The Organizational Context:Strategy, Structure, and Culture
Chapter 2
OUTLINES
• Understand how effective project management contributes to achieving strategic objectives
• Recognize three components of the corporate strategy model: formulation, implementation, and evaluation.and evaluation.
• See the importance of identifying critical project stakeholders and managing them within the context of project development
OUTLINES (Cont.)
• Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects
• Understand how companies can change their • Understand how companies can change their structure into “heavyweight project organization” structure to facilitate effective project management practices
• Identify the characteristics of three forms of project management office (PMO)
OUTLINES (Cont.)
• Understand key concepts of corporate culture and how cultures are formed
• Recognize the positive effects of a supportive organizational culture on project management
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organizational culture on project management practices versus those of a culture that works against project management.
Introduction• Organization’s strategy, structure and culture are integral
parts that create environment in which a project is to be operated.
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• These parts provide the backdrop around which project activities must operate, so understanding what is beneath these issues is paramount.
Projects and Organizational Strategy
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Strategy
Projects and Organizational Strategy
Strategic management – the science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.
Consists of:– Developing vision and mission statements– Formulating, implementing and evaluating– Cross functional decisions– Achieving objectives
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Projects Reflect Strategy
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving forcebehind project development
Some examples include:
A firm wishing to… …may have a projectredevelop products or processes to reengineer products or
processes.
changes strategic direction or product portfolio configuration
to create new product lines.
improve cross-organizational communication & efficiency
to install an enterprise IT system.
Some examples include:
Relationship of Strategic Elements
Mission
Fig 2.1
Objectives
Goals ProgramsStrategy
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Stakeholder Management
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Stakeholder Management
Stakeholders are all individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development.
Sets of project stakeholders include:
Internal Stakeholders• Top management• Accountant• Other functional managers• Project team members
External Stakeholders• Clients• Competitors• Suppliers• Environmental, political,
consumer, and other intervenor groups
Project Stakeholder Relationships
Other Other Other Other Functional Functional Functional Functional ManagersManagersManagersManagers
External External External External EnvironEnvironEnvironEnviron
mentmentmentment
Parent Parent Parent Parent OrganizOrganizOrganizOrganiz
ationationationation
ClientsClientsClientsClientsProject
Manager
ProjectProjectProjectProject
TeamTeamTeamTeamAccountAccountAccountAccount
antantantant
Top Top Top Top ManageManageManageManage
mentmentmentment
Fig 2.3
Client Client Client Client • Concerned with the duration of receiving the project• Seek the right to make suggestions and request
alternations in project features
External Stakeholders
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• Result-oriented without overly involvement in project running
• Difficult to raise additional expenditure to client • May consist of a number of interest conflict clients• Communication must be done in business languages to
suit various clients.
CompetitorsCompetitorsCompetitorsCompetitors• Similar projects launched alter the project course of direction• Derive plausible lessons from competitor failures
SuppliersSuppliersSuppliersSuppliers• Raw material or resources provider
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• Raw material or resources provider• Ensure supplier receives the input information• Ensure supplier delivers items accordingly
Intervenor groupsIntervenor groupsIntervenor groupsIntervenor groups• Environmental, political, social, community-activist, or consumer
groups.• Effects asserted either positive or negative
Internal StakeholdersTop managementTop managementTop managementTop management• Control over project managers• Giving the initial ‘go’ decision, sanctions additional resource
transfers, supports and protects project managers.
AccountingAccountingAccountingAccounting• Support and actively monitor project budgets.
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• Support and actively monitor project budgets.
Functional managersFunctional managersFunctional managersFunctional managers• Project members – individuals on loan from departments• Divided loyalties among team members• Performance evaluations are conducted by functional managers
Project team membersProject team membersProject team membersProject team members• Motivation, commitment and productivity
Project Stakeholder Management Cycle
Identify Stakeholders
Gather Information on Stakeholders
Implement Stakeholder Management
Strategy
Fig 2.4
Project Management Team
Determine Stakeholder Strengths & Weaknesses
Strategy
Identify Stakeholders
Mission
Predict Stakeholder
Behavior
Identify Stakeholder
Strategy
Organizational Structure
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Organizational Structure
Organizational Structure
Consists of three key elements:
1. Designates formal reporting relationships– number of levels in the hierarchy– span of control
2. Groupings of:– individuals into departments– departments into the total organization
3. Design of systems for– effective communication– coordination– integration across departments
Forms of Organization Structure
• Functional organizations – group people performing similar activities into departments
• Project organizations – group people into • Project organizations – group people into project teams on temporary assignments
• Matrix organizations – create a dual hierarchy in which functions and projects have equal prominence
Functional organizations – group people performing similar activities into
departments
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Functional Structures for Project Management
Strengths Weaknesses1. Firm’s design maintained
2. Fosters development of in-depth knowledge
1. Functional siloing
2. Lack of customer focusdepth knowledge
3. Standard career paths
4. Project team members remain connected with their functional group
3. Projects may take longer
4. Projects may be sub-optimized
Functional Siloing Effect
• Siloing occurs when similar people in a work group are unwilling or unable to consider alternative viewpoints, collaborate with other groups or work in cross-functional ways.
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• Leads to interdepartmental arguments for crashing of interests and priority.
Project organizations – group people into project teams on temporary assignments
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Project Structures for Project Management
Strengths Weaknesses
1. Project manager sole authority
2. Improved communication
1. Expensive to set up and maintain teams
2. Chance of loyalty to the
3. Effective decision-making
4. Creation of project management experts
5. Rapid response
2. Chance of loyalty to the project rather than the firm
3. No pool of specific knowledge
4. Workers unassigned at project end
Matrix organizations – create a dual hierarchy in which functions and projects have equal prominence
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Matrix Structures for Project Management
Strengths Weaknesses1. Suited to dynamic
environments
2. Equal emphasis on project
1. Dual hierarchies mean two bosses
2. Negotiation required in order 2. Equal emphasis on project management and functional efficiency
3. Promotes coordination across functional units
4. Maximizes scarce resources
2. Negotiation required in order to share resources
3. Workers caught between competing project & functional demands
Weak Matrix vs Strong Matrix
Weak matrix (functional matrix)• Functional departments maintain control over their
resources and are responsible for managing their components of the project.
• Project manager – coordinator
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• Project manager – coordinator• Prepare schedules, update project statusStrong matrix (project matrix)• Control of project activities and functions • Assignment and control of project resources.• Functional manager – consultative position.
Heavyweight Project Organizations
Organizations can sometimes gain tremendous benefit from creating a fully-dedicated project organization
• Project manager authority expanded• Project manager authority expanded• Functional alignment abandoned in favor of market
opportunism• Focus on external customer
Project Management Offices
Centralized units that oversee or improve the management of projects
Resource centers for:Resource centers for:– Technical details– Expertise– Repository– Center for excellence
Forms of PMOs
• Weather station – monitoring and tracking
• Control tower – project management is a skill to be protected and supportedbe protected and supported
• Resource pool – maintain and provide a cadre of skilled project professionals
Organizational Culture
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Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and guide behavior, is shared by some subset of organizationmembers and is taught to all new members of the company.
Key factors that affect culture developmentKey factors that affect culture development– Technology– Environment– Geographical location– Reward systems– Rules and procedures– Key organizational members– Critical incidents
Culture Affects Project Management
• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation