Episode 465: Projects as Profit Centers - Part 1 (Free)
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The world of project management is undergoing a fundamental change -- a collaborative revolution: Projects that would have been done internally in the past are more and more given to external contractors, who in turn may use subcontractors and sub-subcontractors, building complex project supply networks (PSNs).
This cross-corporate way of doing projects is the market for professionals in project business.
Based on specific expertise and assets, they have the intention to serve their project customers, make them happy, but also need to be profitable and consider cash-flow. Project business is high-risk business for all parties involved.
Our guest today is Oliver F. Lehmann to give us his insights into the specific challenges of doing Project Business and provides an example for methods managing it like Benefit Engineering
Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: In this episode of The Project Management Podcast™, we explore the Part 1 of how to run projects as profit centers.
Hello, and welcome back to The Project Management Podcast™ at www.pm-podcast.com. This is the live stream for Episode 465, and I’m Cornelius Fichtner. How nice of you for being here with us today for this live episode.
And for those of you who are accessing this episode recorded and not live, please remember that this is a video episode. So, if you are only getting audio then please look for the “Play video episode” link in your Podcast app or visit www.pm-pocast.com/465 where you can stream the video.
And now for today, you are in for a treat because the world of project management is undergoing a fundamental change, a collaborative revolution, if you like. Projects that would have been done internally in the past are more and more given to external contractors who in turn may use subcontractors and sub subcontractors building complex project supply networks, PSNs. This cross-corporate wave doing projects is the market for professionals in project business. Based on specific expertise and assets, they have the intention to serve their project customers, make them happy but also need to profitable and consider cash flow. Project business is high-risk business for all parties involved.
And our guest today is Oliver Lehmann to give us his insights into the specific challenges of doing project business and provides an example for methods in which we manage it like benefits engineering.
Cornelius Fichtner: Hello, Oliver!
Oliver Lehmann: Hello!
Cornelius Fichtner: And welcome back to The Project Management Podcast™!
Oliver Lehmann: Hi, Cornelius! Great to be here!
Cornelius Fichtner: Yes. So, for those of you who don’t know Oliver, he is a project management practitioner and trainer from Munich, Bavaria, Germany and after 13 years of doing project management and also project business management with the focus on the automotive industry, he started his own business as a trainer in 1995. And today, he helps corporations to be more successful in project business, high-risk business for both customers and project managers.
Since 2002, he has volunteered for PMI, Project Management Institute and since 2019, he is in fact the President of the Project Business Foundation and you can find the Project Business Foundation at www.projectbusiness.org.
Oliver, tell me, how did this presentation before we get going, how did this presentation about projects as profit centers actually start?
Oliver Lehmann: That’s a good point! We have a shortage in project management on materials and understanding of projects when they are profit centers. And that’s not a rare thing. That’s a very common thing. You’ll have one organization acting as a contractor for another organization and this was the starting point also of the Project Business Foundation when we found out, when we saw, it means me and some friends and enthusiasts in the field. We found out somehow this is missing in the entire project management discipline to talk about those project managers, those organizations that are doing projects for strategic goals and big new product and service developments and so on. They bring money on with these projects. They are contractors. And this is how it started.
What does it really mean to work for such an organization? If you do that, what are the changes for you? What are the things that you need to do differently, the skills that you need in this business which are really different from the skills in internal projects and that’s how we started the whole thing. By the way, I have a second slide dissected, we aren’t going to show it today. We have a slide set, where we talk about the customer side. Because a lot of things change on the customer side as well when you do projects, work with internal people, but then you buy them from outside. But our focus today is the contractor side.
Cornelius Fichtner: Alright! Thank you very much and right now, we are going to go and continue. I will bring up Oliver’s presentation in just a moment. But for those of you who are joining us live here today, please, if you have any questions, there is a chat function both in Facebook and YouTube, please make use of it and I will interrupt, Oliver. He said: “Yes, please do interrupt me. Make it more lively and I’m now handing things over to you, Oliver.
Oliver Lehmann: That’s a secret.
Cornelius Fichtner: Thank you! Thank you very much for being here with us today. Let me remove the logo here. So well, so that it not so dominant there at the top. There we go! Oliver, thank you for joining us today. It’s your show.
Oliver Lehmann: Thank you very much. Well my logo is the dominant one. So it's about projects as profit centers. What is different for a project manager when projects are done for paying customer? It really changes a lot in the industry. Here again, some things about me. We don't want to spend too much time here, but I hold a Master of Science in Project Management. I’m PMP, of course I've been PMP certified for more than 20 years now. I've been a volunteer active member at PMI, Project Management Institute for again over 20 years now. And I'm actually, I'm at a time now being active at the Project Business Foundation, but I'm still also in PMI. I do some volunteering for PMI in their educational field, but my real focus is now the Project Business Foundation, where we talk about different things in project management, things that should be discussed far more often here.
A bit about my publications. I have two books and one obviously is about Project Business Management. I think it's the first book that really looks at that as a business from both sides, looks what we can do better to have better projects when the project is cross-functional, when you are not doing the project inside one organization, but you break through the walls of an organization and bring other organizations in contractors, subcontractors, and so on, this changes a lot. And I have over 30 papers on the topic. So really a lot of stuff out there on the topic, but mostly on the topic of project business management.
This is the content for today for me, it's evening, for you, depending on where you are in the world, it may be morning. We do the walk from internal projects to customer-facing projects. Try to understand what is the main point of concern in internal projects. And how does this change when you go to customer-facing projects. By the way, customer-facing project is the same here as customer project. Meanwhile, I really prefer customer project. It's not just with faces to it. It's not the direction of the face. It is a different kind of project that we do here. But what are the challenges in this specific kind of project? And we'll give you one solution for these challenges. Something that can be very helpful, that can be very, very strong. We will talk about benefits engineering topic, a method that can help your project out of crisis where necessary. And I have, of course I'm happy to answer your questions. Yeah.
So the first thing is from internal projects to customer-facing projects. And I'd like to introduce you to Clara Loft. Clara Loft, a project manager, obviously, and a pretty normal project manager, I would normally say. But hey, she knows the value of her work. This is something that doesn't go without saying, this is something special for many project managers. Many of them do not know the value of their work and their organizations don't either. So she knows what her job is worth. And she is very, very good in internal projects. That's what she learned and what she is very good in, implementing strategic initiatives, sorry. I had a long training day behind me already. Strategic initiatives is one thing that she does and change to the organization. New products, new services. She builds teams across the organization, and she delivers on time. Hey, that's a great thing. Her home world so far is the world of the internal project --- the cross-functional project. Let's understand what this means.
To understand what it means and what the main challenges in internal projects, we have to look at something which is called the matrix. It's described in the PMBOK® Guide, by the way. Yeah, but we are missing a bit the elaboration on that because it's a big topic when you are in internal projects. So let's have a brief look into that what it means.
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