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project management 7th edition

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  1. 1. Chapter 5 The Role of Projects in the Organization
  2. 2. Project Growth <ul><li>Need for speed, market responsiveness, and product flexibility </li></ul><ul><li>Need for broader areas of knowledge in developing new products and services </li></ul><ul><li>Rapid expansion of technology </li></ul><ul><li>Management inability to understand and control large numbers of activities </li></ul>
  3. 3. Switching to Project Environment <ul><li>Is difficult and time consuming </li></ul><ul><li>Requires the full commitment of upper management </li></ul><ul><li>Generally causes a lot of “concern” among employees </li></ul><ul><li>As a result, organizations may have multiple structures </li></ul>
  4. 4. Organizational Issues Related to Projects <ul><li>How to tie project to parent firm </li></ul><ul><li>How to organize the project </li></ul><ul><li>How to organize activities common to multiple projects </li></ul>
  5. 5. Traditional Forms of Organization <ul><li>Functional </li></ul><ul><li>Pure project </li></ul><ul><li>Matrix </li></ul><ul><li>Mixed </li></ul>
  6. 6. The Project as Part of the Functional Organization <ul><li>Organization is divided into functional sub-units </li></ul><ul><ul><li>Integration between sub-units handled by rules, procedures </li></ul></ul><ul><ul><li>Management chain handles problems </li></ul></ul><ul><ul><li>Works well in stable environment </li></ul></ul>
  7. 7. Including Project In Traditional Forms Figure 5-1
  8. 8. Advantages <ul><li>Flexible use of staff </li></ul><ul><ul><li>Experts assigned to functional units </li></ul></ul><ul><ul><li>Assigned to projects as needed </li></ul></ul><ul><li>Staff can easily be assigned to multiple projects </li></ul><ul><ul><li>Experts can be switched between projects easily </li></ul></ul><ul><ul><li>Functional manager picks best expert for each project </li></ul></ul>
  9. 9. Advantages Continued <ul><li>Specialists can share knowledge and experience </li></ul><ul><li>Functional units provide technological/knowledge continuity </li></ul><ul><ul><li>Also provide continuity of policies and procedures </li></ul></ul><ul><ul><li>Functional manager can train and inspect </li></ul></ul>
  10. 10. Advantages Continued <ul><li>Functional areas provide for a career path within a knowledge area </li></ul><ul><ul><li>Engineers can become supervisors or VP’s </li></ul></ul><ul><ul><li>Does not require movement into project management to advance </li></ul></ul>
  11. 11. Disadvantages <ul><li>Client is not the focus </li></ul><ul><ul><li>Function unit has its own work outside the project </li></ul></ul><ul><ul><li>Functional manager not likely to be accountable for project and therefore client </li></ul></ul><ul><li>Functional units not focused on project </li></ul><ul><ul><li>Function unit sees success in its area as most important </li></ul></ul><ul><ul><li>Project seen as secondary, or worse, an interruption </li></ul></ul>
  12. 12. Disadvantages Continued <ul><li>Project manager may not have adequate authority </li></ul><ul><ul><li>Must share authority with functional managers </li></ul></ul><ul><ul><li>May be several managers responsible for various parts of project </li></ul></ul><ul><ul><li>Client may not have a single point of contact at project </li></ul></ul><ul><ul><li>This can make response to the client slow or non-existent </li></ul></ul>
  13. 13. Disadvantages Continued <ul><li>Slow response </li></ul><ul><ul><li>Functional managers manage their part to benefit their functional unit </li></ul></ul><ul><ul><li>Interests outside their area may not be fully considered </li></ul></ul><ul><li>Tendency to sub optimize </li></ul><ul><ul><li>Complex projects require input from a large number of different areas </li></ul></ul><ul><ul><li>This can be difficult to coordinate without a common manager </li></ul></ul>
  14. 14. Disadvantages Continued <ul><li>Motivation is weak </li></ul><ul><ul><li>Project is not the worker’s “home” </li></ul></ul><ul><ul><li>Project manager most likely does not do their performance evaluations </li></ul></ul><ul><ul><li>May not receive additional pay for difficulties of working on project </li></ul></ul>
  15. 15. Pure Project Organization Figure 5-2
  16. 16. Advantages <ul><li>Project manager has full authority </li></ul><ul><ul><li>Will typically report to senior management (project sponsor) </li></ul></ul><ul><ul><li>This gives project manager access to managerial advice </li></ul></ul><ul><ul><li>This centralizes authority and makes for rapid decision making / response to client </li></ul></ul>
  17. 17. Advantages Continued <ul><li>Everyone reports to the project manager </li></ul><ul><ul><li>This gives the project manager the ability to make quick decisions </li></ul></ul><ul><ul><li>Makes it easier for project manager to motivate and reward members </li></ul></ul><ul><ul><li>May be tempered by relationship to functional unit </li></ul></ul><ul><li>Shorter communications lines </li></ul>
  18. 18. Advantages Continued <ul><li>Can maintain project management skills </li></ul><ul><ul><li>Project managers can move from project to project </li></ul></ul><ul><ul><li>It pays to hire, train, and promote skilled project managers </li></ul></ul><ul><li>Project team has its own identity </li></ul><ul><ul><li>Project members work for the “project” not the functional unit </li></ul></ul><ul><ul><li>This can significantly improve performance </li></ul></ul>
  19. 19. Advantages Continued <ul><li>Quick decisions </li></ul><ul><ul><li>Authority is centralized </li></ul></ul><ul><li>Unity of command </li></ul><ul><ul><li>Each worker reports to one, and-only-one, manager </li></ul></ul><ul><ul><li>Project has a simple structure </li></ul></ul>
  20. 20. Advantages Continued <ul><li>Structurally simple and flexible </li></ul><ul><ul><li>Easy to implement </li></ul></ul><ul><li>Holistic approach </li></ul><ul><ul><li>Everyone on project is concerned about project, not their functional unit </li></ul></ul>
  21. 21. Disadvantages <ul><li>Duplicate staffing </li></ul><ul><ul><li>Each project has a full staff </li></ul></ul><ul><ul><li>This leads to overstaffing </li></ul></ul><ul><li>Stockpiling </li></ul><ul><ul><li>Project managers tend to stockpile resources so they are available when needed </li></ul></ul><ul><ul><li>They also tend to keep those resources longer than needed just-in-case </li></ul></ul>
  22. 22. Disadvantages Continued <ul><li>Experts falling behind in other areas </li></ul><ul><ul><li>Experts on a project will focus on the areas essential to the project </li></ul></ul><ul><ul><li>This can lead to them falling behind in other areas </li></ul></ul><ul><ul><li>It can also be difficult to feed their developing expertise back into the organization </li></ul></ul>
  23. 23. Disadvantages Continued <ul><li>Organizational inconsistency </li></ul><ul><ul><li>Corner-cutting </li></ul></ul><ul><ul><li>“ They don’t understand our problems” </li></ul></ul><ul><li>Life of its own </li></ul><ul><ul><li>Projectitis </li></ul></ul><ul><ul><li>Us versus them </li></ul></ul>
  24. 24. Disadvantages Continued <ul><li>Life after the project ends </li></ul><ul><ul><li>Lots of uncertainty </li></ul></ul><ul><ul><li>Will there be layoffs </li></ul></ul><ul><ul><li>Rusty skills </li></ul></ul>
  25. 25. Comments on Pure Project <ul><li>Only way to do large, one-time projects </li></ul><ul><li>Disadvantages make it impractical for continually doing projects, e.g. construction </li></ul><ul><li>Matrix developed in aerospace to deal with this </li></ul>
  26. 26. The Matrix Organization Figure 5-3
  27. 27. The Matrix Organization Continued <ul><li>Functional part provides home for workers after project </li></ul><ul><li>Functional part helps maintain expertise </li></ul><ul><li>In a strong matrix, people from functional areas are assigned to project </li></ul><ul><li>In a weak matrix, capacity from functional areas are assigned to project </li></ul>
  28. 28. Advantages <ul><li>The project is the focus </li></ul><ul><ul><li>That remains the project manager’s responsibility </li></ul></ul><ul><li>The project has access to entire organization for labor and technology </li></ul><ul><ul><li>Projects draw from functional organizations as required </li></ul></ul><ul><ul><li>This reduces duplication of resources </li></ul></ul>
  29. 29. Advantages Continued <ul><li>Less anxiety about the end of the project </li></ul><ul><ul><li>Project members return to their functional organizations </li></ul></ul><ul><li>Response to client is rapid </li></ul><ul><ul><li>That remains the project manager’s responsibility </li></ul></ul><ul><ul><li>With much remaining within parent organization, response to parent is also rapid </li></ul></ul>
  30. 30. Advantages Continued <ul><li>Consistent policies </li></ul><ul><ul><li>Parent organization will oversee project </li></ul></ul><ul><ul><li>Project will have closer access to parent administration </li></ul></ul><ul><li>Easier to balance organizational resources </li></ul><ul><ul><li>Less competition for resources </li></ul></ul><ul><ul><li>Competition can be controlled by parent organization and functional managers </li></ul></ul>
  31. 31. Advantages Continued <ul><li>Flexibility </li></ul><ul><ul><li>Many different possible structures between strong and weak </li></ul></ul><ul><ul><li>Different structures can be used for different projects </li></ul></ul><ul><ul><li>Different structures can be used for different functional areas </li></ul></ul>
  32. 32. Disadvantages <ul><li>Functional units make many decisions, including technology ones </li></ul><ul><ul><li>Project manager has less control than in a pure project </li></ul></ul><ul><ul><li>Project manager’s control is balanced against that of the functional manager </li></ul></ul><ul><ul><li>If they disagree, it can be hard to resolve </li></ul></ul><ul><ul><li>Negotiation is the key to project success </li></ul></ul>
  33. 33. Disadvantages Continued <ul><li>Projects compete for resources </li></ul><ul><ul><li>This is especially true when there are several large projects </li></ul></ul><ul><ul><li>Someone above project managers must set and enforce priorities </li></ul></ul><ul><ul><li>Multiple schedules will add stress to functional managers </li></ul></ul>
  34. 34. Disadvantages Continued <ul><li>Strong matrices mirror many disadvantages of project structure </li></ul><ul><ul><li>People are assigned to, and identify with, “their” project much as in the project structure </li></ul></ul><ul><li>Workers do not have a single manager </li></ul><ul><ul><li>This splits loyalty </li></ul></ul><ul><ul><li>Makes performance appraisal difficult </li></ul></ul><ul><ul><li>Information flow is difficult </li></ul></ul>
  35. 35. Virtual Projects <ul><li>Project team crosses time, space, organizational, or cultural boundaries </li></ul><ul><li>Facilitated by the Internet </li></ul><ul><li>Often organized as a matrix </li></ul>
  36. 36. Virtual Project Rules <ul><li>Challenging and interesting projects </li></ul><ul><li>Use volunteers </li></ul><ul><li>Use people who know each other </li></ul><ul><li>Create a resource to learn about one another </li></ul><ul><li>Encourage frequent communications </li></ul><ul><li>Divide work into modules </li></ul>
  37. 37. Mixed Organizational Systems Figure 5-4
  38. 38. Choosing an Organizational Form <ul><li>Firms typically do not set out to “pick” an organizational form </li></ul><ul><li>Rather, the structure evolves over time </li></ul><ul><li>The structure is not static </li></ul><ul><li>Rather, it changes as the organization, its goals, and its environment changes </li></ul>
  39. 39. Functional Form Best for… <ul><li>In-depth application of a technology </li></ul><ul><li>Large capital investment, especially when that investment is concentrated in one functional area </li></ul>
  40. 40. Project Form Best for… <ul><li>Handling a large number of similar projects </li></ul><ul><li>Handling a one-time project that requires much control but is not focused on one functional area </li></ul>
  41. 41. Matrix Form Best for… <ul><li>Projects that require inputs from several functional areas </li></ul><ul><li>Projects that use technology from several functional areas </li></ul>
  42. 42. Two Special Cases <ul><li>Risk Management </li></ul><ul><li>The Project Office </li></ul>
  43. 43. Risk Management <ul><li>Projects are risky, uncertainty is high </li></ul><ul><li>Project manager must manage this risk </li></ul><ul><li>This is called “risk management” </li></ul><ul><li>Risk varies widely between projects </li></ul><ul><li>Risk also varies widely between organizations </li></ul><ul><li>Risk management should be built on the results of prior projects </li></ul>
  44. 44. Parts to Risk Management <ul><li>Risk management planning </li></ul><ul><li>Risk identification </li></ul><ul><li>Qualitative risk analysis </li></ul><ul><li>Quantitative risk analysis </li></ul><ul><li>Risk response planning </li></ul><ul><li>Risk monitoring and control </li></ul><ul><li>Risk management database </li></ul>
  45. 45. Risk Identification <ul><li>List ways a project can fail </li></ul><ul><li>Evaluate severity </li></ul><ul><li>Estimate likelihood </li></ul><ul><li>Estimate the ability to detect </li></ul><ul><li>Find the risk priority number </li></ul><ul><li>Consider ways to reduce </li></ul>
  46. 46. The Project Office <ul><li>All projects should have an office dedicated to that project </li></ul><ul><ul><li>Often called the war room </li></ul></ul><ul><li>In addition to providing a place to work, this helps built a feeling of team among the workers </li></ul>
  47. 47. The Project Team <ul><li>Different project need different staffs </li></ul><ul><li>Some common members include </li></ul><ul><ul><li>Engineer </li></ul></ul><ul><ul><li>Contract administrator </li></ul></ul><ul><ul><li>Controller </li></ul></ul><ul><li>Should report to project manager </li></ul>
  48. 48. Human Factors and the Project Team <ul><li>All projects are composed of inter-connected groups </li></ul><ul><li>These groups can form teams </li></ul><ul><li>It is not enough to have an effective team </li></ul><ul><li>The team must also be working towards the good of the project </li></ul><ul><li>Need to avoid “us versus them” mentality </li></ul>
  49. 49. Human Factors Continued <ul><li>Some of the problems that prevent a team from performing effectively: </li></ul><ul><ul><li>Internal conflict </li></ul></ul><ul><ul><li>Member frustration </li></ul></ul><ul><ul><li>Wasting time </li></ul></ul><ul><ul><li>Poor decision making </li></ul></ul><ul><ul><li>Team members more concerned with finishing job than doing good job </li></ul></ul><ul><li>Project teams need to work together </li></ul>