Understanding the Difference Between a Project and Operations

Every business consists of two aspects of work: temporary (this includes more than just short-term) projects and day-to-day operations. Both aspects are as important to contribute to the business’ success! However, it’s crucial to understand the differences between operations and projects in order to be able to set the budget, daily schedules and assure that the manager of the project or operations has a clear understanding of what is needed for a successful result. Here are some of the differences between projects and operations:

Operations and Businesses

To start with operations, this is a business’ ongoing, day-to-day function, which performs repeat activities like manufacturing products or supplying services. Production operations, manufacturing, accounting operations, and IT service management are all considered operational activities. These are permanent endeavors to produce long-term, repetitive outputs.

In order to achieve the results needed from the day-to-day operations, managers and employees are assigned to do the same tasks over and over, in accordance with the business’ operating procedures and policy. The goal of operational management is to improve operations continually, in order for the business to cut costs, increase effectiveness, and gain competitive advantage on an ongoing level.

An operational manager uses his or hers specialist skills to do routine work repeatedly. For this, the manager uses a budget which is set aside through an annual planning cycle. The amount is set, and the events are fixed. However, it’s important to acknowledge that it’s because of the operations, there is a budget at all. Operations generates the budget though it’s day-to-day activities, as it has to earn profit in order to run the business.

Project-Based Management

Projects, on the other hand, are temporary and initiated by businesses for a variety of reasons such as to change operations, products and services to meet new needs, gain competitive advantage and respond to new markets. The only way businesses can accomplish any of these goals, is by expending resources of the organization over time, for an extra cost. The budget must last the entire project, and incorporate labor, equipment, raw materials and more depending on the project. Because projects explore new and unique areas, extra budget overhead is often needed for unforeseen circumstances. Projects can be financed by business grants and sponsorships, or they may be part of the business’ master budget.

Now, let’s look at what’s needed from a project manager. A project manager is hired to run a temporary project together with a temporary team. His or her role ends once the project is completed, as well as the roles of the temporary employees making up the team. A project is run with time, cost and scope constraints, and since it’s not a routine operation, it’s often difficult to estimate time and budget.

The manager need to be less specialized and hold many different skills in order to meet the unforeseen circumstances of a first time endeavor. This is important since projects are run with the goal of creating a unique product, service, or result.

However, the nature of each project management is also dictated by the business structure. These are three such structures to take into consideration:

Dividing and Conquering

A business operating with a functional organizational structure is organized into functional divisions, which operates independently with isolated groups of workers. The functions may be planning, engineering, human resources, finance, IT, and policy.

A functional manager allocates and monitors the work but have very limited authority. Functional organizations are set up for ongoing operations to produce standardized goods and services, with some temporary projects to meet new needs, gain competitive advantage and respond to new markets, as described above.

In a matrix organizational structure, however, organization control is shared. The project manager shares responsibility for the project with the operational managers. The shared responsibilities may include assigning tasks to the team members. The operational managers will still make the overall decisions, however, and have the final say on who will work on the projects as well as be responsible for administration. Businesses that are responsible for maintaining ongoing operations but which also commissions projects mostly have matrix structures.

Finally there is the projectized organizational structure. Here, the project manager has full authority over the project. He or she set the priorities, apply resources, and direct the work of team members assigned to the project. The team members report directly to the project manager, and everybody is assigned to a project. As a result, conflict management is essential for project managers to master. They are primarily responsible to help team members be on the same page and arrive at mutually beneficial conclusions. When a project is completed, resources will be re-assigned to other projects. Businesses that work on long-term projects, such as in the construction industry are often projectized organizational structures.

Project managers and operations managers are equally important to contribute to the success of a business. The secret is to find the right manager for the right role.

Amit Patel

Amit Patel founded Crush the PMP Exam, an online resource dedicated to helping professionals pass the PM exam on their first try. Amit provides reviews, study resources and tips that simplify the process and fast track your success.