How can economic conditions influence the acceptance of a project management methodology?

The book says that during the recession senior managers realized that they did not know as much
about project management as they needed to know. By the end of the recession companies
started to recognize the need for a more structured and organized way to do projects and plan
strategic planning. Companies understood the need for good strategic planning but they did not
have a good way to implement their plans. Companies started understanding that they could use
project management to implement their strategic plans as well as their operational plans. The
book stated that another factor that helped in promoting project management acceptance in
companies was strategic business units. The strategic business units were usually more excepting
to the use of project manage and more aware of the necessity to obtain horizontal and vertical
work flow. These groups recognized that project management was a vehicle for implementation
of most any plan and any project.

According to Importance of project management in strategic planning article, Good Project
Management is critical to keeping strategic targets on schedule. A strategic plan is usually
management-driven and forward-looking. That means your strategic plan may take over three,
five or ten years to achieve its goal. During that time, you need a heartbeat, or tracking method -
to ensure everything is on the right course; or corrections are made at the right time to keep it on
course. Any activity performed during the course of a project to ensure it remains on target is
called Tactical Planning. Tactical Planning Decisions are made for short-term goals. A good
project manager will monitor the overall life-cycle of a project, and suggest changes or
adjustments as needed, depending on their requirements (Cost, Quality and Time drive most
schedules...)
Mattie 2012 stated that, research conducted with senior project management leaders on PMI's
Global Executive Council found that the most important skill for managing today's complex
projects and programs is the ability to align the team to the vision of the project and design the
project's organizational structure to align people and project objectives.
Importance of project management in strategic planning, 2014, http://wiki.answers.com
Mattie, Geoff, August 2012, The Strategic Role of Project Management, article,
http://projectmanagementinstitute


In my own personal experience I have found this to be true. Where I use to work along right after
the 9/11 instance our company decided that they need to do something. The company was
growing at an astounding rate in fact we had quadrupled in size in the matter of 5 years and they
had all these project going on around the world and they were having a tough time realizing the
benefits and controlling them. All of the different business had their own way of doing things it
was impossible to control or even know what was going on from one business to the other.
Along about that time we started getting pressure from outside sources and completion on our
product that they knew they had to change the way they done things. That is when they started
training on the subject of Lean Six Sigma and pushing for a centralized project management
system in all there plants. I was lucky because I was one of the first selected to be trained. This
worked out really well for me and got to be part of the training group. The company went to
Lean Six Sigma format for all its projects over the next 5 years and it is that way
corporation wide

When the economy is favorable, management culture and changes in management style are
considered slow to adapt. According to Kerzner (pg.153) it is the deterioration of economic
conditions, which brings about a more rapid change in business organizations, with management
believing that their guidance would serve to maintain their companies. This was evident with the
1989-1993 recession where management had previously accepted the implementation of project
management at a tedious pace and senior management began to realize that this was no longer
the case. Companies began to recognize that principles of project management could be used to
implement strategic planning as well as operational planning.
As Rezak (n.d.) points out, when an organization is impacted by an economic downturn, the
actual degree of impact is dependent upon the industry, geography, company, and competitive
environment. What is common across all these variables is that when financing becomes more
difficult to obtain, many companies tend to react quickly and placed projects on hold. Some
projects are postponed indefinitely while others are cancelled outright in midstream. Some
projects already underway are merged with initiatives, scaled back, or scaled up with accelerated
deadlines, while, new projects launched during the economic downturn were limited to those that
were essential, focusing more on support projects as opposed to innovation projects.
From my own experiences, a downturn in the economy places a lot of added stress on the
organization; which in turn is passed along to the project team. With the typical knee-jerk
reaction being to cut funding to a project in order to save money somewhere in the organization.
The most common justification, or excuse I hear is always do more with less which is quickly
followed up by do it faster. In the effort to save money, team members are often times
expected to take on additional duties or taskings, or in some cases take on the complete role of a
secondary person in addition to their own. Secondly, milestones and deadlines are moved
forward, at the expense of the team to free up resources for use in the future. These cost cutting
measures end up costing the organization more in the long run, whether it be in correcting
mistakes that were made resulting in things having be reworked or the anticipated result falls
short under the shortened deadline.
Rezak, C. (n.d.). Project Team Success in Todays Economy: Back to Business and Back to
Basics. Business Simulation Games for Corporate Companies. Retrieved March 10, 2014, from
http://www.paradigmlearning.com/documents/ProjectTeamSuccessinToday'sEconomy003.pdf
This question seems pretty straight-forward, and its approached in a straight-forward fashion in
our Kerzner text: During favorable economic times, changes in management style and corporate
culture move very slowly, but favorable economic conditions dont last forever As economic
conditions deteriorate, change occurs more and more quickly in business organizations By the
end of the recession in 1993, companies finally recognized the importance of both strategic
planning and project management, as well as the relationship between them, (p.153-154).
Unfortunately, the response the response of some companies during poor economic times isnt
always to implement Project Management but to eliminate it. According to Kevin Barry of PM
Alliance, During good economic times, investing in project management is financially feasible
and acceptable by most companies. However, during bad economic times, project management is
considered an overhead cost and the tendency is to downsize, (Barry 2009).
Its understandable that during bad economic times, a company might want to cut back on all of
the unnecessary expenses. However, viewing Project Management as an unnecessary expense
may be a mistake that they dont live to regret. If you suddenly found yourself in poor economic
times does it make sense to divorce your wife because feeding an extra person costs extra
money? If you just look at the numbers, its possible that you could come to that conclusion. But
looking at it logically yes, it costs more to feed two people than just one, but your wife is also a
helpmate she can clip coupons with you, look for an additional job, and take care of other
aspects of life, like cooking doughnuts when you are otherwise occupied with money-producing
activities. Divorcing your wife would simply halve your family units productive capacity and
similarly, cutting out your Project Management program will halve your businesss productive
capacity.

References:
Kerzner, H. (2004). Advanced Project Management: Best Practices on Implementation.
Hoboken, NJ: John Wiley & Sons, Inc.
Barry, K. (2009). The Importance of Project Management in a Down Economy. PM Alliance
Project Management. Retrieved March 3, 2014, from http://pm-
alliance.com/The_Importance_of_Project_Management_in_a_Down_Economy.pdf.