The Organizational Context:Strategy, Structure, and CultureChapter 2

OUTLINESUnderstand how effective project management contributes to achieving strategic objectivesRecognize three components of the corporate strategy model: formulation, implementation, 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 projectsUnderstand how companies can change their structure into heavyweight project organization structure to facilitate effective project management practicesIdentify the characteristics of three forms of project management office (PMO)

2-*OUTLINES (Cont.)Understand key concepts of corporate culture and how cultures are formedRecognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.

2-*IntroductionOrganizations strategy, structure and culture are integral parts that create environment in which a project is to be operated.

These parts provide the backdrop around which project activities must operate, so understanding what is beneath these issues is paramount.

COMPANY STRATEGY MANAGEMENT

Vision & MissionObjectives & strategies Goals & programsStakeholder management

COMPANY STRUCTURE

Functional, projectmatrix, project management Office

COMPANY CULTURE

Operating policies and procedures, patterns of collective thinking, attitudes, and norms of behavior

2-*Projects and Organizational Strategy

Projects and Organizational StrategyStrategic 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 statementsFormulating, implementing and evaluatingCross functional decisionsAchieving objectives

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Projects Reflect StrategyProjects are stepping stones of corporate strategyThe firms strategic development is a driving force behind project developmentSome examples include:

A firm wishing tomay have a projectredevelop products or processesto reengineer products or processes.changes strategic direction or product portfolio configurationto create new product lines.improve cross-organizational communication & efficiencyto install an enterprise IT system.

Relationship of Strategic ElementsActivity:Write strategic elements of your organisation/company.

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2-*Stakeholder Management

Stakeholder ManagementStakeholders 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 StakeholdersTop managementAccountantOther functional managersProject team members

External StakeholdersClientsCompetitorsSuppliersEnvironmental, political, consumer, and other intervenor groups

Project Stakeholder RelationshipsClientsProjectManagerOther Functional ManagersExternal EnvironmentProjectTeamAccountantTop ManagementParent OrganizationFig 2.3

2-*Client Concerned with the duration of receiving the projectSeek the right to make suggestions and request alternations in project featuresResult-oriented without overly involvement in project runningDifficult to raise additional expenditure to client May consist of a number of interest conflict clientsCommunication must be done in business languages to suit various clients.

External Stakeholders

2-*CompetitorsSimilar projects launched alter the project course of directionDerive plausible lessons from competitor failures

SuppliersRaw material or resources providerEnsure supplier receives the input informationEnsure supplier delivers items accordingly

Intervenor groupsEnvironmental, political, social, community-activist, or consumer groups.Effects asserted either positive or negative

2-*Internal StakeholdersTop managementControl over project managersGiving the initial go decision, sanctions additional resource transfers, supports and protects project managers.

AccountingSupport and actively monitor project budgets.

Functional managersProject members individuals on loan from departmentsDivided loyalties among team membersPerformance evaluations are conducted by functional managers

Project team membersMotivation, commitment and productivity

Project Stakeholder Management CycleFig 2.4

2-*Activity: Draw organizational chart of your previous organization/company.

How many levels are there between fresh graduate engineer and the top management?Organizational Structure

Organizational StructureConsists of three key elements:

Designates formal reporting relationshipsnumber of levels in the hierarchyspan of control

Groupings of:individuals into departmentsdepartments into the total organization

Design of systems foreffective communicationcoordinationintegration across departments

Forms of Organization StructureFunctional organizations group people performing similar activities into departments

Project organizations group people into project teams on temporary assignments

Matrix organizations create a dual hierarchy in which functions and projects have equal prominence

2-*Functional organizations group people performing similar activities into departments

Functional Structures for Project Management

StrengthsWeaknessesFirms design maintained

Fosters development of in-depth knowledge

Standard career paths

Project team members remain connected with their functional groupFunctional siloing

Lack of customer focus

Projects may take longer

Projects may be sub-optimized

2-*Functional Siloing EffectSiloing 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.Leads to interdepartmental arguments for crashing of interests and priority.

2-*Project organizations group people into project teams on temporary assignments

Project Structures for Project Management

StrengthsWeaknessesProject manager sole authority

Improved communication

Effective decision-making

Creation of project management experts

Rapid responseExpensive to set up and maintain teams

Chance of loyalty to the project rather than the firm

No pool of specific knowledge

Workers unassigned at project end

2-*Matrix organizations create a dual hierarchy in which functions and projects have equal prominence

Matrix Structures for Project Management

StrengthsWeaknessesSuited to dynamic environments

Equal emphasis on project management and functional efficiency

Promotes coordination across functional units

Maximizes scarce resourcesDual hierarchies mean two bosses

Negotiation required in order to share resources

Workers caught between competing project & functional demands

2-*Weak Matrix vs Strong MatrixWeak matrix (functional matrix)Functional departments maintain control over their resources and are responsible for managing their components of the project.Project manager coordinatorPrepare 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 OrganizationsOrganizations can sometimes gain tremendous benefit from creating a fully-dedicated project organization

Project manager authority expandedFunctional alignment abandoned in favor of market opportunismFocus on external customer

Managers Perceptions of Effectiveness of Various Structures on Project Success02-*Figure 2.10

Project Management OfficesCentralized units that oversee or improve the management of projects

Resource centers for:Technical detailsExpertiseRepositoryCenter for excellence

Forms of PMOsWeather station monitoring and tracking

Control tower project management is a skill to be protected and supported

Resource pool maintain and provide a cadre of skilled project professionals

PMO Control TowerPerforms four functions:Establishes standards for managing projectsConsults on how to follow these standardsEnforces the standardsImproves the standards02-*

2-*Organizational Culture

Discuss organizational culture in your organization and how its affect team performance.2-*

Organizational CultureThe unwritten rules of behavior, or norms that are used to shape and guide behavior, is shared by some subset of organization members and is taught to all new members of the company.

Key factors that affect culture developmentTechnologyEnvironmentGeographical locationReward systemsRules and proceduresKey organizational membersCritical incidents

Culture Affects Project Management Departmental interactionEmployee commitment to goalsProject planningPerformance evaluation

Astrategy is a plan of action designed to achieve a specific goal direction and scope of an organisation

Organisational structure- task allocation, coordination and supervision, which are directed towards the achievement of organizational aims

Culture- work-life balance, management-worker relationship, punctuality**USM vision: Transforming Higher Education for a Sustainable TomorrowUSM Mission: USM is a pioneering, transdisciplinary research intensive university that empowers future talent and enables the bottom billions to transform their socio-economy.

A mission statement answers three key questions:What do we do?For whom do we do it?What is the benefit? A vision statement, on the other hand, describes how the future will look if the organization achieves its mission. A mission statement gives the overall purpose of an organization, while a vision statement describes a picture of the "preferred future." *VisionMissionValuesThrusts*Classic example Kodak have to change its strategic direction as digital camera is becoming cheaper and less film-based cameras are used.*All elements should be in parallel with each other.*Internal stakeholder-top management, accountant, other functional managers, project team membersExternal stakeholder-ClientsCompetitorsSuppliersEnvironmental, political, consumer, and other intervenor groups

*Intervenor group: *Lynas stakeholder: Regulators, environmentalist, voters, residence, public body representativesCONSULTATION*Eg: Ipad team*