Today we are going to talk about the project and the operation, as well as the difference between these two.
Since you are going to attempt the PMP exam, it is important for you to have a clear understanding about the definition of the project, the operation, and how they are different from each other.
You may see a few scenario-based questions on your exam asking you whether a person is engaged in a project work or busy with operational activities.
Therefore, make sure that you understand these concepts well.
Many people get confused between these two, even though the difference between them is so clear. This is possibly because they share some characteristics, such as:
- both are performed by people,
- both are planned, executed and controlled, and
- both have resource limitation
You can find only two aspects of work (or the combination of these two) in any organization; i.e. projects and operations.
The organization which purely deals with projects, known as a projectized organization, and the organization which deals with operational work, are known as a functional organization. And the organization which deals with projects and as well as operations, known as a matrix organization.
Visit my blog post on type of organization structure to learn about them.
What is a Project?
A project can be defined in many ways. For example, PRINCE2 defines the 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 wordings of both definitions are different, essence is same, and you can conclude that:
- The nature of the project is temporary, and
- The project is undertaken to produce a unique output, for example, a product, service, or a result.
The first point says the nature of the project is temporary. What does this mean?
This means once you deliver the deliverables (output of the project), your project will cease to exist because its objective has been achieved.
A project has definitive start and end: It cannot continue forever, and it has to end when the objective is achieved, or it is terminated.
The second point says that the project produces an output. Projects are undertaken to produce a certain output. If it is a construction-related project, it may produce any tangible structure.
If it is a research-related project, it may produce a report; for example, analysis of the impact of vehicle pollution on the environment.
A project may also produce service-related output; for example, setting up a call center to help customers in solving their problems.
What is an Operation?
Operations are the ongoing execution of activities that produce the same output, or provide a repetitive service.
Operations don’t produce anything new, 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 sustain the business.
Operations are different as opposed to Projects, which are known for their uniqueness.
Operations are permanent in nature, and their only constraint is to make profit for the organisation.
Any manufacturing or production process can be an example of an Operation.
The difference between the Project and the Operation
Projects are unique and temporary (definitive beginning and ending), while Operations are ongoing and permanent with repetitive output.
- Projects have a fixed budget; on the other hand Operations have to earn profit in order 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 it is ongoing.
- Projects create a unique product, service, or result; Operations produce the same product, aim to earn profit, and keep the system running.
I believe by now you will have a clear understanding about projects and operations. If not, continue reading…
Let’s say you have been given a project to build a car manufacturing facility.
You build the facility and hand it over to the client. Your job is completed, and the client has started manufacturing the 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 starts, this will be an example of operation, because here the facility is producing a repetitive output, i.e. cars, and the process is ongoing.
I hope the concepts are clear to you.
Before I conclude this blog post, let me tell you an interesting discussion about the project and the operation that happened between me and my friend.
A few days ago, I had an argument with my friend regarding the definition of a project.
He was not able to differentiate the project and the operation. He was confused by the similar nature of projects with operations.
He was saying that an organization has completed a project to build a school building. This project is completed, and the school building is handed over to the client.
Now if the same organization gets another project to build a similar school building at another place, it would be an operation, because the organization is performing the same task.
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 similar projects, but they have to start fresh whenever they get any new project regardless of whether they have completed any similar type of project in the past.
Being similar does not mean the same, or it can be categorized as operations. Although you are constructing a school building, once you hand it over it to client, your job is completed and the team is released.
Whenever you will get a similar type of project in the future, you will start planning from scratch, develop your project team, contract the procurement, and so on. Everything will be new and will start from the beginning.
Although your past experience will help you better manage the project, it is not the same as before.
I explained to him the definitions of a project and an operation and how he can apply these definitions to his school building example.
I asked him: once the school building is completed, will the project team remain with it, or they will leave? He replied that once the school building is completed, the team will disappear. I said it fulfilled the first condition of a project, which says that the nature of the project is temporary.
I asked him again: will this team give you any output, and is there is any repetition to it? He replied, yes they will give output as a school building, and there is not any repetition. I said it fulfills the second condition of a project, which says projects are undertaken to produce some unique service, result or product.
I also asked him if there is any fixed budget or time duration to complete the constructing of school building. He said yes. I told him that these are properties of projects, that they have a definitive beginning, ending and has fixed budget.
Operations don’t have fixed budget or time duration.
Finally he got the difference between a project and an operation, and thanked me.
This is all about the project and the operation. Let me know if you require any further clarification, and be prepared to see at least one question from this topic in your PMP certification exam.