What Is a Project Management Tool?

What Is a Project Management Tool?

A reliable project management tool significantly facilitates monitoring, planning, and executing projects across all organizational levels. These tools create transparency, so everyone knows their responsibilities and obligations.

With a diverse range of features, including flexible project views such as portfolio, table, analytics, project tracking, resourcing, and Gantt charts, among others, project management tools are crucial for any business workflow.

According to the latest estimates, nearly 77% of high-performing teams use a project management tool. Also, companies that invest in project management software waste 26 times less money than companies that don't.

Project management tools assist individuals and teams in managing and organizing their tasks and projects effectively. It's important to mention that project management tools aren't specifically designed for project managers. They can be customized and adjusted to fit the needs of a team of different sizing and with different organizational goals.

Among other features, these tools help project managers control costs, stay within scope, and stick to a deadline. Now, let's further explain its features, review its potential benefits, and see how it affects project management.

How does project management work?

Project management isn't something you can learn overnight. It takes years of experience and hard work to master this particular set of skills, especially when you have to complete a project within budget and on time.

Each project has its ups and downs and poses a distinct set of project management challenges. But whatever project you are working on, you probably face high expectations and tight deadlines.

Unfortunately, project management isn't a system of trial and error, and experimentation in most cases leads to failure. To succeed, you need to abide strictly by principles. If we were to define project management, we would say this is a process of planning, executing, and completing projects.

Project managers apply specific processes and methodologies and use specifically designed software to deal with resources and guide their teams. Nowadays, most companies will use project management tools like ActiveCollab, which allows them to manage costs, resources, plans, and teams in one place.

The main goal of project management is to finish a project within budget, on time, and quality. Projects, of course, have a life cycle since none of them lasts forever. Their life cycle starts when the project is initiated and ends when it is completed or terminated.

At the end of each stage, stakeholders will decide whether to terminate the project or to continue with its flow. According to some surveys, only 58% of companies understand the importance of project management.

You can't expect to tackle any issue if you don't know how project management works. Apart from boosting project transparency and productivity, project management brings many other advantages to the table:

  • A clear vision of the team
  • Efficient resource management
  • Effective communication
  • Better customer satisfaction
  • Retrospective learning
  • Improved team morale

What is a project management system?

Put simply, a project management system oversees the execution of a project. It can offer managers and teams a framework for creating procedures, delegating responsibilities, and managing expectations.

A project management system covers a wide range of features that are part of a project plan. With the help of this system, you can assess and organize information when needed. The common project plan components include:

Scope. It is crucial to set up a clearly defined scope since it identifies project expectations and ensures everyone involved understands what's expected from them. When you have a clearly outlined scope within a project management system, it means that no one else can add new elements without corresponding allowances.

Measuring success. Knowing how involved parties judge a project's success at completion is important during the planning and execution stage. By applying certain success metrics, stakeholders can evaluate performance on the project. This ensures everything runs smoothly while avoiding misunderstandings about expectations during the final stages of the project.

Deliverables. When the project is near the finishing line, parties involved might expect certain deliverables. Therefore, it's crucial to include those in the project management system. It might be a good idea to list details about deliverables as well, like quality and quantity information. If you include deliverables, you will have a written record of expectations, which allows you to avoid misunderstandings at delivery.

Work breakdown structure

Another significant part of the project management system, the work breakdown structure, defines tasks necessary to complete a project while meeting goals and expectations. It also defines the team's responsibilities and ensures members understand their expectations and roles during the execution stage.

Timeline. Establishing a schedule is equally important as previously mentioned steps. The project management system assists you in managing scheduling throughout the execution of a project by offering a timeline for individual elements and the overall project. A project management system may use different apps or tools to help team members figure out their timeline expectations and track progress for individual tasks.

Budget. It's the project manager's responsibility to keep a project within budget. But, if you have a project management system set in place, you can easily track overall spending and allocate funds successfully. Project management software allows you to monitor the spending of an allocated budget without too much trouble. This helps you determine whether some departments in your organization need additional funding.

Quality control. This process ensures that production and deliverables on a project meet necessary standards. A project management system measures quality levels and signals when they have fallen below a set threshold. This way, you can quickly recover by making sudden changes to improve quality levels and meet targets.

Staff management plan. A staff management plan guides team members working in human resources. This plan can be an important part of a project management system because it offers structure to HR staff when collaborating with other staff on the project.

Stakeholders. They are parties who have an invested interest in project success. They might be owners or investors within a company. Stakeholders can be active participants or simply benefit from the project. They can also state their project goals.

Type of communication. Communication is crucial to any project, and your project management system can make communication significantly easier. Meetings and events are a form of formal communication. Also, the software you use within an organization can help you improve communication by forming messaging systems and chat rooms to discuss projects.

Risk assessment. Effective planning isn't possible without risk assessment. The risk section of the project management system evaluates the potential cost of risks your company faces when executing a project and the likelihood of facing the risks. You may include financial, quality, and time-based risks at this stage.

Procurement plan. Sometimes you will work on a project that demands outside resources. In that case, knowing how to get them is important. They can be a physical resource you need to complete a project or labor resources like a task that requires you to contact another organization or a professional.

What are project management tool benefits?

If you use a project management tool like ActiveCollab, you can enjoy the following benefits.

Scheduling and planning. One of the most constructive features of project management software is the scheduling and planning of tasks and activities. You can't expect your project to succeed without scheduling and planning. This tool allows you to delegate and plan work, divide responsibilities to all team members, and have everything in one place, including tasks, subtasks, templates, workflow, calendars, and folders.

Collaboration. Emails are no longer the only form of communication when transferring information from one team member to another. You can effectively use a project management tool to ask for approvals and proofing, assign tasks, organize dashboards, and add files or comment on tasks.

Documentation. When working on multiple projects, expect some files to get lost. Most of the time, there will be no way to recover them. To avoid similar mistakes, project management software provides features like editing, saving, and storing files, making your life much easier.

Assessment. This software provides functionalities like reporting and resource management, which help project managers evaluate and track productivity as well as growth.

Remote working. Modern projects aren't bound to a physical location or a department. Now, the workforce is scattered worldwide, and managing them has become quite challenging. With the help of project management software, you can manage projects remotely, as these help project managers lead their teams successfully.

Easier integration of new members. Projects tend to be quite dynamic, and sometimes new members have difficulties fitting in. However, you can easily handle this issue with the help of a project management tool. This software has the option to maintain a project log automatically and simplistically envision the entire project.

Budget management. As we discussed, a major benefit of using project management software is its ability to efficiently manage every resource. During a project lifecycle, your project may go off track. However, project management tools can prevent project costs from skyrocketing.

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The key project management tool requirement

Projects. Projects are the primary component of a project management tool. Specifically, this software oversees projects and all their parts. It also allows project managers to define projects for their teams, lay out crucial information like assumptions, risks, and scope, centralize information, prevent time-wasting, and confirm project expectations.

Many tools have pre-built plan templates, which is incredibly useful. You don't have to start from scratch every time you initiate a new project. Keep in mind that pre-built templates apply only to standard projects. For non-standard projects, you can create your own custom project templates.

Tasks and requirements. Part of managing projects is managing people as well as getting work done. Project management tools offer a wide range of features that help managers organize their teams. You can set milestones or divide large goals into smaller ones by breaking them into manageable structures.

These tasks also have due dates, ensuring the project stays on schedule. Another feature project managers can explore is task dependencies. It means you can connect tasks that depend on other tasks and reschedule them if necessary. This will ensure all activities stay organized and on track.

Users and roles. Since projects tend to involve sensitive information, role-based access is crucial. The project management tool allows you to grant guest account access and invite clients, freelancers, vendors, and other participants to assess the project to some degree.

Managers can also create user groups. For instance, freelancers can see some project sections, but the manager can access everything. This minimizes confusion between teams.

Workflow. The project management tool helps users design customized workflow. It means they can use already designed workflows with standardized task tracking or choose to create their own.

What is a simple project tracking tool?

Let's start from scratch and explain what project tracking is. Essentially, this is a project management method that tracks the progress of tasks in a project. By tracking progress, you can identify issues and keep your project on schedule and within budget.

Project tracking assists stakeholders and project managers in knowing how much work has been done and what resources have been used. It's necessary to mention that project tracking wouldn't be possible without specific project management techniques and tools.

For instance, we have a Gantt chart that provides an overview of milestones, workload, and tasks at every stage of the project life cycle, ensuring project managers easily track project progress.

Now, let's move to project tracking tools and what they actually stand for. As the name implies, project tracking software is the best way to track your project. It overviews all the tasks linked to the project and helps project managers stay on schedule.

The majority of project tracking tools aren't used for tasks only; they also track resource management and budget. A project tracking tool is highly beneficial even before the execution stage of a project. During planning, it can help you with the resources you require to complete tasks.

Once you move to the monitoring and control stage of your project, the software really shows its value, allowing you to see whether your actual progress fits the timeframe you hoped to accomplish. This tool is superior to project tracker templates made with spreadsheets like Google Sheets or Excel because it allows project managers to access data in real-time.

What to look for in work planning tools?

Aside from business resource planning, the success of your project will mostly depend on the project planning apps and software solutions you choose because they will help you optimize the planning phase.

First, project planning strategies should include apps or tools that help project managers gather teams and compile documents at the outset of the project.

Moreover, you want your work planning tool to have a feature that facilitates capacity planning. For those unfamiliar with this term, capacity planning helps you organize your resources so that you can accomplish project goals with the resources you already have.

Lastly, you'll want your tool to have a resource planning option to use your resources efficiently while avoiding project delays and burnout.

Don't forget about task management, which is another highly desirable feature. Many work planning tools will allow you to create tasks, and subtasks, set deadlines, assign task owners, approve, review, and organize tasks according to priority.

The ability to integrate your planning tool with other apps will significantly facilitate your work. Some names include Adobe Creative Cloud, Google Drive, Gmail, Slack, and others.

Now that you understand the purpose of the project management tool, you may be wondering, what is the best tool for my needs? While there are many solutions available on the market, the best project management software for your organization will need to include several factors like pricing structure, the number of users, scalability, user-friendly, and key features required.

We strongly believe that ActiveCollab ticks all the boxes. If you have already tried it, tell us your impressions, and if not, you can check out How the best project management tools compare.