Companies undertake projects because the outcome is deemed to be profitable or desirable. As part of the project approval process, each initiative is thoroughly vetted and cost budgets, deliverables, timelines, resource requirements, individual responsibilities and ROI targets are formally documented. Diluting the role of project management as a potential cost savings strategy can thus lead to an inadequately prepared project and lead to greater problems and recovery cost incurrence down the road.
The premise of this article is that project management should not be viewed as an optional line item cost and an unaffordable luxury. When a project “fails” – often due to poor management and planning – the result is significant penalties across multiple dimensions: cost overruns, cash hemorrhage, wasted time, squandered resources, lost opportunities, excessive risk assumption, low morale, and lost competitive advantage.
The benefits of project management.
Case preservation and protection. The cash costs you incur in such areas as salaries, consulting fees and capital investments should be deemed as “good” costs to the extent that they fall within budgetary guidelines. After all, they are being incurred ostensibly to achieve the desired and profitable outcome. For projects that are completed on-time and on-budget, the real benefits of project management remain obscure. But what if the project was derailed because of poor oversight? This would have led to salaries and related costs spiraling above your budgets causing a significant hemorrhage of cash. So, when you try to place a value on project management, think about the coverage you get on the company’s precious cash flow.
Save time. Some projects can take weeks to complete, others can last months and years. When a project goes awry, your human resources may get bogged down. Project management helps you enhance your chances of delivering projects on-time and maximize the utilization rate of your limited human resources. While pinning a precise cost value of such time delays may be difficult, they often outweigh actual cash costs.
Risk protection. Undertaking excessive risk is not a cost free proposition. Project management allows you to have checks and balances in place to contain issues before they reach the crisis point. Ultimately, managers must perceive that unbridled risk taking is not sound policy. Yes, we may feel the economic pain around us, but cutting corners on project management may leave us exposed to substantial additional risk at a time you can least afford it.
In an attempt to conserve cash and cut costs during recessionary periods, some companies tend to under-estimate the true contribution of project management in preserving cash, conserving time, and containing business risks. Project management is instrumental in preventing these very mishaps that could derail your performance at a time your company can least afford it.