What is 'Project Management'

Project management involves planning and organization of a company's resources to move a specific task, event or duty toward completion. It typically involves a one-time project rather than an ongoing activity, and resources managed include personnel, finances, technology and intellectual property. A project manager helps to define the goals and objectives of the project and determines when the various project components are to be completed and by whom; he also creates quality control checks to ensure completed components meet a certain standard.

BREAKING DOWN 'Project Management'

Generally speaking, the project management process includes the following stages: planning, initiation, execution, monitoring and closing. Different industries have also developed specialized project management templates that are specific to the unique needs of their respective fields. The templates make project planning efficient and easily repeatable from one set of deliverables to the next. For example, IT project management specializes in facilitating the process of delivering technical products that pass through several life-cycle stages including development, testing and deployment.

What Does a Project Manager Do?

For many people, the title of project manager doesn’t really mean much. It may seem like a fluffy title for sitting and supervising. While supervision is one important part of the job, a lot more goes into project management than just watching everyone work.

Project management is often associated with fields such as engineering and construction and,more lately, health care and information technology (IT), which typically have a complex set of components that have to be completed and assembled in a set fashion to create a functioning product. But no matter what the industry is, the project manager tends to have roughly the same job.

A Project Manager Plans: From start to finish, every project needs a plan that outlines how things will get off the ground, how they will be built and how they will finish. For example, in architecture, the plan starts with an idea, progresses to drawings and moves on to blueprint drafting, with thousands of little pieces coming together between each step. The architect is just one person providing one piece of the puzzle. The project manager puts it all together.

A Project Manager Facilitates: When there is a large team working on a single project, communication can quickly break down. This especially holds true when some parts of the job are outsourced. For instance, if you want to start a company that sells widgets online, you need to build a website, get your marketing together, talk to suppliers, find a sales crew and have someone in charge of shipping. As a small business, you wouldn’t have all of that done in-house, so you act as the project manager to bring all the pieces of the crew together and facilitate cooperation and collaboration. (For more, see How Agile Project Management Works.)

A Project Manager Does PR: Public relations is a huge part of any business. It’s not enough to only make sure that the company has a favorable view in the eyes of the public; internal public relations aims to ensure that the head of the company knows what is going on and holds a favorable view of the department. The project manager is in charge of making sure that the higher-ups are kept in the loop and know what is taking place.

A Project Manager Closes: Every project has a budget and a time frame. Blow either of those, and the whole project may be lost. The project manager makes sure to keep everything moving smoothly, on time and on budget. That means when the time frame is coming to an end, the manager can keep all the team members working on the project to finish on schedule.

An Example of Project Manager Responsibilities

Let's say a project manager is tasked with leading a team to develop software products. He or she begins by identifying the scope of the project. Then he or she assigns tasks to the project team; this team can include developers, engineers, technical writers and quality assurance specialists. The project manager creates a schedule and sets deadlines. Often he or she uses visual representations of workflow, such as Gantt charts and PERT charts, to determine which tasks are to be completed by which departments. He sets a budget that includes sufficient funds to keep the project within budget even in the face of unexpected contingencies. The project manager also makes sure the team has the resources it needs to build, test and deploy a software product.

When a large IT company such as Cisco Systems Inc. acquires smaller companies, a key part of the project manager's job is to integrate project team members from various backgrounds and instill a sense of group purpose about meeting the end goal. Project managers may have some technical know-how but also have the important task of taking high-level corporate visions and delivering tangible results on time and within budget.

Obviously, a project manager must have pristine organizational and time-management skills. But while attention to detail is key, he or she must also be able to visualize a project in its entirety to ensure that it comes together properly. A good project manager is a powerful leader in any circumstance, adept at interpersonal skills and thinking quickly, and able to devise creative solutions to problems. (See also Common Interview Questions for Project Managers.)

Agile Project Management

The computer software industry was one of the first to use a particular methodology called agile project management. With the basis originating in the twelve core principles of the Agile Manifesto, agile project management is an iterative process focused on the continuous monitoring and improvement of deliverables.At its core, high quality deliverables are a result of providing customer value, team interactions and adapting to current business circumstances. Unlike Waterfall project management, a more traditional method, agile project management doesn’t follow a sequential stage-by-stage approach. Instead, phases of the project are completed in parallel to each other by various team members in an organization. This approach can find and rectify any errors in the project without having to restart the entire procedure.

Agile project management provides more flexibility in error detection throughout project stages, resulting in consistently fewer errors than Waterfall, which can only test bugs during developmental stages. In software development, agile approaches are typically used to help businesses respond to unpredictability. Within the Software Development Life Cycle (SDLC), team members are involved in the requirement, design, development and testing phases. Most importantly, agile techniques involve the regular overview of task efficiency in order for team members to adjust behaviors and procedures accordingly.

Agile Project Management Tools

Agile project management uses a set of narrow-focused tools.

  • Scrum methods focus on the empirical feedback loops to adapt to the complexity and unpredictability typically found in software development. Decision making is based on observed results following short intervals known as sprints. During each sprint, a tested product is kept in a ready-to-ship state at all times. As a whole, a scrum is a set of roles, responsibilities and feedback that remains consistent throughout the project. Removing predictable errors in the process allows businesses to easily learn and adapt to future errors. Product owners, team and scrum masters are integral to the scrum’s success. The product owner is responsible for overseeing, communicating and building the vision for the project. The team is responsible for meeting the goals of each sprint in an autonomous fashion. Working with the product owner and team, the scrum master facilitates the completion of goals by removing any impediments.
  • Lean methodology focuses primarily on the continuous improvement of processes through waste elimination. Waste is the root of unprofitable activity and consists of defects, overproduction, transportation, waiting, inventory, motion and processing.  By getting rid of waste, organizations can improve their value stream and effectively deliver increasing value to their customers; ultimately, customer value is created through processes with zero waste. With continuous improvements throughout the process, errors in project deliverables are effectively minimized. Individuals who meet certain criteria can become Lean Six Sigma certified, thus validating their knowledge and application of lean methodology in business practices.

Zara Agile Supply Chain

Applications of agile project management aren’t limited to the IT industry. Apparel retailer Zara has used an agile model to transform itself into one of the world’s most valuable chains. Instead of relying on outside production, processes such as design, manufacturing and warehousing remain internal. Designers and product managers are responsible for the initial orders and in-season responses. Rather than focusing on large production runs prior to a new season, Zara manufactures clothing in small batches. Consequently, the company avoids high inventory and profit-eroding markdowns.

Thanks to internal agility, the company can deliver new product to stores in as little as 15 days. Following basic agile principles enables Zara to focus on creating customer value, self-organizing teams and short-cycle but high-quality deliverables.

Agile Pros and Cons

Agile Project Management can reduce error-related costs through continuous improvement and changes within the planning cycle. Through constant team interaction at short intervals, mistakes can be quickly detected, eliminating the need to restart projects. As a result, any repeated work that is necessary doesn’t hurt the organization as much as it would have otherwise. Likewise, agile methodology helps ensure end products most effectively meet customer needs.  

While agile processes have tremendous upside, this process isn’t fit for all organizations. Agility is contingent on highly skilled team members who can collaborate but also work autonomously.  Any holes amongst the team can prove costly and time-consuming for organizations. For example, agile methods wouldn’t be suitable for the construction industry, due to its lack of iterative deliverables.

RELATED TERMS
  1. Scope

    Scope is a project management term for the combined objectives ...
  2. Program Manager

    A manager with oversight for the management of a specific program, ...
  3. Gantt Chart

    A Gantt chart is a visual representation of a project schedule. ...
  4. Critical Path Analysis - CPA

    Critical path analysis is a project-management technique that ...
  5. Deliverables

    Deliverables is a project management term for the quantifiable ...
  6. Replacement Chain Method

    The replacement chain method is a decision model for evaluating ...
Related Articles
  1. Personal Finance

    Project Manager: Job Description & Average Salary

    Discover more about the specific tasks that project managers are responsible for and the average salary that can be expected in such a position.
  2. Personal Finance

    A project manager's qualifications and career path

    Learn about a project manager's job, the qualifications necessary for the position, and the most common careers for these professionals.
  3. Small Business

    How Agile Project Management Changed Zara

    Zara has created a competitive advantage in the retail industry by using a supply chain centered on agile project management.
  4. Insights

    How Agile Principles Are Used in Holacracy

    Holacracy itself has been an actively utilized management system since 2007 with its framework rooted in agile methodology.
  5. Investing

    Style Matters In Financial Modeling

    If you're looking to get a job as an analyst, you'll need to know how to work it.
  6. Financial Advisor

    Preparing for a Career as a Portfolio Manager

    Find out what it takes to win a spot in one of the most coveted financial careers, portfolio manager.
  7. Financial Advisor

    Wells Capital Management: Investment Manager Highlight (WFC)

    Read about Well Fargo & Company's institutional asset management subsidiary Wells Capital Management, a firm with over $348 billion in assets under management.
RELATED FAQS
  1. How do you use the profitability index rule when scoping out a project?

    Understand the parameters of the profitability index rule and how this rule is used in corporate capital allocation to determine ... Read Answer >>
  2. How do you use net present value to calculate a capital budget?

    Learn about the net present value calculation (NPV) and how the NPV rule is used in capital budgeting to compare the expected ... Read Answer >>
  3. How do you calculate costs of capital when budgeting new projects?

    Discover how a company should estimate its costs of capital when budgeting for a new business project using the weighted ... Read Answer >>
  4. How do you use internal rate of return to calculate a capital budget?

    Learn about how the internal rate of return is used in the creation of a capital budget along with net present value and ... Read Answer >>
  5. How do you use discounted cash flow to calculate a capital budget?

    Learn how discounted cash flows are used in creating capital budgets as a part of the net present value and internal rate ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center