Economies of Scale. by Jeffrey Bouley.

8/11/2019 Economies of Scale. by Jeffrey Bouley.

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Small companies may not beable to afford full projectmanagement departments or

dedicated staff, but they canstill employ manyof the underlyingprinciples.

by Jeffrey Bouley

The measure of project management success is not

always an enterprise project management office or an

incredibly detailed set of metrics. In fact, for small-

and medium-sized companies, particularly those with fewer

than 500 people, it might not even be feasible to have a full-

time, dedicated project management staff. But that doesnt

mean that project management shouldnt be an organiza-

tional value.

Although project management once was almost exclu-

sively the concern of large multinationals and defense con-

tractors, todays small- to medium-sized businesses (SMBs)

are emphasizing more discipline and utilizing project man-

agement principles more intently, according to a survey

conducted by EdWel Programs, Chicago, Ill., USA.

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The survey of 382

SMBs found that 36 per-

cent adhere to docu-

mented procedures for

managing projects, while

27 percent require project

teams to follow more

informal project manage-

ment practices.

Savvier organizations

use project management to

improve company decision-

making, says Michael Welles,an EdWel spokesperson. Knowing which product to

develop or system to install requires more than just a hunch

in todays competitive landscape. Ultimately, [project man-

agement] comes down to making the right business deci-

sion at the right time.

Perhaps no business understands this more than the small-

est ones with the fewest resourcesthey have the most to lose

from a single misstep. The following three casestwo soft-

ware firms and a biotechnology companyshow that project

management can bring success, even on the smallest scales.

Embrace Outsourcing

Companies outsource all sorts of functions, from building

maintenance concerns to management

and consulting support.When a company

lacks the time, budget or resources to

employ a dedicated project management

practitioner for the long haul, outsourcing

may be the smartest decision, says Jason

Korkin, chief executive officer of Safe

Data Technologies, Concord, N.H., USA.With just two in-house employees and

four contracted software developers, Mr.

Korkin realized his own companys limita-

tions and looked outside for project man-

agement support. Safe Data Technologies

recently released several Web-based appli-

cations for attaching massive files, sending

highly secure encrypted e-mails, remote

data backup and global e-mail access.The

company also is gearing up to release a

spam- and virus-scanning and filtering solution as well as a

monitoring solution for servers and networks. I looked at

the cost of developing products completely in-house and

having it done by outside individuals while I managed the

company, he says. I even went so far as to look at the

project management aspect and ask myself if I really

wanted to manage projects directly or focus my attention

on other critical issues, such as customers.

Mr. Korkin considered project management firms and

individuals who simply had project management experi-

ence. He finally settled on contracting with a single person

rather than a firmsomeone with whom he felt he con-

nected and comfortable.I didnt want to spend all my time micromanaging all

the projects were working on, Mr. Korkin says. With five

or six projects going on concurrently, it made sense for me

to outsource the function and have someone else manage

the day-to-day.That project manager makes sure things are

on time, are done professionally and meet the feature

requirements.

The key benefit of outsourcing, Mr. Korkin says, is not

necessarily cutting costs. His major concern, aside from

whether he had all the necessary project management skills,

was whether he had the time to manage projects. In the

midst of saving himself time, Mr. Korkin found that his

decision to outsource also saved him money because the

Executive Summary> No longer the purview of just large

enterprises or government agen-cies, project management can help

even the smallest businesses.

> E-mail and data managementsoftware firm Safe Data Tech-nologies shows that outsourcingproject management can free upvaluable time.

> Biopharmaceutical technologycompany BioPAL illustrates howdocumentation and research canhelp keep projects profitable andtied to business strategies.

> SAP software reseller NWareTechnologies proves that communi-cation skills can be critical to stay-ing within budget.

With five or six projects goingon concurrently, it made

sense for me to outsource thefunction and have someoneelse manage the day-to-dayThat project manager makessure things are on time, are

done professionally and meetthe feature requirements


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manager kept all the projects on

task and on target. In addition,

Mr. Korkin is aware of progress

on a weekly basis.

But outsourcing the project

management function didnt mean

taking an entirely hands-off ap-

proach, he emphasizes. You have

to stay on target, or a project will

never end, Mr. Korkin says.

When I spec out a project, I try to

be as all-encompassing as possible.

Almost all software projects will have feature creep, additionalenhancements you see that need to be done to roll out the prod-

uct. I tend to budget an additional 10 percent into a project to

ensure we have funds and resources available to handle that.

With most of his products scheduled to hit the market late

last year and early this year, Mr. Korkin expected to wrap up

with his project manager before the end of 2005. However, he

is likely to contract with the same project manager for additional

work quite often as the business moves forward.

Milestones or Gravestones

With nearly $3 million in current grants,BioPhysics Assay Lab-

oratory (BioPAL) has significant project activity for a biotech-

nology company with only 10 people.The Worcester, Mass.,

USA-based laboratory receives much of its funding from the

U.S. small business innovation research (SBIR) program.

Were doing a whole lot more project managementthan we realize, even though were so small we dont really

have a project management staff or even call what we do

project management, says BioPAL chairman Dennis Vac-

caro, Ph.D. But it is project management, and we cannot

live without it. We make do with what we haveunlike

larger companies that have the resources to dedicate funds

for project management. So we have to choose projects

that will pay off for us and stay on track so that we dont

waste money. Project management isnt a nicety for us

its life or death.

At the company, resources dont exist for a dedicated

project manager. Dr.Vaccaro and his two business partners

essentially take on the role of project managers as needed

for various tasks and pull other staff in as needed.

The company works backward by identifying the mar-

ket need for a product before even consid-

ering the idea of starting the associated

project. Whenever possible, the company

identifies projects that can be completed in

a few weeks or less by building off an exist-

ing product in the pipeline.The SBIR grant proposal documents

provide a handy guideline for project

management, because research on

market viability, necessary timelines and

other issues are required. As such, the

SBIR documentation often serves as the

framework for managing a given project,

and timelines and milestones are

created to support the scope, Dr.

Vaccaro says.

Dennis Vaccaro, Ph.D., Chairman,BioPhysics Assay Laboratory (BioPAL),

Worcester, Mass., USA

WE HAVE TO CHOOSE

PROJECTS THAT WILL PAY OFF FOR

US AND STAY ON TRACK SO THAT WE

DONT WASTE MONEY. PROJECT

MANAGEMENT ISNT A NICETY

FOR USITS LIFE OR DEATH.

Knowing which product todevelop or system to install

requires more than just ahunch in todays competitivelandscape. Ultimately, [projectmanagement] comes down to

making the right businessdecision at the right time.


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That concept really became clear

when we were awarded a fast-track proj-

ect for magnetic resonance angiography

work, he says.We had to set clear mile-

stones, and we told the SBIR funders

that if we couldnt make the milestones,

we would simply stop.The only way the

project could achieve fast-track was to

stay on target. And its that way with

most projects, even if they arent on an

accelerated timeline, because you dont

want to waste time pursuing something

that isnt going to be successful.

Communication and Control

For NWare Technologies, sale of a

product is only the first step, followed

by implementation work at the cus-

tomers site. The reseller and maker of

enterprise resource planning software

is based in Ville de Saint-Georges,

Qubec, Canada.

With only slightly more than 40

employees in three Canadian offices

and one U.S. office, dedicated project

managers are not feasible, notes

Claude Parent, president of NWare

The companys six analysts pull dou-

ble-duty as project managers, typically

juggling two implementation projects

at once. The company accountant also

plays a double role, not only taking

care of routine financial matters but

also handling oversight of projectbudgets and timelines.

Communication is key, Mr. Parent

says. Everyone must know what they

need to do and must let someone else

know where they are in a project. Along

with that, we all must document every-

thing we do.

NWare maintains the same commu-

nication philosophy with clients. You

have to communicate to the client

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exactly what will happen with the proj-

ect, Mr. Parent says. You need to tell

them, This is what we are going to do

first, and were going to work with this

timeline until the end of the project.

The last point, he says, is the most

critical: Clients must be restricted, he

says, for projects to be successful.

Although customer satisfaction is the

ultimate goal, Mr. Parent says, the cus-

tomers cannot and should not get all

they want at the expense of timelines

and project milestones.We have what we call the nice to

have things, he says. Clients say, It

would be nice to have this, so why dont

we put it in now?You have to resist that

pressure, and you have to communicate

the need to stay on task. We have to let

them know we can do that for them, but

only after the scheduled project work is

done.You have to finish the main project

first, or the project as a whole will almost

certainly go out of control.

Part of that communication is mak-

ing the clients understand that every

addition to a project brings additional

costs, which can quickly mount up.

They will often say at first, Yes, we can

afford to go over budget, but then when

it comes time for them to pay, its a dif-

ferent story, he says. If you handle

changes at the end of the project, you

and the client will be happy because youstayed within budget and perhaps went

under budget. Then there is a better

sense of what you can do and what they

can afford. PM

Jeffrey Bouley is a freelance writer based in

Saco, Maine, USA, and news editor of the PM

Network Stakeholders department. He has

contributed to Interface Tech News, Drug Dis-

covery News and Mainebiz.

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Economies of Scale. by Jeffrey Bouley.

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