Projects as Profit Centers - Part 1 | Episode 465

About this Video

• Video Title: Projects as Profit Centers - Part 1 | Episode 465
• Channel: CorneliusFichtner
• Speakers: Cornelius Fichtner, Oliver Layon
• Duration: 00:48:35

Introduction

This video podcast episode discusses the shift in project management towards projects as profit centers, particularly in the context of outsourcing and complex project supply networks. The speaker interviews Oliver Layon, an expert in project business management, to explore the challenges and methods for managing projects as profit-generating entities.

Key Takeaways

• The Changing Landscape of Project Management: The traditional internal project is evolving into a more externally-focused, profit-driven model involving multiple contractors and subcontractors. This necessitates a shift in project management skills and strategies.
• Internal vs. External Projects (Matrix Organizations): The video contrasts internal projects within a matrix organization (weak matrix, where line managers hold significant power) with external, customer-facing projects (strong matrix, where project managers have more authority and control). The weak matrix structure often leads to conflicts and project challenges due to competing priorities between project managers and line managers.
• Projects as Profit Centers: In customer-facing projects (profit centers), the focus shifts from cost management to profitability and liquidity. Project managers are responsible for securing and managing their budgets, procuring resources, and ensuring timely invoicing to maintain cash flow. The success hinges on customer satisfaction, profitability, and maintaining financial liquidity.
• Challenges in Customer Projects: Managing customer projects presents unique challenges, including navigating disputes between organizations, managing different communication styles, processes, and tools, dealing with contractual obligations, and mitigating the risk of lawsuits.
• The Importance of Benefit Engineering: Benefit engineering is presented as a method to help resolve project crises and improve project outcomes, particularly in high-risk customer projects.