Reflection on “Boosting the Bottom Line, By Swanson, August 2011”

The article “Boosting the Bottom Line” discussed another set of good practices when it comes to project management, taking into consideration the behavior of many organizations that are trying to remain profits through cutting underperforming projects. The article discussed the innovation projects which most of the time have more profits, but in the same time they carry more risk, and here comes the role of the project manager who should build a strong business case to convince decision-makers that the benefits outweigh the risks; however, project managers should keep in mind that top managers who force the creation of a business case before the real scope and level of effort are known end-up with misleading and meaningless numbers. When it comes to creating a business case, the project manager should make sure that business case Clear and Concise where the project scope plus approach should be in simple terms that are familiar to the audience. Additionally, it has to be Correct and Compelling by building it relying on facts and data, and that will make the ROI speak for itself.

It is also discussed that portfolio will not remain static, so it has to be modified when changes occur; sometimes organization stop some projects to focus on other projects that are more aligned with the organization strategy. After completing a project, project managers are reallocated to other projects and so, no one is left to be driving the benefits; the leadership team should continue to monitor results, including post-implementation because sometimes it takes long time to determine whether a project was profitable or not. Monitoring projects from concept to cash is not only a project management best practice, but also that establishes a culture of accountability within the organization.

The project management offices that had a big role in increasing profits stick to the following processes; Developing business cases to get project approval by including a benefits realization baseline. Making a stage-gate decision of how to proceed with a particular project. Tracking benefits after implementation, and reporting it to executives. Finally, Connecting bonus compensation to the realization of the project benefits.

Some of the lessons learned from this article are that in many situations project managers and financial managers view the world differently, where Project managers think of a project as a task with a start date and end date, while Financial departments tend to think of it as a cycle, with annual budgets and reporting. And that is why project managers should know how to speak the financial department’s language, and they must engage with financial staff to understand what information they need, and when they need it.

Connecting bonus compensation to the realization of the project benefits reminded me of a technique that my company uses in the marketing projects; making the sales staff involved in the collection process. What happens usually is that the sales people get their money based on the sales, and not the money collected, so even if the sales person knows that this customer has a bad reputation in paying back, or has a bad credit line, they don’t really care, because they still get their money, and the collection itself will be the company’s problem, not theirs. But when the company connects their commission to the money collected, they will do better job in finding the right customers and spending more time and effort going through their backgrounds, and in that way, the company connected their personal interest with the strategic goals of the firm, and that was very helpful as it minimized the gap between the sales and the cash flow.