Project management in small to medium-sized enterprises

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Title: Project management in small to medium-sized enterprises

A comparison between firms by size and industry

J. Rodney Turner

Centre of Project Management, Kemmy Business School,
University of Limerick, Limerick, Ireland and
Lille School of Management, Paris, France
Ann Ledwith
Enterprise Research Centre, University of Limerick, Limerick, Ireland, and
John Kelly
Centre of Project Management, Kemmy Business School,
University of Limerick, Limerick, Ireland

Abstract

Purpose

– Small to medium enterprises (SMEs) play an important role in the economy, in terms of
employment and their contribution to national wealth. A significant proportion of that contribution
comes from innovation. SMEs are also the engine for future growth in the economy. Project
management has a role to play in managing that innovation and growth. The purpose of this paper is
to find the extent to which SMEs use projects, project management and the tools of project
management, and to determine what differences there are by size of company and industry.
Design/methodology/approach – A questionnaire was developed to examine the extent to which
small firms carry out projects, the resources they employ, the way they measure project success and
the tools and techniques that they use. The questionnaire was answered by 280 companies from a
range of industries and sizes.

Findings

– It is found that companies of all sizes spend roughly the same proportion of turnover on
projects, but the smaller the company, the smaller their projects, the less they use project management
and its tools. Surprisingly, hi-tech companies spend less on projects than lo-tech or service companies,
but have larger projects and use project management to a greater extent. They also use the gadgets of
project management to a greater extent.
Research limitations/implications – It is concluded that SMEs do require less-bureaucratic
versions of project management, perhaps with different tool sets than the more traditional versions
designed for medium-sized or large projects, and with different versions for medium, small and micro
projects. For all firms, the important success factors are client consultation; planning, monitoring and
control; and resource allocation are also identified.

Originality/value

– The findings suggest the need for further research into the nature of those “lite”
versions of project management designed for SMEs.
Keywords Small to medium-sized enterprises, Innovation, Project management, Economic growth
Paper type Research paper


Important Terms/Concepts:

1. Small to Medium Enterprises (SME)

"…SMEs account for 99.8 per cent of all companies in the EU; they generate 56 per cent of
GDP, and employ 67 per cent of all private sector workers (European Commission,
2008)."

"…successful innovation is not easy for SMEs (O’Regan et al., 2006), small firms have several disadvantages in innovating; restricted cash flow, a limited pool of knowledge and skills, and a low
volume of sales over which to spread innovation costs (Rogers, 2004)."

2. Three Levels of SME:

(1) those with global sales of more than e20 million;
(2) those with global sales of more than e5 million; and
(3) high-potential start-ups, HPSUs.

3. PRINCE2(TM):

http://www.prince2.com/

4. Ghobadian and Gallear (1997) described differences between SMEs and larger
organizations. In particular, they identified the following:

a. Processes. SMEs require simple planning and control systems, informal
evaluation and reporting.

b. Procedures. SMEs have a low degree of standardization, with idealistic decision
making.

c. Structure. SMEs have a low degree of specialization, with multi-tasking, but a
high degree of innovativeness.

d. People. Because of the higher consequence of failure in SMEs, people prefer
tested techniques.

5. "Thus, as firms grow in size, they do not do more projects as a percentage of
turnover, but projects grow in size. This is consistent with the findings of Ghobadian
and Gallear (1997) that in smaller companies people prefer trusted techniques because
of the higher risk of failure."

6. Gantt Charts:

Wikipedia: Gantt Charts
Project Management with Gantt-Charts

"Gantt Charts are a way to graphically show progress of a project. Management of a project is
made easier if it is viewed as small manageable items where the dependencies are visually
illustrated, parallel processes are discovered, the overall processing time determined and
progress tracked. The tasks of a project can be quite complex and dependent on each other.
With a project management tool, such as a Gantt chart,all subtasks of a task can be viewed
graphically."

7. Critical Path Method (CPM):

Wikipedia: Critical Path Method (CPM)
Critical Path Calculator
The Network Diagram & Critical Path (Good Slide Show)
Critical Path and Scheduling Using Priority Lists

8. Earned Value Analysis (EVA):

Wikipedia: Earned Value Analysis (EVA)

"Earned value management (EVM) is a project management technique for measuring project progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. When properly applied, EVM provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress (Wikipedia, 2010)."

EVA @ NASA
United Kingdom - Ministry of Defense: Earned Value Analysis - Slide Show
Earned Value Management (EVM)

9. Project Success Criteria:

(a) budget;
(b) schedule;
(c) quality standards;
(d) specification;
(e) appreciation by users;
(f) appreciation by stakeholders; and
(g) appreciation by project personnel.

We also asked firms to rate the importance of the following six success criteria:

(1) clear goals and objectives;
(2) senior management support;
(3) planning, monitoring and control;
(4) resource allocation;
(5) risk management; and
(6) client consultation.

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