Operations Management And The Relationship Between Operations Management And Project Management

What is operation?

     Every organization makes a product. This product may be goods or services or a combination of the two. Operation management is concerned with the way the product is made.

     This seems reasonable for manufacturers like which clearly make tangible goods. But it is also true for organizations that provide a service, like the BBC, Prudential Insurance or the Post Office. Anything an organization produces must be a product so all organizations make a product. This can be physical goods such as computer, washing machine or car or intangible services such as education, insurance or television program.

     At the heart of an organization are the activities that make this product. These activities are the operations which describe what the organization does. Operations in car factory make cars; in a computer company they make and sell computers; in hospital they cure sick people; in schools they educate children; in bank they borrow and land money; on farms they grow food.

What is operations management?

     At the heart of an organization is the set of activities directly concerned with making a product, these activities are the operations, and are the organization’s most important function. Operations management is concerned with the way the operations are performed.

     Organizations take a variety of inputs and perform the operations needed to convert these into desired outputs. The inputs include raw materials, money, people, machines, time, and other resources. Operations include manufacturing, assembly, packing, serving, training, and so on. The outputs include goods, services, staff wages, and waste material. The operations management works in all kinds of organizations. These can be:

•          Primary industries; agriculture, mining and quarrying
•          Secondary industries; manufacturing and construction
•          Tertiary industries; which are all the services.

 Operations management in manufacturing industry

     All manufacturers plan to perform the same basic function that converts resources into finished goods. To perform this function in nowadays business environment, manufacturers must continually aim to improve operational efficiency. They must adjust their production processes to concentrate on quality, to minimize the costs of materials and labor, and to eliminate all costs that don’t add value to the finished product. Making the decisions concerned with the effort to achieve these goals is the job of the operations manager. That person’s responsibilities can be classified as follows:

• Production planning: During production planning, managers determine how goods will be produced, where will be produced and how manufacturing facilities will be laid out.
• Production control:  Once the production process is getting started, managers must continually schedule and monitor the activities that form that process. They must encourage and respond to feedback and make modification where needed. At this stage, they also supervise the purchasing of raw materials and the handling of inventories.
• Quality control: Finally, the operations manager is directly involved in efforts to ensure that goods are produced meeting the specifications and that quality standard are complied.

Operations management in construction industry

     The construction industry is characterized by fragmentation, each actor having their own goals in the value chain. The complexity of products delivered is regarded to be high. A contractor is generally hired to undertake some of the work directly and supervise the overall project, but 75-80% of the work is subcontracted. Projects are executed by temporary organizations assembled to deliver a specific artifact to a client, while a contractor is a permanent organization designed to organize projects. A contractor and projects have overlapping interests in firm resources.

     Like every firm, a contractor must have a business strategy and an operations strategy. The business strategy frames what products and on what market (where) they are offered. Construction contractors can either develop a ‘fast-cycle’ competence in multiple modes of strategy-making or “throw process to the wind” or concentrate on the content of business. An operations strategy is a long-range plan for the operations function. An operations strategy frames how operations should be conducted to support a business strategy. This is the guiding idea on the tactical level, often emergent and traceable as a pattern of decisions. A popular example of an operations strategy is Lean Construction. Other functional strategies are designed e.g. for marketing and finance.      Operations capabilities can even determine a business strategy, especially in environments that are difficult to forecast. Situations in construction are often highly changeable and difficult to forecast. Thus, the analysis of operations strategies among construction contractors should provide indications about how they balance engagement in temporary projects versus sustained survival.

Project management and operations management

     Although both professions focus on oversight in pursuit of a business objective, operations management and project management are two distinct roles. An investigation will be conducted on the difference between operations management and project management; and the common aspects between the two positions.

Project Management

     According to the PMBOK® Guide – Sixth Edition, project management professionals oversee organizational projects, determining the scope and objectives, planning the project stages, managing the execution, and closing the project. Resources are typically assigned to the project for a specific duration, and the project manager is responsible for coordinating those resources to ensure the project is carried out correctly, on time and in budget.

Operations Management

     Operations management is responsible for overseeing, directing, and controlling business operations. Production operations, manufacturing operations, accounting operations, and maintenance are examples of operations management.

It makes sure that the businesses operations are creative, minimum resources are used, and customers’ expectation and requirements are satisfied. Operations deliver products, fulfill quality, and create services.

How are operations and project management Differ?

     The main difference between these roles comes down to the definition of a project vs. operations.

    The Project Management Institute, better known as PMI, defines a project as a temporary endeavor undertaken to create a unique product, service, or result, whereas operations, are continuous activities that produce long-term, repetitive outputs, such as manufacturing products or supplying services.

    Consequently, an operations manager’s role is continuous, whereas a project manager’s role is temporary in nature in regards to a specific project.

Other main differences between the two positions are concentrating on specific responsibilities, skills, and education required for success.

Features of operations management include:

•         Generates a fixed output
•         Must be profitable
•         Does not produce new outcomes
•         Produce the same product or outcome recurrently
•         Earn a profit and maintain the system Smoothly

     The responsibilities of operations managers often include, but are not limited to:

•         supervising daily operations
•         Determining and directing problems and opportunities
•         Managing the budgeting, planning, reporting, and auditing
•         Ensuring regulatory compliance
•         Developing operational policies and procedures

     While features of project management include:

•         Creates a unique output
•         Operates on a fixed budget
•         Produces new outcomes to fulfill business goals
•         The project ends, once the new product or service is complete

     The roles and responsibilities of project managers are expected to:

•         Manage teams
•         Define and Plan projects
•         Coordinate and supervise the carrying out of projects
•         Manage the schedule
•         Monitor and control the budget
•         Measure and report progress

How are operations and project management Similar?

     Looking at differences in project management and operations management, it is also important to think about the areas in which they interfere.

There are cases where the role of a project manager will interfere with operations management.

·          When a need emerge to significantly change a part of business operations then the change will often be managed as a project.  Once the project has delivered the change, operations will restart concentrate on preserving, operating, and supporting the products or services produced as a result of the project.

·            Project managers and operations often cooperate at a project’s closeout phase to start transitioning responsibility of any ongoing maintenance and operations related with the deliverable or service.

     In these cases, project managers and operations managers must cooperate to share deliverable and information to ensure favorable outcomes for the business. These roles are also similar in that they have one individual at the management, they requiring comprehensive planning and supervision, and they are often resisting limited resources.