Benchmarking of Project Planning

An article by Zwikael and Globerson provides quite informative research of project planning in different industries showing that the Production and Maintenance industry where I'm occupied is the weakest in terms of project planning practices compared to Construction and Engineering, Software and Communications and Services.

Authors concluded that Construction and Engineering industry organizations maintain the highest quality of planning due to project oriented nature of their businesses. Production and maintenance organizations have the lowest quality of planning because such organizations are concentrated on daily routine.

I assume the weakness of my organization is that we don't have much experience in projects. We don't treat our activities as projects. For example every customer's request is normally dealt in accordance with standard procedure designed in the middle of 20th century. The procedure instructs the Service manager to find out what customer wants, fill in the Customer Interview Form, calculate the cost of labor according to the ERLG (Equipment Repair Guide Lines) and parts, send quotation to the customer and finally deliver what was quoted.

The most of such requests are more or less standard, meanwhile some business situations satisfy Wysocki's definition of project: "A project is a sequence of unique, complex, and connected activities that have one goal or purpose and that must be completed by a specific time, within budget, and according to specification" (Wysocki, 2009).

Formal inflexible approach often causes a set of problems:

* Schedule overrun

The most significant gap between leader and outsider is percentage of Schedule overrun: 19% in Construction and Engineering versus 32% in production and Maintenance. Unlike Construction industry, we often make our time schedule using own experience and a little bit of guess work.

Nature of a construction business is that completing the project in time is one of most important performance indicators. Tough competition and complexity of projects force builders to pay particular attention to estimating duration of each task.

In Production and Maintenance quality of project planning can be improved by employing same techniques as used in Construction and Engineering industry. 6 basic methods for making estimation are outlined in Wysocki's "Effective Project Management" on page 149.

* Cost overrun

Percentage if cost overrun is 17% VS 26% in construction and production industries respectively. According to Zwikael and Globerson (2006) there is direct relationship between cost and duration overrun: Cost overrun = 0.76*schedule overrun. "Major reason for the relationship between increase in duration and cost increase stems from the additional cost required for supporting the required infrastructure". (Zwikael and Globerson, 2006)

The cost overrun