Introduction to Project Management

Dr. Chenglong LI

School of Management
Northwestern Polytechnical University
 Chapter 2

The Organizational Context:

Strategy, Structure,
and Culture
 ＊ Objectives

? 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.
? Identify the characteristics of three forms of a project management office (PMO).
? Understand key concepts of corporate culture and how cultures are formed.
» Introduction

• For successful project management, the organizational setting matters—its

culture, its structure, and its strategy each play an integral part, and together they
create the environment in which a project will flourish or founder.

• Contextual issues provide the backdrop around which project activities must
operate, so understanding what is beneath these issues truly contributes to
understanding how to manage projects. Issues that affect a project can vary
widely from company to company.

• Before beginning a project, the project manager and team must be certain about
the structure of the organization. All reporting relationships must be specified
clearly, the rules and procedures that will govern the project must be established,
and any issues of staffing the project team must be identified.

Intro_to_PM_ch02 4
» 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.
• Developing vision statements and mission statements
• Formulating, implementing, and evaluating
• Making cross-functional decisions
• Achieving objectives

• Projects are called the stepping-stones of corporate strategy. An organization’s

overall strategic vision is the driving force behind its project development.

Intro_to_PM_ch02 5
» Projects and Organizational Strategy

• How projects operate as strategic building blocks

Intro_to_PM_ch02 6
» Projects and Organizational Strategy

• TOWS matrix
• Threats–Opportunities–Weaknesses–Strengths
• The challenges faced in both internal environment
and external environment
• The tool for strategy generation
and selection, following the roots
of SWOT analysis
• First identifying, then formulating
appropriate strategies
• Projects as a device for pursuing
strategic choices

Intro_to_PM_ch02 7
» Stakeholder Management

• 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. Stakeholders can affect and are affected by organizational actions
to varying degrees.

• 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 stakeholder analysis, consists of formulating strategies to
identify the impact of stakeholders on the project and, if necessary, manage it for
positive results.

• Stakeholder analysis is helpful to the degree that it compels firms to acknowledge

the potentially wide-ranging effects, both intended and unintended, that their
actions can have on various stakeholder groups.
Intro_to_PM_ch02 8
» Stakeholder Management

• Identifying project stakeholders

• Internal
‒ Top management
‒ Accounting
‒ Other functional managers
‒ Project team members
• External
‒ Clients
‒ Competitors
‒ Suppliers
‒ Environmental, political, consumer,
and other intervenor groups

Intro_to_PM_ch02 9
» Stakeholder Management

• Block’s six steps for 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

• The stakeholder management process is really best understood as a cycle.

Intro_to_PM_ch02 10
» Organizational Structure
• Organizational structure consists of three key elements:
• Designates formal reporting relationships
‒ Number of levels in the hierarchy
‒ Span of control of managers and supervisors
• Identifies the grouping of
‒ Individuals into departments
‒ Departments into the total organization
• Design of systems for
‒ Effective communication
‒ Coordination
‒ Integration of effort across departments
Intro_to_PM_ch02
Common reasons for creating departments
1) function—by grouping people performing
similar activities into similar departments
2) product—by grouping people working on
similar product lines into departments
3) geography—by grouping people within
similar geographical regions or physical
locations into departments
4) project—by grouping people involved in
the same project into a department
11
» Organizational Structure

• Forms of organizational structure

• Functional organizations—by grouping people performing similar activities into departments.
• Project organizations—by grouping people into project teams on temporary assignments.
• Matrix organizations—by creating a dual hierarchy in which functions and projects have equal
prominence.

• Typically, the structure of an organization does not happen by chance; it is the

result of a reasoned response to forces acting on the firm.
• In turn, the organizational structures have a strong impact on the manner in which
projects are best managed within the organization.

Intro_to_PM_ch02 12
» Organizational Structure—Functional Organizations

• The functional structure is probably the most common organizational type used
in business. Division of labor in the functional structure is according to the type of
work performed, and members routinely work on multiple projects or support
multiple product lines simultaneously.

functional siloing effect

Intro_to_PM_ch02 13
» Organizational Structure—Functional Organizations

• Strengths and weaknesses of functional structures

Intro_to_PM_ch02 14
» Organizational Structure—Project Organizations

• Project organizations are set up with their exclusive focus aimed at running
projects. In the project organization, each project is a self-contained business unit
with a dedicated project team.
• The firm assigns resources from
functional pools directly to the
project for the time period they are
needed.
• The project manager has sole control
over the resources the unit uses.
• The functional departments’ chief
role is to coordinate with project
managers and ensure that there are
sufficient resources available as they
need them.
Intro_to_PM_ch02 15
» Organizational Structure—Project Organizations

• Strengths and weaknesses of project structures

Intro_to_PM_ch02 16
» Organizational Structure—Matrix Organizations

• The matrix organization, as a combination of functional and project activities,

seeks a balance between the functional organization and the pure project form.

‒ the weak matrix (the functional matrix)

‒ the balanced matrix
‒ the strong matrix (the project matrix)

• The matrix structure creates a dual

hierarchy in which there is a
balance of authority between the
project emphasis and the firm’s
functional departmentalization.

Intro_to_PM_ch02 17
» Organizational Structure—Matrix Organizations

• Strengths and weaknesses of matrix structures

Intro_to_PM_ch02 18
» Project Management Offices

• A project management office (PMO) is defined as a centralized unit within an

organization or department that oversees or improves the management of
projects.

• Serving as resource centers for

• Technical details offloaded from manager
• Expertise in project management skills
• Repository of lessons learned, documentation
• Center for project management excellence

Intro_to_PM_ch02 19
» Project Management Offices

• A PMO can be placed in any one of

several locations within a firm.
• corporate level (Level 3)
• functional level (Level 2)
• project level (Level 1)
• The key to understanding the
function of the PMO is to recognize
that it is designed to support the
activities of the project manager
and staff, not replace the manager
or take responsibility for the
project.
Intro_to_PM_ch02 20
» Project Management Offices

• Three types of PMOs

• Supportive (low degree of control)—provide a consultative role to projects
• Controlling (moderate degree of control)—provide support and require compliance with
standards or adopted procedures
• Directive (high degree of control)—take control by directly managing the projects of the
organization

• Some well-established PMO models

• 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 trained and skilled project professionals

Intro_to_PM_ch02 21
» Organizational Culture

• Organizational culture refers to the unwritten rules of behavior, or norms that are
used to shape and guide behavior, that are shared by some subset of
organizational members and that are taught to all new members of the company.
• No two organizations, no matter how similar in size,
products, operating environment, or profitability, are the
same. Each has developed its own unique method for
indoctrinating its employees, responding to environmental
threats and opportunities, and supporting or discouraging
operating behaviors.
• When allowed to get out of control, a culture can quickly become toxic and work
against the goals of the organization. A fundamental truth regarding cultural
change: it is easy for a toxic environment to ruin a team’s culture and very difficult,
once it is affected, to positively revitalize it.
Intro_to_PM_ch02 22
» Organizational Culture

Could you share something about one of your teams built in other courses previously,
for example
…
what is the goal of the team?
how do you feel about your teammates?
are you satisfied with the final outcome?

Intro_to_PM_ch02 23
» Organizational Culture

• Key factors that affect the development of a culture

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

Intro_to_PM_ch02 24
» Organizational Culture

• Culture affects project management

• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation

Intro_to_PM_ch02 25
 ＊ Objectives

√ 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.
√ Identify the characteristics of three forms of a project management office (PMO).
√ Understand key concepts of corporate culture and how cultures are formed.
 Introduction to
Project Management

End of Chapter 2

Dr. Chenglong Li
Email: aquarius@nwpu.edu.cn