What Is Project Management, and Why Is It in High Demand?

What do healthcare, construction, software, and manufacturing companies all have in common? They need skilled project managers—and fast!

The Project Management Institute projects that there will be a demand for 87.7 million project managers worldwide by 2027. It's an excellent opportunity for anyone interested in a new career.

So, what is project management, exactly, and why do so many industries need it?

• What is project management?
• Why is project management important to businesses?
• What is the project management process like?
• The five stages of effective project management
• Popular approaches to project management
• How to work as a project management expert
• The future of project management

What is project management?

On paper, the definition of project management seems straightforward: it's the entire process of leading a team toward completing goals. In reality, project management is a complex job that requires confidence in many areas of business.

Project management responsibilities

Project management involves work in many different areas, from monitoring budgets to ensuring enough supplies and personnel are on hand. Over the course of a project lifecycle, project management plays a key role in:

• Finance: It is project management's responsibility to ensure work remains in budget.
• Scheduling: If a project schedule goes off course, the work becomes more expensive and can create trouble with clients or stakeholders.
• Resource management: Materials are to be sourced in a cost-effective way, without excess waste.
• Supply chains and inventory: The flow of materials can impact a project plan and schedule, so project management professionals must understand how relevant supply chains work.
• Personnel management: Large-scale projects can involve internal team members and external contractors.
• Risk mitigation: Good project management ensures teams follow relevant regulations and safety protocols.
  

Project management may also involve working with stakeholders from marketing, sales, client companies, vendor partners, municipal governments, and more on any given day. Effective project management requires attention to:

• Time management
• Organization
• Leadership
• Delegation
• Customer service
• Research and development

Types of projects

Project management is important in various industries, and is essential to the execution of small and large projects alike. Project management is necessary when:

• Building apartment complexes
• Constructing new roadways
• Remodeling an apartment building
• Building residential homes
• Ecological restoration initiatives
• Evaluating which state or country to expand operations into
• Moving personnel into a new office building
• Selecting a new payroll processor
• Developing new employee health insurance plans
• Rebranding a popular consumer product
• Overseeing a merger or acquisition
• Launching a new corporate brand identity
• Building a new mobile shopping app
• Deploying software across a hospital system
• Migrating a legacy phone system to VOIP

Why is project management important to businesses?

Think about the last time you took a trip. Chances are, you set a budget, booked a hotel, and found some things you’d like to do before ever leaving home. If you didn’t, you could wind up at your destination with nowhere to stay and have to blow your vacation fund on a last-minute hotel.

Just as planning a vacation helps you maximize your time and budget, project management helps companies stay on track with spending, schedules, and resources.

Project management is the key to knowing exactly how much time, money, material, and personnel a company needs to complete a project. It helps businesses streamline:

• Onboarding subcontractors or freelancers
• Sourcing materials from different vendors
• Adjusting contractor and vendor use to fit within the budget
• Obtaining the necessary permits from municipal governments
• Coordinating environmental and building inspections
• Enforcing use of personal protective equipment
• Communicating changes to other teams and stakeholders
• Aligning efforts between marketing, sales, public relations, and customer service initiatives
• Adherence to all necessary safety, environmental, financial, and regulatory processes

What is the project management process like?

Project management isn't a one-size-fits-all job. What works best for a project manager at a civil engineering firm won't work for a large banking corporation that wants to develop an app. There are several different approaches to project management, each involving specific strategies and methodologies.

Project managers choose a strategy based on a company, industry, complexity, risk factors, and goals. From here, they can begin to build a project management plan.

Every project begins with a project proposal that outlines the vision, need, potential benefits, possible timeframe, anticipated cost, and expected impact of a project. From there, a project manager will begin the five key stages that make up every project.

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The five stages of effective project management

Every project goes through the same stages: initiation, planning, execution, monitoring, and closure. These stages may follow each other in linear order or begin to overlap at times—it all depends on the project manager's preferred approach toward planning and work.

Stage 1: Project initiation

In the initiation stage, a project manager will decide if the proposed project is viable. This can include evaluating staff, finances, competitors, customers, resources, local regulations, and the physical environment a project takes place in. As part of this stage, a project manager will:

• Conduct feasibility studies to determine if a project is likely to succeed, and its challenges.
• Write a business case document to illustrate the project's necessity to stakeholders. The business case shows the required project investment and what long term benefits may be. This document is rich in data and details about project goals, limitations, risks, strategy, and possible limitations.
• Establish a structure for tracking and reporting progress to stakeholders during the project lifecycle. This structure may include providing budget reports, charting financials, and logging key performance indicators (KPIs) that show progress on project objectives.
  

Some projects do not progress beyond this stage. If the project manager cannot confirm the value of the project by creating the business case, it may be time to return to the drawing board and develop alternate proposals.

However, If all parties are interested in proceeding, the project manager will incorporate the business case into another document called a project charter. A project charter includes best estimates for the overall scope and objectives, including required resources and necessary deliverables.

Stage 2: Planning

After successfully completing a business case and project charter, a project manager will embark on the project planning phase. During this stage, the manager will develop detailed deliverables and refine the project timeline.

Planning project requirements

A project manager will take the documentation from the first stage and develop milestones. These milestones can include essential steps like obtaining permits, placing orders, and receiving shipments. The milestones are then plotted into a timeline with start and finish dates. Project managers may do this plotting with a Gantt chart.

Gantt charts allow project managers to easily plot milestones and create a work breakdown structure (WBS). The WBS lists every step necessary to complete milestones and, in turn, the entire project. Project managers can link project stages and create dependencies, where specific tasks can't begin until the preceding item is finished. The individual steps outlined in the WBS are displayed as horizontal bars in the Gantt chart, giving a great visual representation of the entire project scope.

When building a project timeline, project managers must also consider potential risks—and risk mitigation. This can include a review of environmental hazards, options for protective equipment, insurance requirements, and potential financial liability. Such factors may impact how quickly a project can proceed. A project manager might need to increase the budget or modify their planned schedule to ensure safety and compliance.

As project managers build out their schedule, they should include the KPIs that they will use to assess project progress.

Defining project processes

Project managers must also plan for the unexpected. Unforeseen delays, staffing issues, budget cuts, and permitting problems can happen on any project. If they do, project managers turn to their change control processes. Change control processes outline how teams will handle requests to change a project. A change control process involves several core steps:

1. Where and how to log a change request
2. The guidelines for evaluating a change request
3. Who is responsible for approving a change request
4. What happens if a change request is approved or denied
5. Guidelines for implementing the results of an approved change
   

These change management controls will guide any future deviations from the project’s baseline.

Writing a statement of work

The project plan should also include a statement of work that clearly defines what is and is not included in the project, and at what cost. This document is an essential part of the final agreement between all involved parties as to what the project will entail.

Using project management tools

The use of dedicated project management software can make the planning stage much easier and more efficient. Such tools typically offer a way for project managers to visualize the status of each deliverable, often using a chart or kanban board.

Project managers may opt for an all-in-one solution like OpenProject or Adobe Workfront. They may also choose to put together a project management software stack using tools like Excel, Trello, SmartSheet, Monday, and Asana.

Stage 3: Execution

The execution stage is typically when a project manager begins to utilize the teams and resources outlined in the project plan and charter. During execution, a project manager will implement established processes to:

• Oversee personnel and ensure work is progressing as scheduled
• Source and distribute necessary resources
• Schedule check-in meetings with stakeholders
• Communicate project progress to clients
• Monitor expenditures
• Address any bottlenecks or roadblocks as they arise

Stage 4: Monitoring and controlling

After execution begins, managers will keep a close eye on how the project is progressing. They'll collect data on team performance, costs, roadblocks, and quality control. This information is used to determine if KPIs are met.

A project manager may prepare reports including expected vs. actual costs, completed vs. planned deliverables, and personnel timesheets when evaluating progress. The content of a report may vary. However, to make reports accessible to all stakeholders, they often include multiple data views such as lists, tables, and charts.

If the project begins to move off schedule, scope, or budget, a stakeholder may propose changes. The project manager will move through the change control processes established during the planning stage. They’ll evaluate the possible impacts of the change and decide how to proceed, recording any changes in a log.

Stage 5: Closing

A project manager’s work continues even after reaching the primary goal. The closing stage is important, as it's when all stakeholders agree that project work and processes are complete. It serves as a formal acknowledgment of the project's completion.

During this stage, project managers will compare the final results to their initial plan. They will typically prepare a project closure report that provides a written assessment of the project manager's findings. This report may be shared with clients and should include:

• The original project scope, including requirements, timeline, and budget
• Data to provide proof that objectives were met
• Confirmation of payments made
• A team performance review for each project stage
• Lessons learned by the project team
• Client feedback
• Relevant files and communications that serve as an archive
• Documentation that project deliverables were transferred to the client
  

Project managers can also benefit from conducting final analysis and reporting. By evaluating data, a project manager can see where bottlenecks occurred, if inefficient processes arose, and how workflow can improve. These insights are vital for ensuring increased project success in the future.

Only after completing these reports is a project manager's work truly finished.

Popular approaches to project management

Project managers don’t make up their process as they go. Instead, they follow one of several existing approaches accepted across industries. Some companies favor one approach more than another, and consultants may specialize in a particular approach.

Traditional project management

Also known as the waterfall approach, traditional project management follows each of the five stages in order. Traditional project managers put a lot of time into initiating and planning to account for every possible scenario. Any delay or error could throw the rest of the project off.

A structured timeline is crucial in traditional waterfall project management applications. Each project step builds upon the last, and team sizes may grow as the project complexity changes.

Traditional project management is a good choice for situations with a lot of "red tape." A great example is construction—typically, project managers must obtain permits and clearances before building. The project itself must also follow a specific order. You can't put a roof on a house before building the walls!

While traditional project management has many benefits, its linear structure can mean that any mistake comes with a large impact on budget and timeline. If an error is made in the first week of project execution but not discovered until the end, it may be necessary to redo a large portion of the work.

Lean project management

Lean is a business philosophy focused on eliminating waste and improving repeated processes. In a lean environment, waste may include unused inventory, meetings, paperwork, lead times, excess production, and defective products. A lean project manager seeks to remove as many of these "waste items" as possible from each phase.

While lean principles aren't exclusive to the project management process, they can be a great addition to the project flow. This benefit is particularly true in manufacturing environments, where teams may repeat a process to make identical products.

For example, a car manufacturer may make their most popular vehicle model every year for five years. By applying lean principles to project management, the manufacturer can identify ways to streamline production when it's time to produce the next iteration of the vehicle.

Lean does not work as well in situations like construction, where the waiting times and paperwork required by municipal governments are out of the project manager's control.

A lean project will move through the five traditional project stages in order, but with additional emphasis on the Lean principles:

1. Value: How will a client perceive the value of this project?
2. Value stream: What actions are necessary to execute the project?
3. Flow: Where can waste be eliminated to improve the workflow?
4. Pull: Is production following customer demand? Is it moving out of scope?
5. Perfection: What can be learned from the project to refine and improve future iterations?
   

The lean focus on waste reduction can result in fewer meetings and documents than in a traditional project management environment. In the closing stage, a lean project manager may spend more time analyzing data, to get closer to perfection.

Agile project management

Agile project management is focused on improving efficiency and is structured differently than other forms of project management. Unlike lean and waterfall projects, an agile project will not move through the five stages in order. Instead, an agile project manager will launch every project phase at once.

First, the project manager will divide personnel into groups focused on a specific type of deliverable. For example, during an app development project, one group may be working on design, one working on programming, and another on marketing strategy.

Next, each group works on its deliverables for a period of several weeks, also known as a "sprint." Sprints are treated as small project management ecosystems, moving through planning, execution, review, and adjustment stages. It typically takes multiple sprints to complete a project.

After each sprint, groups make adjustments to processes and workflow to improve the next session.

The concept of separating project deliverables and working in multiple sprints is known as the Scrum methodology. This methodology—and structure—is what makes agile project management unique.

The iterative Scrum setup makes it easy to isolate problems. Because each group works on different deliverables, it won't impact design or development if an issue happens with marketing. Thanks to the short sprint structure, it's easier and more cost-effective to repeat one part of a sprint rather than the entire project.

Because of this, agile project management is a favorite choice for software development. Unlike building a house or road, not-quite-finished iterations of software projects still have value. They can even go to market as a beta product. As product teams gain information about the use and performance of the software, they will modify processes and goals for future sprints.

How to work as a project management expert

There's no one set career path for project managers. Regardless of the route a project manager chooses, the role requires strong attention to detail and a willingness to learn from every experience.

Education

Some project managers go through a formal course of study for project management. These professionals may hold degrees such as:

• Associate of Applied Science in Management
• Bachelor of Science in Project Management
• Master of Science in Project Management
• Master of Science in Operations and Project Management
• Master of Business Administration with a Project Management concentration
  

University education isn’t required to do the job, though! Many successful project managers have gotten their start by taking on additional responsibilities at work. Project managers without a degree can further supplement their careers by taking classes in business administration, management, and project management methodologies.

Project management certification

Many project managers find it beneficial to obtain a project management certification, whether they have a degree or not. The Project Management Institute (PMI) is the major industry group offering these professional certifications, with multiple options available for project managers at every stage of their careers.

• Certified Associate in Project Management (CAPM): The CAPM certification is great for early-career project management professionals who want to take on more responsibility and grow in their field. A CAPM certification indicates that a project manager is serious about the field and has the skills to lead a project team effectively.
• Project Management Professional (PMP): PMI calls PMP  the "gold standard" of certifications. It's an ideal choice for more experienced project managers with on-the-job experience or an existing CAPM certification. The PMP certification signals extensive experience with project management and leading product teams, and a solid understanding of how project management fits into overall business strategy.
• Program Management Professional (PgMP): Certified program management professionals work at a senior level and manage multiple projects at once. Seasoned project managers with experience coordinating simultaneous projects can benefit from PgMP certification.
  

PMI also offers certifications for professionals interested in specializing in a particular focus area within project management:

• PMI Scheduling Professional (PMI-SP): This certification is for experienced project managers who wish to highlight their expertise in successful project scheduling.
• PMI Risk Management Professional (PMI-RMP): Project managers holding a PMI-RMP certification demonstrate experience and skill in reducing project risks and improving project performance. This certification is for experienced professionals working on large projects in complex or high-risk environments.
• PMI Professional in Business Analysis (PMI-PBA): Project managers who enjoy the analysis side of project management may benefit from a PBA certification. This certificate is a good choice for anyone interested in working as a business analysis expert, or who wants to feel more confident in analysis when managing projects.
  

Each PMI certification requires on-the-job experience or project management education. Continuing professional development courses are required to keep certifications active. The organization also produces guidelines for project management work, including the Project Management Body of Knowledge Guide, or PMBOK.

Project management certifications may be required for specific roles. Obtaining a PMI certification can expand the number of opportunities available to a project manager when they seek a new job, client, or promotion.

Work environment

Project managers can work in-house for one company or as a freelance project management consultant who serves many different clients. Depending on the industry, project managers may work on job sites, such as a construction build, or in an office.

The future of project management

The need for skilled project managers will only grow as more and more companies move toward a project-based operations model. With project-oriented industries expected to contribute as much as $20 trillion to the global GDP by 2027, many companies will soon find themselves in need of a project manager for the very first time. Hiring a freelance project manager is a great way to begin streamlining operations and improving the results of complex projects. Upwork makes it easy—simply post a project management job and connect with experienced project management professionals who are ready to work on your next project.

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