Archive for July 22nd, 2008

According to the Business Change Forum “Investment analysis and capital development” is one of the top 10 problems of 20^th century management . This includes the problems with project management structures and systems.

Project management structures concentrate on managing activities and performance

Project management has always attempted to manage people, tasks, and activities. This is the cost side of the project. However, even with the attention to the cost side, there is no good method to manage costs. The benefit side is not managed.

The problems arise in investment analysis and capital development from three main sources:

1. Failure to plan and manage the economic outputs or results to be produced by utilizing the developed capital to set up value creation
2. Failure to define the capital being developed as specific solutions to be utilized in performance to produce economic outputs or results, to capture the cost of development, to set up specific capabilities to support and manage utilization of capital in operation, and to capture the cost of capital consumption in operations
3. Failure to organize and manage capital development projects as a business to utilize assigned capital in performance to produce project results as a sub-business of an enterprise result in progress like “implemented capital solution” or “development project in progress”

The failure to define results and performance solutions affects both the external management of the capital being developed by the project and the internal project management of performance solutions utilized to produce project results.

Project management problems arise because we do not organize and manage the business

These problems arise because we do not organize and manage the business. The precise definition of the enterprise business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. If we are going to plan, organize, or develop a business, including a project, we must plan, organize, and develop the three components of the business:

• Results: Specific economic outputs of value and quality produced at any level from business performance
• Capital: Specific invested capital available as solutions to be utilized in business performance
• Performance: Utilization of a specific solutions of worth to incur costs to produce specific results

20^th century capital development and project management structures manage the project to develop capital as tangible assets or a completed project, but do not manage the new results to be produced and the specific capital solutions needed to produce the results.< [more...]