This document discusses how organizational strategy, structure, and culture impact project management. It covers how projects reflect and further an organization's strategy. Different organizational structures like functional, project, and matrix are reviewed in terms of their strengths and weaknesses for project management. The roles of project management offices and how organizational culture can influence factors like department interaction and employee commitment are also summarized.

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The Organizational Context:
Strategy, Structure, and Culture
Chapter 2

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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
– Making cross functional decisions
– Achieving objectives

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Projects Reflect Strategy
A firm wishing to… may have a project
redevelop products or processes, to reengineer products or processes.
change strategic direction or product
portfolio configuration,
to create new product lines.
improve cross-organizational
communication & efficiency
to install an enterprise IT system.
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving force
behind project development
Some examples include:

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Relationship of Strategic Elements
Fig 2.1
Mission
Objectives
Goals ProgramsStrategy

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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

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Project Stakeholder Relationships
Clients
Project
Manager
Other
Functional
Managers
External
Environment
Project
TeamAccountant
Top
Management
Parent
Organization
Fig 2.3

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Managing Stakeholders
1. Assess the environment
2. Identify the goals of the principal actors
3. Assess your own capabilities
4. Define the problem
5. Develop solutions
6. Test and refine the solutions

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Project Stakeholder Management Cycle
Fig 2.4
Project
Management Team
Identify
Stakeholders
Gather Information
on Stakeholders
Determine
Stakeholder
Strengths &
Weaknesses
Implement
Stakeholder
Management
Strategy
Identify
Stakeholders’
Mission
Predict
Stakeholder
Behavior
Identify
Stakeholder
Strategy

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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

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Forms of Organizational Structure
• Functional 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

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Functional Structures for Project
Management
Strengths Weaknesses
1. Firm’s design maintained
2. Fosters development of in-
depth knowledge
3. Standard career paths
4. Project team members remain
connected with their functional
group
1. Functional siloing
2. Lack of customer focus
3. Projects may take longer
4. Projects may be sub-
optimized

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Project Structures for Project Management
Strengths Weaknesses
1. Project manager sole authority
2. Improved communication
3. Effective decision-making
4. Creation of project
management experts
5. Rapid response
1. Expensive to set up and
maintain teams
2. Chance of loyalty to the
project rather than the firm
3. No pool of specific knowledge
4. Workers unassigned at project
end

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Matrix Structures for Project Management
Strengths Weaknesses
1. Suited to dynamic
environments
2. Equal emphasis on project
management and functional
efficiency
3. Promotes coordination across
functional units
4. Maximizes scarce resources
1. Dual hierarchies mean two
bosses
2. Negotiation required in order
to share resources
3. Workers caught between
competing project & functional
demands

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Heavyweight Project Organizations
Organizations can sometimes gain tremendous benefit
from creating a fully-dedicated project organization
Lockheed Corporation’s “Skunkworks”
• Project manager authority expanded
• Functional alignment abandoned in favor of market
opportunism
• Focus on external customer

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Project Management Offices
Centralized units that oversee or improve the
management of projects
Resource centers for:
– Technical details offloaded from manager
– Expertise in project management skills
– Repository of lessons learned, documentation
– Center for project management excellence

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Forms of PMOs
• Weather 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

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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 organization
members and is taught to all new members of the company.
Key factors that affect culture development
– Technology
– Environment
– Geographical location
– Reward systems
– Rules and procedures
– Key organizational members
– Critical incidents

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Cultural Influences
• Technology
• Environment
• Geographical location
• Reward systems
• Rules and procedures
• Key organizational members
• Critical incidents

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Culture Affects Project Management
• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation

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