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7 Project Management Methodologies You Need to Know About

Meredith Wood

Meredith Wood

Vice President and Founding Editor at Fundera
Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
Meredith Wood
Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone.

Time is money. We’ve all heard this mantra of entrepreneurs at least once before. Small business owners know it’s true––the more time spent on a task, the less money you make. So how can you streamline your operations and become more efficient with your work if you have few resources and a small team?

Enter project management. As a small business owner, you are also a project manager. This means that it falls on you to continuously optimize and improve your small business’ day-to-day operations.

Delivering your services to clients in a timely, effective manner while staying within budget is your ultimate goal. With a limited budget and only a handful of employees, this is no easy task. Luckily, project management systems can give you the framework and guidance you need to be a more efficient project manager for your business.

Below, we’ll cover the main methodologies for project management. They range from broad ideas to specific processes, giving you plenty of options when it comes to choosing the right system for your small business. Read through each method to find out more about them or jump straight to our infographic or a visual look at these project management methodologies.

Agile Project Management

Originally created in 2001 by the Agile Manifesto, the Agile Project Management system was developed as a solution to the inadequacies of the older Waterfall Method.

Agile Project Management is not a specific process to be followed. Instead, it is a broad idea of project management, characterized by key values that help teams adapt to situations as they occur. It serves as an umbrella for several other project management methods, including Scrum, Kanban, and Lean.

Values of Agile Project Management:

  1. Individuals and interactions over processes and tools
  2. Working software over comprehensive documentation
  3. Customer collaboration over contract negotiation
  4. Responding to change over following a plan

Benefits of Agile Project Management

  • Emphasis on adaptability
  • Constant feedback from end users
  • Multiple iterations to make adjustments
  • Opportunity for team collaboration

Agile Project Management works best for teams who operate with a degree of unpredictability or frequent change. Often used for software, game development, or digital collaboration tools, Agile systems allow for a dynamic response to evolving requirements and give teams ongoing communication with their clients, cross-functional departments, and customers.

When to Use Agile Project Management

Agile Project Management works best when:

  • Requirements or deliverables are not clearly defined by clients.
  • Clients or stakeholders have high involvement in the work process.
  • Frequent changes in work-flow are possible.
  • Team members collaborate frequently and effectively.
  • System failure would not harm or damage a group of people.
    • For example, a system failure in a hospital setting could lead to hundreds of patients receiving inadequate care or improper treatment.

Scrum Project Management

One of the most popular forms of Agile Project Management, Scrum systems work to improve communication and speed of development through cross-functional teamwork. However, Scrum Project Management is unique in that it focuses on short bursts of time to complete work.

Important values of Scrum Project Management include:

  • Focus on the Sprint (current tasks) and goals of the team.
  • Practice transparency within the team.
  • Allow for independent problem-solving.

Scrum Project Management is unique in that it centers on specific sequential processes to complete work and accomplish team goals.

Scrum “events” or stages of work:

  1. Sprint Planning: Preceding every Sprint, the Scrum team meets to plan tasks.
  2. Sprints: These chunks of time (usually two to four weeks) are used to accomplish team goals.
  3. Daily Scrum: 15-minute meetings are held daily to discuss and review goals.
  4. Sprint Review: Meetings held at the end of the Sprint are used for client feedback.
  5. Sprint Retrospective: The Scrum team reflects on the previous Sprint and plans improvements for the next Sprint.
  6. Product Backlog: This to-do list highlights tasks in order of importance for the team.

Benefits of Scrum Project Management

  • Emphasis on flexibility
  • Periodic feedback from clients
  • Frequent quality checks

Scrum systems work best for small, cross-functional teams who prefer to operate with flexibility. As with other Agile Project Management methods, Scrum work is highly adaptable and relies on a cohesive team. In general, Scrum works when projects take less than a month to complete.

When to Use Scrum Project Management

Scrum Project Management works best when:

  • Projects generally take less than one month to complete.
  • Team size does not exceed eight to nine people.
  • Project requirements are not clearly defined.
  • The possibility of some change during a project is high.
  • Individual team members are independent workers.

Scrum Project Management is popular with employees and improves team collaboration. One case study found that Scrum increased team motivation and satisfaction and reduced development time by 75% for a Brazilian pharmaceutical company.

This is especially relevant for small business owners who know that keeping employee morale high is crucial for success.

Kanban Project Management

Similar to Scrum, Kanban Project Management is a form of the Agile system. However, where Scrum focuses on time, Kanban Project Management focuses on organization.

The overall goal of the Kanban Project Management method is to achieve higher output with lower production times. The method originated in the 1940s on a Toyota manufacturing line in Japan and was created as a way to better compete with American car production.

The core principles of the Kanban Method are as follows:

  • Make no changes to current processes.
  • Pursue small, incremental changes.
  • Make no changes to current roles or titles.
  • Encourage leadership at all levels.  

The Kanban Method has six basic steps:

  1. Visualize the flow of work with a Kanban Board.
  2. Limit tasks in the work-in-progress (WIP) section.
  3. Manage the flow and make small adjustments.
  4. Make process rules clear for all team members.
  5. Add feedback loops for faster course correction.
  6. Collaborate and experiment to continue improving.

The focus of implementing the Kanban Project Management Method is on the Kanban Board. This can either be a physical or digital board and should be used to accurately track the flow of tasks in the system.

The three main sections of the Kanban Board are:

  1. To-Do: tasks not yet completed by the team
  2. In-Progress: tasks currently being worked on.
  3. Done: tasks recently completed.

Benefits of Kanban Project Management

  • Non-disruptive to current processes
  • Gradual changes
  • Reduce cycle time

The main benefit of the Kanban Method is that it can be applied to any work process in virtually any industry without disrupting current practices. It is not a traditional project management method for software creation, but rather a method of improving personal or team work flow.

When to Use Kanban Project Management

Kanban Project Management works best when:

  • Current processes cannot be changed easily.
  • Projects or priorities change often.
  • Projects are typically large and take more than a month to complete.

Kanban Project Management can help companies manage projects that take up most of their resources. Teradata, an analytics and consulting services company, found Kanban Project Management preferable to Scrum after noticing that Scrum Management did not accommodate for larger projects. After implementing the Kanban Method, the Teradata team was able to complete a project one month early and under budget.

Lean Project Management

As the name implies, Lean Project Management focuses on efficiency. The goal of this type of Agile Project Management is to create the most value for customers and clients while reducing waste and using fewer resources.

The five principles of Lean Project Management are:

  1. Define value for the customer or end user.
  2. Map the value stream and remove waste.
  3. Create flow to eliminate interruptions.
  4. Respond to pull (consumer demand) for just-in-time delivery.
  5. Pursue perfection for continuous improvement.

Waste as described by Lean Project Management:

  • Muda refers to any activity that does not add value for clients and customers. This includes transportation, wait time, overproduction, over-processing, and defects.
  • Mura refers to variances in workflow that may slow or hinder production time, including too much time spent on one task.

  • Muri refers to managers imposing unnecessary stress on their team, including poor organization, unclear expectations, and unreasonable standards.

For small business owners who need to save money wherever possible, the Kanban Project Management method could be a solution for projects that take the majority of company resources to execute.

Benefits of Lean Project Management

  • Focus on delivering value
  • Efficiency
  • Streamlining
  • Improved customer satisfaction

By eliminating “waste” from a system, Lean Project Management gives teams and managers greater control over their process and allows them to look more closely at what adds value for customers.

When to Use Lean Project Management

Lean Project Management Method works best when:

  • The project is relatively small and has a short lifespan.
  • Past projects have gone over budget or projected lifespan.
  • The project is relatively simple to complete.

Lean Project Management works well for financial institutions hoping to stand out from competitors. Boston Consulting Group found that banks see 15–25% improvement in efficiency using the Lean Method by cutting wait time in customer service. In fact, one bank was able to process customer transactions 30% more efficiently.

If your small business needs an improvement in overall efficiency, the Lean Project Management method could help you reduce unnecessary tasks and focus on those that really matter to the client.

Waterfall Project Management

First introduced in 1970, the Waterfall Project Management method uses a sequential pattern to move through the software development lifecycle.

Waterfall Project Management is a simple step-by-step process that follows six stages:

  1. Requirements: A document outlining what the application should do is created.
  2. Analysis: Models are generated and the team begins building the application.  
  3. Design: Technical design elements, including programming and coding, are created.
  4. Coding: Source code is written to implement all design elements.
  5. Testing: Beta testers discover and report malfunctions or “bugs” in the application.
  6. Operation: The application is deployed, supported, and maintained by the team.

Benefits of Waterfall Project Management

  • Structured order
  • Organization
  • Predictable process

Some argue that the Waterfall method is too rigid for the fast-paced environment of today’s software development firms and agencies, leading to the emergence of Agile Project Management methods.

When to Use Waterfall Project Management

Waterfall Project Management works best when:

  • Requirements for the project are clear.
  • The project must meet strict, inflexible deadlines.
  • Technological components are simple and easily understood.
  • The project is short and relatively uncomplicated.
  • The team involved is large or subject to change.
  • System failure would harm or damage a group of people.

Waterfall Project Management shouldn’t be combined with other methods when system failure could be harmful to end users. On October 1, 2013, HealthCare.gov rolled out their website for the first time. Within 2 hours of launching, the website was down, leaving millions of Americans in the dark on their new health care coverage.

Project management systems for the website tried to combine Agile and Waterfall principles, a fatal mistake for a website with millions of users attempting to access at one time. Website users lost access to the site and were unable to register for potentially life-saving health insurance. The cost of the website inflated dramatically from $93.7 million to $1.7 billion, a disaster for HealthCare.gov.

Small business owners beware: trying to adapt Waterfall Project Management with Agile principles can be dangerous for end users, clients, and customers.

However, the Waterfall method is still commonly used around the world as an effective method of project management. In fact, one study found that it is still more widely used than Agile Project Management, with 53% of projects using Waterfall.

Six Sigma Project Management

Six Sigma Project Management focuses on improving the quality of output. Originally coined by Motorola in the 1980s, Six Sigma Project Management has been used successfully across industries to streamline operations by using both statistical and empirical principles to manage quality. It can be added to other project management techniques to improve the overall process of a business.

Six Sigma Project Management is defined by the DMAIC roadmap, an outline of steps needed to complete a project:

  1. Define: This step identifies problems, goals, resources, project timeline, and scope. It may include a project charter document where details are kept for team use.
  2. Measure: This step collects data on the current system to establish a baseline for future improvement.
  3. Analyze: Using collected data, this step identifies problems and variances in the system to prioritize issues to be solved or improved.
  4. Improve: This step tests solutions to identified problems, involves brainstorming for possible alternatives, and implements plans to improve the system.
  5. Control: Solutions and improvements are monitored, maintained, and adjusted to ensure continuous control of the system.

The Benefits of Six Sigma Project Management

  • Customer-focused
  • Reduction of waste
  • Quality improvement

The goal of Six Sigma Project Management is continuous improvement. The method uses statistical principles to look for areas of improvement and implement solutions in those areas.

When to Use Six Sigma Project Management

  • Customer loyalty and retention is dropping.
  • Projects have strict deadlines.
  • Data about a project or process is readily available.

More than half of all Fortune 500 companies use Six Sigma Project Management. General Electric implemented Six Sigma Project Management in 1995 after turning their focus towards product quality. After a five-year implementation period, General Electric reported $12 billion savings. Companies like Ford, Boeing, Amazon, and Samsung now incorporate Six Sigma into their processes as a result.

With large companies seeing great success under the Six Sigma framework, it’s likely that a small business could also benefit from the process.

PRINCE2 Project Management

PRINCE2, acronym for Projects in Controlled Environments, uses a product-based approach to define projects and divide them into manageable stages. It’s used primarily by the British government and private sector in the United Kingdom.

The PRINCE2 process has seven steps:

  1. Start the project: A detailed outline of the project is presented to a board, who determines if the project is a viable option for the company.
  2. Initiate the project: In this stage, factors like scope, risk, strategies, and plans are identified and documented.
  3. Direct the project: This step includes the beginning of the project’s lifespan and all stages of the project.
  4. Control stages: The project manager delegates work and monitors the project, looking for potential issues and problems with quality.
  5. Manage product delivery: In this step, the product is completed, packaged, and delivered.
  6. Manage stage boundary: The project manager reviews performance with the board, who then review and approve an updated plan for the project.
  7. Close the project: The project is evaluated to ensure all goals have been met before handing off to the end user or client.

Benefits of PRINCE2 Project Management

  • Flexibility
  • Clarity
  • Standardization

PRINCE2 can be applied to any project regardless of size, scope, or industry. It clearly defines roles within a team, establishes how a project should be managed, and holds management accountable for a project’s success.

When to Use PRINCE2 Project Management

PRINCE2 Project Management works best when:

  • Projects can be easily divided into smaller tasks
  • Team members have defined roles
  • A board or top-level management figure is available

PRINCE2 can help businesses minimize risk and error in current processes. VocaLink processes domestic and international payments in the UK, running nearly 91 million payments every day and 9 billion annually. The company adopted PRINCE2 Project Management to help minimize risk and eliminate potential errors in business systems with great success, seeing fewer missed transactions and greater control of small tasks.

If your small business is struggling to maintain control of details, adopting the PRINCE2 Project Management method could help eliminate errors.

How the Right Project Management Methodology Could Help Your Small Business

For small businesses, project management can be a challenge. While large companies have nearly limitless resources and staff available to monitor departments and tasks, small business owners may be on their own or have only a small team to help them hit goals, meet deadlines, and keep customers happy.

This is why the right project management method is crucial to the success of your goals as a small business owner. So how do you know which one is right for you?

How to Choose a Project Management Methodology

Every small business is different: teams, goals, culture, and clients all contribute to highly unique environments. So how do you choose a project management method to suit your specific needs?

When evaluating different methods of project management, consider these factors:

  • Strategic goals
  • Core values
  • Business drivers
  • Constraints
  • Stakeholders
  • Risks
  • Project complexity
  • Project size/scope

These factors play a significant role in the project management method that will work for your needs. Once you have evaluated and documented these, it’s time to test a method.

Follow these general steps to find and implement a project management method:

  1. Identify goals and priorities of the project.
  2. Note all factors a method might impact.
  3. Determine which methods are most relevant.
  4. Compare and contrast each method for your project.
  5. Identify which method offers the best results with the least risk.
  6. Inform stakeholders and get feedback.
  7. Document the chosen method and choice rationale.
  8. Implement the methodology as dictated by that method.
  9. Monitor project and make adjustments as needed.
  10. Review completed project.

Check out the infographic below to learn everything you need to know about project management methodologies.

Remember: there is no one-size-fits-all method when it comes to small business project management. Always approach project management implementation with a critical eye, look for ways to streamline processes, and strive for continuous improvement in all areas of your small business for best results.

 

Sources:
Digital Initiative | FinancesOnline | Agilest | Emerald Insight 1, 2 | Scrum Alliance | Software Advice | The Lean Way | Playbook HQ | Smartsheet | 6Sigma | Grey Campus | Project Manager | PMI | CIO | Clarizen | Digital Project Manager | nTask Manager | Agile Manifesto | University of Maryland | Gartner | Knowledge | PRINCE2

Meredith Wood

Meredith Wood

Vice President and Founding Editor at Fundera
Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
Meredith Wood

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