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Certainly, you have already asked yourself why a position involving project management – hereafter referred to as PM – is included in a quotation and whether this position is really necessary for you. Depending on the project, quite large sums of money can be shown here.

I can reassure you, this is probably the fate of any person who has not yet dealt with this topic in depth. But the answer to the question is quite simple: To increase the business value of your company!

At first sight, it seems a bit paradoxical, because PM causes costs and your business value should increase at the same time. In the following, I will go into the topic a little bit more deeply and show you employing examples, how good PM increases the business value of your company.

Reliability

PM in the traditional approach (waterfall/predictive) is the art of planning a project as completely as possible before the actual implementation begins and to act as little reactive as possible. If, for example, time is the limiting factor and there is a fixed acceptance date, good PM tries to realize this date already by applying various techniques in the planning. It is also checked in this process whether all limiting factors (scope, time, costs, resources, …) are feasible or renegotiates individual points with the sponsor until the goal is realistic. Through good project planning, you have time to take care of other important issues in your company, because your reactive efforts are reduced to a minimum.

→ Business Value

Efficiency & Sustainability

If similar or even identical projects have already been carried out in the past, good PM tries to reduce the effort by means of existing knowledge (lessons learned, issue logs, risk logs, schedules, network diagrams, effort estimates, contracts…) in the best possible way and thus save your company time and money. PM is also responsible for using necessary resources efficiently, identifying synergies or dependencies between existing projects, complying with existing laws, communicating in a target group-oriented manner and treating the team fairly. Overtime of the team can be avoided in almost every case with good planning, for example by risk management or alternative analyses. Among other things, this increases the satisfaction of your employees, your customers and thus yours as well.

→ Business Value

Risk Management

Finally, I would like to go into the subject of risk management in more detail, which is or should be an integral part of every project. In risk management, different techniques are used in the planning phase to proactively identify all possible risks – whether negative or positive – to determine the impact on the project and to plan measures to solve or bring about the individual risk in advance. This process extends over the entire project life cycle. The monetary impact of a risk is calculated by multiplying the impact of the expected event by the probability of the event occurring. These values are then cumulated to form a contingency reserve and added to the project budget. If measures for solving or causing an event have been identified, they are incorporated into the WBS and the project’s network diagram as early as the planning phase, if the cost/benefit ratio makes sense. Risks identified at a later stage are taken into account in the implementation.

An example of this:

Imagine you have to move your data center to a data center about 200km away on a special weekend in winter because the contract with your Houser has been canceled. All preliminary work and tests for the move have been successfully completed so that the move can be carried out on that weekend. In advance, you have received two offers from local logistics companies for the transport of the hardware by truck and you have decided on one company. After the physical move has been successfully completed, you notice that central components no longer start or report errors when you start the systems according to the recovery plan. After a time-consuming and stressful root cause analysis (RCA), it turns out that these systems have suffered frost damage and also damage from vibration. According to SLAs, the manufacturer takes up to 24 hours to restore these systems, so that the entire infrastructure is not available again until Monday evening. A large part of your staff could not work productively on Monday. During the escalation and after several telephone calls with the logistics company, they informed you that you did not make any requirements for air suspension or heated loading area and therefore did not receive them. In the worst case, the resulting damage will remain at the expense of your company or your company’s transport insurance – so far.
A good PM would have identified this risk with little use of risk management and formulated the transport requirements accordingly. Your company would not have suffered the monetary damage caused by one day’s outage of the IT infrastructure, nor would it have suffered the damage needed to clarify the circumstances.

→ Business Value

Apart from these, there are many other points that can demonstrate the added value of a good PM for your company and thus also increase the business value. More about this in the next article.

If you have the opportunity, you should always include PM in your project budget to ensure the successful execution of a project in your interest, but also in that of your customer. It should also be mentioned that it is also very important to choose the “right”(?) method for the project in question. The article “Agile or planned? Which project management method is the right one?” deals with exactly this question.

The original version of this article by Bastian Wunderskirchner (SVA System Vertrieb Alexander GmbH) can be found at https://focus.sva.de/business-value-durch-projektmanagement/.

SVA Software, Inc.

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