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2. 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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3. 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.
change strategic direction or product
portfolio configuration,
to create new product lines.
improve cross-organizational
communication & efficiency
to install an enterprise IT system.
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4. Relationship of Strategic Elements
Mission
Objectives
Strategy
Goals
Programs
Fig 2.1
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5. 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
External Stakeholders
•
•
•
•
•
•
•
•
Top management
Accountant
Other functional managers
Project team members
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Clients
Competitors
Suppliers
Environmental, political, consumer,
and other intervenor groups

6. Project Stakeholder Relationships
Parent
Organization
External
Environment
Other
Functional
Managers
Project
Clients
Top
Management
Manager
Project
Fig 2.3
Accountant
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Team
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7. 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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8. Project Stakeholder Management Cycle
Identify Stakeholders
Implement
Stakeholder
Management
Strategy
Predict Stakeholder
Behavior
Fig 2.4
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Gather Information
on Stakeholders
Project
Management
Team
Identify Stakeholder
Determine
Strategy
Stakeholder
Strengths &
Weaknesses
2-8
Identify
Stakeholders’
Mission

9. 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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10. 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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11. Functional Structures for Project Management
Strengths
Weaknesses
1. Firm’s design maintained
1. Functional siloing
2. Fosters development of indepth knowledge
2. Lack of customer focus
3. Standard career paths
3. Projects may take longer
4. Project team members remain 4. Projects may be sub-optimized
connected with their functional
group
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12. Project Structures for Project Management
Strengths
Weaknesses
1. Project manager sole authority 1. Expensive to set up and
maintain teams
2. Improved communication
3. Effective decision-making
4. Creation of project
management experts
5. Rapid response
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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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13. Matrix Structures for Project Management
Strengths
Weaknesses
1. Suited to dynamic
environments
1. Dual hierarchies mean two
bosses
2. Equal emphasis on project
management and functional
efficiency
2. Negotiation required in order
to share resources
3. Promotes coordination across
functional units
3. Workers caught between
competing project & functional
demands
4. Maximizes scarce resources
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14. 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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15. 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
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16. 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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17. 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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18. Cultural Influences
• Technology
• Environment
• Geographical location
• Reward systems
• Rules and procedures
• Key organizational members
• Critical incidents
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19. Culture Affects Project Management
• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation
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22. STAKEHOLDER MANAGEMENT
• Important discipline that successful people
use to win support from others.
• It helps them ensure that their projects
succeed

23. ELEMENTS OF STAKEHOLDER MANAGEMENT..
• STAKEHOLDER ANALYSIS
• STAKEHOLDER PLANNING

24. STAKEHOLDER ANALYSIS
• The technique used to identify the key people
who have to be won over.
• You then use Stakeholder Planning to build
the support that helps you succeed

25. STEPS IN STAKEHOLDER ANALYSIS..
• Identifying your stakeholders.
• Prioritizing your stakeholders
• Understanding your key stakeholders
After you created a stakeholder map, you can use the
stakeholder planning tool to plan
how you will communicate with each stakeholder.

26. BENEFITS
• Use the opinions of the most powerful
stakeholders to shape your projects at an early
stage. i.e the most experienced staff.
• It is more likely that they will support you, their
input can also improve the quality of your project.
• Gaining support from powerful stakeholders can
help you to win more resources …..

27. • Communicate
stakeholders
early
and
often
with
– ensure that they know what you are doing and
fully understand the benefits of your project
– this means they can support you actively when
necessary.
• You can anticipate what people's reaction to
your project, and build into your plan the
actions that will win people's support

28. IDENTIFYING YOUR STAKEHOLDERS
• 1st step (stakeholder analysis)
– brainstorm who your stakeholders are.
– Think of all the people who are affected by your work, who have influence
or power over it, or have an interest in its successful or unsuccessful
conclusion.
• For example:
–
–
–
–
Engineers
Marketing Executive
Public Relations Officer
Risk Management Officer

29. PRIORITIZE YOUR STAKEHOLDERS
• After getting the long list of names.
– Some of these may have the power either to
block or advance it. Some may be interested in
what you are doing, others may not care.
• Map out your stakeholders on a
Power/Interest Grid and classify them by their
power over your work and by their interest in
your work.

30. High
Keep Satisfied
Manage Closely
Low
Power
Monitor
Low
Keep informed
Interest
High

31. UNDERSTANDING YOUR STAKEHOLDERS
1. You now need to know more about your key
stakeholders. You need to know how they are
likely to feel about and react to your project.
You also need to know how best to engage
them in your project and how best to
communicate with them.

32. STAKEHOLDER COMMUNICATION WORKSHEET

33. 2.
Plan Your
Management
Approach
to
Stakeholder
– allocate time depends on the size and difficulty of
your projects and goals,
• the time you have available for communication
• the amount of help you need to achieve the results you
want.
– Think through the help you need, the amount of
time that will be taken to manage this and the
time you will need for communication. Help with
the project could include sponsorship of the
project, advice and expert input, reviews of
material to increase quality, etc.

34. 3. Think Through What You Want from Each
Stakeholder
– Work through your list of stakeholders thinking
through the levels of support you want from them
and the roles you would like them to play (if any).
Think through the actions you would like them to
perform. Write this information down in the
‘Desired Support’, ‘Desired Project Role’ and
‘Actions Desired’ columns.

35. 4. Identify the Messages You Need to Convey:
– Identify the messages that you need to convey to
your stakeholders to persuade them to support
you and engage with your projects or goals.
Typical messages will show the benefits to the
person or organization of what you are doing, and
will focus on key performance drivers like
increasing profitability or delivering real
improvements.

36. 5. Identify Actions and Communications:
– work out what you need to do to win and manage
the support of these stakeholders.
– Focusing on the high-power/high-interest
stakeholders first and the low-interest/low-power
stakeholders last, devise a practical plan that
communicates with people as effectively as
possible and that communicates the right amount
of information in a way that neither under nor
over-communicates ….

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39. Project Management Structures
• Challenges to Organizing Projects
– The uniqueness and short duration of projects relative to
ongoing longer-term organizational activities
– The multidisciplinary and cross-functional nature of
projects creates authority and responsibility dilemmas.
• Choosing an Appropriate Project Management
Structure
– The best system balances
the needs of the project
with the needs of the
organization.

40. Project Management Structures
• Organizing Projects: Functional organization
– Different segments of the project are delegated to
respective functional units.
– Coordination is maintained through normal
management channels.
– Used when the interest of one functional area
dominates the project or one functional area has a
dominant interest in the project’s success.

41. Functional Organizations
FIGURE 3.1

42. Functional Organization of Projects
• Advantages
– No Structural
Change
– Flexibility
– In-Depth Expertise
– Easy Post-Project
Transition
• Disadvantages
– Lack of Focus
– Poor Integration
– Slow
– Lack of Ownership

43. Project Management Structures (cont’d)
• Organizing Projects: Dedicated Teams
– Teams operate as separate units under the
leadership of a full-time project manager.
– In a projectized organization where projects are
the dominant form of business, functional
departments are responsible for providing support
for its teams.

44. Dedicated Project Team
FIGURE 3.2

45. Project Organization: Dedicated Team
• Advantages
• Disadvantages
– Simple
– Expensive
– Fast
– Internal Strife
– Cohesive
– Limited
Technological
Expertise
– Cross-Functional
Integration
– Difficult Post-Project
Transition

46. Project Organizational Structure
FIGURE 3.3

47. Project Management Structures (cont’d)
• Organizing Projects: Matrix Structure
– Hybrid organizational structure (matrix) is overlaid on
the normal functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both
functional and project managers.
– Matrix structure optimizes the use of resources.
• Allows for participation on multiple projects while
performing normal functional duties
• Achieves a greater integration of expertise and project
requirements

48. Matrix Organization Structure
FIGURE 3.4

49. Division of Project Manager and
Functional Manager Responsibilities in a
Matrix Structure
Project Manager
Negotiated Issues
Functional Manager
What has to be done?
Who will do the task?
How will it be done?
When should the task be done?
Where will the task be done?
How much money is available to
do the task?
Why will the task be done?
How will the project involvement
impact normal functional activities?
How well has the total project
been done?
Is the task satisfactorily
completed?
How well has the functional
input been integrated?
TABLE 3.1

50. Different Matrix Forms
• Functional (also Weak or Lightweight) Form
– Matrices in which the authority of the functional manager
predominates and the project manager has indirect
authority
• Balance (or Middleweight) Form
– The traditional matrix form in which the project manager
sets the overall plan and the functional manager
determines how work to be done
• Strong (Heavyweight) Form
– Resembles a project team in which the project manager
has broader control and functional departments act as
subcontractors to the project

51. Project Organization: Matrix Form
• Advantages
– Efficient
– Strong Project Focus
– Easier Post-Project
Transition
– Flexible
• Disadvantages
– Dysfunctional
Conflict
– Infighting
– Stressful
– Slow

52. Rated Effectiveness of Different Project
Structures by Type of Project
Source: Larson, E. W., and Gobeli, D. H., “Matrix Management: Contradictions and Insights,”
California Management Review, vol. 29, no. 4 (Summer 1987), p. 137.
FIGURE 3.5

53. Choosing the Appropriate Project
Management Structure
• Organization (Form) Considerations
– How important is the project to the firm’s
success?
– What percentage of core work involves projects?
– What level of resources
(human and physical)
are available?

54. Choosing the Appropriate Project
Management Structure (cont’d)
• Project Considerations
–
–
–
–
Size of project
Strategic importance
Novelty and need for innovation
Need for integration (number of departments
involved)
– Environmental complexity (number of external
interfaces)
– Budget and time constraints
– Stability of resource requirements

55. Organizational Culture
• Organizational Culture Defined
– A system of shared norms, beliefs, values, and
assumptions which bind people together, thereby
creating shared meanings
– The “personality” of the organization that sets it
apart from other organizations.
• Provides a sense of identify to its members
• Helps legitimize the management system of the organization
• Clarifies and reinforces standards of behavior

56. Key Dimensions Defining an Organization’s
Culture
FIGURE 3.6

57. Identifying Cultural Characteristics
• Study the physical characteristics of an
organization.
• Read about the organization.
• Observe how people interact within the
organization.
• Interpret stories and folklore surrounding the
organization.

58. Organizational Culture Diagnosis Worksheet
FIGURE 3.7

59. Implications of Organizational Culture
for Organizing Projects
• Navigating Organizational Cultures:
Working Upstream or Downstream?
– Interacting with the culture and subcultures of the
parent organization
– Interacting with the project’s clients or customer
organizations
– Interacting with other
organizations connected
to the project

60. Cultural Dimensions of an Organization
Supportive of Project Management
FIGURE 3.8

61. Key Terms
Balanced matrix
Dedicated project team
Strong matrix
Matrix
Organizational culture
Weak matrix
Projectitis
Projectized organization

62. Organization of Product Development Projects
at ORION
FIGURE C3.1

63. Traditional Master Plan at ORION
FIGURE C3.2

64. Proposed Project Organization for the Jaguar
Project
FIGURE C3.3

65. Jaguar Master Plan
FIGURE C3.4

66. Mechanisms for Sustaining Organizational
Culture
FIGURE A3.1

67. References
1. Organization Structure & Culture. http://www.csun.edu/
1. The Stakeholder Management Concept. www.business.utah.edu
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