BHM 419: Project Management 2021 – Lecture 8

LECTURE 8: PROJECT PLANS, ORGANIZATIONAL STRUCTURES AND

ETHICS IN PROJECT MANAGEMENT

Structure of a Project Plan

There are some sections that are present in almost all project plans:
1. The title, goal, objectives, participating institutions/persons
2. Background of the project (need, target groups, priority description)
3. Project description (work packages, key deliverables and activities)
4. Time-table of the project
5. Administration of the project (description of partners, division of work, work
arrangements, responsibility of partners, risk management, quality management etc)
6. Plans for dissemination and/or application of the outcomes
7. Estimations of economic and social influence of the project’s outcomes
8. Budget
9. Summary of the project

The general development scheme of the project plan usually is the following:
Outcome/Goal → Subgoals/Activities → Time-table → Budget

Additional sections in project plan depend on the type of the project. These can be for
example, the following:
 Description of the methodology and tools used (in research projects),
 Compliance to the standards,
 Perspectives for further development of the project outcome,
 Glossary/definition of terms used in the text.

Budget for a project

The budget of a project will be composed in final stage of composition of project plan. The
budget should reflect all costs, including indirect costs and costs that will be covered by other
sources. The general structure of the budget is relatively standardized and contains the
following categories:
1. Staff costs (salaries and all taxes).
2. Travel and subsistence.
3. Equipment and materials (incl. software and licences).
4. External services (incl subcontracting and consultancy).
5. Other direct costs (incl bank charges, hiring training premises, translation/publishing).
6. General costs (incl infrastructure, communication, photocopies).

Determination of sources for financing

As most of the financing institutions support certain (usually fixed) type of projects only the
determination of the main objective of the project and sources of financing will be made in
parallel, hand by hand. By the financing scheme the projects can be divided into the
following three bigger groups:
 In-house projects. Resources are given according to the needs of the project and resources
available
 Projects in the framework of bigger programmes. The projects are selected usually by
open calls; the project that will be financed usually will not get the amount of money that

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was applied for. The project plans are form-based and there is usually no direct contact
between the applicant and the deciding body
 Projects supported by private institutions either on basis of individual negotiations or
written applications. The application procedures can be very different, from form based
project plans to just one page application. Projects in this group are less formalized and
are based on sponsorship. Possibilities to find sponsors differ from country to country:
sponsoring is wide-spread in some countries and almost nonexistent in others; it is a
matter of honour for companies in USA but relatively difficult to find sponsors in others.

PROJECT FUNDING
Project funding may not be of direct concern to every project manager – unless shortage of
funds puts the future of the project (and its manager) in question. However, here is a list of
possible sources from which an organization may be able to find the capital needed for
investment in a project:
1. Cash reserves (money held in the bank or in short-term investments, including profits not
distributed as dividends to shareholders)
2. Sale of assets (for example, the owner of a stately home sells a valuable work of art to
raise capital for a building restoration project, or a company realizes cash on its real estate
in a sale and leaseback deal)
3. Mortgaging property
4. Borrowing from a bank or other financial institution, either as an overdraft or as a fixed
term loan
5. Borrowing through a lease purchase agreement
6. Renting or leasing (in which case the project will be owned by the financing institution
and not by the project user)
7. Issuing debentures or loan stock
8. Raising share capital, either in a private or public company (the company may be
specially set up for the project)
9. Collaborating with other companies to set up a consortium or a joint venture company in
which skills, resources and risk are all shared
10. Government sources at international, national or local level, through direct grants or fiscal
incentives
11. For export projects it might be possible to borrow from a bank against security provided
by a government’s export credit guarantee scheme.

Looking for project sponsorship

There are some common principles for looking for sponsorship. These principles have
statistical character and therefore can be only partly applicable in every single case.
1. Present your application as an offer for investments, not as a charity. The applicant
should look attractive for an investor. The people tend to invest into progressive/
advanced, successful, enterprising.
2. Follow the wishes and suggestions of the potential donor. If the potential donor is
interested in educational software it is not wise to convince him/her to support
development of medical software. The best way to get informed about the donors wishes
is to ask: asking right people right questions can be decisive; people like if their opinion
will be asked, people like to be respected.
3. Compare your institution in relation to the competitors. Attractive institutions are
visible; they know how to present their competence. The key is to have convincing
answers to the critical questions like: What are your major competencies? What are your

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major achievements? How does it look if compared to this offered by other institutions?
One should think on marketing, not on selling: if you offer something that is needed then
selling will follow automatically (instead of “Buy this” you should explain that “having
this you can do this and this”).
4. Make your case bigger than your institution. This means that you are not asking
support to an institution to do something, but for a realization of a big idea. The aim is to
achieve what people will consider the project as very important. A donor should feel that
the project will make not only his/her life better but for children and grandchildren as
well, that the whole nation/region will benefit. The best visions can be formulated with
few sentences or with one memorable phrase.
5. Few will do the most. 10% will offer 90% of resources (Not 20:80) and therefore the
main attention should be paid to the main donors. The best donors are those who already
have supported you. The early donor sets the level of donation: if you already did get 10
000 from one donor you hardly can expect to get much more from the next (even if the
next donor has much more resources available).
6. Inform about your plans without asking support. Create opportunities to discuss the
activities and plans of your institution with the CEOs of local companies. Doing this you
will understand the position of your institution in their minds, you are able to adapt your
plans to the priorities and wishes of potential donors. Direct face-to-face communication
is utmost important, the letters will usually be thrown directly to the wastebox.
7. Patience will succeed. One should meet with a potential donor repeatedly; usually the
donors need some “digesting” time. One should be very precise and concrete in
presenting your offer, explain for what purpose the donation will be used, how much does
the whole project cost and what is the role of this particular donor etc. Sentences like
“Whatever you would give” are not convincing enough.
8. Relations with the donors should be kept after completion of the project as well. The
donor should be thanked, invited to festive meetings, informed about new initiatives etc.
A number of aspects should be agreed already at the beginning of the project, for
example: Will the sponsorship be publicly announced? Can the donor use the sponsorship
in its PR-activities? Does the sponsor accept other sponsors?

POWER AND INFLUENCE

The level of authority provides a level of power and influence on the project and its members.
There are five different types of power:
1. Coercive power – use of some form of punishment or threat to get people to do things
2. Reward power – involves the use of incentives such as money, status, promotions,
official recognition or special work assignments
3. Expert power – use of personal expertise to influence the team to follow directions
4. Legitimate power – based on formal authority, and uses the power vested on the project
manager by the organization to make decisions and assign work to the project team
5. Referent power – based on the personal charisma of the project manager; it is based on
the leadership qualities of the project manager and his or her ability to build a good level
of trust with the team.

PROJECT STRUCTURES
A project organization is a structure that facilitates the coordination and implementation of
project activities. Its main purpose is to create an environment that fosters interactions among

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the team members with a minimum amount of disruptions, overlaps and conflict. Each
project has its unique characteristics. The design of an organizational structure should
consider the organizational environment, the project constraints in which it will operate, and
the level of authority the project manager is given. A project structure can take on various
forms with each form having its own advantages and disadvantages. Organizational structure
determines employee hierarchy, functions, and workflow, and also provides a transparent and
fair reporting system. It is an enterprise environmental factor guiding how an organization
runs its operations. As organizations grow, their requirements change, and the structure must
adapt to support its objectives.

Factors in designing a project structure

There are two design factors that significantly influence the design of a project management
structure. These are the level of specialization and the need for coordination.

THE 4 TYPES OF PROJECT ORGANIZATIONAL STRUCTURE

A common way to differentiate between business organizational structures is between
ongoing operational work versus capital projects.  Operational work maintains an existing
sales channel, whereas projects are one-time, unique expenditures with a defined budget,
beginning and end dates, and they accomplish a specific goal. There are four types of
organizational structures, each of which has their own unique set of influences on the
management of the organization’s projects: 1) Functional 2) Project 3) Matrix 4) Composite
1. Functional
Most organizations are divided along functional lines, that is, each “division” is organized by
work type, such as engineering, production, or sales.
In the functional organizational structure,
projects are initiated and executed by the
divisional managers, who assume the project
manager duties in addition to their regular,
functional, roles.  They are often given
secondary titles such as “Coordinator of
Project X.” In this structure, project
managers usually don’t have alot of
authority to obtain resources or to manage
schedules and budgets.  They must obtain approvals to utilize resources from other
departments, which can be a complex undertaking.  This is because the functional
organization is designed to focus on the provision of the divisional services rather than
project deliverables.

2. Project-Oriented
On the other end of the scale is the project-oriented organization.  These companies do most
of their work on a project basis and are therefore structured around projects.  This includes
construction contractors, architectural firms, and consultants.
Project managers are usually full time in the
role, and for small projects they might
manage several projects at once.

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In this structure project managers usually have a great deal of independence and authority. 
They are able to draw on resources with little required approval.
In fact, most of these types of organizations have some form of functional divisions which are
placeholders for resources that can be utilized by all projects.  They are usually called
“departments.”
For example, at an engineering firm the geotechnical department is available as an expert
resource to all projects within the firm.

3. Matrix
Although the project-oriented and functional structures are at opposite ends of the spectrum,
it is possible to be located somewhere in between (a hybrid).  In fact, most organizations are
along some level of the spectrum, utilizing a structure that gives project managers a bit more
authority without losing focus on the provision of functional services.

In the typical matrix structure, a project

manager is assigned from within one of the
functional departments in either a part time
or full time capacity.  They are assigned
project team members from various
departments, who are released from their
departmental duties (at least partially). 
Thus, a high priority can be placed on the
project while maintaining the functional
division services.
However, the project manager and team members are still paid by their respective functional
departments, thus the final accountability for the project still lies at the functional level.  For
example, if one of the department managers thinks that they have contributed more than their
fair share, the project will stall quickly. From a theoretical point of view, there are two more
adjustments that can be made.  A weak matrix retains the management of the project in the
hands of the functional managers instead of the project team, like this:

On the other side, a strong matrix is still a

functional organizational structure, but has a
completely separate project management
arm. All of the project roles are still fulfilled
within the functional departments, but the
project manager is on the same level as the
functional managers.
This project management arm often takes
the form of a Project Management Office, or
PMO.
In spite of its name, the terms strong and weak matrix are not meant to imply a level of
desirability to the organization.  The names have been coined by the project management
industry which has studied the role of projects within organizations, and hence they
correspond to strength or weakness in achieving project success.  But if that comes at the
expense of poorer delivery of functional services, the organizational’s goals are not
necessarily being achieved. 

Hence, the correct project organizational

structure is one which achieves the

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organization’s goals, and this can fall anywhere along the project/functional spectrum
according to the specific needs of the organization and/or project.

4. Composite
A composite organization blends the functional, matrix, and projectized types of
organizations. A composite is just two or more models that are adapted for a special project,
for simplicity, or to keep power in check. Most modern businesses are of the composite type.

This occurs when a project structure and a

functional structure both report to a central
executive. For example, a state government
department of transportation has a
maintenance division which seeks to
maintain the level of service of the state’s
roads and bridges, and a capital projects
division which builds new roads and
bridges.  The maintenance division and the
capital projects division are located side by
side, reporting to the executive.  This is a composite organizational structure (A matrix
structure would require new construction to occur within one of the maintenance departments
– the project manager would report to a functional manager rather than the executive).
Most organizations lean one way or the other rather than using both structures, because of the
drastically different management styles necessary to perform each of the roles well.

Examples
 A car dealership wants to initiate a new sales process.  It assigns the design and
implementation to the sales manager, who utilizes some of the sales as well as
maintenance personnel to develop the necessary documents and implement the plan.  This
is a functional organizational structure.
 A web design firm has a user interface design department, which is available for project
work when necessary. The UI department supports the firm’s projects and doesn’t
otherwise carry out much work on its own. This is a project-oriented organizational
structure.
 A vehicle manufacturing firm sets up a project to modernize its assembly line, whereby
the project manager is dedicated full time to the project and reports to the executive.  The
project manager chooses their project team from the design, production, and maintenance
departments, who must balance their time between their regular duties and achieving their
project work.  This is a strong matrix organization.

Importance of an Organizational Structure

An organizational structure has a well-defined reporting structure, reducing friction among
employees by clarifying roles and responsibilities.
Having a proper organizational structure can bring immense benefits to any organization. A
well-chosen structure
 Allows an organization to grow.
 Focuses attention on strategic goals, instead of each department focusing on its
agenda.
 Unites a group of people and points them towards a common goal.

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 Encourages employees to enhance their skills.

 Makes the decision-making process efficient, smoother, and faster.
 Facilitates the specialization of employees.
 Empowers better control and use of resources.
 Establishes a proper reporting system.
 Enables easier and effective communication, which helps reduce conflicts.
 Allows employees to perform better.
 Equips employees to grow their careers and streamlines new employee on
boarding.
 Identifies clear roles and responsibilities.

OUTSOURCING PROJECT WORK

The advantages of outsourcing project work are many:

1. Cost reduction. Companies can secure competitive prices for contracted services,
especially if the work can be outsourced offshore. Furthermore, overhead costs are
dramatically cut since the company no longer has to internally maintain the contracted
services.
2. Faster project completion. Not only can work be done more cheaply, but it can also be
done faster. Competitive pricing means more resources for the dollar. For example, you can
hire three Indian software engineers for the price of one American software engineer.
Furthermore, outsourcing can provide access to equipment that can accelerate completion of
project tasks. For example, by contracting a backhoe operater you are able to accomplish in
four hours what it would take a landscaping crew four days to complete.
3. High level of expertise. A high level of expertise and technology can be brought to bear on
the project. A company no longer has to keep up with technological advances. Instead, it can
focus on developing its core competencies and hire firms with the know-how to work on
relevant segments of the project.
4. Flexibility. Organizations are no longer constrained by their own resources but can pursue
a wide range of projects by combining their resources with talents of other companies. Small
companies can instantly go global by working with foreign partners.

The disadvantages of outsourcing project work are less well documented:

1. Coordination breakdowns. Coordination of professionals from different organizations can
be challenging, especially if the project work requires close collaboration and mutual
adjustment. Breakdowns are exacerbated by physical separation with people working in
different buildings, different cities, if not different countries.
2. Loss of control. There is potential loss of control over the project. The core team depends
on other organizations that they have no direct authority over. While long-term survival
of participating organizations depends on performance, a project may falter when one
partner fails to deliver.
3. Conflict. Projects are more prone to interpersonal conflict since the different participants
do not share the same values, priorities, and culture. Trust, which is essential to project
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success, can be difficult to forge when interactions are limited and people come from
different organizations.
4. Security issues. Depending on the nature of the project, trade and business secrets may be
revealed. This can be problematic if the contractor also works for your competitor.
Confidentiality is another concern and companies have to be very careful when
outsourcing processes like payroll, medical transcriptions, and insurance information.

Few people disagree that reducing costs is the primary motive behind outsourcing project
work. However, recent industry polls indicate a shift away from simply nailing the best low-
cost deal to securing services from companies that provide the best value in terms of both
cost and performance. Performance is not limited to simply the quality of specific work but
also ability to collaborate and work together. Companies are doing their homework to
determine “Can we work with these people?”

ETHICS IN PROJECT MANAGEMENT

Ethics is about making the best possible decisions concerning people, resources and the
environment. Ethical choices diminish risk, advance positive results, increase trust, determine
long term success and build reputations. Leadership is absolutely dependent on ethical
choices. It has been determined that honesty, responsibility, respect & fairness are the
values that drive ethical conduct for the project management profession.

ETHICAL ISSUES IN PROJECT MANAGEMENT

1. The “Correct” Project Reports: Even within the parameters of being factually correct,
project status or progress reports could be any of the following:
- Pessimistic: Being conservative in recognizing progress
- Optimistic: Very common, as all project managers like to give the impression of being
on top of things and keep everybody in good cheer.
- Factual: present plain facts and figures and leave judgment and interpretations to the
reader.
- Establish the standards and parameters of reporting and let everybody know in
advance.
- Be as accurate as possible in reporting figures. Approximations used, should be clearly
stated.
- Do not succumb to pressures to suppress facts or stating falsehoods and half-truths,
even if it comes from your boss.
- Within limits of reason and materiality, always try to provide early visibility of issues
and risks and provide mitigation plans. Things do not go away just by ignoring them.
2. Protect the Interests of “All” Stakeholders: “All stakeholders are equal, but some are more
equal than the others”! Stakeholder management calls for the project manager to master the art
of diplomacy. It is very tempting for project managers to take the easy way out and listen to
the most influential stakeholders—be it customers, superiors, or sponsors. A PM's professional
responsibility should include the following:
- Establish and document each stakeholder's interest in a project and set trade-offs and
boundary conditions in advance if possible.
- Ensure transparency and honesty in determining the impact of key decisions on all
stakeholders

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- Try to use negotiation and conflict resolution techniques to reach the optimum decision
involving all stakeholders (never let decisions get taken by “default” assuming the
other side would never know).
3. Remaining “Objective”: Not “taking sides” in technical discussions – be objective. It is
important not just to be objective but to also appear to be so, just as Caesar's wife must be
above suspicion. Something as simple as hanging out with one group all the time can give the
impression that the PM is biased. So protocol is important in the life of a PM.
4. Get Leaders to “Act” for the Project's Benefit: When unreasonable demands are made of
the project team by the business or the customer or other stakeholders. It is the leader's
responsibility to ensure that the goals of a project are “feasible.” Project managers often kill
themselves and their teams chasing goals that are not realistic in the first place. When
important stakeholders are refusing to play along. It is the leadership's responsibility to ensure
that the project manager gets the necessary cooperation from everybody. When changes
threaten to overwhelm the project goals. A project manager is responsible for “managing”
change, but needs help from leadership to protect it from “unnecessary” change.
5. Get the Right Level of Authority: A project manager is responsible and accountable for the
success of the projects. But responsibility without authority calls for super-human qualities
from the project manager and is unfair. It is a project manager's professional duty to ensure
that he or she is empowered enough to carry out all duties. A project manager is ethically
bound to ask for authority before signing up for a project. Authority should include:
- The authority to insist upon a clear charter and to seek clarifications from time to time.
- The authority to refuse a change without a compromise on either the cost, scope, time,
or quality variables.
- The signing authority to procure the required resources for a project within the
approved budget. This includes the authority to select the project team.
- Authority to ask for detailed project plans from all contributing teams and to be able to
influence the plans.
- The authority to ask for the metrics necessary to keep projects on track from the project
team and functional managers.
- Access to senior management of the project for any escalations.
6. Accepting and Assigning Responsibility: A project manager is ethically bound to accept
responsibility for a project's success or failure. It does not mean that he or she “alone” is
responsible. A project manager has the responsibility to look for the real root causes and try to
resolve them. This requires open, frank and honest communication and a project manager must
promote that culture. He or she must accept responsibility as well as be prepared to assign
responsibility without fear or favour. Project progress or closure meetings often beat around
the bush without ever getting to the point. Nobody wants to end the project on a sour note, so
the discussions will be sugar-coated and covered in a nostalgic hue.
7. Use the “Right” Process: For example, if the risk management practices in a project are
missing or inadequate, the project manager must insist on bringing in the best process. If
change management is weak, he or she must bring his or her knowledge to bear in introducing
this to the team. There will always be resistance to change. “We have always done it this way,”
“if it ain't broke, don't fix it” are some comments that you will encounter. But if you are
committed to the success of your project and you think you know something that will make
things better, you should show the courage of conviction to bring about the change. It might
require you to ruffle feathers, appear like a lone crusader at times, but if you have changed
something for the better in the end, it will all be worth it. And you may very well end up with a
halo around your head as the pioneer who brought good things to your organization.
8. Help Other Project Managers: Here are some ways a project manager can help fellow
project managers:

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- Be a mentor to budding project managers by doing any or all of the following:

- Going “out-of-the-way” to help them acquire skills and methods they need in their
profession.
- Explaining to them the importance of certification, studying and “networking‥
- Acting as a consultant when they face problems and need advice.
i. Participate in voluntary activities involving practicing or budding project
managers.
ii. Help promote the cause of project management in their organizations in any or
all of the following ways.
- Building good job profiles and career progression tracks for project managers.
- Selling the value of project management in whatever way they can.
9. Corporate social responsibilities: project managers and their team members should also fulfil
ethical and corporate social responsibilities as being a good citizen.

UNETHICAL ISSUES IN PROJECT MANAGEMENT

Following are some of the most common unethical issues related to project management.
1. Violation of Basic Rights of Workers – Most of the project managers misuse their
powers by violating the basic rights of workers. They engage their team members even
after office timings. Moreover, they do not give them any leave even if there is any
emergency. These things decrease the motivation level of team members.
2. Ignoring Health or Safety Standards – Although, some countries have protected the
employees by setting health, safety and environmental standards, most project managers
ignore these standards.
3. Backstabbing – Project managers always backstab their team members especially those
who are lower than them. It is highly unethical.
4. Making Shady Deals – Money attracts everyone so some corrupted project managers
finalize those deals that give more benefit to their own self. These deals are mostly
dangerous for the organization but still project managers accept them in order to get more
value in the form of money. If we move a step forward then fraudulent cases are very
common these days. The project managers use fictitious records such as show any
expense that never occurred, etc.
5. Wrong People on Job – Sometimes project managers hire their family members,
relatives or friends in their team without considering that these people lack desired skills
and qualifications.
6. Biasness – When project managers’ show biased behaviour, it leads to a disturbance in
the whole working environment.
7. Blaming Others – When you work in a team environment then failure of one person is
considered as the failure of whole team. This is the most ethical behavior but
unfortunately most project managers blame their team members or subordinates without
thinking that being a project head it was also their responsibility to ensure success.
8. Favoritism between subordinates, project managers must build their teams and support
members by ensuring everyone in the team is heard. Those with greater expertise in a
subject, more experience, a longer history of working with the manager, or superior
communication skills can often crowd out valid concerns of other team members. Not
only can this undermine the project, it might also build resentment among team members.
9. Admission of Wrongdoing: it is difficult for people to admit that they have done
something wrong. Ethically, if the project manager is at fault for the unsuccessful venture
of project completion, then he/she must be able to admit this wrong. Not admitting
wrongdoing can greatly damage the team relationship. The unethical practice will also
most likely cause the team members you are in charge of to not trust the manager as well.

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10. Focus of Blame: When a project fails, it is so much easier to point the fingers at this
person or that person. However, ethically, no person should be singled out for project
failure unless it is the project manager. In the end, he or she is the one assigned the
ultimate task of ensuring the project is completed. However, there is no “I" in team. In
these cases of project incompletion or failure, it should be said that the team failed. This
is the most ethical outcome in this sense because it points the blame for failure on the
team as a whole instead of just one or two people. Therefore, in a nutshell, it is ethically
wrong to blame failure to complete a project on any one person.
11. Hard Choices Regarding Contracts: When working with contracts, there are often
many stipulations and requirements between the two parties involved. Sometimes, these
stipulations may violate ethical beliefs and values.

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