Chapter 2


1. 2.



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. 7. 8.

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.


implementing and evaluating business opportunities ◦ Making cross functional decisions ◦ Achieving objectives 4 . implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.  Consists of: ◦ Developing vision and mission statements ◦ Formulating.Strategic management  The science of formulating.

Some examples include: A firm wishing to… redevelop products or processes change strategic direction or product portfolio configuration improve cross-organizational communication & efficiency …may have a project to reengineer products or processes. The firm’s strategic vision is a driving force behind project development. to install an enterprise IT system. 5 . to create new product lines.Projects are stepping stones of corporate strategy.

1 Programs 6 .Review Figure 2.2 page 36 for an example Mission Objectives Strategy Goals Figure 2.

Sets of project stakeholders include: Internal Stakeholders • • • • Top management Accounting Other functional managers Project team members External Stakeholders • • • • Clients Competitors Suppliers Environmental.Stakeholders are individuals or groups who have an active stake in the project and can potentially impact. either positively or negatively. consumer. political. and other intervenor groups 7 . its development.

the level of influence. and who will have a voice in new developments. Can be beneficial at the beginning of new projects and when projects change direction. Displayed in a stakeholder analysis matrix 8 .   Will inform you of the interests and influence of those involved in a project change. Should show each person or group’s interest in the change. where interests converge.

Divide each quadrant into fourths again.” Label across the top starting at the left with “Significant influence. 4. Label down the left side starting at the top with “Significant Importance. 3.four levels per category) Draw a box divided into four equal quadrants. your matrix will be a graphic display of who holds the most importance and influence (the group in the upper left-hand corner) and who holds the least amount of influence and importance (the group in the lower right-hand corner). Begin by making a list of anyone who has interest and influence over your project. i. customers. etc. Create the Matrix: (example .” “No influence. See World Wildlife Foundation example at: 05.” “Little influence. 5. 6. 2. Use this list to weigh the interest and influence of each person.” “No Importance. When you are done.panda.” “Some Importance.” Organize your stakeholders according to importance and influence.pdf 9 .   1.e.” “Some influence.” “Little Importance. general public. investors. You should now have sixteen boxes.

Parent Organization Other Functional Managers External Environment Project Clients Manager Top Management Accountant Project Team Figure 2.3 10 .

4. 5. Define the problem Develop solutions . 11 .What are your strengths and weaknesses? 3. 6. Assess the environment .Is this low key or significant? Identify the goals of the principal actors .1. Test and refine the solutions – it is an iterative process.What true goals do the stakeholders have? Assess your own capabilities .Try to cover as many stakeholder’s concerns as possible (80%). The goal is to formulate strategies to identify and manage for positive results. 2.

Identify Stakeholders Implement Stakeholder Management Strategy Predict Stakeholder Behavior Project Management Team Gather Information on Stakeholders Identify Stakeholder’s Mission Identify Stakeholder Strategy Determine Stakeholder Strengths & Weaknesses Figure 2.4 12 .

Functional? Geographic? Product type? Project based? 3. Designates formal reporting relationships ◦ including the number of levels in the hierarchy ◦ span of control of management Groupings of: ◦ individuals into departments ◦ departments into the total organization  2. Design of systems to ◦ ensure effective communication ◦ coordination ◦ integration of efforts across departments 13 .Consists of three key elements: 1.

 Functional organizations – groups people performing similar activities into departments Project organizations – groups people into project teams on temporary assignments Matrix organizations – creates a dual hierarchy in which functions and projects have equal prominence   14 .

Figure 2.5 Board of Directors Silos of work Chief Executive Vice President of Marketing Vice President of Production Vice President of Finance Vice President of Research New Product Development Testing Market Research Logistics Sales Outsourcing After Market Support Advertising Warehousing Accounting Services Contracting Research Labs Distribution Investments Quality Employee Benefits Manufacturing 15 .

3.Strengths 1. Weaknesses Functional siloing – no collaboration Lack of customer focus -self-focusing 2. 4. 2. 16 . 3. Fosters development of in-depth knowledge Projects are developed within the basic functional structure – no change to firms functional design Project team members remain connected with their functional group Standard career paths 1. Projects may take longer as tasked are routed from one department to another Projects may be sub-optimized 4.

7 Board of Directors Chief Executive Vice President of Projects Vice President of Marketing Vice President of Production Vice President of Finance Vice President of Research Project Alpha Project Beta 17 .Figure 2.

Chance of loyalty to the project rather than the firm 3. Workers unassigned at project end 5. Flexible and rapid response 18 . Project manager sole authority 1. Improved communication across the organization 3. Expensive to set up and maintain teams 2. Promotes the creation of project management experts 4. Rapid decision-making 2. No pool of specific knowledge 4.Strengths Weaknesses 1.

5 resources 1 resource 3 resources Project Beta 1 resource 2 resources 2 resources 2.5 resources 19 .8  Seeks a balance between the functional and project organizations Vice President of Projects Vice President of Marketing Board of Directors Chief Executive Vice President of Production Vice President of Finance Vice President of Research Project Alpha 2 resources 1.Figure 2.

Workers caught between competing project & functional demands 20 . Negotiation required in order to share resources 3.Strengths 1. Promotes coordination across functional units 4. Equal emphasis on project management and functional efficiency 3. Dual hierarchies mean two bosses 2. Suited to dynamic environments 2. Maximizes scarce resources Weaknesses 1.

-PMBok 2004 21 .

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 22 .

 Centralized units that oversee or improve the management of projects Resource centers for: ◦ ◦ ◦ ◦ Support with technical details Expertise Central repository for lessons learned Center for excellence  23 .

 Weather station ◦ used only to monitor and track projects  Resource pool ◦ maintain and provide a group of skilled project professionals  Control tower ◦ project management is a skill to be protected and supported ◦ focuses on establishing standards. consulting/enforcing. and improving project management skills 24 .

The unwritten rules of behavior. or norms. Key factors that affect culture development ◦ ◦ ◦ ◦ ◦ ◦ ◦ Technology level Business environment Geographical location Reward systems Rules and procedures Key organizational members Critical incidents Have you heard of “The Toyota Way?” 25 . is shared by some subset of organization members and is taught to all new members of the company. that are used to shape and guide behavior.

     Departmental interaction Employee commitment to goals Project planning Performance evaluation Attitudes 26 .

which have been sprayed with cold water. And that's how company policy begins. The new one makes it to the stairs and is attacked as well. the other apes all try to prevent it. To his horror. hang a banana on a string and put stairs under it. Before long. replace a third original ape with a new one. he knows that if he tries to climb the stairs. remove another of the original five apes and replace it with a new one.      27 . Next.. In the cage. After another attempt and attack. Now. an ape will go to the stairs and start to climb towards the banana. Remove one ape from the cage and replace it with a new one. have been replaced. or why they are participating in the beating of the newest ape. he will be assaulted.. Two of the four apes that beat him have no idea why they were not permitted to climb the stairs. As soon as he touches the stairs. This continues through several more attempts. another ape makes an attempt with the same result . Start with a cage containing five apes. After a while. Again. no ape ever again approaches the stairs. After replacing the fourth and fifth original apes. The newcomer goes to the stairs and is attacked. all the apes. Pretty soon. when another ape tries to climb the stairs. spray all of the apes with cold water. Why not? Because that's the way they've always done it and that's the way it's always been around here. The previous newcomer takes part in the punishment with enthusiasm.. all of the other apes attack him. The new ape sees the banana and wants to climb the stairs. turn off the cold water.all the apes are sprayed with cold water. Nevertheless.

c. What are some of the key decision criteria that will help them determine which model makes the most sense? 28 . As part of their operational shift. b. Why is stakeholder analysis important as a precondition of the decision whether or not to follow through with such a plan? Consider a medium-sized company that has decided to begin using project management in a wide variety of its operations. The chapter suggests that a definition of strategic management includes four components: Developing a strategic vision and sense of mission Formulating. d.1. Make an argument for the type of PMO they should be adopting (weather station. 2. Your company is planning to construct a nuclear power plant in Oregon. 3. a. 4. control tower. How do projects serve to allow an organization to realize each of these three components of strategic management? Discuss the difference between organizational objectives and strategies. and evaluating Cross-functional decisions Achieving its objectives Discuss how each of these four elements are important to understanding the challenge of strategic project management. implementing. or resource pool). they are going to adopt a project management office (PMO) somewhere within their organization.

optical scanners. What are some of the key organizational elements that can affect the development and maintenance of a supportive organizational culture? As a consultant. b. what advice would you give to a functional organization that was seeking to move from an old. You have historically been using a functional structure set up with five departments: finance. where the various departments actively resisted helping each other. marketing. adversarial culture. 29 . and defense communications. With the project structure. production.5. Create a drawing of your simplified functional structure. and engineering. you have four projects currently ongoing: stereo equipment. What might be some of the environmental pressures that would contribute to your belief that it is necessary to alter the structure? c. Draw the new structure that creates these four projects as part of the organizational chart. instrumentation and testing equipment. to one that encourages “project thinking” and cross-functional cooperation? 6. human resources. a. You are a member of the senior management staff at XYZ Corporation. Assume you have decided to move to a project structure. identifying the five departments.

prepare a two-minute briefing for the class to identify the project and what you see as the key elements your project will have to address. Your task: 2. address the following questions: 30 . Specifically. 1. ◦ What are some of the main issues that you will need to address in this project? In your groups. Include a discussion of aspects of Good Answers’ operations that would not be part of the project but rather are part of Good Answers’ general procedures. ◦ What is the project in this scenario? ◦ Who are the stakeholders? Create a stakeholder matrix.

31 .

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