Last week we wrote about the different project types (external, internal & NPD) and the key differences including the key success criteria for each one of them. However more often than not, these projects of different types are linked to each other in a chain like manner to such an extent that success of each project in the chain depends upon the success of the rest of the projects & therefore managing the success of the chain becomes critical which includes projects & links (read relationships, objectives & mindset).
For example, a global automotive company wants to launch a new passenger car. So it kicks of a NPD Project. Now it outsource different component design & mfg to its suppliers and so for their suppliers, it becomes a External or Revenue Project. At the same time it kicks of a Internal project for implementing a dealer network management software.
Now o
ne NPD project can kick off multiple external & internal projects & the chain can become even longer with each supplier further kicking of further external (further outsource), internal & NPD projects & so on. This example is specific to automotive but the concept is applicable in any other industry as well.
The picture below depicts this scenario:
Now look at the big picture, the very purpose for which all these projects have been kicked off is the design, develop, launch and sell the passenger vehicle. The success criteria of the big project is to maximise the revenue (by selling the new vehicle) in the 3-5 years from the launch. The NPD project has been started off with the initial set of requirements and will change the requirements as the market conditions change. This is the key project of the Global Automotive Company & its fortunes are linked to it. The risks are high & so are the rewards.
Lets now focus on the 2nd line of projects which are external outsourced projects to suppliers. They have agreed to a price based on the project requirements at that time & any foreseeable expected changes. Their success criteria is the profitability of the project along with customer satisfaction on a sustainable basis. They expect the project to finish within a timeline and with minimal or no changes within the agreed price & payment terms (cash flow). They probably work with other customers as well to grow their business and mitigate their risks.
The internal project for a software implementation has a different objective & a different. The software will be implemented for long term basis and not necessary for a specific NPD project. \Again they are dependent upon the software vendor and implementation services provider for whom the project success criteria is profitability & the customer satisfaction on a sustainable basis.
Its obvious from the above that for NPD project (Passenger Vehicle) to be a success, all the projects down the chain should perform at optimum levels but its not so obvious that the failure of NPD project can also fail the other projects in the chain even though each one of them have done fantastic work in their own project. We have seen examples of this when a automotive company failure leads to problem for otherwise excellent supplier network, when a failure of silicon valley startup can land its outsourcing partners in trouble etc. The recent example of city of Detroit filing for bankruptcy is a related example.
Having made the point that success of each project in the link is dependent upon the success of all other projects, it is therefore collective responsibility of all project managers or the organizations in the chain to keep working towards building a strong healthy chain and leverage the strengths of each link. Its easier said than done. It requires certain maturity & wisdom of first visualizing the project chain & then the different objectives, people, mindset, commercial aspects and thought process at each link. And then using the right rational to make right decisions keeping the project chain in mind. Successful companies are those who have gone ahead & build the great project management chains and then sustained them for their own growth & profitability.
