Back from Munich

Today I will not speak about project management and I insert a parenthesis about my participation to a study tour to Munich, included in the activities of my MBA at MIB School of Management. Next time I will go back to project management talking about the first knowledge area, integration.

From 1st May to 4th May I had the opportunity to visit Munich and some of its well-known companies.

The tour started on 2nd May with Siemens in the morning and BMW in the afternoon. On 3rd May we had a full day with Allianz and we concluded our tour on 4th May at the airport, with some managers of Munich airport (MUC) and Lufthansa.

Hereafter I will provide a brief overview of the lectures I attended at Siemens and at Munich airport.

Since the foundation in 1847, Siemens was associated with innovation and internationality: the first invention was the electric telegraph, which helped the company to expand immediately to two big powers of that age, Russia and Great Britain, interested in this important invention. The Indo-European telegraph, built in 1868 from London to Calcutta, was the first big endeavour (a nice description of this project is provided at this link).

Today Siemens has more than 360,000 employees in 190 countries (68% outside Germany) and sales of 73.5 billion € (85% outside Germany). Last year 3.93 billion € were invested in R&D.

Astonishing but true, our lecture said that Siemens does not want to influence the market and create new demand as Apple successfully has done in the last years. Its mission is to satisfy with innovation the existing demand, answering and anticipating the needs of the customers of its customers (an example is the totally integrated software for BMW automation).

Four divisions - energy, healthcare, industry and infrastructures - are Siemens answer to four main global trends: urbanization, demographic change in developed countries (with need of new solutions for elder people), climate change (new solutions for energy efficiency) and globalization.

The lecture also highlighted Siemens environmental concern: a central environmental department, opened several decades ago, has defined the corporate environmental constraints for the recycling of all the products well before the enforcement of any European directives. In Siemens engineers have in fact to take in account the environmental aspects since the first phases of the design.

Another important aspect where Siemens is well positioned is intellectual property. In a business world where patent prices are growing and patent wars are common, Siemens is ranked third in Germany for number of patents hold.

At Munich airport (MUC), a manager presented the history, the achievements and the targets of Flughafen Munchen Gmbh (FMG). 

This company was founded in 1949 and has three shareholders: 51% is held by the Land of Bavaria, the other shares come from the Federal government (26%) and the city of Munich (23%).

In 1992 the airport was moved from the eastern part of Munich to the current location, changing its objective from a city airport to an international airport.

In 2011 MUC had 37.8 million passengers, ranking number 6 in Europe, only behind London, Paris, Frankfurt, Amsterdam and Madrid and ahead of Rome Fiumicino. The number of passengers tripled in only 20 years. In few words, this airport is an example of what Malpensa could have become; unfortunately, Malpensa was clearly not able to achieve the same results.

The new airport of Berlin is not deemed as a competitor because the capacity of this new airport is limited at 25 million passengers and the catchment area of Munich is much bigger thanks also to the presence of the headquarters of many multinational companies.

The current strategy of Flughafen Munchen Gmbh (FMG) is to be the most attractive, efficient and sustainable hub airport. Depending on the results of a referendum, it plans to build a third runaway and to increase even more its passengers. The company introduced the so-called 4 x 4 target: 44 milion passengers, 444,000 tons cargo movements, a cut of 44 tons of CO2 and 44% EBITDA. 

I liked very much this lecture because I understood as an airport pursues a diversification of its revenues looking not only at air-related activities. In order to be less dependant on the decisions of the airlines and the demand of air transportation, through the years MUC in fact introduced also cargo facilities and several non-air activities such as hotels, multi-functional and service centers.

They have forced the retailers located inside the airport to have the same prices of downtown Munich and have encouraged the people of the surrounding towns to shop in the airport. They also organized beach volley or surfing contests. The airport company opened the VIP wing, once thought only for presidents and diplomats, to all the people that  look for a rest in a luxurious place at around 290€ + VAT. 

FMG wants to position the airport as a gateway for the Arab world. They therefore offer many services specifically targeting the Muslim passengers such Arab-speaking personnel and prayer rooms.

Common processes for every industry

Become a project manager in a biomedical company without being a chemist or a biomedical engineer is very difficult, unless you attend a specific master or a period of training. A deep knowledge of the industry is in fact essential to manage a project. 

However, projects, as defined in a previous post, are activities performed in every industry. So, some processes used by an IT project manager may be very similar to those used by a project manager in the construction sector. These processes are peculiar of the project management and can be abstracted from the specific product or service. 

The project management processes surely need to be tailored to the context in which they are applied, so, for example, quality management may require more time than a risk analysis. Moreover, the organization design widely affect how the project is carried out.

According to my Oxford dictionary, a process is "a series of things that are done in order to achieve a particular result". A process can be the cost definition or the team management. Processes can be sequential (outputs of a process becomes the inputs of the next one), overlapping (e.g. a quality plan may affect the cost definition) or iterative (monitoring activities are repeated many times through the project).

PMBOK® Guide maps the processes in two ways: process groups and knowledge areas. 

There are five different process groups: initiating, planning, executing, monitoring and controlling, and closing. It's important to say that these processes are NOT the phases of the project lifecycle, as the processes may be repeated in different phases.

According to PMBOK® Guide, the same processes can be grouped in nine knowledge areas, which an effective project manager should master. PRINCE2® is instead built around seven themes, quite similar to those defined in PMBOK® Guide

The below table shows a comparison between the two different approaches. My aim for the next months is to go through these knowledge areas.

Project Manager and Organization Design

After Easter holidays, I would like to touch an argument that a good project manager should understand: organization design. To be sincere, I've just concluded a course of Organization Design for my MBA, so I will recall some topics covered during that course (and I hope that the professor will forgive me if I sum up some points too quickly).

McKinsey 7S Framework

The McKinsey 7S framework is a well-known model to describe the internal characteristics of an organization. Moreover, in some ways, it could be also applied to a project. It's subdivided in two parts: Strategy, Structure and Systems are the hard elements and form the so-called "cold triangle", while Style, Staff, Skills and Shared values are the soft elements and form the "warm square".

Some of these elements, such as the strategy, may be known only by the CEO or the top management but some others can be easily understood by the project manager. A clear knowledge of the culture, the corporate values, the systems and the structure help a project manager to understand how to operate inside the company and to bring this knowledge to her/his advantage for the success of the project.

The structure defines, in particular, the role of a project manager and the available resources. Typical organization structures are: functional, divisional, matrix (a combination of the previous ones) and project-based.

In a functional structure, a vertical hierarchy is dominant with the aim to improve the efficiency and the control over the organization. The drawbacks are a management overloaded with routine tasks and a lack of coordination between the different functions.

In this structure, the role of the project manager is very poor or even this job title doesn't exist.

As the organization structure moves from functional to divisional to matrix and, eventually, to project-based, the hierarchy becomes flatter and flatter, the focus is on the learning outcomes more than the efficiency and there are more cross-functional and transnational teams. The drawbacks can be the lack of clear responsibilities in terms of costs and tasks.

The role of the project manager in these structures is essential to guarantee the operation of the company without wasting time and to reduce possible conflicts that can arise from cross-responsibilities. In these cases, the budget and the resources are directly controlled by the project manager.

Rules, procedures, communication requirements or incentives naturally follow the organization structure and should be clearly in the project manager's mind in order to successfully tackle the project.

Project Lifecycle - Part 2

The first post about the project lifecyle said that each phase is different from the others in terms of scope, costs and time spent. The below figure sums up these differences in accordance with the PMBOK GUIDE®.

Cost and staffing level (orange line), stakeholder influence, risk and uncertainty (red line), and cost of changes (green line) during a project lifecycle. Picture taken from this website.

During the first two phases (initiation and planning), time and costs are relatively low: only the project manager or a small part of the project team is in fact involved. It's a newborn project, so almost everything can be easily changed: team composition, schedule, resource allocation, etc. Stakeholders, including customers and suppliers can significantly influence the direction that the project will take. This variability makes uncertainty high: execution and success of the project are still unpredictable.

The initiation and planning are anyway crucial phases to lay the foundations for a successful project: a good team and a careful planning save a lot of money in the following stages.

The execution phase requires the participation of the whole team and, consequently, cost of execution and time spent reach the peak of the entire project. As things moves from paper to reality, the cost of changes increases and the stakeholders' influence diminish: modify a drawing, fix a component or change some features of a service can be very expensive.

The closure is a stage of formal validation of the project: the new product or service is now available, so changes are not possible and the customer can only accept or reject the deliverables. To avoid surprises, if the project is divisible, the execution phase is broken down in some milestones, which require a formal acceptance of the customer. Durng the closure, most of the resources are already consumed and, once the project is accepted, they are released back to the organization.

P.S. My weekly commitment to deliver a post was slightly obstacled by this early spring that, due my allergy, brought me difficulty to sleep and bad cold. Please forgive me for the small delay!

Project Lifecycle

As mentioned in a previous post, a project must have a defined time limit, with a beginning and an end. Although using different names, both PRINCE2® and PMBOK GUIDE® divide a project lifetime in four phases or stages that can be called: initiation, planning, execution and monitoring, and closure. These phases are very different in terms of scope, costs and time spent.

Project Lifecycle

Picture taken from http://www.method123.com/project-lifecycle.php

In the initiation, the goals of the project and the main constraints are defined and the project manager is appointed.

In the planning phase, the project manager performs all the activities that are necessary to accurately prepare the execution: among other things, she/he defines the project schedule (using Gantt chart), breaks down the project in many different tasks, allocates the resources available and analyzes the possible risks.

In the execution, the project goes into action and the planned activities are performed. The project manager should continuously control and monitor the status of the activities and takes appropriate actions against deviations from what was planned. This phase can be split up in intermediate steps, usually called milestones, that generally require the production of a deliverable or a status report written by the project manager.

The closure certifies that the goals agreed during the initiation are met and the project is concluded with the release of the resources back to the organization.

In my opinion, the initiation and the closure are the formal, yet necessary, phases of a project, oriented towards the stakeholders of the project, because the project manager is always accountable to somebody. The planning and the execution are instead part of the true project, where the project manager should show her/his technical and managerial skills.

Job titles

A job title is usually composed by one or few words that should clearly sum up a position. The job description then provides the details about the specific tasks and responsabilities that are required for that position.

In my opinion (at least from my professional experience), there is a weird proliferation of job titles in Italy. First of all, Italian is usually used less and less: the job title in English is much cooler. Then, everybody is becoming a leader or a manager of something, because Italians are a bit vain and like honorifcs to feel more powerful. Some job titles however are sometimes very ridiculous.

Even in project management, I think there is a bit of confusion in using the terms "project manager", "product manager" or "program manager".

The meaning of these titles changes from company to company, too. For example, in my previous job, there was no project managers but project leaders for technical features and program managers for managerial features.

Hereafter I give a classical definition in order to clarify what "Project Manager" means.

"Project manager" is the person in charge of the project and, by means of the available resources, she/he is responsible to achieve the project goals in the defined timeframe. In this case, resources mean both people and money (there is always a constraint in terms of costs!).

The project manager is at the same time a technician, because she/he has to know deeply the technical aspects of the project, and a manager, a person that defines the objectives, plans the allocation of the resources and leads a team of people in order to obtain the desired results.

"Program manager" is at a higher layer in the organizational hierarchy: she/he is responsible for several projects grouped in a program. Whilst the project manager focuses on the objectives of a specific project, the program manager should have a broader vision, in order to implement the strategic goals of the organization.

Depending on the size of the organization, the hierarchy may include also a "portfolio manager", responsible for many programs. In my short professional experience, I didn't notice this specific position: the chief of the business unit or division was also the responsible for all the programs.

In R&D and engineering world I was used, product manager is a quite unusual job title but in industries dealing with consumer goods, this position is fundamental. "Product manager" is the responsible of a specific product through its entire lifetime. She/he leads a cross-functional team that manages the development and marketing of the product.

Some definitions

To start this adventure in the world of Project Management, I believe it's necessary to give some definitions, even if on the web it's easy to find plenty of definitions, introductions and guidelines on this subject. So, the added value of this post may be not so significant but I will try to be a bit original.

In my Oxford dictionary, project is "a planned piece of work that is designed to find information about something, to produce something new, or to improve something".

I think this general definition gives already some important clues: project is something planned and designed, a work that needs a careful preparation in order to achieve the desired results.

To do so, a clear and specific goal should be set.

According to this definition, the objective of a project is to improve something or to obtain something new, so a project deals with words such as creation, innovation, engineering, optimization.

Going more technical, PMI (Project Management Institute) defines a project as "a temporary endeavor undertaken to create a unique product, service or result".

"Temporary" means that a time frame should be defined with starting (kick-off), intermediate (milestones) and ending points. The adjective "temporary" also distinguishes the project from ordinary production or operation, ongoing and repeated activities already part of a company's know-how.

[Contract jobs driven by a project are in fact defined by a limited timeframe, even if in Italy companies tend to abuse these forms of contract (the so-called "co.co.pro.") to overcome the rigidity of our labour market. This is however another story.]

The non-repetition of a project is linked with another adjective mentioned in the PMI definition: "unique". Each project is unique, always different from previous and future projects in a such a way that it can't be repeated.

Project management is therefore a discipline that manages project, that means it takes care of planning, organization and control of a project.