GM’s portfolio of projects with project type matrix and project life cycles
Project portfolio is also referred to as the company’s aggregate project plan. Its primary purpose is to define whether the organization succeeds in managing all the projects it has. It is made to see whether the company is good at achieving it long-term objectives. The reason for developing it is that the organization usually has way too many projects because it focuses on the financial attributes of them, not their contribution to the set goals. The point here is to define the appropriate order in which to conduct operations so that both financial and strategic objectives of the company are achieved. What should be taken into consideration is the project type and project life cycle.
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There are few types of projects included in project portfolio: derivative aimed at improving output and performance; breakthrough for developing new kinds of processes based on the newest technologies; platform close to breakthrough, however, they depend on the existing technologies; and R&D designed for developing new knowledge (Meredith & Shafer, 2013). They are often used to create project matrixes. What is special about this type of project management is that every project is carried out by the team formed specifically for it of the people from different functional departments. So, it is a perfect way for improving operational performance.
As of the project life cycle, there are two forms of it: one that can be named S-shaped and the exponential form. What should first be said is that there are three stages of conducting the project: initiation, implementation, and termination, and it the distinction between them that is significant in determining the form of the project life cycle. In the case of S-shaped, project, almost all activities are done during the implementation phase, unlike the exponential one in which 90 percent is done in the last phase (Meredith & Shafer, 2013).
The criterion for the division is the budget and the availability of funding. If it is constant throughout the whole project, then S-shaped is the best option. If there is no guarantee for sufficient investment, everything is prepared first, and then most operations are done near to its completion.
Speaking of General Motors, the company’s operational objective is improving performance and the level of customers’ satisfaction. The primary way of achieving it is through using the newest technologies in the manufacturing process. That is why the company has all the projects mentioned above: derivative, breakthrough, platform, and R&D. The major type nowadays is derivative with the breakthrough aspect because the focus is made on improving performance and increasing output by using the newest technologies. In addition to that, GM often forms teams for these project of people coming from different departments and even geographical regions (Hall, 2013).
It means that the project matrix is strong. As of the projects life cycle, GM is the company with vast resources, that is why it can afford to finance the projects throughout the whole process, and usually does it. That means that S-shaped form of projects is more frequent.
GM’s use of project management and scheduling tools
Scheduling and planning crucial in projects success. They are about defining primary activities for the project, drawing the estimated deadlines for carrying them out, and particular order that will guarantee productive project completion.
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It has been said that General Motors focuses on IT projects aimed at improving performance. First of all, GM focuses on the productive system of project management. The company makes sure that its project managers are trained according to its global standards and are highly skilled. Moreover, special attention is paid the leadership features of the managers, so that they are able to coordinate the process and teach the employees if needed (Iamratanakul, 2013). However, the company has faced a challenge of quantity over quality because it focuses on the speed of finishing tasks, not on the essence of the progress (McKie, 2014). It means that planning and scheduling are successful, but the control tools are not always effective.
Ways to better GM projects management with Goldratt’s critical chain
Goldratt’s critical chain is the approach based on his theory of constraints but in the field of projects management. The specificity of this concept is that there is the exact list of phenomena that might preclude from completing project or finishing activities prior dates set in the schedule. They are activity time variability with path interdependencies, inflated activity time estimates, and resource dependence (Meredith & Shafer, 2013).
The primary potential reason of the activity time variability is that there are many projects conducted at once, so, sometimes there is no enough time to carry out all activities. In the case of inflated time estimates, it derives from the illusion that there is always plenty of time to deadline, that is why there are often delays in starting activities that result in the delay in their completion. Finally, projects may require additional or scarce resources that are not always available that leads to the phenomenon called resource dependence.
Goldratt recommends drawing the maximum deadlines and volume of resources (safety buffers) so that there is a small probability of preclusions to achieve the objective of project activities. The approach is named critical chain because it suggests that these safety buffers should be used for sequential activities that can potentially be not completed. They make up a chain, and it is the longest one that can lead to project failure.
Bearing in mind that GM often forms teams of people coming from different countries and with different backgrounds, the possible safety buffer for the company is considering the option of having people with the same backgrounds or drawing up maximum deadlines because these people might be involved in different projects at different places. These steps could lead to minimizing the probability of activity time variability with path interdependencies and inflated activity time estimates
The ways GM controls projects and the use of the earned-value approach to projects control improvement and project success
The earned-value approach is one of the most effective tools for controlling projects. It suggests that there should be cost standards developed on the basis of past performance and estimates for every activity – target costs of the project. The project team prepares reports on actual costs, and the company’s cost-accounting system analyzes it comparing with the standard. If the variance between the two is significant, the manager can take control measures. This approach can help significantly improve the organization’s operational performance because the project is constantly controlled. It should be noted that only variances that are considered unfavorable, i.e. excess spending, are corrected.
The earned-value approach has been historically used by GM since the beginning of its activities. At first, the company used what is known as flexible budgets (Leonard, 2009), but then moved to program evaluation and review technique. It means that the company exploits the method described above to control its projects because it has proved to be effective and complete numerous projects successfully.
Hall, K. (2013). General Motors – what kind of matrix do we need? Web.
Iamratanakul, S. (2013). Project management in Asian car companies. Proceedings of International Conference on Technology Innovation and Industrial Management, 29-31 May. Phuket, Thailand: TIIM.
Leonard, B. (2009). GAO cost estimating and assessment guide: Best practices for developing and managing capital program costs. Washington, DC: Government Accountability Office.
McKie, N. (2014). Project management lessons learned from General Motors and Toyota. Web.
Meredith, J. R., & Shafer, S. M. (2013). Operations management for MBAs (5th ed.). Hoboken, NJ: John Wiley & Sons.