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The Great Challenge: Project Contracting

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“For what one has, in black and white,
One carries home and then goes through it.”

Goethe, Faust 1[1]

 

Summary

In project business management, it is essential for project managers to know the contract. In addition to that, they should have education to understand commercial and legal factors of project business to the depth necessary to perform the projects successfully and to the satisfaction of stakeholders.

 

Project Managers and Legal Knowledge

A project manager is not expected to be a lawyer. The percentage of lawyers managing projects seems to be quite small, most project managers have a different education and are trained in technical and organizational matter, not in legal details. In project business however, a deficiency in legal knowledge can be a problem. Project managers have to make a multitude of decisions every day, each of which can have legal implications, and many of them can cause problems in a worst-case scenario, when a lawsuit is threatened or actually filed.

One can compare this with driving a car: A driver has to make many micro-decisions on the way from one place to another, and each of these decisions may be wrong. Before people can drive cars, they have to be taught by a driving instructor, and the instructions do not only take account of technical matters, but also include knowledge of and compliance with a body of traffic law. Illiteracy or disregard of traffic law can lead to dangers for life, health, and bank accounts. The driving instructor is not a legal expert but needs to know the rules well enough to be able to pass them on.

In project business management, the same applies, however the number of instructors is small. People therefore often learn the rules by trial and error. Unfortunately, trial in projects under contract is expensive, and error often even more.

In project business management, the project contract is an expression of the hopes and wills of the two (or more) parties at the moment of conclusion, but also of their uncertainties, concerns, and fears in this moment. Understanding its relevance is essential for success of any cross—corporate project.

It is therefore surprising, that project managers often don’t know the contract, and this is true for both sides, customers and contractors. Time to dig deeper into the matter. Project contracts matter in project business.

Figure 1: The project contract ends the business development phase and begins the delivery phase.

 

Why Contracts Matter in Project Business

The core document of project business is the project contract.

Project contracts are different from other contracts. It is important for success in project business that project managers understand these differences and act appropriately. And that they know the contract.

 

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. (2020). The Great Challenge: Project Contracting; Series on Project Business Management; PM World Journal, Vol. IX, Issue VI, June.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/06/pmwj94-Jun2020-Lehmann-Project-Contracting-PBM-series-article2.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:

His previous articles and papers for PM World Journal can be found here:

 

[1] (Goethe, 2005)

 

 

When The Race Is On Again

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“It is not by muscle, speed, or physical dexterity that great things are
achieved, but by reflection, force of character, and judgement;”

Cicero[1]

Summary

When the race is on again, who will be among those left behind?

Times of crises, such as the current Coronavirus (COVID-19) crisis, have always been times of troubles and sorrow, but also of re-adjustment of attitudes and approaches, of learning and growth. In project business management, now seems to be the best moment to get prepared for the time, when business will rebound.

The Coronavirus (COVID-19) Crisis and Project Business Management

There was good reason for governments all around the world to enforce quarantine rules to protect people from the novel Coronavirus. It is highly contagious and lethal.

One has to be careful with comparing country numbers. The data collection in these countries does not follow identical rules, and in many countries, there is even political interest to “massage the numbers” in order to support a political agenda. However, these numbers are the best we have at the moment.

Figure 1: Deaths per confirmed cases of COVID-19 infections per 3-May-2020, 10:32 PM UST for the top 20 countries in # of confirmed cases. Data source: Johns Hopkins University[2]

Figure 1 shows for the 20 most affected countries (per 3rd May 2020) the numbers deaths in relation to the confirmed infections and. For some countries, a lethality has been measured of over 15%. The risk for the population is very high, and temporary restrictions of personal freedoms should be considered justified to protect everyone.

Protecting people is necessary, however the effect is disastrous for many businesses, including, of course for project business. “Social distancing” (in essence rather physical distancing) and prohibiting people from travelling has proven to be effective in the fight against the disease, by reducing the spreading of the virus through human-to-human contact, but also crippled many industries that relied on such contacts or on the freedom of people to travel.

Interesting is a look at another set of data for the same countries, the percentage of people, who have recovered from the disease.

Figure 2: Recoveries per confirmed cases of COVID-19 infections per 3-May-2020, 10:32 PM UST for the top 20 countries in # of confirmed cases. Data source: Johns Hopkins University3

On the left hand side of the diagram are countries whose population seems to have widely overcome the crisis. The number of new and active confirmed cases is small in relation to the cases that can be considered ended, at least for the moment. Uncertainties remain, but it seems that for these countries, the pandemic has not ended, but the risks have become smaller.

Ending the Crisis?

Based on the same data from Johns Hopkins University, the smoothed curves in Figure 3 support this assumption. Countries with a high recovery rate typically have a sinking rate of new confirmed infections, while a low recovery rate comes with an even or growing number.

 

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. (2020). When The Race Is On Again; Series on Project Business Management; PM World Journal, Vol. IX, Issue V, May.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/05/pmwj93-May2020-Lehmann-When-the-Race-is-on-Again-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:

His previous articles and papers for PM World Journal can be found here:

 

[1] (Cicero, 1923)

[2] (Johns-Hopkins University, 2020)

Survival Hints for Project Business

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“in time of crisis, character become visible”
Helmut Schmidt[1]

 

Summary

Project business is present when paying customers assign paid contractors to do project work for them under contract. The current Corona crisis poses specific risks for organizations and professionals involved. How can we respond to them?

 

Why the Corona Crisis Matters so Much for Project Business

Project business is at the core of today’s project economy: The move from cross-functional to cross-corporate projects.

Figure 1: Cross-corporate projects at the heart of project business management, driving the project economy

The current crisis met players in project business unprepared. Among all business disciplines, project business has the lowest number of experts, literature, software, and offerings for education. Most people and organizations involved in project business learn it by trial and error. However, trial in project business is expensive and error even more. Now, in a major crisis, trial and error are the direct way into insolvency.

Professionals and organizations need immediate help to survive the crisis, caused by the infamous Coronavirus. How should they respond to it?

For the moment being, we observe a breakdown of systems we rely on as project contractors and customers. Communications of course, is one of them, when we are forced to distance ourselves socially (e.g. here) and have to reduce contacts to online calls and meetings. Other systems impacted include conferences, congresses, and other physical events where project vendors and clients find each other. Even courts of law will be impacted, when they can no more convene, making it hard to resolve conflicts in a civilized manner (e.g. here).

In a major crisis, trial and error in project business are the direct way into insolvency.

Insolvencies will be another disruptive factor. I have long warned that bankrupt project contractors and customers can have a devastating effect on the success of a project’s mission. There is no doubt that we will see companies go bankrupt in huge numbers in the coming months, and we should be prepared that among them will be some of those with whom we make project business.

 

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. (2020). Survival Hints for Project Business; Series on Project Business Management; PM World Journal, Vol. IX, Issue IV, April.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/04/pmwj92-Apr2020-Lehmann-Survival-Hints-for-project-business.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc, ACE, PMP, is a project management author, consultant, speaker and teacher. 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:

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Bundeskanzler-Helmut-Schmidt-Stiftung, 2020)

 

 

The Freelancer’s Story

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“I have learned that success is to be measured not so much by the position that one has
reached in life as by the obstacles which he has overcome while trying to succeed.”

Booker T. Washington, Up From Slavery: An Autobiography

 

 

Summary

A lack of communication between customer and contractor can lead from hope to disaster. Here is an example of that happening to a freelancer, a one-man show as a contractor.

Entry to the Freelancer’s Diary

April 1: This was my lucky day today. I received the confirmation that I will work as the project manager for the DOLPHIN project of Jellyfish, Co. They were impressed of my biography and the experience that I can bring into the project on technical, interpersonal, and organizational level. My help is needed over the entire project lifetime, and my work will be essential to its success.

I will have a team of ten developers, most of them also self-employed freelancers, some may be internals, and Jellyfish will pay me a good rate.

I had 3 months of frustrating searching for a new project, after the end of my last assignment. I am meanwhile running out of cash. The combination of travelling costs and lack of income was devastating for my bank account.  But end of next month, it will be able to write an invoice and hope, they will pay it immediately. It feels good to have income again and to be back in project business.

My wife is not happy that I will need to do a lot of travelling, leaving her alone with the kids, and she has a job to do too. However as the travel costs are covered by the customer, and understanding that jobs like this are not easy to find these days, she accepted the deal with gritted teeth.

Jellyfish—Internal Memo

April 1: Today, we finally took Mr. Smith under contract. He will contribute to the RIGHT FLIPPER work package of the DOLPHIN project. RIGHT FLIPPER is not a mission-critical part of the DOLPHIN project, but it adds to its business value and to its acceptance by important stakeholders. We believe, Mr. Smith’s work will be relevant to gain acceptance of the entire project by the requesting departments.

Mr. Smith was second choice. We had two highly capable candidates for the job, but they decided instead to accept competing offers from other companies that were prepared to pay much better. So, Mr. Smith was our last option. At least, choosing him was a budget-friendly decision.

We are uncertain about his technical capabilities, and there is also a question mark on his ability and preparedness to subordinate to a team mission. Therefore, we will need to have a watchful eye on his performance.

He will start working on the tasks next month. He will be paid based on daily rates and work records. He will send his invoices at the end of each month. We have agreed that travel charges will be included.

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. (2020). The Freelancer’s Story; Series on Project Business Management; PM World Journal, Vol. IX, Issue III, March.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/03/pmwj91-Mar2020-Lehmann-The-Freelancers-Story-PBM-series-article2.pdf

 


 

About the Author

 


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc, ACE, PMP, is a project management author, consultant, speaker and teacher. 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:

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Conflict Resolution in Project Business

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“Come not between the dragon and his wrath.”
William Shakespeare – King Lear

 

Summary

Healing conflicts between contract parties in a project and turning them into project partners may be no more possible in certain instances. For such cases, individuals and organizations involved should understand the various methods of conflict resolution.

Project Business Conflicts

The growing number of projects that are not just done inside the protective walls of an organization but in a cross-corporate manner with customers, contractors, possibly subcontractors and many other parties involved, brings a high potential for conflicts. These conflicts can be damaging to the organizations involved. They may prove disastrous for the projects affected.

In my May 2019 article “Healing Conflicts in Project Business”[1], I discussed approaches to “heal” project conflicts. This healing is based on the fundamental assumption that all parties are interested in a resolution and that the project, its results, but also the business that it incorporates, have enough value for the parties involved that they put aside their differences and find a jointly acceptable solution. The article also talks about the causes of such conflicts, with diverse business interests, cultures, and clashing strong egos at the top.

Here, I want to talk about those situations, when healing seems not possible. The project may be over, the parties have departed, and the conflicts are caused by the need to finally settle claims and obligations. There may no be the mutual interests to achieve joint goals that help overcome differences.

During the project, relationships may also become too poisoned to allow for a healing process. There may still be a joint interest to finish the project and gain the benefits expected from it, however, the causes of conflict are exceeding these positive forces, and emotions of anger, frustration, disappointment, and fear of losing out in the conflict make it impossible to find common ground again[2].

How will such conflicts be resolved?

Do Project Managers Need Legal Knowledge?

Details are depending on the legislation under which the conflict needs to be resolved. The following paragraphs are therefore not to be understood as legal advice, which can only be given by a lawyer. This is basic knowledge that a project manager should have to do the job.

One may compare this to driving lessons that convey basic knowledge of traffic laws, however, when legal advice is needed, this will not come from the driving instructor but from a lawyer educated in traffic laws and regulations. A car driver, however, has to make many decisions in traffic that may in a worst case lead to charges and fines, and the person cannot ask a lawyer in each of these moments. Instead, the person has to rely on education received in traffic rules and common sense.

Project managers in project business are in a similar situation: They make a large number of messages, actions, but also inactions during a project day. Each can cause legal troubles. And just like a car driver, a project manager cannot ask a lawyer at every crossing and every turn what to do. They need education and experience, and a lot of common sense, to make the right decisions.

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. (2020). Conflict Resolution in Project Business; Series on Project Business Management; PM World Journal, Vol. IX, Issue II, February.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/02/pmwj90-Feb2020-Lehmann-Conflict-Resolution-in-Project-Business.pdf

 


 

About the Author

 


Oliver F. Lehmann

Munich, Germany

 

 

 
Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Lehmann, 2019)

[2] I described the underlying forces of such conflicts in my books “Situational Project Management – the Dynamics of Success and Failure” (Lehmann, 2016) and “Project Business Management” (Lehmann, 2018)

 

 

Sleepless in Project Management

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“If a composer suffers from loss of sleep and his sleeplessness induces him
to turn out masterpieces, what a profitable loss it is!”
Antoine de Saint-Exupéry

 

Summary

Listening to project managers can bring many new insights. Here are results of surveys done over a time of seven years, that show how the profession has changed and what keeps project managers sleepless at night.

Surveys Revisited – What Happened Meanwhile?

An interesting question in project management is, what gives project managers sleepless nights. They have to meet different challenges in different projects. Some projects have static requirements from the onset, in others, they are ever changing, and in a third group, no one can tell the project manager, what these requirements are. Project managers have to find that out.

Another major difference are customer projects versus internal projects. The first are mostly profit centers, the latter cost centers.

How common are these different project types?

One of the greatest inventions of the age of the Internet is the availability to survey groups of people with simple and affordable means. This allows us to gain new knowledge about professions such as project management and adjust offerings for services to them, such as training or writing and publishing articles like this one.

It can be an even more interesting exercise, when the surveys are repeated so that older results get confirmed, or not, and the dynamics of the profession become visible. In this article, I report of such a survey I did between June and November 2019. This article is the first to publish the results that repeat older surveys.

Another opportunity that comes with these surveys is the ability to listen, instead of telling practitioners, what their practice is. While practices are changing, many basic principles are universal. Active listening over surveys are a great way to gather knowledge from that.

I made a decision in spring 2019 to do another survey repeating older ones. Here are the results.

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. (2019). Sleepless in Project Management; Series on Project Business Management; PM World Journal, Vol. VIII, Issue XI, December.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/12/pmwj88-Dec2019-Lehmann-Sleepless-in-PM-PBM-series-article2.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Supply Chains Versus Project Supply Networks

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“The only profit center is a customer whose check has not bounced.”
– Peter F. Drucker

 

Summary

In many aspects, project managers working with Project Supply Chains (PSNs) can learn lessons from Supply Chain Management (SCM) in manufacturing and other industries. This corporate function has developed a high degree of maturity in the last decades, that can make it a role model for project management.

However, the differences should also be considered.

Modern Supply Chains

It was a coincidence in my professional life that I was a witness of the beginning of modern supply chain management. In the late 20th century, a major change in manufacturing took place, whose consequences became fully visible only decades later.

Before that time, manufacturing was mostly performed inside the protective walls of the own organization. Here and there, external vendors were used as a “verlängerte Werkbank”[1], providing additional production capacity and skills.

Several revolutionary developments, at least for that time, dramatically changed the way production was done:

  • After studying Japanese methods, in particular the Toyota Production System, Western production managers learned how to become more productive with limited internal resources by outsourcing more work to contractors. In contrast to the Verlängerte Werkbank, which solely outsourced shop floor work, System Suppliers also took over responsibility for organizational and commercial tasks. They became prime contractors managing an often large number of subcontractors over different tiers for the customer.
  • Essentially based on Ford’s Q1 quality management system, the ISO 9000 series of standards[2] for quality management and quality systems was developed. It expanded the rather narrow standard developed by Ford to an open family of norms that could be applied by all industries and across all application areas.

These standards allowed different organizations such as firms, agencies, and associations to put together a network of quality systems in a supply chain. While each of these organizations may differ in their actual implementation of the quality system, they all are based on the same founding principles and therefore compatible.

  • Electronic Data Interchange (EDI) enabled an undisrupted stream of communications between customer, direct suppliers, subcontractors, and so on. They used data structure and transfer protocols such as Odette, Edifact, and XML to ensure all contract partners spoke the same language, at least in a digital field. Its introduction was highly controversial by that time. It allowed a customer to trigger production processes at subcontractors, with whom they had no direct business relationship, just skipping the prime contractor in between.
  • National borders became permeable. An example is the European Economic Area, which includes 28 countries of the EU[3], plus Norway, Iceland, and Liechtenstein. The easiness of crossing borders inside the area led to the creation of millions of new jobs, particularly in manufacturing and supporting industries.[4]
  • Supply chain management (SCM) as a now well understood business discipline evolved. Today, it includes consulting, literature, education, research, standards, and certifications. In addition, the discipline has special software at hand, online services such as digital markets that bring together customers and contractors, and a lot of other supporting offerings. It is mature, and if help is needed, it is likely that this is available somewhere, typically against money.

Supply chains today are engineered and managed in a way that is almost as stringent as internal production management. As multi-tier meta organizations, they are set up in a way that places key players at strategically important nodes and delegates responsibility to them to manage the players that have more distance to the final customer. The intention to make the feasible over long durations and run them as smoothly ad efficiently as possible gives an incentive to all players to maintain a cooperative approach based on good faith and mutual empathy.

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. (2019). Supply Chains Versus Project Supply Networks. PM World Journal, Vol. VIII, Issue X, November.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Lehmann-supply-chains-versus-project-supply-networks.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] German for “extended work bench”

[2] An interesting contemporary comparison of Ford Q1 and ISO 9000 can be found at TQM Magazine (Stephens, 1997)

[3] The British Brexit, the exit from the EU may lead to the United Kingdom getting excluded from the EEA, which would then have 27 EU countries as members.

[4] One may also note the foundation of the World Trade Organization, a multilateral agreement of 165 countries, which also eased cross-border business, however not with the same impact as the EEA.

 

 

Taking Care of (Project) Business

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“I admire Picasso. He sold his oil more expensive than anyone else.”
Unknown

 

Summary

Project Business with clients and contractors comes with specific challenges for all professionals involved. They need a good understanding of project management, but also of commercial and legal matters in order to make the project satisfactory for the organizations and individuals involved.

More education is necessary to prepare even experienced project managers for these challenges. At the moment, most project managers learn Project Business Management through trial and error.

However, trial in project business is expensive, and error even more.

Liquidity

It is autumn 2019 while I am writing this article, and attentive readers of business press find the topic of liquidity addressed in many places:

  • On 23 September, UK’s oldest provider of package holidays went into insolvency after 178 years of operation. British travel firm Thomas Cook had failed to fully refinance huge debts and went out of business, forsaking 150,000 tourists, Britons and people from other nationalities, stranded in holiday destinations, sending several thousand employees into unemployment, and leaving an unknown number of invoices from business partners unpaid[1].
  • On the same day, a scathing letter became public by Ola Källenius, the CEO of German Mercedes-Benz car maker Daimler AG. In this letter, Mr. Källenius criticized the losses of the group, which added up to 4.2 billion Euros, and called for the protection of the “financial solidity”, which he called a “life vein of the corporation[2].
  • Automotive again, same day. South China Morning Post reported that during the second quarter of 2019, the Chinese maker of electric cars NIO burned 2.6 billion yuan (US$4 million) a day. Their cumulative losses since their foundation 5 years ago are reported at US$5.7 billion. The company, according to the article, hopes for an infusion of 10 billion yuan by an investor, however given its reported rate of burning money, this would just help the company to survive another four days.
  • One month earlier, in August, India Business Law Journal wrote that “More action needed to ease contractors’ liquidity crisis”. Blaming unresolved disputes and insufficient performance of contractors in infrastructure and construction projects as the culprit, the article describes how an entire national industry suffers from losses and late payments.[3]
  • US aircraft manufacturer Boeing may currently also be much more in liquidity troubles than what is communicated in public. The corporation had a stock buy-back program over US$20 billion in 2018 and are about to invest US$4.75 billion in buying Brazilian Embraer, a manufacturer of small commercial aircraft. Since March 2019, their most promising model, the Boeing 737 MAX has been grounded by aviation regulators around the world, and newly built aircraft are stockpiling and cannot be delivered. Already delivered aircraft have also been grounded, and their operators already began charging the costs of the grounding to Boeing. According to IBA Group, the costs of grounding are at about US$150,000 – per aircraft and per day.[4] At the same time, sales of Boeing aircraft are slumping[5]. Boeing is still a darling of investors, due to its large backlog of orders from the last years to be fulfilled and its second business in military, however this may finally prove to be a temporary relieve only.

The majority of the examples above are not from project management, however, they show the crucial significance of liquidity for any company’s survival. Most companies need to live from the earnings made from the business they do. The examples also show that the matter is not specific to an industry, or a certain country culture, it is a universal issue for every business anywhere in the world.

Such as project business.

Project Business

Project business takes place, when organizations come together to do one or more projects. These projects are no more just cross-functional, they are cross-organizational.

Figure 1: Cross-functional projects are performed inside the protective walls of a performing organization. Cross-corporate project span over several organizations.

Project Business Management (PBM) brings together project management and business management. However, it is different in its lack of experts who are qualified to help organizations do better projects with paying customers on one side and successful contractors on the other.

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. (2019). Taking Care of (Project) Business; Series on Project Business Management; PM World Journal, Vol. VIII, Issue IX, October.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Lehmann-Taking-Care-of-Business.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Collinson, 2019)

[2] (Köster, 2019)

[3] (Negi & Kumar, 2019)

[4] (Whybrow, 2019)

[5] (Johnsson & Kochkodin, 2019)

 

The Cooperative Transformation

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


“It is the long history of humankind (and animal kind, too) that those who learned
to collaborate and improvise most effectively have prevailed.”
Charles Darwin

Summary

The growing trend to cross-corporate projects done as businesses between customers and contractors challenge the ability of organizations and individuals to cooperate. Humans and their organizations are generally able to cooperate, however, the specific setting with its issues on project management level as much as on legal and commercial level makes it particularly difficult. A transformation is necessary to benefit from this trend.

Innovating Innovation

I often think back to the late 20th century, when I was employed in a leading position in a process-engineering company. Processes here in the meaning of classical chemical and physical processes, that were used in industries, such as automotive and aerospace. In my company, we had a Research and Development (R&D) department, internally, of course, that had a red “Entry for authorized personnel only” sign on its doors. The majority of corporate staff was prohibited from entering the rooms, in which the future products of our company were developed, those products that would secure our future. The innovative work was done inside the protective walls of the company, and the walls of the R&D added further protection.

I also remember the Chairman of the board of the company, an elderly, mostly unshaved man, who could spend days playing golf and nights in the R&D lab, mixing chemicals and developing physical processes for their application, and many of them were truly ground-breaking.

He was not formally educated in process engineering (I never found out, what his actual education was) and it was definitively not his ordinary job, but he was a kind of natural-born talent in process invention.

When he showed us in the morning the results of his long nights, everyone was impressed, however the next problem was, that he rarely documented his inventive work, so we had a perfect test tube of chemistry for which there was no recipe. It could not be reproduced, at least not accurately enough to deliver the lab performance.

I also remember that I received by that time an invitation by the University of Stuttgart to speak to their researchers. I was surprised to meet there the CEO of our direct competitor. He spoke before me and then listened to my lecture. We made a decision to sit together in a nearby restaurant after the event and talk about business. He was a man who loved talking, and I could derive a lot about the business situation of his company and where they stood with certain customers. Great information that I communicated home the next day.

The response was not a friendly one. “How could you sit and talk with that man? You are a soldier for the company, and you have to know, who the enemy is!” On that day, I decided to leave the company. I was their employee, not their soldier.

Today, as a trainer, I am a visitor in similar companies for preparatory talks and for in-house seminars. There are still internal R&D departments, of course, but for many of them, the entire working style has been changed. The lion share of the work is no more done internally but by contractors. The R&D department’s job is rather to is to distribute the work among them, to decide, which contractor does what research, and when.

There is not even certainty that the contractor does the work. The contractor may give it to one or more subcontractors, when specific skills are missing in-house, or when the lab capacity is not there to do the work. If the work is passed over, the customer may be aware and accepts it. Sometimes, customer are not aware and would not accept it if they knew.

Figure 1 illustrates, how projects such as R&D-driven innovation projects are no more done inside the more or less cozy world of the organization but extend out to external contractors. This brings new issues that need to be dealt with, such as contractual matters, non-disclosure of corporate secrets and general protection of intellectual property.

From a project management perspective, the traditional cross-functional character of internal projects is getting replaced with a cross-corporate fashion of doing projects, and the question remains, whether project managers are sufficiently prepared for this change.

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. (2019). The Cooperative Transformation; Series on Project Business Management; PM World Journal, Vol. VIII, Issue VII, August.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/08/pmwj84-Aug2019-Lehmann-The-Cooperative-Transformation.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

 

Are You Ready for Business Success as a Project Vendor?

Here are some Tools for You

 

Project Business Management

SERIES ARTICLE

By Oliver F. Lehmann

Munich, Germany

 


 

“Too swift arrives as tardy as too slow.”
William Shakespeare

Summary

A vendor in project business typically has three major goals: Making customers happy, generating profit, and protecting the own liquidity. These goals must be achieved in a high risk environment. What tools are at hand for the vendor as an organization or an individual to achieve them?


The Boon and Bane of Project Business Management

The practices of Project Business Management can be successfully applied when there are at least two players in a project, a client and a vendor. Often, the number of players is much larger, when contractors create large networks with other suppliers that also act as contractors, or as subcontractors, consultants, and many more. All these companies have expectations what they want to gain from the business. One of these expectations is naturally to bring money home.

The following pages will describe the problems meeting that expectation and recommend tools to improve the monetary benefits from the project contract.

When you work for a vendor of services and products for one or more paying customers, or when you are a self-employed contractor as a one-person business, your job can be a highly profitable business. It can be financially rewarding.

If you are among those who say “By lifting others we are blessed”[1], it is also satisfying to see how one can help customers achieve their objectives, develop products or services, drive improvements and transformations that the client alone would be unable to do, and help companies be more innovative and survive in fast changing markets. For this group of people, the payment is not the singular purpose of their work, but the confirmation that it is done well and the necessary basis to secure the presence and build the future. The sense of achievement is clearly what drives many professionals, self-employed or inside vendor companies, and the profitability derived from projects and their contribution to the own liquidity is one of several success metrics.

These are the successful contractors.

However, there are also contractor companies that are doing much worse. I call them “JAMs” for “Just about managing” in my book “Project Business Management[2]. They somehow get by with the day, but they are unable to build the reserves needed for growth and development and for coping with the potentially hurtful surprises that are part of project business and its temporary and ever unique nature. This “JAMming” may originate in dysfunctionalities on the side of the customer. There may also be shortcomings on the side of their subcontractors, or of course also inside the own organization.

Figure 1 shows the multitude of sources that can disrupt business for a contractor inside a project supply network (PSN), and in essence, they can be found at all players involved.

Figure 1: Sources of business disruption for a contractor in a project supply network (PSN) in project business

In project supply networks (PSNs), troubles of one organization can impact other players and like a complex system of rows of falling dominoes affect the entire project, possibly driving it and its contributing organizations into existential crisis.

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. (2019). Are You Ready for Business Success as a Project Vendor? Here are some Tools for You; Series on Project Business Management; PM World Journal, Vol. VIII, Issue V, June.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/06/pmwj82-Jun2019-Lehmann-Are-You-Ready-for-Business-Success-as-a-Project-Vendor.pdf

 


 

About the Author


Oliver F. Lehmann

Munich, Germany

 

 

Oliver F. Lehmann, MSc., PMP, is a project management author, consultant, speaker and teacher. 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 five years as the President of the PMI Southern Germany Chapter until April 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 “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016 and ofProject Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.

To view other works by Oliver Lehmann, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/oliver-f-lehmann/

 

[1] (Ingersoll, 1902)

[2] (Lehmann, 2018)

 

 

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