The need-to-know terms for a Business-minded Project Manager
Just when you think you have a comprehensive understanding of the standard acronyms encountered within the project management landscape, you discover there’s more lurking out there! This is where we can assist you by staying up-to-date with current terms of everything Project Management related.
In today’s environment, there is an expectancy that you will be savvy with terminology from traditional project management lingo, change management references to the language of business and strategy. Meaning that you will be able to confidently converse on everything from the Project Management Institute (PMI®) versus AXELOS (the Cabinet Office or formerly OGC), A Guide to the Project Management Body of Knowledge (PMBOK® Guide) and PRINCE2® to A Guide to the Business Analysis Body of Knowledge® (BABOK® Guide), P3O®, Agile project management and MSP®.
It can be overwhelming but as a project manager your understanding of industry terms forms the very crux of your role. It’s not up to your organisation’s CEO, CFO or even CIO, nor should they be interested in this minefield of Project Management acronyms.
If you reverse the situation – would you be interested? There is enough “business noise” and day-to-day challenges to focus on running a business, essentially this forms the reasoning for why a business would setup a PMO. The idea is that they have employed the experts – let the experts be exactly that in their field. Does a CEO need to be an expert on taxation rulings or ISO9001? The answer is simply no, they rely on you as their trusted advisors to ensure they are kept across any critical matters and updated accordingly.
What do senior management want to hear?
They want to hear about consistency and predictability of projects; that those projects will deliver against the strategic plan and more importantly provide business value. Your steering committee doesn’t want to hear the jargon of project management nor do they want to be presented with any surprises.
It’s up to you to gain the respect of senior management and build confidence as a trusted advisors within you role. It’s important to remember that at best, the successful project is a strategic enabler or at least, a solution to a pressing business problem.
“Three critical project management skillsets needed for
successful projects are technical project management skills,
leadership skills, and strategic and business management skills.”
PMI Pulse of the Profession 2013.
Before you attend that next steering committee meeting or that catch-up with your sponsor, cast yourself in the role of the business-minded project manager. To get you warmed up, consider the following terms:
- Agility. (Organisational or business agility). Ability of an organisation to adapt rapidly and cost efficiently to changes in the market.
- CAPEX. Capital Expenditure – money spent by an organisation on the improvement or purchase of fixed assets/infrastructure.
- Cost Centre. An accounting term for a division/business unit that does not directly contribute to achieving profit for a company.
- EBIT. Earnings before interest and taxes. Shows how profitable an organisation is from an operating standpoint.
- IRR. Internal rate of return. Used to judge investments – the higher the IRR, the better.
- Margin. Measure of profitability.
- NPV. Net Present Value. Calculation used in decision making for capital expenditure based on the fact that money now is more valuable than money later on. Also known as Discounted Cash Flow (DCF).
- OPEX. Operating Expenditure – Money an organisation spends on an ongoing, day-to-day basis in order to run a business or system.
- Payback. The period of time before cash flows (revenue) from an investment exceed expenditure.
- ROI. Return on Investment. A performance measure used to evaluate the efficiency of an investment.
- Succession Planning. Identifying and developing internal people with the potential to fill key business leadership positions in the company.
- Share options. Right to acquire shares in the future, usually at a fixed price.
- Strategy. Planned direction and scope of an organisation over the long term – the ‘what’.
- Tactics. Actions used to implement strategy – the ‘how’ and ‘who’.
- Working Capital. Money needed to fund the normal, day to day operations of an organisation.
- Value. The definition of value is subjective and unique to every organisation. For example value may be seen as the extent to which benefits (financial and non-financial) exceed the resources (capital and operating expenses) required to realise them. Recommendation: Understand what value means in YOUR organisation.
For more information on how PM-Partners can assist your business in up-skilling your staff around their current level of Project Management knowledge, speak to one of our qualified customer service team today on 1300 70 13 14.