Some under-acknowledged differences, and their
relevance for discussing project management in
Supplier Organisations vs. Owner Organisations
FEATURED PAPER
By Alan Stretton, PhD (Hon)
Sydney, Australia
INTRODUCTION
This article revisits and expands on some earlier articles I have written on differences for project managers working in project-based Supplier Organisations (SOs) and in production-based Owner Organisations (OOs). In Stretton 2017e and a couple of subsequent articles I also included a table from Lehmann which showed differences in ten attributes between what he described as Customer Projects vs. Internal Projects. – and which were then related with projects in SOs and OOs respectively. Both my articles, and Lehmann’s, pointed out that these differences were under-acknowledged in the mainstream project management literature, and that this should be rectified.
In this article, we first describe Lehmann’s two types of projects, the SO and OO types of organisations which undertake projects, and the close links between them, as noted above. We then move to Lehmann’s ten-entry typology of Customer and Internal projects, and look in more detail than previously at the differences he has set down. The differences for project managers in all ten entries are substantial, but the differences in two groupings of these entries are seen as particularly significant.
The first of these, and arguably the most critical, are differences which arise out of Customer Projects in SOs being profit centres, versus Internal Projects in OOs being cost centres. This leads to discussions on the former being managed as business projects, and the need for their project managers and teams to have substantial know-how in a wide range of business-related functions – attributes which are not needed by project managers of Internal Projects in OOs.
One of these business-related functions is a focus on external customers, which is the concern of the second group of entries. This focus, and attendant know-how, are not required of Project managers of Internal Projects in OOs – another key difference. Finally, when you add differences in the several other entries proposed by Lehmann, the sum total of these differences is very substantial indeed.
We then discuss the under-acknowledgement of these differences in the mainstream project management literature in a little more detail than previously. It will be argued that, at the very least, it should always be made clear whether the project management topics being discussed are in the OO or SO context – and more particularly, that project management in SOs should be much more widely represented in the literature.
LEHMANN’S CUSTOMER PROJECTS VS. INTERNAL PROJECTS TYPOLOGY, AND LINKS TO PROJECTS IN SUPPLIER AND OWNER ORGANISATIONS
Customer Projects vs. Internal Projects
In his discussions under this heading, Lehmann 2016 described these as follows.
Customer projects are mostly profit centers. The organizations involved perform these projects for paying customers, and it is the job of the project managers to bring money home. Initiating these projects is far more complicated, as it involves a business development process jointly performed by a buyer and a seller, who will later become the customer and the contractor.
An internal project, performed for an internal requestor, often called “internal customer”, is a cost center. There may be future expectations that the deliverables of the project will give the organization monetary benefits, but the project as such costs money and does not earn it. Projects can be performed for a variety of future goals, including new income, cost savings, strategic benefits. ….
I will be looking into links between these two types of projects, and two types of organisations that undertake projects, which are now described.
More…
To read entire paper, click here
How to cite this work: Stretton, A. (2024). Managing Customer Projects vs. Internal Projects: Some under-acknowledged differences, and their relevance for discussing project management in Supplier Organisations vs. Owner Organisations, PM World Journal, Vol. XIII, Issue V, May. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/05/pmwj141-May2024-Stretton-Managing-customer-vs-internal-projects.pdf
About the Author
Alan Stretton, PhD
Life Fellow, AIPM (Australia)
Sydney, Australia
Alan Stretton is one of the pioneers of modern project management. In 2006 he retired from a position as Adjunct Professor of Project Management in the Faculty of Design, Architecture and Building at the University of Technology, Sydney (UTS), Australia, which he joined in 1988 to develop and deliver a Master of Project Management program. Prior to joining UTS, Mr. Stretton worked in the building and construction industries in Australia, New Zealand and the USA for some 38 years, which included the project management of construction, R&D, introduction of information and control systems, internal management education programs and organizational change projects. Alan has degrees in Civil Engineering (BE, Tasmania) and Mathematics (MA, Oxford), and an honorary PhD in strategy, programme and project management (ESC, Lille, France). Alan was Chairman of the Standards (PMBOK) Committee of the Project Management Institute (PMI®) from late 1989 to early 1992. He held a similar position with the Australian Institute of Project Management (AIPM), and was elected a Life Fellow of AIPM in 1996. He was a member of the Core Working Group in the development of the Australian National Competency Standards for Project Management. He has published 270+ professional articles and papers. Alan can be contacted at alanailene@bigpond.com.au.
To see more works by Alan Stretton, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/alan-stretton/.
