In this Case study we will illustrate how Project Management service providers can anticipate higher fees from non-projectized buyers given projects of equal complexity and scope.
The author completed two back to back six month contracts as a project manager doing similar types of systems integration work for two different firms within the same year. Both jobs were obtained through staffing agencies and both were ‘independent’, ‘corp-to-corp’ style contracts in the same city.
Firm A had a highly defined organizational hierarchy and strict process methodology. The project managers in this company were nine management levels beneath the CEO. The company was highly projectized and project managers had explicit authority over defined problems and resources over a the project lifecycle. Projects were assigned to project managers from a system that allocated work to resources across the enterprise based on availability.
Firm B had a much flatter organizational profile. There were only three management layers between the project managers and the CEO. Project managers were expected to negotiate resources and objectives with sponsors and also functional managers. Consultant’s pay rate at firm B was $17.50 per hour higher than firm A, and the staffing agencies rate to firm B was $25.00 higher than to firm A.
It appears from this experience that there is financial benefit to project management sellers to serve customers who have less mature project management processes in non projectized firms with flatter organizational lines of reporting.
Wednesday, August 22, 2007
Tuesday, August 21, 2007
Project Management Efficiency, Experience & Expertise
One author (Mills 2004), differentiates professional services providers among three categories; those who sell efficiency, those who sell experience, and those who sell expertise. He calls this the three E's model.
With respect to project management, Scope, Schedule, Quality, and Risk Management are relatively mature knowledge process areas, as such, these services utilize standardized methods that simplify problems and are widely distributed throughout many industries. Mills (2004) also notes that efficiency driven services are generally differentiated on price and methodology. The other KPAs are subject to much wider variations in complexity and standardization within and across industries which implies that they are not necessarily purchased based on proven methods or low price.
The differentiating factor between needs that are served best by expertise rather than by experience is the relative level of uniqueness of the problem. While all projects can be characterized as having some level of uniqueness (Mandjak & Verez 1998), effectively applying Project Management methods combined with experience in their application helps to reduce unique problems to common inputs that can be applied across one or more of the KPAs described above resulting in manageable levels of uncertainty. From the consumer’s perspective the need for high cost expertise can be at least partially satisfied at potentially lower cost by experienced project management. So one way to characterize the demand for Project Management services is along the dimension of buyer’s needs based on the 3E’s model.
REFERENCES
Mandjak, T., and Verez, Z. (1998). The D-U-C model and the stages of the project marketing process. Paper presented at the 14th IMP conference. Turku, Finland
Mills, H. (2004). The Rainmaker's Toolkit: Power Strategies for Finding, Keeping, and Growing Profitable Clients. AMACOM
With respect to project management, Scope, Schedule, Quality, and Risk Management are relatively mature knowledge process areas, as such, these services utilize standardized methods that simplify problems and are widely distributed throughout many industries. Mills (2004) also notes that efficiency driven services are generally differentiated on price and methodology. The other KPAs are subject to much wider variations in complexity and standardization within and across industries which implies that they are not necessarily purchased based on proven methods or low price.
The differentiating factor between needs that are served best by expertise rather than by experience is the relative level of uniqueness of the problem. While all projects can be characterized as having some level of uniqueness (Mandjak & Verez 1998), effectively applying Project Management methods combined with experience in their application helps to reduce unique problems to common inputs that can be applied across one or more of the KPAs described above resulting in manageable levels of uncertainty. From the consumer’s perspective the need for high cost expertise can be at least partially satisfied at potentially lower cost by experienced project management. So one way to characterize the demand for Project Management services is along the dimension of buyer’s needs based on the 3E’s model.
REFERENCES
Mandjak, T., and Verez, Z. (1998). The D-U-C model and the stages of the project marketing process. Paper presented at the 14th IMP conference. Turku, Finland
Mills, H. (2004). The Rainmaker's Toolkit: Power Strategies for Finding, Keeping, and Growing Profitable Clients. AMACOM
Wednesday, August 15, 2007
Credence: Trust, Capability, and Belief in Project Management
In an earlier article it was noted that:
“physical evidence is particularly important for communicating about credence services..." (Zeithaml & Bitner, 1998).
So what exactly are "credence services"? Are Project Management services “credence services”?
The Merriam-Webster Dictionary defines credence as “belief or trust” (2007). Based on our earlier construction of the definition of Project Management as a supervisory work we can infer that the relationship between the buyer and seller is based , at least in part, on trust due to the fact that management is a fiduciary function. It has also been shown how Project Management services add capability to manage discontinuity, complexity, and uniqueness in an organization. Credibility, or believability, is also a product of trust and capability (Gardner et al. 1998). So it can be said that Project Management services are credence services.
Trust, Capability, and Belief, together create the necessary condition of credibility, that distinguishes Project Management from other impersonal services. Since credibility is earned, or built over time, this infers that the initial relationship between the seller of Project Mangement services, and the consumer of those services is one of low-trust, and low-belief. Yet it is possible that the seller could possess high capability. In Project Mangement, capability can equate to process expertise which could potentially generate operational efficiencies for the client.
When a seller with high capability encounters a buyer with low-trust and low-belief it is often under the conditions where price is a factor in the purchasing decsion and where the buyer is looking to reduce expenses. Consequently the sale is usually highly competitive and little differentiation is observed from the customer's perspective. Typically, the sellers compete on price, but often err by advertising the features and benefits of their proprietary methods which are largely irrelevant to the client. However, this kind of relationship, where a buyer with a tactical need and a seller with a tactical solution is stable. It works as long as the economic conditions remain favorable to each of the parties. Initial proposals often focus on ROI. Sellers use "defensive" management language that focuses on increasing operating margin by reducing expenses.
An even more stable and advantageous relationship for the high capability seller can occur when the client's trust and belief evolve to higher levels. When this occurs, opportunities for strategic alignment of both the client and seller begin to appear. It is within these windows of opportunity that conversations can take place that address the buyer's long term, structural needs. These initial proposals, by contrast, should be focused on ROE. Sellers should use "forward-leaning" executive language that speaks to growth, competition, and market share issues.
It cannot be over emphasized that a positive prior track record is essential at this stage and that it would be premature for the seller to attempt a strategic relationship without the required level of trust and belief on the part of the buyer. This is because clients often do not reveal the full extent of their problems until they have determined that they first can depend on the consultant. In many cultures, especially the U.S. , the perception of dependency and it's attendant loss of power implies diminished value. It is therefore critical for the seller to constantly monitor the health of the relationship, and especially prior to attempting to discuss strategic positioning.
An unstable buyer/seller relationship can occur when low capability sellers attempt to enter into strategic relationships with buyers. This is often seen when personal relationships are the basis of business dealings and can present chaotic conditions for project management work, since conflicting covert and overt authority structures can be hard to identify and navigate.
Conversely when a high capability seller is matched with a buyer who has high belief and expectations, but low-trust, a situation that can be characterized as a "solution looking for a problem" occurs. At best, the consultant is viewed as "warm body" or "an extra pair of hands" which is short-term, tenuous and unstable. At the other extreme, as this scenario unfolds, the seller becomes frustrated at the buyer's unwillingness to act on her advice as the buyer beings to resent the seller's presumptions and may even feel threatened. It is a common reaction to respond to feelings of resentment with feelings of guilt, and unfortunately many project managers not only lose the trust of their sponsors, but also face a crisis of confidence after such encounters. The best strategy approach for a seller in this position is to attempt to manage the client's expectations by under promising and attempt to over-deliver.
“physical evidence is particularly important for communicating about credence services..." (Zeithaml & Bitner, 1998).
So what exactly are "credence services"? Are Project Management services “credence services”?
The Merriam-Webster Dictionary defines credence as “belief or trust” (2007). Based on our earlier construction of the definition of Project Management as a supervisory work we can infer that the relationship between the buyer and seller is based , at least in part, on trust due to the fact that management is a fiduciary function. It has also been shown how Project Management services add capability to manage discontinuity, complexity, and uniqueness in an organization. Credibility, or believability, is also a product of trust and capability (Gardner et al. 1998). So it can be said that Project Management services are credence services.
Trust, Capability, and Belief, together create the necessary condition of credibility, that distinguishes Project Management from other impersonal services. Since credibility is earned, or built over time, this infers that the initial relationship between the seller of Project Mangement services, and the consumer of those services is one of low-trust, and low-belief. Yet it is possible that the seller could possess high capability. In Project Mangement, capability can equate to process expertise which could potentially generate operational efficiencies for the client.
When a seller with high capability encounters a buyer with low-trust and low-belief it is often under the conditions where price is a factor in the purchasing decsion and where the buyer is looking to reduce expenses. Consequently the sale is usually highly competitive and little differentiation is observed from the customer's perspective. Typically, the sellers compete on price, but often err by advertising the features and benefits of their proprietary methods which are largely irrelevant to the client. However, this kind of relationship, where a buyer with a tactical need and a seller with a tactical solution is stable. It works as long as the economic conditions remain favorable to each of the parties. Initial proposals often focus on ROI. Sellers use "defensive" management language that focuses on increasing operating margin by reducing expenses.
An even more stable and advantageous relationship for the high capability seller can occur when the client's trust and belief evolve to higher levels. When this occurs, opportunities for strategic alignment of both the client and seller begin to appear. It is within these windows of opportunity that conversations can take place that address the buyer's long term, structural needs. These initial proposals, by contrast, should be focused on ROE. Sellers should use "forward-leaning" executive language that speaks to growth, competition, and market share issues.
It cannot be over emphasized that a positive prior track record is essential at this stage and that it would be premature for the seller to attempt a strategic relationship without the required level of trust and belief on the part of the buyer. This is because clients often do not reveal the full extent of their problems until they have determined that they first can depend on the consultant. In many cultures, especially the U.S. , the perception of dependency and it's attendant loss of power implies diminished value. It is therefore critical for the seller to constantly monitor the health of the relationship, and especially prior to attempting to discuss strategic positioning.
An unstable buyer/seller relationship can occur when low capability sellers attempt to enter into strategic relationships with buyers. This is often seen when personal relationships are the basis of business dealings and can present chaotic conditions for project management work, since conflicting covert and overt authority structures can be hard to identify and navigate.
Conversely when a high capability seller is matched with a buyer who has high belief and expectations, but low-trust, a situation that can be characterized as a "solution looking for a problem" occurs. At best, the consultant is viewed as "warm body" or "an extra pair of hands" which is short-term, tenuous and unstable. At the other extreme, as this scenario unfolds, the seller becomes frustrated at the buyer's unwillingness to act on her advice as the buyer beings to resent the seller's presumptions and may even feel threatened. It is a common reaction to respond to feelings of resentment with feelings of guilt, and unfortunately many project managers not only lose the trust of their sponsors, but also face a crisis of confidence after such encounters. The best strategy approach for a seller in this position is to attempt to manage the client's expectations by under promising and attempt to over-deliver.
Tuesday, August 14, 2007
The Project Management Service Encounter
Both primary and secondary Project Management services, like all services, can be said to be performed within the context of a Service Encounter between the buyer and seller. The Service encounter defines the characteristics of Service Quality and it is a useful construct in establishing Service Standards (Zeithaml & Bitner 1996). Service Quality is reflected by the physical evidence of the service which Zeithaml and Bitner call the “Servicescape” (1996). They note:
“physical evidence is particularly important for communicating about credence services, but also for services dominated by experience attributes." (Zeithaml & Bitner 1996).
A servicescape is the complete envrionment in which project mangement services are provided. It not only includes the immediate physical environment of the transaction, but it also extends throughout the client's virtual experience with the brand. All of the elements in the servicescape should reinforce the positioning strategy.
Other experts and scholars are invited to submit comments and articles that deal in more depth with the topic of positioning project management. For the time being, it can be said that term "positioning " refers to the oversimplificaton and repetition of a marketing message so that it becomes synonomous with the actual brand in the consumer's mind (Ries & Trout, 2001).
Let's say that market research findings indicate that a certain segment of project management services buyers seek to improve intra-project communication. An example of a brand position taken by a seller of project management services operating in this hypothetical scenario might be "crisp communication". Given these parameters, it would be appropriate to ensure that all the elements of the servicescape supports crisp communication. For example, one would expect any written communication to be clear and to the point, grammatically correct, and free of spelling errors. Likewise, It might also be inadviseable to staff a receptionist position in such a company with a non-native speaker or with a speech impaired person. Taking this example one step further, it may also be important to train the on-site personnel to always be accessible and to provide them with tools and techniques to support effective communication.
A servicescape that is aligned with the company's positioning strategy promotes a good first impression and can help to reassure a buyer that his needs will be satisfied. In selling project management services, it is especially important to ensure that the entire service encounter works to support the chosen position. This is due to the fact that most buyers of services spend more time evaluating the performance and quality of a given service, such as project managment, than they spend making the initial purchase decision (Zeithaml & Bitner 1996).
REFERENCES
Ries, A. and Trout, J. (2001). Positioning, The Battle for the Mind. 20th Anniversary Edition, New York: McGraw-Hill
Zeithhaml, V.A. and Bitner M.J. (1996). Services Marketing. New York: McGraw-Hill.
“physical evidence is particularly important for communicating about credence services, but also for services dominated by experience attributes." (Zeithaml & Bitner 1996).
A servicescape is the complete envrionment in which project mangement services are provided. It not only includes the immediate physical environment of the transaction, but it also extends throughout the client's virtual experience with the brand. All of the elements in the servicescape should reinforce the positioning strategy.
Other experts and scholars are invited to submit comments and articles that deal in more depth with the topic of positioning project management. For the time being, it can be said that term "positioning " refers to the oversimplificaton and repetition of a marketing message so that it becomes synonomous with the actual brand in the consumer's mind (Ries & Trout, 2001).
Let's say that market research findings indicate that a certain segment of project management services buyers seek to improve intra-project communication. An example of a brand position taken by a seller of project management services operating in this hypothetical scenario might be "crisp communication". Given these parameters, it would be appropriate to ensure that all the elements of the servicescape supports crisp communication. For example, one would expect any written communication to be clear and to the point, grammatically correct, and free of spelling errors. Likewise, It might also be inadviseable to staff a receptionist position in such a company with a non-native speaker or with a speech impaired person. Taking this example one step further, it may also be important to train the on-site personnel to always be accessible and to provide them with tools and techniques to support effective communication.
A servicescape that is aligned with the company's positioning strategy promotes a good first impression and can help to reassure a buyer that his needs will be satisfied. In selling project management services, it is especially important to ensure that the entire service encounter works to support the chosen position. This is due to the fact that most buyers of services spend more time evaluating the performance and quality of a given service, such as project managment, than they spend making the initial purchase decision (Zeithaml & Bitner 1996).
REFERENCES
Ries, A. and Trout, J. (2001). Positioning, The Battle for the Mind. 20th Anniversary Edition, New York: McGraw-Hill
Zeithhaml, V.A. and Bitner M.J. (1996). Services Marketing. New York: McGraw-Hill.
Friday, August 10, 2007
What are Project Management services?
In the book Services Marketing, the authors define ‘Services’ as”… deeds, processes, and performances.” They note that services “…include all economic activities whose output is not [always] a physical product or construction, … generally consumed at the time produced, and provide value in forms that are essentially intangible concerns of [the] first purchaser.” (Zeithaml & Bitner 1996).
The Project Management Institute classifies project management activities according to nine knowledge practice areas . Each area is comprised of related processes and each of these areas meets Zeithaml and Bitner’s definition of services. The list below provides a brief description of each of the nine services or knowledge areas.
1. Project Integration Management:
Activities related to planning and executing the project as an integrated whole including managing changes.
2. Project Scope Management:
Activities related to defining and maintaining the boundaries of the project.
3. Project Schedule Management:
Activities relating to managing time.
4. Project Communication Management:
Activities relating to establishing and ensuring communications with project stakeholders.
5. Project Cost Management:
Budgeting activities.
6. Project Human Resource Management:
Activities related to managing people.
7. Project Quality Management:
Activities related to measuring performance and variance.
8. Project Risk Management:
Activities related to identifying, qualifying, quantifying, and dealing with uncertainty.
9. Project Procurement Management
Activities related to vendor selection and supervision.
These nine Project Management knowledge practice areas can be considered primary services because they are directly provisioned in the course of managing projects. However, there are also secondary services which are often also provided for the support of project management but are not considered project management knowledge practice areas per-se. Secondary Project Management services generally relate to a “Program” entity which is a context for managing collections of one or more projects. Examples of secondary services include; Project Portfolio Management, Project Management Training, Project Governance, Business Analysis, and other supporting services.
I invite you to contribute your case studies as comments to this post, that can help us better understand how each of the nine primary services are provided in real-life situations.
REFERENCES
Zeithhaml, V.A. and Bitner M.J. (1996). Services Marketing. New York: McGraw-Hill.
The Project Management Institute classifies project management activities according to nine knowledge practice areas . Each area is comprised of related processes and each of these areas meets Zeithaml and Bitner’s definition of services. The list below provides a brief description of each of the nine services or knowledge areas.
1. Project Integration Management:
Activities related to planning and executing the project as an integrated whole including managing changes.
2. Project Scope Management:
Activities related to defining and maintaining the boundaries of the project.
3. Project Schedule Management:
Activities relating to managing time.
4. Project Communication Management:
Activities relating to establishing and ensuring communications with project stakeholders.
5. Project Cost Management:
Budgeting activities.
6. Project Human Resource Management:
Activities related to managing people.
7. Project Quality Management:
Activities related to measuring performance and variance.
8. Project Risk Management:
Activities related to identifying, qualifying, quantifying, and dealing with uncertainty.
9. Project Procurement Management
Activities related to vendor selection and supervision.
These nine Project Management knowledge practice areas can be considered primary services because they are directly provisioned in the course of managing projects. However, there are also secondary services which are often also provided for the support of project management but are not considered project management knowledge practice areas per-se. Secondary Project Management services generally relate to a “Program” entity which is a context for managing collections of one or more projects. Examples of secondary services include; Project Portfolio Management, Project Management Training, Project Governance, Business Analysis, and other supporting services.
I invite you to contribute your case studies as comments to this post, that can help us better understand how each of the nine primary services are provided in real-life situations.
REFERENCES
Zeithhaml, V.A. and Bitner M.J. (1996). Services Marketing. New York: McGraw-Hill.
Wednesday, August 8, 2007
What is Project Management? - A New Definition
Cova and Holstius succinctly define a Project as “…a complex transaction concerning a package of products, services and works, designed specifically to realize in a certain period of time a specific asset for a client." (1993). While the Project Management Institute also emphasizes the constrained, temporary, and unique nature of project activity it adds, “Projects are a means of organizing activities that cannot be addressed within the organization's normal operating limits.” (PMBOK 2004). Others also acknowledge dimensions of discontinuity, uniqueness, and complexity as characteristics common to all projects (Mandjak & Verez 1998).
The Merriam-Webster on-line dictionary defines Management as: (1) “The act or art of managing: the conducting or supervising of something.” , and (2) “Judicious use of means to accomplish an end.” (2007).
Project Management, then, can be distinguished as; the work of supervising temporary, discontinuous, unique, and complex sets of activities with limited resources in order to accomplish a specific result.
REFERENCES
Cova, B. and Holstius, K. (1993). How to create competitive advantage in project business. Journal of Marketing Management 9(2):105-121
Mandjak, T., and Verez, Z. (1998). The D-U-C model and the stages of the project marketing process. Paper presented at the 14th IMP conference. Turku, Finland.
PMBOK (2004). A Guide to the Project Management Body of Knowledge, 3rd Ed. Newton: Project Management Institute.
The Merriam-Webster on-line dictionary defines Management as: (1) “The act or art of managing: the conducting or supervising of something.” , and (2) “Judicious use of means to accomplish an end.” (2007).
Project Management, then, can be distinguished as; the work of supervising temporary, discontinuous, unique, and complex sets of activities with limited resources in order to accomplish a specific result.
REFERENCES
Cova, B. and Holstius, K. (1993). How to create competitive advantage in project business. Journal of Marketing Management 9(2):105-121
Mandjak, T., and Verez, Z. (1998). The D-U-C model and the stages of the project marketing process. Paper presented at the 14th IMP conference. Turku, Finland.
PMBOK (2004). A Guide to the Project Management Body of Knowledge, 3rd Ed. Newton: Project Management Institute.
Tuesday, August 7, 2007
Why blog about Selling Project Management?
The purpose of this blog is to discuss some of the key issues surrounding marketplace needs for Project Management services. One objective is to synthesize relevant themes about the Project Management market and trends in the existing body of academic work with trade literature, case history, and other sources of quantitative and descriptive data in a way that promotes discovery of best practices in order to create testable hypotheses that can be used to develop a go-to-market approach for a Project Management business.
Currently practiced in 161 countries, Project Management is a growing field. According to the Project Management Institute (PMI), the de-facto industry standards organization, at the end of January 2007 there were 212,622 certified Project Management Professionals around the world. Approximately 59% in North America. The number of certified Project Managers increased by 8.7% between January 2006 and January 2007 (PMI 2007).
“PMI professionals come from virtually every major industry including, aerospace, automotive, business management, construction, engineering, financial services, information technology, pharmaceuticals, healthcare, and telecommunications." (PMI 2007).
Despite the widespread growth of the profession, it has only relatively recently begun to attain occupational status in many industries. As a consequence, until the late 1990’s there has been little academic interest in the subject. In fact, the US Department of Labor does not yet classify Project Management as an occupation. (Bureau of Labor Statistics 2007). Since then, with few notable exceptions ( Thomas et al. 2000, 2002), there have been few studies that describe how and why consumers of these services purchase them.
Furthermore, partially as a result of the phenomenon of Globalization, the US Economy is expected to continue evolving from a goods-producing to a service economy through at least the next decade. (Bureau of Labor Statistics 2007). Core project management competencies[1] will play a greater role in business as the workforce continues to transform.
REFERENCES
Bureau of Labor Statistics (2005). Tomorrow's Jobs. US Department of Labor. December 20, 2005. Retrieved June 22, 2007 from http://www.bls.gov/oco/oco2003.htm
PMI (2007). Introduction to the Project Management Institute Overview. Retrieved July 7, 2007 from http://www.pmi.org/info/AP_IntroOverview.asp
Thomas, J., Delisle, C., Jugdev, K., et.al.(2000). Selling Project Management to Senior Executives: What's the Hook? Paper presented at Project Management Institute Research Conference, June 2000: Paris, France.
Thomas, J., Delisle, C.L., & Jugdev, K. (2002). Selling Project Management to Senior Executives: Framing the Moves that Matter. Newtown: Project Management Institute.
[1] Such as the ability to balance time, cost, and quality while managing sets of related tasks over finite duration.
Currently practiced in 161 countries, Project Management is a growing field. According to the Project Management Institute (PMI), the de-facto industry standards organization, at the end of January 2007 there were 212,622 certified Project Management Professionals around the world. Approximately 59% in North America. The number of certified Project Managers increased by 8.7% between January 2006 and January 2007 (PMI 2007).
“PMI professionals come from virtually every major industry including, aerospace, automotive, business management, construction, engineering, financial services, information technology, pharmaceuticals, healthcare, and telecommunications." (PMI 2007).
Despite the widespread growth of the profession, it has only relatively recently begun to attain occupational status in many industries. As a consequence, until the late 1990’s there has been little academic interest in the subject. In fact, the US Department of Labor does not yet classify Project Management as an occupation. (Bureau of Labor Statistics 2007). Since then, with few notable exceptions ( Thomas et al. 2000, 2002), there have been few studies that describe how and why consumers of these services purchase them.
Furthermore, partially as a result of the phenomenon of Globalization, the US Economy is expected to continue evolving from a goods-producing to a service economy through at least the next decade. (Bureau of Labor Statistics 2007). Core project management competencies[1] will play a greater role in business as the workforce continues to transform.
REFERENCES
Bureau of Labor Statistics (2005). Tomorrow's Jobs. US Department of Labor. December 20, 2005. Retrieved June 22, 2007 from http://www.bls.gov/oco/oco2003.htm
PMI (2007). Introduction to the Project Management Institute Overview. Retrieved July 7, 2007 from http://www.pmi.org/info/AP_IntroOverview.asp
Thomas, J., Delisle, C., Jugdev, K., et.al.(2000). Selling Project Management to Senior Executives: What's the Hook? Paper presented at Project Management Institute Research Conference, June 2000: Paris, France.
Thomas, J., Delisle, C.L., & Jugdev, K. (2002). Selling Project Management to Senior Executives: Framing the Moves that Matter. Newtown: Project Management Institute.
[1] Such as the ability to balance time, cost, and quality while managing sets of related tasks over finite duration.
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