds the G&A costs, also called indirect or overhead costs (the cost to be able to do the business), the organization can be profitable from its projects.

Over half a year later, Happy Mollusk’s management looked at the costs of the projects that have occurred so far and that were forecast for the remaining six months of the year, and found out that four of the projects were on the way to meet their forecasts, but two would exceed them. Figure 2 shows how these increased costs reduced the company’s profit from the projects:

More…

To read entire article, click here

Editor’s note: This is the first in a series of articles by Oliver Lehmann, author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016. See full author profile below.



About the Author


Oliver F. Lehmann

Munich, Germany

 

 


Oliver F. Lehmann
, MSc., PMP, is a project management author, consultant, speaker and teacher. He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich

He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and serves currently as the President of the PMI Munich Chapter. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.

Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at [email protected]

Oliver Lehmann is the author of the book “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016.

To see other original works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Situational Project Management

BOOK REVIEW

Book Title:   Situational Project Management: The Dynamics of success and failure.
Author: Oliver F. Lehmann
Publisher: CRC Press, Taylor and Francis Group.
List Price:   $79.95 USA
Format: Hard Cover, 274 pages
Publication Date: July 2016  
ISBN: 13-978-1-4987-2261-2
Reviewer:     Jorge Galvan, PMP         
Review Date: January 2017

 


Introduction

Situational Project Management (SitPM) is a concept that I have barely heard of or thought about during my project management training and in subsequent PMI certification; the PMBOK 5th Edition doesn’t mention it much.

The book uses the approach of seeing projects with its traditional adjectives such as being unique, temporary, undertaken to deliver a product, service or result, but with the peculiarity of being situational. Said that, it emphasizes very well throughout the book that the concept of “one size fits all” might not be real and even less practical when one is about to embark into the uncertainties of a project, and that so called best practices are dependent upon the situation.

It carries us through a series of known project management concepts and traditional practices towards the core of where situational approaches must be applied. It contains, explains and exemplifies interesting theoretical models that can be applied for some specific project management situations to keep a project under control.

Next the author takes us to his situational project management by first structuring a topology of projects that will be used to define the type of project we are about to undertake and thus the methodology that fits best for a successful outcome.

The introductory questions at the beginning of each chapter takes the opposite approach than some PM books with questions at the end, to my perspective it has pros and cons but personally prefer the question at the end.

Overview of Book’s Structure

The structure of the book looks fine and takes the reader to gradual but sometimes not that clear path to the place the author intends to.

After a little too long introductory chapter and then going deeper in chapter two, it starts the interesting part of the book, what one expects from it. Chapter three to me is the most interesting section, would be better if more diverse examples were shown and in major quantity.

The chapter about practices for SitPM would benefit if it gets extended; from my perspective I expected it to go deeper on some of the methodologies and examples but unfortunately is the shortest chapter.

The last two chapters of the book are also very well thought out and structured, talks about basic tools for SitPM and leadership and the Dynamics of Success and Failure (this one that I personally liked very much and again would have loved to get it extended), and it seems to be a good end for the main topic of the book that is Situational Project Management.

Highlights

The real examples that the author makes reference to are a clear and nice way to show the reader what is being exposed. As a reader I love to assimilate and understand my lecture when I can relate it to real life examples.

The topology the author makes of projects seems very practical and useful for the critical part of deciding how to manage and conduct a project to a successful ending.

The small talk of waterfall and agile methodologies are very welcome, just needed to be extended a little longer to my perspective.

More…

To read entire Book Review, click here

 


 

About the Reviewer


Jorge Galvan, PMP

Texas, USA

 

 

Jorge Galvan has extensive experience in the telecom industry working as a software, hardware and infrastructure Engineer for both Core and Radio systems. He has a bachelor’s degree in Telecommunications and Electronics Engineering with a minor in Control. He has over 10 years of experience working with projects in different parts of the world and performing different roles such as project team member or technical engineer, as well as project coordinator and SME.

Extensive experience includes different phases of software development projects from feasibility to testing and deployment. Jorge is a member of the Project Management Institute, Dallas Chapter and obtained his PMP certification from PMI in July 2016. He can be contacted at [email protected].

 

Editor’s note: This book review was the result of a partnership between the publisher, PM World and the PMI Dallas Chapter. Authors and publishers provide the books to PM World; books are delivered to the PMI Dallas Chapter, where they are offered free to PMI members to review; book reviews are published in the PM World Journal and PM World Library. PMI Dallas Chapter members can keep the books as well as claim PDUs for PMP recertification when their reviews are published. Chapter members are generally mid-career professionals, the audience for most project management books.

If you are an author or publisher of a project management-related book, and would like the book reviewed through this program, please contact [email protected].

 

 

Customer Projects: What is the Future of the Business?

FEATURED PAPER

A micro-survey on current trends in Make-or-buy decisions 

By Oliver F. Lehmann

Munich, Germany


Running Projects as Businesses

Many project managers have the task to directly provide income for their employer. They are running “Customer projects” or “Projects under contract”, projects that are performed with the foremost intention to bring money home. A customer project has a very simple business case: It must make a profit for the performing organization, and survival and success of this organization depend not only on the technical skills of the project manager and the team, but also on their business acumen, customer orientation, and approach to profitability.

Internal projects are cost centers, customer projects are (mostly) profit centers.

Overall, textbooks and other literature remain silent on the particularities of customer projects. Standards mention them only “en passant” (for example in PMI, 2013, p. 10) or ignore them entirely (BSI, 2000, DIN, 2009), and they are rarely a topic in magazines and at congresses. Training companies have no offerings for project managers to get trained in the business dynamics of customer projects, and academic studies and research also ignore the subject in large part. Given the value of contractor work in projects, it is furthermore astonishing that not much market research is done on the topic and that reliable data for both the as-is situation and future projections are hard to find.

The Rationale of the Research

In a survey from October/November of 2015, the author of this article asked project managers what kinds of projects they were currently managing. He received 246 responses, and the results were distributed as shown in Figure 1.

Figure 1: Internal projects vs. customer projects (see also Lehmann, 2016b, p.9)

Both types of projects had roughly the same relevance with a slightly stronger emphasis on customer projects. When literature on project management generally focuses on internal projects, as mentioned above, this means that the particular situation of about 50% of the project managers is not addressed by books, articles, presentations, etc. When one looks at offerings from consultancies, one finds also that no expert help is given for a better understanding of what it takes for these project managers to not only meet the specific requirements on a technological level, on professionalism and on the selection of tools and techniques but to bring money home with projects.

In his book “Situational Project Management: The Dynamics of Success and Failure” (Lehmann, 2016a), the author proposes an open typology of projects with the intention to help project managers better adjust their practices to the particular demands of specific projects. The typology was also presented in the December 2016 issue of this magazine in a condensed epitome (Lehmann, 2016b). The distinction between internal projects and customer projects is one of the most obvious. Internal projects are commonly done to implement organizational strategies, meet business goals or to respond to mandatory demands from law or other binding regulations. If they are expected to create financial benefits like cost savings or income, these benefits will generally follow the project lifecycle.

Customer projects are expected to produce this income while they are performed, and the timeliness and sufficiency of the income are the most crucial metric for project success. Their benefit realization is commonly ended when the project is finished, possibly even earlier, notwithstanding subsequent income from services that are then operational and no more project revenues. Figure 2 shows how the lifecycles of projects and benefit generation commonly relate. An essential element of the benefit realization lifecycle is obviously the payment scheme that the contractor has agreed with the customer. The essential benefit from a customer project is the money that the project must make.

More (figures, footnotes and references)…

To read entire article, click here

 


 

About the Author


Oliver F. Lehmann

Munich, Germany


 

Oliver F. Lehmann, MSc., PMP, is a project management trainer, author and speaker. He has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich and a volunteer and insider at the Project Management Institute (PMI).

Living in Munich, Bavaria, he is the President of the PMI Southern Germany Chapter and author of the book “Situational Project Management: The Dynamics of Success and Failure” (Taylor & Francis, ISBN 9781498722612).