Applying a project management model for medium, small, and micro-enterprises
In terms of project development, Latin America lives in a transformation age. In this environment the medium, small, and micro-enterprises (PYMEs) appear and involve 60% of the Region Producto Bruto Interno (PIB) or Gross Domestic Product (GDP). These organizations, in order to go compete with big corporations, require mechanisms to drive their needs, prioritize them, implement them, and give feedback to continue their growth. This pressure proposes a new project management model based on A Guide to the Project Management Body of Knowledge (PMBOK® Guide – Third Edition). Therefore, this paper covers a practical focus and a simple set of the concepts and best practices to conduct PYMEs’ projects.
The life cycle of these projects are linked with the nature of their products and/or services. It is important to have an infrastructure that supports several attention channels of clear requirements and a demanding and flexible project planning process at the same time. The business natural forces gather the projects in requirement portfolios being their objective and goals monitored and controlled according to the market. This periodic launch program needs a closed interaction among the portfolios in order to guarantee the synchronization of their work products which makes an optimal use of an integrated change control process that keeps a balance of their work plan.
The success of this best practice is monitoring projects throughout PMO which should have the support of the High Steering Committee.
Finally, we will share the lessons learned that will help you to decide, make, and redefine the best way to manage projects in PYMEs.
The use of project management has increased in recent years. The current concept and scope of project management goes beyond what we traditionally understand about managing a project. Traditional project management has been imperative in the construction area due to the complexity and magnitude of its projects. Besides, construction industry projects have been the ones which started the “professionalization” project management.
However, when the enterprises are changing from a massive and steady production to a production that satisfies specific needs of each client; when the new e-business area is having a revolution regarding the way that business is conducted; when clients, providers, and sales channels start being considered as part of an enterprise is when the necessity of making important projects becomes a reality for any firm of any size. Practically, all the firms are reinventing themselves, and the PYMEs are not the exception. Enterprises want to be profitable and that is why they need to have this renovation, and a good way to achieve this is through projects of transformations, re-engineering of processes, quality certifications as ISO, acquisition, and implantation of new technologies and so on.
Currently, all the enterprises manage more and more projects as well as assure efficiency in the operative area, which is not easy. The challenge for small and medium enterprises is the intelligent modernization that can make them increase their efficiency and productivity. A way to achieve this objective is by selecting and executing projects of modernization intelligently. We are living in an era where every expense has to be highly productive and has to generate value and that value must become visible for the organization.
It is in this point that we go back to the initial comment where it was stated that the current discipline of project management goes beyond the traditional concept that we apply when we manage projects. The experience of a person who has managed projects with “brute force” and afterwards has applied processes and concepts of project management can affirm that there are some benefits. These benefits are as follows:
- The project has no “surprises” during its execution and ending because at the beginning of the project planning and risk management was made.
- The product or service delivered at the end of the project is what the client has asked for due to the fact that every requirement is validated in detail with the client at the beginning of the project and any change that may impact the final product is authorized by the client.
- The real execution time of the project is very close to the planned schedule. The project is not going to suffer serious delays as it frequently occurs because the totality of the work that has to be done is considered and some specialists are consulted in order to estimate the time that last each activity.
- The real cost of the project does not differ significantly from the estimated cost due to the similar reasons from the previous point.
- The inevitable changes do not affect the project’s health because these changes are carefully analyzed and approved or rejected by the indicated person. The project is also updated and the people involved are informed about the impacts that any change may cause.
- The moral of the team has not deteriorated from the beginning of the project to the end. Some processes are executed to maintain and take care of the work done, reducing the amount of work done, especially when the project is really close to its end.
- The relationships among the people affected or involved by the project stay healthy from the beginning to the end of the project because there is a crucial care for communication and human resources management.
The project management discipline has another advantage: it can be adapted to the client and the project. When the project is small and does not involve too many people or too much time, the planning session including the risk analysis is done in a short period of time, and the control over the execution of the project is limited to supervisors and basic reports of advances.
The authorization procedures for changes are really simple as are the communication processes. The larger the project, the longer is the planning time. Nevertheless, we have to consider that the investment in time to plan a project professionally reduces in a significant way its execution time and increases dramatically the opportunities for success.
Identifying the Small, Medium and Micro-Enterprises (PYME) Project Management Model
The environment and the particularity of the PYMEs business suggest a faster and more integral attention to their necessities and projects. In these special conditions, the PMBOK® Guide principles has helped to identify a better practice of project management in these kinds of enterprises, which is going to improve the efficiency in the organizational project management that constitute the new business force.
Exhibit 1: PYMEs project management model
Establishing a Tool of Requirement Planning (Prioritization Process Model) and their corresponding Balance Model of Resources Demand
Prioritization Process Model
The requirements demand needs an effective and efficient prioritization process in order to have a good plan. The requirements previously identified and defined by the users accomplish certain criteria that are reviewed by the project managers. Then, these are canalized through a mechanism that allows an agile and good prioritization. This criterion is shown in Exhibit 2:
Exhibit 2: PYMEs Criterion to Requirements Prioritization
We prioritized requirements grouped them by “business unit.” These are different products and services that the organization must meet regarding its strategy.
Balance Model of Resource Demand
The prioritized requirements and business units groups are extrapolated against person/hours bid by that organization. Then it establishes certain criteria to establish the proportion of hours for each resource; in this activity the best practice product of lessons learned is shown in Exhibit 3.
Exhibit 3: PYMEs Balance Model of Resource Demand
Based on these criteria a matrix is developed. It includes the criteria set versus requirements demand (business units). At the end of this process, we have the requirements of the business units that may be met and those who may not be by the resource installed capacity.
Exhibit 4: PYMEs requirements prioritization process model
Defining a Baseline through a Scheme of Quarterly Planning
The dynamic business of this new business reality makes that makes the key to its success centered on three pillars:
- Very defined strategic objectives,
- Much knowledge of the market, their environment, and internal/external implications, and
- A solid mechanism of change management at all levels (very dynamic).
Under these guidelines an agile and efficient scheme to project management into PYMEs has been defined. This mechanism makes the delivery of business solutions (deliverables) conducted quarterly.
Deploying the Initiation and Planning Processes Group
For the deployment of this process group, the project manager has to update the requirements of the business units in order to have control of the acquired commitments in the last four months. After that, he or she plans the new commitments for the next four months, assures the quality of the deliverable and finally, makes a baseline meeting in order to get the agreements and commitments of all the work team for the execution of the requirements of the business units.
Initiation Processes Group
The main objective of this process is to establish the formal channels to authorize the beginning of the activities for the next four months and its formal closing. An essential part in this phase is the project definition report (PDR) update of the last four-month period and the control of each deliverable in order to make a balance of what has been executed and to get an approximation of the impact on the new requirements that will be developed in the business units for the next four-month period.
PDR Update. The PDR represents the work plan of the business units’ requirements that each project manager plans to do and implement in the four-month period that has been planned. This activity constitutes the update of the following deliverables:
- Work Breakdown Structure (WBS) Matrix: It shows if there is any pending functionality to complete or if some functionality has been incorporated or rejected.
- Work schedule: It shows the advanced percentage of each requirement, the complete deliverables, the incomplete deliverables, the beginning and the end dates of the executed and not executed activities, the main achieved milestones, and the work of each resource involved.
- It updates the executed and committed costs.
- It outlines the risks, problems, and changes, which are closed or in process to be attended.
- It provides lessons learned and summaries.
Once these activities are finished, the project manager makes a release meeting with the sponsor, the user leaders, the stakeholders and the team work in order to close the commitments of the previous for month period and to inform the state of the deliverables and to formalize the beginning of the activities of the new four-month period of requirement planning of the business units.
Planning Processes Group. The main objective of this process is to plan the requirements of the business units that will be executed in the next four-month period. The main deliverable of this phase is the PDR, which has a logbook that follows the changes that have taken places (configuration management).
PDR Elaboration. The deliverables in the PDR are as follows:
- WBS matrix,
- Work schedule,
- Cost budget,
- Risk, problem, and change control plans, and
- Lessons learned.
WBS Matrix Elaboration. It identifies the scope of the business units of each project manager. The scope is defined according to the required functionality. Moreover, the other affected “business portfolios” are indicated as well as the support of other work teams which might be needed. This includes the provider deliverables that participates in the development of the requirement. The documents for each requirement are the following:
- Requirements request
- Matrix of functionalities/applications/business units, and
- Provider proposal request.
Exhibit 5: WBS Matrix of the Business Unit PDR
Work Schedule Elaboration. The project manager uses a schedule template in order to complete the start and end dates of each requirement as well as the start and end dates for each phase of the development of the defined product/service life cycle for each requirement. Afterwards, the project manager will estimate the demanding effort for the requirement’s development and management. These data and information will be obtained through estimations based on lessons learned, historical information, and products/services analysis.
Furthermore, it must be identified that all the involved resources in the development of each one of the requirements (members of the same business units from other business units, from other organizational areas, and external involved units). We have to take into account the following criteria that will obtain permissible limits for the charge balance of the work done, which should be between 80% and 120% allocation.
It is important to identify the milestones and the key tasks that will give us an efficient monitoring of the deliverables, mechanisms of quality assurance and control as well as the acceptance criteria. In addition, it is indispensable to be very careful with the interrelations with other requirements of the same business units from the other business units and from the organizational requirements.
Exhibit 6: Work Schedule of Business Unit PDR
Cost Budget Elaboration. It is a document that the project manager creates to get the cost plan for the requirements of the business units. This cost budget will be planned in a four-month period to make its control easier and the data and information capture will aid in the exploitation of the lessons learned, future estimations, and will constitute a knowledge basis for the organization. The format is generally a simple document that is handled in Microsoft® Excel.
Risk Plan Elaboration. Based on the constraints and suppositions, the project manager along with the members of the work team identify the risks of the requirements of the business units, analyze them qualitatively, and quantitatively and establish a mechanism of response or action. Finally, they develop a contingency plan to manage any eventuality that has not been requested previously. The format is simple and considers the minimum fields that will be represented in one of the Excel sheets of all the information about the business units.
Exhibit 7: Risk List of the Business Unit PDR
Problems List Elaboration. This document establishes the problems, known and unknown risks, and other events that appear from the beginning of the requirement development of the business units in order to improve our organizational processes. In this case, the format is also simple and considers the minimum fields which will be represented in the information in one of the Excel sheets about the business units.
Exhibit 8: Problems List of the Business Unit PDR
Changes Request List Elaboration. This list is another important document that has to be generated from the beginning of the requirement development of the business units. Changes will always occur during the life cycle of the project. The key is to manage these changes in an effective and efficient way. That is why it is good to constitute a change control committee from the beginning in order to decide which actions we should take if we face any change that impacts the baseline of the business units. In this case, the format used is a simple list that involves the necessary fields that allow a following and control over a change. This information will be represented in one of the Excel sheets about the business units.
Exhibit 9: Change Request List of the Business Unit PDR
Lessons Learned List Elaboration. It is a document that the project manager makes with the active participation of the members of the work team. In this document, the most important events that appear in the requirement development are registered. The events are those that have either a positive or negative impact on the objectives that are established to achieve a successful project. As a consequence, the list of lessons learned is crucial to evaluate, analyze, and discuss problems and solutions in order to increase the organizational knowledge afterwards. The format is friendly and allows an easy registration. This information will be represented in one of the Excel sheets about the business units.
Once the PDR is done completely, the project manager requests a revision with some managers in order to assure the quality of the deliverable; the project manager then organizes a baseline meeting with the sponsor, user leaders, stakeholders, and work team to formalize the four-month commitment through meeting minutes.
Exhibit 10: Lessons Learned List of the Business Unit PDR
Deploying the Executing, and Monitoring and Controlling Processes Group
With respect to the deployment of these group processes, all the activities that the project manager has to do are detailed. These activities ought to assure the compliance of the obtained commitments during the planning process. They should also include the following and control of the established tasks and commitments in order to identify the variations, trends and the efficient and effective control management in the four-month period. During this phase, the project manger of each business unit will manage the PDR deliverables emphasizing the risks and problems as well as the registration of the learned lessons.
Execution, Control, and Following of Advances. The project manager will have to follow the requirements that belong to his or her portfolio. The project manager will have to adhere to the following recommendations:
- Every meeting summoned by the project manager or any work team member will have to be accompanied with an agenda and meeting minutes.
- The project manager will convene a weekly meeting to discuss the project’s progress and to control and communicate the state and the requirements from the business units. In each one of these meetings, there should be an agenda and meeting minutes.
- The project manager will inform the committee of each business units of the state of the project every 15 days.
- A common report named Status Report of Requirements will be generated automatically and will be shown on a Web site where some organizational indicators will also displayed. This report will be generated from the information contained in schedules and from the team members’ work hours.
- During the meeting there has to be an emphasis on the health requirements whose severity are labeled by the colors red and yellow and the project’s risks, problems, and changes need to be identified.
- There must be a schedule to follow and control the registered events during the established period of time. These events are taken from the schedules and the actions to take are described in the meeting minutes.
- There also has to be a following regarding the registered information in the list of learned lessons because every single event is validated and registered in the corresponding list.
The metrics that are suggested to use to control meetings are:
- Percentage of requirements accomplishment from the business units; and
- Percentage of deviation of the requirement schedule from the business units. The health color from the business units will be determined according to a variation limit.
Exhibit 11: Schedule Variation Limits
Risk and Problem Management. The project manager will have to assess the risks and problems of the requirements from the business units by taking the risk list and the problems list as inputs, which are located in the Excel sheet. In the event a new risk is identified, this will have to be registered for its analysis and response.
The risks whose severity are high (A) and any other risk identified by the project manager should be communicated to the business units committee. Moreover, any problem with a high impact (A) should also be communicated to the business units committee.
Change Control Management. For the process of the requirements change control from the business units we will take into account that if the change is because of the entrance of new requirements or is due to existing requirements. In both cases, the business units will impact and might impact the other business units that are involved.
Every change will be registered and after its evaluation, analysis, and decision, it will be rejected or approved. If it is approved, the PDR will be updated and a new version generated. That is why the following deliverables will have to be updated:
- WBS matrix,
- Work schedule,
- Cost budget,
- List of risks, problems, and changes, and
- Lists of learned lessons.
In the event that the change has a severe impact on the business units and/or the other business portfolios and overcomes the calculated risks (limits of acceptable variations), a new PDR baseline will have to be generated.
Deploying the Closing Processes Group
For the deployment of the closing process group, the project manager communicates the accomplishment of the goals of the defined four-month period in the PDR. The project manager also gets the learned lessons from the work team and gives the complete planned commitments for the next four months.
Requirements Closing of the Business Units. The project manager will be in charge of the closing requirements meeting of the “business units with the work team at the end of the fourth month. In this meeting, several areas will be reviewed and discussed, including all the information regarding the accomplishments of what was planned in the PDR; the incomplete commitments; the state of the list of risks, problems, and changes; and the state of the list of learned lessons (where positive and negative experiences have to be registered along with the period of time). It is important to mention that the lessons which have a stronger impact for the feedback activities should be prioritized.
The requirements for closing the business units occur when the project manager in the closure report, presents the results of the four-month period to the business units committee, generating closing minutes.
Interrelation of New Process with PMO and Project and Programs Portfolio
This new process is created to manage the requirements of the business units from the PYMEs. This process requires an appropriate infrastructure in order to manage these kinds of dynamic, interactive, and changing projects. The PMO and the organizational projects and programs portfolio need to be adjusted and allow us to manage the business units in an objective, efficient, and effective way as well as the other projects which form part of the general dashboard.
Putting into Practice the Process through a Business Case
An exercise will be presented in a dynamic way during the presentation.
Lessons Learned on the New Process
Based on the implementation, experiences, and improvements, these are the main lessons learned on this new process:
- Establish clearly the scopes of an implementation proposal from a successful project management model for the medium, small, and micro-enterprises (PYMEs) by taking into consideration the kind of business and its environment.
- Apply the best PMBOK® Guide practices in a reasonable way; understand your business fully and its internal and external variables. Exploit your common sense to the maximum.
- Work closely with the experts of your organization in order to define the typology of the requirements, the criteria for prioritization, the alignments for the segmentation of the business portfolios, the application of an efficient and effective demand balance model, and the kind of infrastructure used to support a new process.
- Apply your knowledge and experience together with your project managers. Adapt your process group, your knowledge areas, and the infrastructure of project management to the necessities of this new work model (PMO).
- Implement and pilot the new process. See if it accomplishes the organizational objectives so it can be implemented in a massive way after the approval of the executives.
- Promote business users and experienced project managers as part of the work team for the creation of this model, for the process implementation phase, and its execution.
- Pay attention to the change control committee because the dynamism, agility, and pressure of the business demand will require excellent sponsorship.
- For the application of this new process model of project management for the medium, small, and micro enterprises (PYMES), micro-manage and pay attention to the details and the changes.
Project Management Institute. (2000). A guide to the project management body of knowledge (PMBOK® Guide – Second Edition). Newtown Square, PA: Project Management Institute.
© 2008, Alfonso D. Núñez, MBA, PMP
Originally published as a part of 2008 PMI Global Congress Proceedings – Denver, Colorado, USA