Category: Project Management Professional (PMP)® Exam using A Guide to the Project Management Body of Knowledge (PMBOK® Guide)

Business Acumen for the PMP Exam

Depositphotos 12865546 s 2015Do you have business acumen? Successful project managers do. Business acumen is something you can learn and this article will help you do so. I’ll clarify what business acumen is, why it matters and, crucially, how it relates to the PMP Exam in a project context.

In the PMP Exam, organizational and operational awareness is a topic you will most likely be tested on. This is linked to business acumen and I’ll share everything you need to know about these topics too, so you can be fully prepared for any of the business acumen and related questions in the PMP Exam.

Business Acumen for PMP: A Definition

Let’s start by defining what we mean by business acumen. ‘Business’ refers to the operational context, the environment in which you work. You don’t have to work in a company that traditionally sees itself as a ‘business’ so you could work for a charity or in a volunteer capacity, but you’ll still have an operational context.

‘Acumen’ refers to the ability to be able to make good decisions and to have good professional judgment.

Business acumen, therefore, is common sense in a business environment. It relates to being able to read the financial and operational landscape and apply that to your decision making and recommendations. It’s big picture thinking with a commercial hat on.

The Connection to Business Value

As a PMP, business value is how you show that your projects are worth investing in. Business value is about the return that your company gets for the effort and resources you put into the project. If you have good business acumen, you are going to get better business value out of your projects.

The more connected you are to your organizational context, the more strategically aligned your decisions, the more aware you are of what the business considers valuable, the easier it is to drive business value from your projects. You’ll be making decisions that take all of that into consideration and working every day to get the best result for the company.

That might sound like something only business owners need to do. Business acumen plays a major role in the everyday life of a business owner. They need this to drive their business forward. However, there’s a strong connection between business acumen, value and the role of the project manager.

Project managers today need to do more than just plan out and mark tasks as complete on a Gantt chart. The role of the project manager is evolving to include the consideration that the projects we work on deliver value. You can do that more effectively if you have business acumen.

To give you an example, you can schedule your projects so that your interim milestones deliver something of value to the business, so that your stakeholders get some returns more quickly instead of waiting until the project completes to see the difference that you have made.

Organizational and Operational Awareness for PMP

While organizational and operational awareness might sound like totally different concepts to business acumen, they are all related. Business acumen is a more generic term that is transferable between jobs and companies. You can have business acumen wherever you work, and that mindset goes with you to your new job.

Organizational and operational awareness change from company to company as they relate specifically to the business you are working in right now. When you join a new company you will have to spend some time being open to learning about these concepts as they relate to your new job in your new company.

As a PMP, operational awareness relates to how you get work done in the business. It refers to how the business operates, and your understanding of these processes. Organizational awareness is more to do with general, wider understanding of business culture, the different teams, hierarchy and values.

Let’s look now at what it means to apply business acumen and organizational and operational awareness in real life.

Business Acumen: PMP Guide

The easiest way to build your business acumen quickly is to think about how your company or organization operates in the marketplace. Think about the products you sell and how the business generates an income. Think about what it spends that money on.

It’s not always easy to find out how it all works in your company, so a good way to begin is to sit with your manager, project sponsor or mentor and ask them. Here are some questions to get started.

Does doing this project generate cash for the business or simply spend it?
If the project generates cash, when will we start seeing it and what could we do to see it more quickly?
Does this project impact the company’s margins? In other words, will we be more cost-effective as a business after this project has completed?
Does this project help us do work more quickly? What’s the benefit of that?
Does this project address failings in customer satisfaction?
Does this project align with the business values and goals?

As you can see, business acumen in the PMP world is really about understanding how your project contributes to the financial and strategic position of your company in relation to others in the marketplace, shareholders and competitors.

Business acumen often comes down to being able to assimilate information and a lot of that information relates to finances. If you aren’t comfortable working with numbers, then start improving your confidence there.

Your project sponsor and stakeholders are often mainly interested in how much projects will cost and what they are going to get out of them. Business acumen and answering these questions will give you the answers!

How To Use Business Acumen in Project Management

Business acumen is knowledge and an approach you take: an outlook on how to do project management in the most effective way. Think of it like professional judgment.

As a PMP, business acumen is something you have and use but it’s not important to document it. There are exceptions to this as there are some elements of operational awareness that might be relevant in your business case or project charter.

To give you another example, business acumen also helps you define the operational dependencies that you might face on the project, or the socio-political constraints. You would document these, but you wouldn’t document how you are going to use your business acumen.

Tip: If it helps you, make notes about the things you learn about your business and how it works. These can be your personal crib sheets and ‘go to’ guides, but they don’t need to form part of your published project documentation.

Taking it Further: More on Business Acumen

Business acumen, organizational awareness and operational awareness are big topics and while we’ve covered a lot here there is more to learn than we have space for. When you’re choosing a PMP training course, make sure that it covers these topics in detail. The PM PrepCast contains everything you need to know about business acumen for PMP, along with all the other topics required to pass the PMP Exam. Find out more at http://www.pm-prepcast.com/pmprepcast.


Training for Project Management Professional (PMP)®, PMI Agile Certified Practitioner (PMI-ACP)®, and Certified Associate in Project Management (CAPM)®