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Thought Thursdays

 Business insight is essential in pre-planning of capital projects

2012-10-09 00:00
By Gerhard Cloete, Media Communication Consultant for USB-ED
The lack of sufficient business and ‘demand’ management involvement in the pre-planning of capital projects is one of the main reasons why the service delivery of local authorities in South Africa remains problematic. Many projects are simply approved without sufficient pre-planning.

Inadequate business management involvement in the pre-planning of capital projects is however as much of a  problem in the private sector as it is in the public sector, and can put the profitability of companies in jeopardy.

A solution for this is the improvement of insight and understanding among the business people involved, those making the business-related decisions regarding a project, and the project team responsible for the execution thereof. Business management acumen has to be harnessed in such a way as to enable the project team’s optimal realisation of its critical goals pertaining to costs, schedules and the operability of a project. This applies equally to the private and public sectors.

In the public sector, where the ‘business’ is service delivery, slow progress with capital projects is responsible for major frustration among consumers. This is obvious judging by the large number of protest marches currently held.

A recent report to parliament stated categorically that service delivery by the public sector is fundamentally handicapped by a shortage of planners and engineers with the ability to prepare suitable concept specifications and tenders for projects, as well as by poor capital expenditure planning and poorly managed procurement channel processes. Then there is also political interference and a shortage of management capacity.  

It is against this backdrop that the Centre for Project Management Intelligence at USB Executive Development (USB-ED) has launched the Business Management of Projects programme on 19 September 2012 at The Campus in Bryanston.  USB-ED is the public executive development company within the University of Stellenbosch Business School (USB).

The programme is aimed at decision-makers in the public sector and business managers in the private sector, as well as project managers of specifically capital projects to address the problems mentioned above. Furthermore, the programme is not only aimed at South Africa and its neighbouring countries, but also the greater African continent, particularly Africa south of the Sahara.  

In order to provide direction and momentum to the Business Management of Projects programme, the former managing director of Sasol Technology, Willem Louw, recently joined the Centre as an associate. Louw says the right questions are usually not asked by decision-makers early enough to prevent poor decisions. Business people involved in projects also do not always have enough insight into their particular accountability for the success of the project. This often results in conflict with the project management team.

“It has become exceedingly necessary that the project decision-makers and the business management component of large capital projects are brought together for their optimised involvement and input, specifically during the pre-authorisation phase of a project. This is what we plan to emphasise in the programme,” Louw says.

“The focus will however not fall on business alone. We also want to involve project managers in the process. On the one hand, we want to point out to business people what the project manager’s role in the pre-planning phase should be, and, on the other hand, we want to give project managers insight into the important aspects of projects from a business perspective,”

He referred to the concept of ‘front-end loading’, which is terminology widely used in the project management industry to refer to the upfront phase of a project from the formation of the project team to the awarding of funds for the execution of the project. In the public sector this is called ‘demand management’. 

Should this aspect not be managed correctly with business input, the chances are good that the project will not succeed. This usually leads to continuous crisis management during the execution of a project. The necessity for the improvement of this upfront phase applies across all industries and sectors. 

The executive head of the Centre for Project Management Intelligence MC Botha said there is major under-spending of budgets for capital projects and non-achievement of service delivery goals in the public sector. This can be attributed to the large-scale absence of planning prior to the sanction of projects.

Michael McFadden, responsible for research and product development at the internationally renowned project management consultancy Independent Project Analysis (IPA), said as guest speaker at the launch of the programme that businesses sometimes get the projects they deserve.

“Business managers are the people who control and govern projects and the systems around them – which can have a profound influence on how projects turn out. The problem is they do not always realise that and need a better understanding of how projects work. If not, they can harm shareholders’ wealth,” McFadden said.     

For more information about this new programme, contact MC Botha at MC.Botha@usb-ed.com or Willem Louw at Willem.Louw@usb-ed.com.
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Project Management