SPONSORS

SPONSORS

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.