I often see that aspirants do not understand the difference between a project and an operation. I regularly receive emails from those interested in applying for the PMP exam but are working with operations.
Some aspirants who applied for the PMP exam were selected for audit and failed. Afterward, they contacted me, and I reviewed their application. I found that they had been working in operations, but they thought they were in project management, and that was why they failed the audit process.
Therefore, you must understand the difference between these terms to know if you can 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 that deals with projects is known as a projectized organization, and an organization that deals with operational work is known as a functional organization. A matrix organization deals with projects as well as operations.
Before understanding project vs operation, let’s understand the project and operation.
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 definition is different, the meaning is the same. You can conclude that:
- The nature of a project is temporary.
- 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?
Your project will cease to exist once you deliver the final project deliverable because its objective has been achieved. A project has a definitive start and end: it cannot continue forever. It has to end when the project objective is achieved or 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 that follow an organization’s procedures to produce the same result or a repetitive service. Operations are permanent.
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 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 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.
Example of Projects and Operations (Project Vs Operation)
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 produces a repetitive output: cars.
Therefore, this is an example of an operation.
Before I conclude this blog post, let me tell you about 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 another.
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 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. 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 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 on a project or operation? Please share your experience in the comments section.
I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.
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?
Hello Hamada, negotiations are not project.
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.
As per my understanding it is an operation as you are doing it on regular basis.
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?
It will be a new project.
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.
Interesting post. Thank you! What is the relationship between operations and program and portfolio management, if any?
Please refer to the following blog post:
https://pmstudycircle.com/project-management-vs-program-management-vs-portfolio-management/
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?
You have clearly said that you worked as a “Project Manager”, so what is the doubt?
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
Thanks Bilal for your addition..
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