Sales Return

Top 3 differences across 3 different project types, a must know!

July 25th , 2013

Last week we wrote in our blog about the three different project types and how it is important to identify your project type before you begin. This piece we will identify the three most important differences across these three different project types. Understanding the basic differences will help you to configure your project processes and project management software tool for successful project execution.

Project AttributeRevenue Projects or External ProjectsInternal ProjectsNPD(New Product Development) Project
Funding & SponsorFunding for this is done by external source in form of customer purchase order or work orderThis is funded internally from the budget of CIO (if its IT deployment or similar) or CEO approval capital expansion budget or sometimes by the sponsoring department etcThis is also funded internally from the Product Development budget or sometimes internal subsidiaries fund it based on the market potential or the product
Functional Scope & Requirements OwnerThis is driven by the external customer & is the final approver.This is driven by internal customers like each sponsoring department. The general purpose is to improve the operational efficiency of the department or the organization.This is essentially driven by the market need & articulated by the sales & marketing department. The needs can change very rapidly based on the market conditions
Success CriteriaThese projects are generally done for the purpose of profit & this becomes one of the key parameters to be tracked during the project life cycle. Other parameters to be tracked is Customer Satisfaction Index on the basis of quality & scheduleSuccess for these projects is hard to quantify & mostly qualitative in nature but IRR (internal rate of return) is often used as criteria for approval & for measurement. Success for these project could be “Reduced transaction time from 30 mins to 10 mins” or increase capacity from 30 units to 60 units per hour” or ”reduced business risk by 90% by building disaster recovery management”Success for these projects are measured by the increase in organization revenue due to the product being sold in the market. This is mostly quantitative in nature. Success is often measured as the revenue contribution % up to 5 years from the product launch date.

Needless to say that there are many other differences but the larger point is that these different types of projects need a different mindset, skill set, different processes, and different software configuration to achieve optimum results. While this may well be the subject of another blog, we will discuss as to how these project types are related in a chain-like manner in our next blog.