Q What might a global economic crisis mean to me as a project manager?
A Some see e-mail as an annoyance. Not me: I have always gotten a kick out of my e-mail inbox, filled with generous offers from caring souls who want to improve my life. Some, who must know that I can be a bit lax about schedules, want to help by selling me their Rolexes—and for only US$10. Other kind folks try to help by making some parts of me smaller and other parts larger, if I'll only send them my credit card number. And I can count on regularly receiving a chance to help the family of some regrettably slain dictator smuggle out their hard-earned cash—once I put up some financial evidence of my own good faith, of course.
Lately, though, my inbox hasn't been as much fun. Instead of fake watches, phony pharmaceuticals and even sillier swindlers, I'm faced with an increasing number of résumés from skilled, experienced project managers looking for work. Some are former students, others are past and present colleagues. They cut across industries and ranks, from the newest trainees to executive vice presidents. As far as I can see, they have only one thing in common: They are all victims of circumstance.
I write these words 90 days before you read them, which adds a certain element of risk to this forum. It's possible that by the time you read this, the world economy will be back on its feet, humming along with projects of every sort. It is equally possible that my project manager friends will be back at work and my e-mail back to normal. But just in case it's not, it's worth considering how the current economic crisis might affect project management.
Maybe Money Is Everything
Beginning around September or October of 2008—earlier for well-run firms, a little later for others—an enormous but little-publicized change took place in executive suites around the world. As the economic downturn loomed larger, organizational priorities shifted. Rather than emphasizing revenue growth, market share and net profit—as had been the case as far back as anyone could remember—companies (and not-for-profits as well) switched their focus to just one thing: cash. Anything that conserved cash was to be sought, and anything that used cash was to be shunned. Long-term thinking took a back seat to the short-term preservation of cash as organizations rediscovered a long-underemphasized reality: Businesses don't fail for lack of profit nearly as quickly as they do for lack of cash.
The ramifications of the switch to short-term preservation of cash is huge. By their very nature, most projects use money today to bring long-term benefits to the firm in the future.
For project managers, the ramifications of this are huge. By their very nature, most projects use money today to bring long-term benefits to the firm in the future. With this in mind, I shouldn't be surprised to see so many project manager résumés in my mailbox. The real surprise is that there haven't been even more.
What might be some of the new rules in a cash-focused environment? Let me suggest a few:
Troubled projects will be dead projects. Whatever the past tolerance level of your organization, expect far less patience for projects plagued by performance problems, schedule slips and especially cost overruns.
Long-term projects will be at much greater risk than those that will finish near term. In his book Leadership in the Era of Economic Uncertainty [McGraw-Hill, 2008], management expert Ram Charan advises CEOs to constantly reevaluate the desirability of ongoing projects from a cash perspective.
Plan for more frequent milestones and more “go/no go” decision points. In the new environment, expect an increase in the intensity of managerial oversight. Quarterly reviews will not suffice.
Expect a shift to cash flow as the primary measure. Once upon a time—like six months ago—projects were evaluated on ROI, but no longer. A project offering near-term cash flow will be seen as preferable, even to one offering a higher ROI over a longer term.
None of this may seem terribly fair, of course. After all, project managers rarely get the opportunity to choose their ideal project. Many project parameters discussed above are far beyond the project manager's ability to determine, especially for projects already under way. But the rules have changed, and they will likely continue to evolve in ways that we project managers need to ponder. PM
| Bud Baker, Ph.D., is a professor of management at Wright State University, Dayton, Ohio, USA. Please send questions for Ask PM Network to [email protected]. |