Further exploration of differences between the two
in the context of a range of specific
management functions
FEATURED PAPER
By Alan Stretton, PhD (Hon)
Sydney, Australia
INTRODUCTION
Background
In an article in the May issue of this journal (Stretton 2024e), I discussed some aspects of differences in managing Internal Projects in Supplier Organisations (SOs) and Customer Projects in Owner Organisations (OOs). These differences focused on ten particular attributes identified by Lehmann 2016. With a couple of exceptions (staffing and procurement), these attributes related to relatively broad issues, rather than differences associated with specific project management (PM) functions.
It occurred to me that it could be interesting to try and extend discussions of differences between managing projects in OOs and SOs to a range of particular management functions, and to see if this added any further insights into these important types of differences.
This article is a tentative exploration of such possibilities. The primary reason for exploring this further was summarised in Stretton 2024e, broadly as follows.
As Lehmann 2016 observed, distinctions between managing Internal and Customer projects have not been well elaborated in the literature and research. In like vein, Taggart 2015 observed that, “Conventionally, either directly or by implication, the project management bodies of knowledge focus on the role of the Owner Organization (OO)….” Further, Stretton 2023l observed that, historically, the project management literature at large has been primarily concerned with PM in production-based Owner Organisations.
However, these under-representations of project management in Supplier Organisations do not appear to align well with the distribution of project managers and SOs in practice. Both Lehmann and Taggart point out that there are evidently at least as many project managers actually practicing in SOs as in OOs. Further, Stretton 2024e observed that SO projects may well exceed OO projects in magnitude, at least in dollar terms.
On the basis of this apparent imbalance between the OO focus in the literature, and the prominence of SO projects in practice, this further exploration of the differences in managing projects in OOs and SOs would appear to be a potentially useful undertaking.
We start by summarising some of the relevant materials in Stretton 2024e.
Descriptors of Owner Organisations (OOs) and Supplier Organisations (SOs)
The nature of OOs and SOs were described in Stretton 2024e, as follows.
Project-based Supplier Organisations (SOs) derive most (if not all) of their revenue and/or other benefits from creating and delivering projects/programs to external customers.
Production-based Owner Organisations (OOs) derive most (if not all) of their revenue and/or benefits from producing and selling products and services. They utilize projects to create new, or improve existing, products and services; enter new markets; or otherwise improve or change their organisations.
Descriptors of Internal Projects (within OOs) vs. Customer Projects (within SOs)
Lehmann 2016 distinguished between Internal Projects and Customer Projects, as shown in the following descriptors.
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.
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.
Internal Projects can relate to both OOs and SOs, but are primarily linked to OOs
Although Internal Projects can also be undertaken within SOs, the above descriptors indicate that they can be most closely linked with projects undertaken in OOs. This link was followed in Stretton 2024e, and will be continued in this article
More…
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How to cite this work: Stretton. A. (2024). Managing Customer Projects vs. Managing Internal Projects (2): Further exploration of differences between the two in the context of a range of specific management functions, PM World Journal. Vol. XIII, Issue VI, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/06/pmwj142-Jun2024-Stretton-Managing-Customer-Projects-vs-Internal-Projects-2-exploring-further-differences.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/.
