1. Day 3
ELC 347/BUS 348/PSA 347

2. Agenda Questions? Assignment 1 Posted Assignment 2 Posted
Case Study 1.1, Megatech Inc., and Case Study 1.2, The It Department at Hamelin Hospital. Due September 17 prior to class.
Assignment 2 Posted
Read Case Study 2.2, Paradise Lost: The Xerox Alto., and Case Study 2.3, Project Task Estimation and the Culture of "Gotcha!". Due September 24 prior to class.
The Organizational Context
Copyright 2005 Prentice Hall

3. Integrated Project Team
1st team group meeting and group assignment (pages 67-68) will be part of next class period
IP part one due Thursday, September 26 (two weeks)

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

5. Chapter 2 Learning Objectives
After completing this chapter, students will be able to:
Understand how effective project management contributes to achieving strategic objectives.
Recognize 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.
Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects.

6. Chapter 2 Learning Objectives
After completing this chapter, students will be able to:
Understand how companies can change their structure into a “heavyweight project organization” structure to facilitate effective project management practices.
Identify the characteristics of three forms of project management office (PMO).
Understand key concepts of corporate culture and how cultures are formed.
Recognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.

7. US Army LEMV

8. 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

9. Projects Reflect Strategy
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving force behind project development
Some examples include:
A firm wishing to…
…may have a project
redevelop 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.

10. Relationship of Strategic Elements
Mission
Objectives
Strategy
Goals
Programs
Figure 2.2

11. “… the business of
supplying system
components to a world-
wide nonresidential
air conditioner market.”
Mission
Objectives
14.5% ROI
Non-decreasing dividends
Socially-conscious image
Strategies
Existing products in existing
markets with image
maintenance
Existing products in new
markets (foreign, restricted)
New products in existing
markets (significantly improve
image)
Goals
Year 1: 8% ROI, $1 dividend,
maintain image, unit cost
down 5%
Year 2: 9% ROI, $1 dividend,
improve image
Year 3: 12% ROI, $1 dividend,
Year 4: 14% ROI, $1.10 dividend
Programs (Projects)
1. Product Cost Improvement
Program (PCIP)
2. Image Assessment Program
(IAP)
3. Product Redesign Program
(PRP)
4. Product Development Program
(PDP)
FIGURE 2.3  Illustrating Alignment Between Strategic Elements and Projects
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

12. 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 intervener groups

13. Project Stakeholder Relationships
Figure 2.4

14. Managing Stakeholders
Assess the environment
Identify the goals of the principal actors
Assess your own capabilities
Define the problem
Develop solutions
Test and refine the solutions

15. Project Stakeholder Management Cycle
2. Gather information
on stakeholders
7. Implement
stakeholder
management
strategy
4. Determine
strengths and
weaknesses
5. Identify
6. Predict
behavior
3. Identify
stakeholders’
mission
1. Identify
Stakeholders
Figure 2.5

16. Organizational Structure
Consists of three key elements:
Designates formal reporting relationships
number of levels in the hierarchy
span of control
Identifies groupings of:
individuals into departments
departments into the total organization
Design of systems for
effective communication
coordination
integration across departments

18. Forms of Organization 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

19. Functional Organizational Structure
Figure 2.6

20. Silo Effect Found in Functional Structures
Figure 2.7

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

22. Project Organizational Structure
Figure 2.8

23. Project Structures Strengths Weaknesses Project manager sole authority
Improved communication
Effective decision-making
Creation of project management experts
Rapid response
Expensive 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

24. Matrix Organizational Structure
Figure 2.9

25. Matrix Organization
Cross-functional & Project teams

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

27. 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

29. Manager’s Perceptions of Effectiveness of Various Structures on Project Success
Figure 2.10

30. Project Management Offices
Centralized units that oversee or improve the management of projects
Resource centers for:
Technical details
Expertise
Repository
Center for excellence

31. 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

32. PMO Control Tower Performs four functions:
Establishes standards for managing projects
Consults on how to follow these standards
Enforces the standards
Improves the standards

33. Alternative Levels of Project Offices
Figure 2.11

34. 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.
Unwritten
Rules of behavior
Held by some subset of the organization
Taught to all new members

35. Key Factors That Affect Culture Development
Technology
Environment
Geographical location
Reward systems
Rules and procedures
Key organizational members
Critical incidents

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

37. Summary
Understand how effective project management contributes to achieving strategic objectives.
Recognize 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.
Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects.

38. Summary
Understand how companies can change their structure into a “heavyweight project organization” structure to facilitate effective project management practices.
Identify the characteristics of three forms of project management office (PMO).
Understand key concepts of corporate culture and how cultures are formed.
Recognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.

39. Why? What do you as a Project Manager do about it?
People hate change!
Why?
What do you as a Project Manager do about it?

40. Seth Godin (Fast Company)
“Competent people are quite proud of the status and success that they get out of being competent. They like being competent. They guard their competence, and they work hard to maintain it. “
“Competent people resist change”
“ Why? Because change threatens to make them less competent. And competent people like being competent. That's who they are, and sometimes that's all they've got. No wonder they're not in a hurry to rock the boat.”
In fact, competence is the enemy of change!

41. External forces that drive Change
Environmental
Economics
Competition
Interest rate
Distribution channels
Labor
Availability of raw materials
PROJECTS !

42. Reaction to change Behavior is manifested in company culture
“what people do when no one is telling then what to do”
Peter Bijur, CEO of Texaco, Inc

43. Organizations must adapt
“For sustainable competitive advantage, you have to change the culture”
Peter Bijur
Company culture must see change as a positive
Raising to a challenge

44. Effect of Change on the project manager
Projects Manager deal with change on a daily basis
Schedules
Specifications
Supplies
Labor
Project manger are “Change Agents”
Seth Godin

45. Individual responses to change
People responds differently to change depending on past experience with change
Tolerance of ambiguity
Novelty
Complexity
Insolubility
Project mangers must display a positive response to all change

46. 3 Possible reactions Negative reactions
Employees stop being cooperative
Accepting change but not embracing change
We do it because we have to
Grudging acceptance
Passive resistance
Inciting change
Change for change’s sake

47. Professional Survival in the face of change
Adopt the following behaviors
Develop awareness for external conditions that drive company success
Recognize cause and effect relationships in the workplace
Take creative actions
View change as positive
Read “Who Moved My Cheese?”

48. Organizational approaches to change
3 Common approaches
Slash and burn
Support and nurture
Inspire and motivate
Project managers do not make large change decisions but are responsible for implementation of those decisions.

49. Urgent Change Problems are aggravated when change is “URGENT”
Challenge #1 Bailout
Provide real information
Set priorities and get commitments for “on high”
Challenge #2 Poor Morale
Remain realistically positive
Get the facts
Move to the new agenda ASAP

50. Ways to speed Change Acceptance
Explains reasons for change
Project positive outcomes
Hold a “wake” for old ways
Create group “memories”
Get change implementation ideas for departments affected
Ask employees to drive the change process

51. Ongoing Change Managament
A project manager is a facilitator
Set an example
Behave consistently
Recognize employees for embracing change
Nurture growth in employees
Involve employees min goal setting