Stronger project management can help drive manufacturing performance

As manufacturing organizations switch their focus from surviving to demonstrating business value, project governance and metrics will play an increasingly important role in keeping management informed about project performance and its impact on the bottom line and customer service.

By Joseph R. Czarnecki, PMP, Senior Advisor, ESI International February 18, 2010

According to Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, 2010 will be a recovery year for the US factory sector. Nonetheless, shaken consumer confidence coupled with high unemployment and excess capacity presents a tough set of challenges for the manufacturing industry. This sector will need to rely even more heavily on savvy project and program management skills to emerge unscathed.
As manufacturing organizations switch their focus from surviving to demonstrating business value, project governance and metrics will play an increasingly important role in keeping management informed about project performance and its impact on the bottom line and customer service. The themes of governance and metrics are reflected over and over again in the key project management trends for 2010 as determined by an international panel of experts convened by ESI International in November.

1. The Implementation of New PPM Solutions Will Soar
Program and project managers, under pressure from senior management to demonstrate project portfolio performance and its impact on the enterprise, will make the pitch for – and win – resources to implement project portfolio management solutions. This will provide the fact-based decision-making senior management needs to demonstrate an impact on the bottom lines: financials and production. Leadership skills within the manufacturing industry will be increasingly important to further these goals.
2. Reliance on Requirements Metrics to Measure Performance Will Increase

As we head into 2010, manufacturers will rely more heavily on requirements management and development, also known as business analysis, to assess performance. Reliance on RMD to determine metrics to track project performance will increase in 2010, helping to quantify organizational performance improvement for management. This will lead to increased factory efficiency, meeting production goals, cycle times, and decreased equipment down time for repairs.
3. Senior Executives Will Embrace the Value of Project and Program Governance
Across all forms of the manufacturing business, project and program governance will prove to be a vital aspect of running a smooth operation. To facilitate improved organizational performance, project and program governance will be embraced from executive management to the project managers. This will help performance by ensuring the portfolio, programs and projects align with organizational resources and goals across the enterprise. In order to improve integration between process updates, retooling and equipment maintenance, manufacturers will look at their entire organization as one portfolio versus a multitude of projects.
4. Vendor Management and Program Outsourcing Will Move Front and Center
The trend of outsourcing will leap forward in 2010 as organizations continue to look to do more without permanent increases in staffing and other resources. Raw material management will take on even more importance. Whether it is outsourcing the production of sugar beets and sugar cane for food production or steel and aluminum for the automotive industry, proper vendor management will be key to the organization’s continued success. Thought leading organizations will use project management principles to guide their contracting and outsourcing processes, leveraging project managers’ skills and knowledge in schedule, risk, requirements and quality management to remove gray areas and hold the vendor’s "feet to the fire."
5. PMOs Will Go to the Next Level with BA Centers of Excellence
During the previous decade we saw the number of PMOs and their positive business impact increase significantly.
PMOs will use this position of strength as a jumping off point to establish business analysis centers of excellence (BA-COE) either within the PMO or alongside it to further improve project outcomes. We have seen those enterprises with BA-COEs in place decrease the time search for just the right new products. With the help of these centers, they will be better positioned to determine new product lines and areas for improvement. Business analysis enables companies to determine product improvement more quickly and efficiently.
6. Demand for Agile Project Metrics Will Increase
The ability to quickly change in new environments will increase the speed of production. Due to the government bail-out of the automotive industry, for example, new regulations had a great impact on the industry’s ability to perform. Agile project management allows manufacturers to deftly incorporate those new requirements without significant production loss. With this increased use of Agile project management approaches, senior management will demand quality metrics that clearly demonstrate the value of Agile over other PM approaches for specific projects as well as Agile’s impact on the achievement of organizational objectives.
7. Risk Management Will Become a PM Obsession
The greater emphasis on financial risk management will trickle through to other parts of the manufacturing enterprise where risk assessment principles can be used to drive performance. This will lead to an increased focus on PM risk assessment with an emphasis at the program as well as the portfolio level. Manufacturers will seek a clear delineation between systemic and non-systemic risks; the determination and management of risk factors that could jeopardize success; and dependencies between program and portfolio components.
8. Crisis Environments Will Leverage Project Portfolio Principles for Better Outcomes
Whether it’s a new business in Baghdad, rapid flu vaccine development or repairs to a sugar cane processing plant in Haiti, proper logistical processes need to be in place to drive project success and ensure performance meets expectations. War zones, global pandemics and natural disasters will continue to present hard challenges for manufacturers as they pursue new opportunities presented by unexpected change. To help them select the right projects to achieve the desired outcomes manufactures will increase their reliance on project portfolio management principles. PPM will also be counted on to help manufacturers effectively measure and communicate progress to shareholders and other constituents.
9. PM Learning Measurement Will No Longer be a "Nice to Have"
Smart companies know that training alone will not solve their issues. Increasingly, companies have learned to identify their starting point to measure overall learning improvement. In 2009, many manufacturers implemented first-time learning initiatives focused on project management maturity as a way to jump ahead of the competition. These forward-looking organizations required programs be based on insightful pre-assessments that drove the design of learning programs, along with ways to assess progress and demonstrate performance improvement. 2010 will see an unprecedented increase in manufacturing companies using assessments to pinpoint their PM learning needs, track progress and identify the ROI senior management is looking for in this critical investment.
10. PM Learning Will Push out of the Classroom
To improve PM learning retention rates, and keep employees on-the-job as they learn, organizations will seek to leverage recent technological advances that help adults learn outside of the traditional classroom. This will be achieved via a range of learning modalities such as "burst" learning that focuses on a particular skill area for two to four hours, on-demand reference tools, electronic performance systems, job-aids and increases in formal coaching.
Wise senior managers will continue to invest in increasing their organization’s PM skills and capacity. They will want to ensure success of projects essential to manufacturing great products, improving customer satisfaction and driving revenue and profit growth to enjoy the full benefits of this year’s recovery.

Joseph R. Czarnecki, PMP, Senior Advisor, ESI International, works with regional and global clients to help ESI client’s maximize their investments in improving the performance of project management and business analyst professionals and operations. Joe has been with ESI for over a decade and during that time has played a key role in the development and refinement of a majority of ESI’s courses as well as developed several highly tailored project management course suites for ESI’s global clients. For more information visit