Project Business Management
SERIES ARTICLE
By Oliver F. Lehmann
Munich, Germany
“…and then the day came when the risk to remain tight, in a bud,
was more painful than the risk it took to blossom…”
– Elizabeth Appell [1]
Focus on project business from the contractor’s viewpoint: An aspect of Project Business Management is the need to develop project managers with business acumen – the ability to run a project as a profit center that contributes to the organization’s profitability and liquidity. In addition to that, project managers should be helped develop business spirit, the preparedness and willingness to apply this ability.
Needs and Wants
I was some time ago tasked by a new training customer to give seminars to their project managers on matters of project business. The company was performing projects for paying customers and the projects where its main source of income. The company’s project business was not going well, and my customer assumed that the cause was a lack of business acumen but its project managers.
My seminar attendees were generally well prepared for tasks of project management, but as the projects they managed were done for paying customers, and their task was not only to ensure project success, They understood the desire of their employer to increase their commercial capabilities. They had to learn to run their projects as profit centers.
In our seminar, we discussed matters of customer satisfaction, but also profitability and cash flow. The company had a large portfolio with customer projects and each of its customers considered it normal that the Contractor would lay out money for them during the course of the project. This became a challenge to the credit line of the company, which got even more difficult by the habit of many customers to pay late. So over time, the outlays of the contractor grew larger and larger. Another problem was that the project managers were slow in reporting billable work done for the customer, which led to delayed invoicing to customers.
Figure 1 shows how a cash flow can be negative most of the time, even when the project work is profitable. Between the time, when the work is done, and the moment of payment, several weeks may pass, in which the contractor is funding the project for the customer.
Figure 1: Elements that delay the payment when the contractor lays out money for the customer
Sometimes, contractors find out that they can no more afford funding their customers’ projects…
More…
To read entire article, click here
Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018. See author profile below.
How to cite this article: Lehmann, O.F. (2020). Business Acumen and Business Spirit, PM World Journal, Vol. IX, Issue XII, December. Available online at https://pmworldlibrary.net/wp-content/uploads/2020/11/pmwj100-Dec2020-Lehmann-Business-Acumen-Business-Spirit-PBM-series-article.pdf
About the Author
Oliver F. Lehmann
Munich, Germany
Oliver F. Lehmann, MSc, ACE, PMP, is a project management educator, author, consultant, and speaker. In addition, he is the President of the Project Business Foundation, the home association for professionals and organizations involved in cross-corporate projects.
He studied Linguistics, Literature and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree. Oliver has trained thousands of project managers in Europe, USA and Asia in methodological project management with a focus on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.
He has been a member and volunteer at PMI, the Project Management Institute, since 1998, and served as the President of the PMI Southern Germany Chapter from 2013 to 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch”, analyzing troubled projects around the world.
Oliver believes in three driving forces for personal improvement in project management: formal learning, experience and observations. He resides in Munich, Bavaria, Germany and can be contacted at oliver@oliverlehmann.com.
Oliver Lehmann is the author of the books:
- “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016
- “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.
His previous articles and papers for PM World Journal can be found here:
[1] (Sky Blue Press Editor, 2013)
