Successful project management for small to medium enterprises (SMEs)

Introduction

This paper is partly based on research and partly based on the authors experience in providing effective project management to SMEs. Most SME managers still consider project management as using a Gantt chart, displaying the time and sequence of tasks. There is a growing awareness that good project management practices will produce better results, but most of those that have ventured into the world of project management have been scared of by the shear complexity of project management practices.

Most of the literature on the market today tends to make project management look complex and overwhelming to most managers of SMEs. It involves a substantial number of different knowledge areas, processes, methodologies, tools and techniques. While large companies can afford full time professional project managers and full time teams, SMEs are likely to be closer to the other extreme where the owner is managing a project part time, while running his company full time. It is unreasonable to expect that the two extremes use the same project management methods and processes. The same is true for individual projects types, they are not necessary the same type and should not necessarily be managed in the same way. Because of this complex issues, SMEs tend to manage projects the best way they can and most likely without any formal project management methodology.

The paper aims to look at the big picture or “System” and give an overview of the key concepts that need to be addressed and managed to increase project success. It will look at what success means, the importance of the business case, ROI and alignment with the company strategy. The key factors have been tailored to suit SMEs, and considered systems thinking in relation to the project. The key areas of the paper will focus on the 20% of project management that I think is responsible for a major part of project success.

The last segment of the presenter will demonstrate the simple and powerful combination of using Mind mapping, A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) (2004) and PMI^® Compendium of Project Management Practices, as a tool to develop practical project plans and to monitor and control the project.

This paper is aimed at the conceptual level rather than the specific methods, processes and tools and techniques. The paper is also limited in size and focuses on key concepts. Additional reading is recommended.

Successful Project Management for SMEs.

Project Success

What does success in the project context mean? The increasing acceptance and use of project management has increased considerably in recent years. So has the need to establish project management practices that increased the changes of project success. Project management has long been concerned with project success and a considerable amount of research has been conducted on the subject. Project success has also featured regularly on PM seminars and conferences. There are an increasing number of books, papers and articles being written aimed specifically at project management for SME companies but very little has focused on project success. Large scale research on project success or critical success factors (CSF) has largely focused on the larger companies and government organisations. I do believe however, that some of the lessons learned or critical success factors from research in larger companies can be used to improve project success in smaller companies, as long as the critical factors are used in a conceptual way.

It is NOT the aim of this paper to define ‘Project Success’ and/or ‘Critical Success Factors’. However, for the purpose of providing a definition of project success and critical success factors in this paper, the following definitions are used.

Project Success

“The project meets the technical performance specifications and/or mission to be performed, and if there is a high level of satisfaction concerning the project outcome among key people on the project team, and the key users or clientele of the project effort” (Baker, Murphy & Fisher, 1988. p. 903)

Critical Success Factors

“Factors which, if addressed, will significantly improve the chances for successful implementation” (Pinto & Rouhiainen, 2001).

The above definitions are based on literature research and seem to have wide acceptance within the profession.

Critical Success Factors Background

There are a number of competency standards that have been developed in recent years to assist with the PM competency development; such as A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) (PMI, 2004), and The Association for Project Management Body of Knowledge (APM Bok) (Dixon, 2000). Both of these standards heavily relay on processes and methods, and have a strong focus on scope, time, cost and quality for project success.

Murray (2002) identified nine factors for project success in the IT industry. Despite the known difficulties of IT projects Murray claims “that a relatively small number of factors control the success or failure of every IT project, regardless of its size or complexity” (chap. 2). Pinto and Rouhiainen (2001), list about 50% soft skills in their 10 success factor model. A review of 13 studies conducted between 1986 and 2000 by Pinto, Cleland and Slevin (2003), clearly show a balance between soft and hard skill success factors. The review by Pinto et. al., (2003) also revealed “agreement that the competence, or knowledge, skills, and attributes, of the project manager, are critical to project success” (chap. 8).

An interesting viewpoint is presented by Rad and Levin (2002), suggesting that, “Client and the project team viewpoints on the success of the project are fundamentally different; the former is focused on the deliverables, and the latter on the means by which the deliverables are created” (chap. 2) A similar two sided concept is presented by Crawford (2003) who suggests that project success has “two major strands to this concern - how success is judged (success criteria), and the factors that contribute to the success of the projects (success factors)” (p. 110). The two major strands above (Crawford 2003; Rad and Levin 2002) have not been specifically identified or mentioned in the other literature reviewed.

Morris (1988) clearly identified that “behavioural and organisational factors far outweigh technical issues in terms of importance for success. Rather than focusing undue concern on technical issues, it was far more important to pay attention to the human side of the process” (p. 27). Morris’ study also revealed that the order of importance of the critical success factors changes, as the project goes though its life cycle. An extensive study by Pinto & Slevin (1988), covered a wide range project types. Apart from validating the 10-factor model presented by Pinto and Rouhiainen (2001), the research determined that, “to a large degree, the CSFs remain within the control of the project manager responsibility for implementing the project “(p. 489).

Shenhar, Dvir, Levy, and Maltz (2001) developed a multifunctional framework to represent the different dimensions of the meaning of success in different project circumstances. The four different dimensions identified by Shenhar et al. are; “(1) project efficiency, (2) impact on the customer, (3) direct business and organisational success, and (4) preparing for the future” (p. 699). The key difference in the four dimensional model is the long term organisational benefits.

Scalable Project Management for SMEs.

It is important to understand that the definition for SMEs is not the same all over the world. For example the new common European definition states that the company must have fewer than 250 employees, less that 50 million turnover and must be autonomous. 250 employees seem to be the most common number but there are countries that go up to 500 or as few as 19 in New Zealand. SMEs do make up a considerable percentage of business in all countries and make a sizable contribution to their respective economies. SMEs generally account for more that 90% of enterprises and 60% to 70% of employment in OECD economies.

Formal project management is not widespread in SMEs. Most “internal” activities that we would consider to be projects just happen in between normal business activities and are usually looked after by the management staff in an informal manner. “External” activities or project for a client outside the company usually get more attention but are still managed informally and in most cases without any project management training. This is not to say that their projects are not successful. A great number of SMEs do what they do well but I suspect that most of the success is due to tacit knowledge of the individuals involved, rather than a conscious effort. What I do suspect however, is that most project fall short of their potential and could have been a more satisfying experience for both the company and the client.

Looking at the rapidly growing profession of project management, the ever increasing mountain of project related literature and the increasing complexity of methodologies, it is no surprise that managers of smaller companies are hesitant in taking on the challenge. In order to make project management more user-friendly and applicable to SMEs, we need to find solutions that are the right size for the right project i.e. simple, quick, relevant and practical. The same philosophy can also be used for small projects in large companies, substantially reducing cost and time.

Key Elements

Reading through research highlights the fact that there is no single set of critical success factors that can be applied equally to all projects. Considering the CSF and focusing on the areas that are considered key factors can reduce the workload of managing projects considerably and makes more sense for SMEs than trying to manage every aspect of project management listed in the literature.

Project Success

Earlier in this paper we have identified a “Project Success” definition as a general guideline that appears to have acceptance by a number researchers and project management professionals. People involved in project should realise that “Project success is like beauty – it is in the eyes of the beholder”. In other words, every stakeholder has his own thoughts and interpretation of what constitutes project success. It is therefore essential to carry out a thorough stakeholder analysis to identify key stakeholders and find out what their expectations are. Establishing, agreeing and documenting the “project success factors” with the key stakeholders at the outset is paramount.

Success Factors

The success factors below have been identified by Pinto and Rouhiainen (2001). Their research used an universalistic approach and did not consider the different nature of projects. A study by Dvir, Lipovetsky, Shenhar, and Tishler (1998) suggest that “project success factors are not universal to all projects” (p. 915). It is not practical for SME companies to consider all the implications of all the research when considering success factors but they should have an awareness of the limitation of using a given set of success factors. However, from my experience it is far more effective to use “a set of success factors” that are slightly misaligned with the nature of the project than it is to use nothing at all. These key factors need to be addressed during the planning phase and monitored throughout the project.

Business Case

Many SMEs are relatively small and project failure is likely to mean financial disaster or even the end of the company's existence. Project that are financially risky or not in line with company strategy, should never be attempted without compelling justification. Further to that, if the project is to have management support (essential for success) it has to justify itself in term of financial return or strategic advantage for the company. Presenting a good business case or strategic reason for the project is only part of the equation. Smaller companies should have a serious look at their ability to undertake the proposed project. Does the company have enough resources, money, skill base, know how and time to complete the project? Do they have to outsource part or all of the work? What are the risks to the company and/or the project?

Project Planning

Much has been said about planning by some famous people. The general focus of these statements are that it is not the plan that matters, it is the planning that is indispensable. A Guide to the Project Management Body of Knowledge (PMBOK®) and the PMI® Compendium of Project Management Practices are an excellent guide, checklist and toolbox to help develop the project plan. Only select topics that are useful and remember that a project plan does not have to be large, it can be a few pages only. The key is to refer to it frequently. While consideration needs to be given to many things during the planning, there are two planning tools that are key to project success. One is the Work Breakdown Structure (WBS) the other is the Statement of Work (SOW). A simple definition is given below.

Work Breakdown Structure (WBS)

A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverable. (PMI, 2004, 379)

Statement of Work (SOW)

A narrative description of the products and services to be supplied to the client and the needs and requirement of the contractor to properly perform the delivery of such products and services under contract (PMI, 2004, 376).

Taking time to develop the WBS and SOW is the best way I know to insure that all of the project scope and the specifics of the work to be done is understood and documented. These documents then become part of the integrated monitoring and control function.

Now that all the project justification and planning has been done, the project should be in good shape for execution.

Project Metrics

Metrics, key factor had little mention in the literature other than the need to measure progress. Hayes (2002) in his article on Six Sigma Critical Success Factors states, “You can't manage what you can't measure” (¶ 1). To be able to measure progress against success factors, one needs metrics. At the very least, metrics need to be provide an accurate picture of cost, schedule and scope completion status at all times. The WBS and SOW provide an excellent baseline for activity scheduling, measuring project progress and scope compliance.

Quality and Risk

Apart from closely monitoring Scope, Cost and Time, one also needs to closely monitor quality and risk. The quality and risk management plan should be part of the project plan. Quality management for projects needs to address two areas. On one hand it needs to address the management of the project and on the other hand it needs to address the quality of the product of the project. The quality management of the management process is much the same as for all projects, whereas the product quality is product specific.

Risk has first been mentioned in the “Business Case” section above in terms of risks to the business and the project itself. Risk identification is not a one-off activity which is carried out at the beginning of the project. It is an ongoing process that needs to be done at predetermined frequency or whenever potential risks are identified. Every time a risk is identified, the impact needs to be assessed, a strategy to reduce or eliminate the risk needs to be developed, and the risks need to be monitored and controlled. The risk register should be maintained throughout the project.

Systemic View

It is too easy to get stuck in the details of project execution and loose sight of the big picture. A company is a system that maintains its existence trough the interaction of its mutual parts. The same rules apply to a project. If you put the two together you change the way either system behaves and the system behaviour will change as the project goes through its phases. As the company owner or project manager you can not afford to loose sight if the system's behaviour or get to involved in the detail for any length of time. In order to integrate and manage all aspect of the project successfully one needs to maintain the vision of the system while attending to some of the detail. System behaviour and system thinking are interesting subject and are valuable as a tool for project management and further reading is recommended.

Project Leadership

There is considerable evidence that project leadership plays a major part in project success. A significant insight regarding this question has been provided by Laufer and Hoffman (2000):

“Management, produces a degree of predictability, focuses on systems, relays on control, organises and staffs, accepts the status quo and motivates people to comply with standards. Leadership on the other hand, produces changes, focuses on people, relays on trust, aligns people with direction, challenges the status quo and inspires people to change” (p. xx).

There is no doubt in my mind about the importance and positive impact good leadership has on projects. Leading and managing projects is not something you can do when you have some time in between other things, it requires time commitment and dedication.

Mind Mapping as a Project Management Tool

In order to simplify the process of project management to suit smaller companies, one needs to find simple, effective and scalable tools that offer seeming less integration.

A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) 3rd edition is an excellent guide and an essential tool to manage projects. It is “generally recognised as good practice on most projects, most of the time” (PMI, 2004). It provide guidance and acts as a checklist to select the most appropriate processes, methods and tools and techniques to plan projects of any size. To simplify the process even further you can use the PMI^® Compendium of Project Management Practices. This is a ready made source of over 80 customisable forms, checklists, templates and charts to assist project managers with their projects from initiation to closure. All the tools provided in the compendium are in line with the PMBOK^® Guide 2000 Edition.

Combining the guide and compendium with mind mapping software offers scalability, flexibility, versatility not normally found in project management systems. Mind mapping is gaining rapid popularity in all levels of management as a tool to capture, organise, share critical information, monitor and control project and communicate all relevant information with stakeholders. Today, some mind mapping tools offer features like action item, milestones, task and resource information, due dates, alarms etc. and integration with most Microsoft Office applications. It is beyond this paper to fully explain all the advantages and benefits of mind mapping software and I would recommend spending some time perusing the vast amount of information available on the internet.

Exhibit 1 below is a simple project plan developed from the PMBOK^® Guide with hyperlinks to the appropriate templates from the PMI^® Compendium, offering easy access to the detailed information of the plan. The plan can developed to include the tasks, resources, durations, dynamic views of Excel spreadsheet with project metrics (Exhibit 2) and much more. You can also add links to meeting minutes, report or other important project information and build up the mind map to a “one stop” project control centre. To-do items and daily reminders are easily manages as part of the regular monitoring and controlling activities.

Exhibit 1

Exhibit 2 (Source: www.mindjet.com)

Concluding comments

This paper is solely focused on a few key points that I think make a significant difference to the success of projects. It is intended to offer SME organisation and smaller project a scaled down project management concept that will avoid project management turning into a project itself. It only covers a small part of project management methodology and the use of supporting Project Management literature is highly recommended. The order in which the key factors are listed in this paper does not represent the order or sequence of events or processes.