CHAPTER 2

THE ORGANIZATIONAL CONTEXT

STRATEGY, STRUCTURE AND CULTURE

2.0 Introduction

The internal characteristics of the organization make up critical sources for success
(Barney, 1991). Increasing attention has been paid to identifying what characteristics are vital
to organizational success and how they exert their influence on organizational outcomes.
Internal organizational context focuses on broad and relatively stable categories of
organizational characteristics such as structure, culture, and power and political
characteristics (Pettigrew, 1979). They constitute an environment where organizational
activities take place. There has been a large volume of studies that examine how the fit
between organizational context and organizational strategy explains variances in
organizational performance (Daft,1995; Robbins, 1990).

Organizational culture refers to shared assumptions, values, and norms (Schein,

1985). Organizational culture is a source of sustained competitive advantage (Barney, 1991)
and empirical research shows that it is a key factor to organizational effectiveness (Deal and
Kennedy, 1982; Denison, 1990; Gordon and Di Tomaso, 1992; Ouchi and Jaeger, 1978;
Peters and Waterman, 1982; Wilkins and Ouchi, 1983). Organizational structure indicates an
enduring configuration of tasks and activities (Skivington and Daft, 1991). A most studied
dimension is centralization (Rapert and Wren, 1998). Organizational strategy refers to “a plan
for interacting with the competitive environments to achieve organizational goals” (Daft,
1995, W. Zheng et al. / Journal of Business Research 63 (2010) 763–771 765 p. 49).
Organizational strategy has been a central theme in the strategy literature and is closely
related to organizational performance (Govindarajan and Fisher, 1990; Manvondo, 1999;
Rapert et al., 1996; Smith et al., 1986).

Figure 2.1 Structure follows strategy, and culture follows structure (Maria and Peter, 2017)
2.1 Projects and Organizational Strategy

Strategic management is the science of formulating, implementing, and evaluating

cross-functional decisions that enable an organization to achieve its objectives. Strategic
management consists of four elements which are developing vision statements and mission
statements, formulating, implementing, and evaluating, making cross-functional decisions
and achieving objectives.

Project manager should emphasize the current mission statement to sub-ordinates,

which clarifies the purpose and primary, measurable objectives of the organization. A
mission statement is meant for employees and leaders of the organization. A vision statement
is a view into the future with hope and a positive outlook. It describes a firm's inspirational,
long-term plan for what they will be able to accomplish, who they will help, and how the firm
will then be perceived. So, it will give direction for employee behaviour and help provide
inspiration. (Madison, 2019). The vision statement of Jambatan Kedua Sdn. Bhd. is “A global
highway concessionaire with diversified businesses striving for excellence” while the mission
statement is “As a catalyst to stimulate socio-economic activities in the region and providing
comfortable and safe journey to its users by becoming the leader with excellence in every
aspects of its deliverables and fulfilling the stakeholders’ requirements”. (JKSB, 2008).
Jambatan Kedua Sdn. Bhd. (JKSB) established for the construction of Penang Second Bridge,
after the construction of bridge has been completed, JKSB is responsible in the maintenance
of the bridge. As the bridge considered as a highway from mainland to island and vice versa
as well as toll fee is imposed for the vehicles crossing the bridge, so the vision mentioned
about global highway concessionaire. The bridge will act as a catalyst to stimulate socio-
economic activities near the bridge at the mainland and island. As a project manager in
Penang Second Bridge project, JKSB has emphasized the vision and mission to its sub-
ordinates like the design and build companies, CHEC Construction (M) Sdn. Bhd. and UEM
Builders Bhd. to make the project a successful one.

Formulating, implementing and evaluating is a must in a project, these can be carried

out through developing a corporate vision or mission, assessing internal strengths and
weaknesses as well as external opportunities and threats, establishing a long-range objective
and generating and selecting among various strategic alternatives. A few stages had been
developed for Penang Second Bridge project for example, planning, design, and construction.
By implementing different stages in a project, a project will be completed within the planned
timeframe. The evaluation of the bridge started after the completion of the construction.
Multi-criteria decision-making (MCDM) method was selected to compare the sustainability
rating of an existing bridge based on available rating systems. MCDM analysis helps in the
evaluation and ranking of a bridge based on the relative sustainability factors associated with
each of the rating systems, and the preference of the various decision-makers (Shafii & De
Smedt,2009). It seems that the local economic development, sense of community and increasing
social equity have been achieved in this project. The bridge provides the opportunity for local
contractors, consultants, and workers to be involved in the mega project and transfer the
technology to further social development and benefit the local society. It should be noted that the
project has also attracted prawn and other marine life. It should be noted that the industrial areas,
island airport and the highway on the other side of the bridge are the critical points. The
appropriate bridge location reduces the heavy urban traffic and the traffic on the first Penang
Bridge. The project is also intended to reduce air pollution as compared with the traffic jams on
the first bridge, and the usage of old ferry transport across the straits. (Mohammadreza Y., Reza
A., Abd M. M. Z., Chong H. Y., 2015). From this research, we can conclude that the vision
and mission have been achieved through the evaluation of MCDM.

Cross-functional decision making is a critical feature of project management, as

experts from various functional groups come together into a team of diverse personalities and
backgrounds. For Penang Second Bridge project, the organization consists of designer,
constructor, consultant, independent checking engineer and quantity surveyor. So, every
companies with different responsibility come together to form an organization for this
project. Every companies involved in this project will be informed on the changes as they are
a team made up from different backgrounds, so all the companies must come to an agreement
if there is any changes to avoid misunderstanding that may cause delay in the whole project.

Achieving objectives is the final element in strategic management. Project

management objectives are the successful development of the project’s procedures of
initiation, planning, execution, regulation and closure as well as the guidance of the project
team’s operations towards achieving all the agreed upon goals within the set scope, time,
quality and budget standards. (Team Clarizen, 2018). Corresponding to the National
Objectives, considering the importance of road network in the state, the following objectives
of Penang Second Bridge is identified as follows: 1. To strengthen the transportation system
corresponding to national objectives, 2. To support balanced economic development of the
state and 3. To provide smooth and safe traffic service. (Ismail, 2011). The objectives are
almost the same with the vision and mission statement. However, the objectives not really
achieve as reported by Audrey Dermawan in New Straits Times on 2018, according to the
report, traffic on the first bridge had increased between 2.4 per cent and 3.8 per cent from
2014 to 2016. So, the objective of easing congestion has yet to be achieved as the traffic is
keep increasing on the bridge over the year.

2.2 Stakeholder Management

Stakeholder analysis is a useful tool for demonstrating some of the seemingly

irresolvable conflicts that occur through the planned creation and introduction of any new
project. Project stakeholders are defined as all individuals or groups who have an active stake
in the project and can potentially impact, either positively or negatively, its development.
Project stakeholder analysis consists of formulating strategies to identify and manage for
positive results the impact of stakeholders on the project.
 Figure 2.2 The stakeholder analysis matrix offers a way of grouping stakeholders (Vogwell,
2003)
2.2.1 Identifying Project Stakeholders

Internal stakeholders are a vital component in any stakeholder analysis and their
impact is usually felt in relatively positive ways. External stakeholder groups operate in
manners that are quite challenging or even hostile to project development. Intervenor groups
defined as groups external to the project but possessing the power to effectively intervene and
disrupt the project’s development.
Among the set of project stakeholders that project managers must consider are:
Internal
 Top management
 Accounting
 Other functional mangers
 Project team members
External
 Clients
 Competitors
 Suppliers
 Environmental, political, consumer, and other intervenor groups

The special nature of the construction projects makes the stakeholder management in this
sector take into account these special factors, such as types of contracts or the nature of the
project object. The relationships between different process agents in the building construction
sector can be regulated or limited by contracts, for example between the client and the
builder. The contractual deposits or the laws about contacts with the administration limit the
strategic use of stakeholder management. For example, the obligation to finish a job within a
limited time, with budgetary targets attached, makes the stakeholders management work
effective within a pressured environment. (Carlos, 2013)

This activity goes beyond the sentence of a construction project. The users of the
facilities, clients, etc, can enjoy their interests after the building construction phase, so that
the stakeholders management extends throughout the construction lifecycle. In order to
achieve a more successful project result, the project manager should be skillful in the
management of the different stakeholders during the whole process of the project, from the
beginning until after the building of it. The regular communication with the different
stakeholders makes this inform their management of diverse stakes. (Carlos, 2013)

In construction projects stakeholders can include: (Vogwell, 2003)

 Users of a building
 Funders
 Neighbours
 Regulatory bodies
 General public

Figure 2.3 Contracting parties and stakeholders of a construction project. (Ng P. L., 2017)
A project deals with an investment for both external and internal clients. Client does
not in every case refer to the entire customer organization. A client firm consists of several
internal interest groups in which they have different agendas. The client for Penang Second
Bridge project is the government of Malaysia because this bridge is built to solve the
congestion problem on the first Penang bridge. Government of Malaysia hopes to ease the
congestion on the first Penang bridge by building the Penang Second Bridge as an alternative
to travel back and forth from mainland and island. Competitors can be an important
stakeholder element because they are affected by the successful implementation of a project.
For Penang Second Bridge project, there is no competitor for JKSB because JKSB is the
concessionaire appointed by government of Malaysia to design, construct, manage, operate,
and maintain the bridge. While for construction side, the competitor would be Senai Desaru
Expressway Berhad with a main contractor Ranhill Engineers & Constructors Sdn. Bhd.
which responsible for construction of Sungai Johor Bridge that began in 2005 and completed
by 2008. (Wikipedia, 2020).

Suppliers are any group that provides the raw materials or other resources the project
team needs in order to complete the project. Malaysian Industrial Geotechnical Sdn. Bhd. was
the supplier for CHEC Construction Sdn. Bhd. in supplying BSP Hammer and related
products as shown in Figure 2.4 and 2.5 below for Penang Second Bridge project. (MIG,
n.d.). PERI Formwork Malaysia Sdn. Bhd. is another supplier for CHEC Construction Sdn.
Bhd. in supplying PERI systems for construction of pylons and piers as shown in Figure 2.6
below. (PERI, n.d.). Top management is the body that authorizes the development of the
project through giving initial “go” decision, sanctions additional resource transfers as they are
needed by the project team, and supports and protects project managers and their teams from
other organizational pressures. The top management for Penang Second Bridge project is
Malaysian Highway Authority which it has the authority to do decision and sanctions
additional resource transfers.

Figure 2.4 Site photograph

 Figure 2.5 Site photograph

Figure 2.6 Site photograph

Accountants support and actively monitor project budgets and maintaining cost
efficiency of the project teams. The accountant in Penang Second Bridge project is Ministry
of Finance as Ministry of Finance deal a loan of RM2.7 billion with China and also
responsible in the budgeting of different package in construction of this project. (Mazwin,
2007). Project team members has a tremendous stake in the project’s outcome. For Penang
Second Bridge project, there are a lot of team members involved as this is a big project
initiated by government of Malaysia. To give a few examples, LLOYD’S Register of
Shipping (M) Bhd. is the ISO Accreditation, FANLI Marine and Consulting Sdn. Bhd. is the
fisheries impact assessment consultant, CHEC Construction Sdn. Bhd. and UEM Builders
Bhd. are the design and build contract for package 1 and package 2 respectively and Cergas
Murni Sdn. Bhd. is the contractor for package 3A. (Ismail, 2011).

2.2.2 Managing Stakeholders

 A useful framework of the political process that has application to stakeholder
management is offers by Block. In his framework, Block suggests six steps:
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.
Assess the external environment by going directly to the consumer population with
market research. In the planning stage of Penang Second Bridge project, a study was carried
on the traffic demand on the existing bridge. The traffic on year 2000 is 97200 vehicles per
day and 2010 is 140400 vehicles per day and on 2020, the traffic is expected to be 163400
vehicles per day. Due to a tremendous increase of motorcycle traffic utilising the bridge, it
has brought about declining in the bridge’s level of service enforcing the motorist into
intolerable traffic condition. (Ismail, 2011). From here, we can see that Penang Second
Bridge is built due to the study on the increasing of traffic demand on the existing bridge.

Next, identify the goals of the principal actors. A project manager should attempt to
paint an accurate portrait of stakeholder concerns. Project teams must look for hidden
agendas in goal assessment. It is common for departments and stakeholder groups to exert a
set of overt goals that are relevant, but often illusionary. Organizations must consider what
they do well and project team must understand their own capabilities and capacities. Not
everyone has the contacts to upper management that may be necessary for ensuring a steady
flow of support and resources. If you realistically determine that political acumen is not your
suit, then the solution may be to find someone who has these skills to help you.

We must seek to define problems both in terms of our own perspective and in
consideration of the valid concerns of the other party. The key to developing and maintaining
strong stakeholder relationships lies in recognizing that different parties can have very
different but equally legitimate perspectives on a problem. For Penang Second Bridge
project, one of the issues identified is hairline cracks appeared in all Package 1 piers due to
Package 2 SBG launching works and eccentricity of launching gantry legs. Package 1 pier
design consider no eccentricity. Next, developing solutions means precisely that creating an
action plan to address, as much as possible, the needs of the various stakeholder groups in
relation to the other stakeholder groups. It is necessary that we do our political homework
prior to developing solutions. So, the solution for the issue mentioned is JKSB decided to
adopt High Damping Rubber Bearings in lieu of Mechanical Pot Bearings for Package 2 to
cater for the 2500 years period earthquake with ‘no collapse’ criteria for Package 1 piles.

Implementing the solutions implies acknowledging that the project manager and team
are operating under imperfect information. In testing and refining solutions, the project
manager and team should realize that solution implementation is an iterative process. An
alternative, simplified stakeholder management process consists of planning, organizing,
directing, motivating, and controlling the resources necessary to deal with the various internal
and external stakeholder groups. The various stakeholder management functions are
interlocked and repetitive, this stakeholder management process is really best understood as a
cycle. For Penang Second Bridge project, Independent Checking Engineer (ICE) site audit
will be conducted once every 2 months to ensure the quality of the construction meets the
international standard specifications. As the environment changes or as the project enters a
new stage of its life cycle, you may be required to cycle through the stakeholder management
model again to verify that your old management strategies are still effective.

2.3 Organizational Structure

Organizational structure consists of three key elements. First, organizational structure

designates formal reporting relationships, including the number of levels in the hierarchy and
the span of control of managers and supervisors. A span of control determines the number of
subordinates directly reporting to each supervisor. In this project, Arup Jururunding Sdn.
Bhd. is the supervision consultant of Package 3 and under this company, there are contractor
for Package 3A, 3B and 3C. For the second point, organizational structure identifies the
grouping together of individuals into departments and departments into total organization.
Among the most common reasons for creating departments are first function, which is
grouping people performing similar activities into similar departments. For example, in this
project, Package 1 and 2 are grouped into design and build contract while Package 3, quantity
surveyor and design consultant are grouped into conventional contract.

Second is product, which is grouping people working on similar product lines into
departments, third is geography, which is grouping people within similar geographical
regions or physical locations into department and fourth is project, which is grouping people
involved in the same project into a department. For the last point, organizational structure
includes the design of systems to ensure effective communication, coordination, and
integration of effort across departments. This refers to the supporting mechanisms the firm
relies on to reinforce and promote its structure. For Penang Second Bridge project, an
effective communication is very important as this is a huge project that involved many team
members, miscommunication will lead to the delay in the construction and may be put the
safety of their workers on risk.

2.4 Forms of Organizational Structure

Organizational structure is the means by which a business or corporation defines

roles, responsibilities and levels of authority within the company. The structure shows how
information flows from top to bottom and vice versa. Most importantly, the organizational
structure identifies who supervises who, and which employees report to which supervisor.
(Jan, 2019).
Functional structures divide the organization vertically into functional groups, with
employees of similar specialties working together to support the entire organization. A mid-
sized manufacturing company could be divided into functional areas that include
administration, marketing and sales, and production. These functional areas could be
further divided. For example, administration would include departments for human
resource management and accounting. Production might be subdivided into development,
production, and fulfillment and shipping. Employees within these sections typically work
with peers who have similar backgrounds and job descriptions. This provides for useful
cohesion within the work unit, but it also tends to isolate the departments so that the
employees lose sight of how their work impacts the company as a whole. (Jan, 2019).
Figure 2.7 below shows the governance structure chart of JKSB which is a functional
organization chart.

Figure 2.7 Governance Structure Chart of JKSB

A project organisation is one, in which a project structure is created as a separate unit
or division within a permanent functional structure; drawing specialists and workers from
various functional departments who work under the overall leadership, control and
coordination of a project manager to complete projects of a technical and costly nature.
(Raksha, n.d.). Figure 2.8 below shows the project organization chart of Penang Second
Bridge project.
 Figure 2.8 Project Organization Chart
Matrix organization structure is the integration of functional organization and
project organization. In addition to the typical functional structure, in which employees
work in groups of related specialties, various employees may be assigned to additional
bosses for project work, often on an ad hoc basis. This organizational structure is highly
flexible and the cross-disciplinary teams support innovation, but problems can arise from
the unusual reporting system. In particular, employees may feel overworked and burdened
by having two jobs to do, with two sets of responsibilities for their work time. (Jan, 2019).

2.5 Project Management Office (PMO)

Project Management Offices (PMOs) organize and economize resources by

establishing protocols and documentation that normalize, consolidate and centralize project
management. When implementing a PMO it is necessary to recognize the inadequacies of
current project management capabilities, what needs to change and how a PMO can bring
about this change. However, there is no one recommendation to effectively manage the
change. The goal of a PMO depends greatly on the context of the organization as well as
various factors such as the macro economy, the size of the organization and the capacitation
of project management staff. Nevertheless, the most important factor will be how well the
PMO responds to system failures. Naturally, every situation will be different, and therefore
the solutions will have to be adapted accordingly. (ITM Platform, 2016).

The “weather station” PMO is to provide objective, well-structured, and comparable

factual information. By providing templates for reports, information can be presented
uniformly and predictably, allowing for the efficient extraction of information. However, this
type of PMO is merely informative, which means they do not have the authority to coordinate
or to make decisions. They serve purely to inform any interested party and the information
may assist the Project Managers to make better decisions. The “control tower” PMO is the
additional functions of the PMO to ensure that the project complies with established
standards. The functions of “control tower” PMO are setting standards for project
management, the choice of methodologies for the measurement and analysis of results and
compliance and rising standards. The “resource pool” PMO usually occurs in very large
companies where a high degree of specialization is required and where it can mobilize human
resources to new projects with relative ease. (ITM Platform, 2016).

2.6 Organizational Culture

Organizational culture includes an organization’s expectations, experiences,

philosophy, as well as the values that guide member behavior, and is expressed in member
self-image, inner workings, interactions with the outside world, and future expectations.
Culture also includes the organization’s vision, values, norms, systems, symbols, language,
assumptions, beliefs, and habits (Needle, 2004). Organizational culture affects the way
people and groups interact with each other, with clients, and with stakeholders. Also,
organizational culture may influence how much employees identify with their organization
(Schrodt, 2002).

Organizational culture is not stagnant. Members of an organization develop a shared

belief around “what right looks like” as they interact over time and learn what yields success
and what doesn’t. When those beliefs and assumptions lead to less than successful results, the
culture must evolve for the organization to stay relevant in a changing environment.
Changing organizational culture is not an easy undertaking. Employees often resist change
and can rally against a new culture. Thus, it is the duty of leaders to convince their employees
of the benefits of change and show through collective experience with new behaviors that the
new culture is the best way to operate to yield success.

2.6.1 Organizational Culture and Project Management

To create a culture of project management, organizations must understand the benefits

it can bring, as well as the role that projects and programs play in driving change. Previous
research has examined how culture contributes to effective projects. For example, a
2008 study focused on the relationship between an organization’s cultural orientation and
project success, focusing on four types of cultural orientation:
Clan – premium placed on participation, commitment and shared values
Adhocracy – initiative and innovation seen as supporting creativity and entrepreneurism
Hierarchical – formal structure focuses on control and efficiency
Market – focus on results and production in a consumer-driven environment
Project success was defined as including whether schedule and budget goals were
met, and the level of satisfaction among project team members. The study found that the Clan
orientation culture, with its focus on shared values and cohesion, had the strongest
association with effective and efficient projects, as well as with organizational success. In
order to foster an effective organizational culture, it may be necessary first to examine and
define the current culture. At that point, a strategy can be developed for closing the gap
between the existing and desired cultures, which can include changes to systems, practices
and objectives. “Organizational culture sets the tone that ultimately shapes the common
experiences of employees,” the PMI noted in Pulse of the Profession. (Florida Tech, n.d.).
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