What are Projects and Operations?

July 26, 2020
Fahad Usmani
What are the Project and the Operation

I often see that aspirants do not understand the difference between a project and an operation. I regularly receive emails from those who are interested in applying for the PMP exam but are working with operations.

Some aspirants applied for the PMP exam, were selected for audit, and failed it. Afterward they contacted me and I reviewed their application. I found that they have been working in operations, but they thought they were in project management and that was why they failed the audit process.

Therefore, it is important for you to understand the difference between these two terms so you know if you are eligible to apply for the PMP exam.

People get confused between projects and operations because they share some characteristics, such as:

  • Both are performed by people.
  • Both are planned, executed and controlled.
  • Both have resource limitations.

These common characteristics make people confused. However, the differences between projects and operations can be clear.

An organization which deals with projects is known as a projectized organization, and an organization which deals with operational work is known as a functional organization. A matrix organization deals with projects as well as operations.

What is a Project?

A project can be defined in many ways. 

For example, PRINCE2 defines a project as:

“A project is a temporary organization that is created for the purpose of delivering one or more business products according to an agreed Business Case.”

And the PMBOK Guide says:

“A project is a temporary endeavor undertaken to create a unique product, service, or result.”

Although the wording of each definitions is different, the meaning is the same. You can conclude that:

  1. The nature of a project is temporary. 
  2. A project is undertaken to produce a unique output. Output can be a product, service, or result.

What does it mean that a project is temporary by nature?

Once you deliver the final deliverable, your project will cease to exist because its objective has been achieved. A project has a definitive start and end: Ii cannot continue forever. It has to end when the objective is achieved or it is terminated.

The second point says that a project produces an output. If it is construction-related, the output will be any physical structure. If it is a research-related project, it may produce a report; for example, an analysis of the impact of vehicle pollution on the environment. 

A project may also produce a service-related output; for example, setting up a call center to help customers solve problems.

What is an Operation?

Operations are the ongoing execution of activities and they follow an organization’s procedures to produce the same result or a repetitive service. Operations are permanent in nature.

Production, manufacturing, and accounting are examples of operations.

There are many definitions of operations. Some are as follows:

  • Operations do not produce new things, but they are necessary to maintain and sustain the system.
  • Operations are used to run regular business models, achieve the goals of the business, and support the business.
  • Operations are different from projects, which are known for their uniqueness.
  • Operations are permanent, and their only constraint is to make a profit for the organization.

Any manufacturing or production process can be an example of an operation.

The Difference Between Projects and Operations

There are many differences between projects and operations. Some differences are as follows:

  • Projects are unique and temporary, while operations are ongoing and permanent with a repetitive output.
  • Projects have a fixed budget, while operations have to earn a profit to run the business.
  • Projects are executed to start a new business objective and terminated when it is achieved, while operational work does not produce anything new and is ongoing.
  • Projects create a unique product, service, or result, while operations produce the same product, aim to earn a profit and keep the system running.
  • There are more risks in projects as they are usually done for the first time, while in operations there are fewer risks as they are repeated many times.
  • Projects are performance intensive while operations are efficiency intensive.
  • Projects are managed through project management and operations require business process management.

A Real-World Example of Projects and Operations

Assume you were given a project to build a car manufacturing facility.

You build the facility and deliver it to the client. Your job is completed, and the client has started manufacturing cars.

In this example, building the facility is an example of a project, because here you constructed a car manufacturing facility and handed it over to the client and signed off.

However, once the facility starts working and the car manufacturing process begins, this is an example of operations, because here the facility is producing a repetitive output, cars.

Therefore, this is an example of an operation.

Before I conclude this blog post, let me tell you an interesting discussion about projects and operations that my friend and I had.

A few days ago, we argued about the difference between operations and projects.

He was not able to differentiate between the two. He was confused, saying that an organization completed a project to build a school building. This project was completed, and the school building was handed over to the client.

He said that if the same organization got another project to build a similar school building, it would be an operation, because the organization is performing the same task. For him, the construction of a school building was an example of an operation if the organization was building many school buildings for different clients, one after other.

I explained to him that, even though the organization is doing a similar type of project, this is not an operation. The organization may use the experience and template/procedures from previous or similar projects, but they have to start fresh whenever they get a new project, regardless of whether or not they have completed a similar type of project in the past.

Being similar does not mean they can be categorized as operations. Although you are constructing a school building, once you hand it over it to the client, your job is completed, the team is released, and the project is closed.

Whenever you handle a similar type of project in the future, you will start planning from the beginning, develop your project team, execute the plan, etc[1] . Everything starts from scratch. Although your experience will help you manage the project, it is not the same as before.

I explained the definitions of a project and an operation and how he can apply these to his school building example.

I asked him: once the school building is completed, will the project team remain with it, or do they leave? He replied that once the school building is finished, the team will disappear. I said it fulfilled the first condition of a project, which states that it is temporary.

Then I asked him: will this team give you an output and is it repetitive? He replied, yes, they will give output as a school building, but there is no repetition. It fulfills the second condition of a project that they are undertaken to produce a unique service, result, or product.

I also asked him if there is a fixed budget or time duration to complete the construction of the school building. He said yes. I told him these are properties of projects; they have a definite beginning and ending, and have a fixed budget.

Operations don’t have a fixed budget or fixed schedule.

Finally, he understood the difference between a project and an operation.

Why Projects and Operations are Undertaken

Projects are undertaken due to the following reasons:

  • An opportunity or business need
  • Social need
  • Technological advancement
  • Customer request
  • Market demand
  • Legal requirement

On the other hand, operations are performed to run the business and sustain the system.

Summary

Projects are temporary in nature and they produce something new, while operations don’t produce anything new; they maintain and sustain a system. Both are an important part of a product life cycle and interact with each other on many occasions. In a project, your aim is to achieve the objective, while operations are metrics-focused.

This topic is very important from a PMP exam point of view. You will see a few scenario-based questions on your PMP exam asking you whether a person is engaged in project work or busy with operational activities.

Are you working in a project or operation? Please share your experience in the comments section.

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Speak Your Mind

  • I’ve been working as an Account Manager in a distributor for Cisco products. I’m responsible for selling these products to the end customer through partners which are my accounts. I manage 7 accounts and dealing with the sales team, procurement, and finance team in each account.

    It’s not only in each account but also through my organization.

    When it comes to any deal I have to understand which product the customer needs and how I deliver these items to him through all of these channels. I consider every deal as a project am I right?

  • I rarely comment on any article or internet papers, but this article was very helpful and i would like to thank you and acknowledge your effort.
    Regards.

  • thanks for great explanation
    i have a question, if we talk about dinner making from scratch it will be temporary and unique, will it be project or operation?

    • Hello Simi,

      If you are developing a new recipe from scratch, I believe it will be a project but making same dinner again and again will be an example of operation.

  • I would like to have clarity whether repairing work is an operation or project ? As per PMBOK 6 on page 4 under the definition of project , it is mentioned that correction of defect comes under the fulfillment of project objectives. In Rita Mulachy’s book, in chapter 2 project managment frame work, where 1 example of defective PC is mentioned & it is further stated that repair activity of defective pc comprises of 2 sub projects. 1 is fault finding & other is restoring its functionality .

    Most of us consider repairing as an operational work based on real life experince. Based on PMBOK 6 & Rita’s book’s contents , I answered 1 practice question about the repairing activity as project but I got it wrong.

    Please share your views.

    • Every organization has a maintenance contract or maintenance department, when anything breaks they will come immediately and fix it. So in general if you say repairing or defect repair is an example of project, then as per my understanding it is not correct.

  • I have a quick question. If you lead a team to recruit new hires annually, would that be an operation or is each cycle a new project? In a previous role, I developed a new system for recruiting and led a five person team through the recruitment of 23 people. This process takes about 9 months each year. The following year, I led the team through the next annual recruitment , tracked the deliverables, had monthly meetings and did a wrap up before handing off to onboarding.

  • For example we have deliver a website and website development project is completed. Now customer has requested for a new change request in the website so will it be called as a new project or operation?

  • Rightly said I had used this while preparing for my exams and my examiners were impressed when I cited the examples. Pls keep up the work

  • Amazing and clear explanation
    I had a question which is somewhat clear
    Password reset is a project or operation
    1) It is an ad-hoc requirement
    2) It will be achieved when password is set to new password
    3) Password will be reset within agreed SLA timeframe
    4) It is a unique instance as it will happen in future at a unique time where we are setting up the password again just like building a new school for same client with same set of project team as here the customer care representative will try to understand requirement as a fresh requirement

    • It is a part of regular support. If you work in a big organization you will always receive call from people that they forgot their password and you need to reset it for them.

    • In advance Thanks for the great explanation,
      Then I have question.. I work for a charity organization, our main goal is to help needy people by giving them a car taxis and Tuk Tuk to help them increase thier incom, we pay those cars and sell it to needy people in decent price and installments, So what we do is a project or an operation..?
      Thanks…

  • thank you so much for this piece. would like to know apart from a project being similar to operations in the limitation of resources what other similarities are there between the two.

  • Thanks for stating this clear, it really helped me on my project. Earlier I was confusing some operation to be a project but now it’s clearer. Thank you.

    NairaSleek

  • Hi,

    I want to know if some extremely repetitive job (such as crane operation at a building site, or running the concrete mixer at a construction site – day in and day out) be considered as an operation, supporting a Project?

    • For the crane operator, it is an operation. Even if the operator work in project, this experience will not be counted as a project management experience.

  • Hello, I have worked as a Project Manager for a mystery shopping company for 7 years. I handle multiple projects simultaneously. My tasks include project set up, questionnaire design, visit allocation, audit reports review, coordination with internal team, client management, ensuring the projects are completed on time etc…

    Could you please advice, if this is operations role or project management role?

  • Hi,

    Can someone help in making correct decision here.

    I have total 10 years of experience in Operations Management and looking to change my career to project/consulting role. I am six sigma green belt certified and did many short term projects relating to process improvements, have been part of system development, decommission, new system implementation, writing business cases, etc…

    Will taking PMP help me in advancing my career and being in operations will i be eligible for taking PMP test.

  • hi Fahad, very interesting article, i work in a huge organization in the communication directorate.I’m trying to explain to my team the difference between a project and a service; the problem is for some services for example a monthly corporate publication for an organization (is a service or a project) when on your SLA you already have as a service providing clients with publications requests. thank you!!

    • It depends.

      If they are involved in supporting your regular operation, it will be an operation. However, if you ask them to make any amendment to the system, or to add any extra function to the system, it will be considered as a project.

  • Hi everyone.

    My teatcher came up with this question a few days ago… “The VP of marketing approaches you and requests that you change the visitor logon screen on the company’s website to include a username with at least six characters.”

    Is this a PROJECT or an ONGOING OPERATION? Why? Thank you

    • This is an example of the project because you are not creating the logon screen on repetitively.

      You are creating an enhancement or an addition to an existing product), which is still an output of the project.

  • I would like to addd one more point to this discussion

    Projects are elaborated progressively. It means Scope of the project at the start is not clear however in operations we have clear objevtives and scope of work. So projects require more organized management because we have to do Risk Management, Expectation Management, change management etc. These various areas come into action for projects but for operations the activites and their associated risks and quality parameters are already defined and calculated. Hence progressive elaboaration characterstic can also be a factor to differentiate between project and operatilon.

    Regards
    Bilal

  • Hi,

    Thanks for this information. What is the difference between projects and operations in terms of:
    Projects are Revolutionary vs. operations are evolutionary
    Projects have unbalanced objectives vs. operations have balanced objectives
    Projects use transient resources vs. operations have stable resources

    As operations and projects are different, can you please give me more information on the above 3 points.

    Thanks

  • Hi Fahad,

    Thank you for sharing the above information. It is simple, precise & accurate.

    I would like to request to please suggest which of the specilisation is more suitable i.e MBA in Operations Management & Project Managment . I am about to enroll for the distance MBA (since i am working) but i am not sure, as to which specilization is better.

    I have 9 years of work experience.

    Isn’t Operations Management more comprehensive & may also cover project management as one of the section/topic?

    Thank you in advance.

    • Hello Kaushal,

      Honestly, I can’t say that which course will be more suitable for you as each course has its own significance. It depends on your choice and experience.

      As you said that you nine years of work experience, in this case I would suggest you to select the course that is more aligned with your experience.

      Fahad

  • Good stuff only, I am working for PMP certification now. Can you have a quickly blogging for it only help me for cert?

    Thanks & Regards,
    Banga

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