A common mistake for many is to talk about operational aspects of an organisation as if they were projects. This is common but incorrect!
There are some key differences between operations and projects so let’s explore them now.
An organisation exists so that it can achieve its set objectives. These will vary across organisations and may include a financial return for shareholders or increasing the benefits to a community.
It all starts with the strategic plan as this informs stakeholders on what the organisation’s vision, mission and goals are. The strategic plan sets the tone for how they are going to achieve the goals that are set. It also clarifies the values and behaviours of the organisation.
From the strategic plan a set of objectives are developed. There will be two ways to achieve these.
Operations
In operations a set of plans will be developed. These convert the strategic objectives into accountable actions. From the plans comes the day-to-day activities of the organisation. These are known to many of us as business as usual.
The operations of the organisation will deliver a set of defined outputs. These can include goods for sale, services for clients or even payroll for staff. Essentially it is anything that the organisation delivers on a routine, regular basis.
The outputs are then converted into organisational outcomes. Outcomes are the benefits that occur as a result of the business-as-usual actions. Examples may include reducing the number of complaints from users or increasing participants knowledge in a certain subject.
Projects
Our organisation may also pursue project opportunities that will also align with the objectives of the entity. These opportunities can be stress tested through feasibility studies and business cases so that we can land on that one recommended project.
Projects provide a temporary and unique way to also provide project outputs and outcomes. An example of a project output may be the building of a medical centre in a rural area. The project outcome may be the increased health benefits for people in that area.
The organisation will have two ways to achieve their objectives. That is through the more organic business as usual or through a more disruptive method being projects.
So, lets at the 5 key ways that we differentiate projects and operations.
1) Temporary
Sometimes there can be some confusion on what constitutes a project and what is operations. An important thing to remember is that there is no such thing as an ongoing project.
So, what is a project?
As defined by the Project Management Body of Knowledge (PMBOK) a project is:
“A temporary endeavour undertaken to create a unique product, service or result.”
In this definition it is clear that a project is temporary and therefore has a start and end date. Operations on the other hand are routine and cyclic. They are constant and continue through time.
2) Uncertain Performance
Projects have an element of uncertain performance. It is this uncertainty that means project teams need to plan effectively. In fact, a general rule of thumb is that the better the planning the better the project.
Operations on the other hand are based on precedent and only require routine planning. The classic example for routine operations is a manufacturing business. They continue to manufacture the product and reinvest a percentage of the profits back into the business/
3) Planning
With the high level of uncertainty of projects significant planning is required. This is because the risk of the project is at its highest at the planning phase. As the project continues the levels of risk reduce.
Business operations on the other hand are grounded in precedent in that what we are doing today is similar to what we did yesterday and the day before that.
4) Upfront Finance
Another key difference between projects and operations is the way that they are financed.
Projects usually do not bring in revenue until they are handed over. Therefore, they require up front finance which is expensed until the project becomes operational.
Operations on the other hand are generally self-sufficient in that they pay for themselves with the revenue that is generated.
5) Relationships
Projects bring together new sets of stakeholders with sometimes differing agendas and incentives. The competing demands can give rise to conflict. So, the soft skills of the project manager become very important!
In operations the relationships are established and have grown and developed over time.
Conclusion
As we have discovered there are some important differences between projects and business operations. Another way to think about it is that projects bring disruptive change to the organisation whilst operations provide organic change.
