Introduction to Project Management Schedule and Cost Control

This chapter is from the book

Comprehensive Guide to Project Management Schedule and Cost Control, A: Methods and Models for Managing the Project Lifecycle

Learn More Buy

This chapter is from the book

This chapter is from the book 

Comprehensive Guide to Project Management Schedule and Cost Control, A: Methods and Models for Managing the Project Lifecycle

Learn More Buy

Organizational Influences

Projects can play an important role in the success of an organization, but the development and management of these structures alone will not result in isolated entities within the organization. However, these roles are still subject to other internal and external influences that can make or break the goal of completing objectives. Projects simply give the organization focus and the ability to control activities required to complete special objectives within the organization. Because the organization typically has established departments to complete certain activities for daily operations, some of these areas produce things for profit, called profit centers; other areas within the operation complete tasks to support the profit centers, such as administration, accounting, and human resources. Because special projects can utilize resources throughout the organization primarily from within the profit centers, projects are connected to other areas within the organization not associated with profit centers to facilitate completion of strategic objectives. Although these areas are needed, they can present either positive or negative influences on the success of completing projects; therefore, project managers should take them into consideration. Three primary areas within the organization can have a significant influence on how projects are structured, scheduled, budgeted, and controlled, and they have to do with the organization’s leadership, culture, and structure.

Organizational Leadership

There is a consistent rule within most organizations that everything starts from the top and rolls down. This rule also is true in the area of managing projects. Whether it is perception or actual fact, the impact this rule will have on an organization starts with the general maturity of the organization and senior staff as well as specific management styles of those overseeing projects. If the executive staff does not understand the importance and benefits of projects, they will not always be supportive of what managers are trying to accomplish and the approach they are taking in using projects to manage activities within the organization. This can come across in several forms, behaviors, attitudes, and actions such as

• Poor selection of key managers in critical roles
• Approval or nonapproval of certain projects and activities
• Unnecessary timelines or budget constraints creating undue stress on projects and activities
• Misunderstanding or ignorance of critical activity update information
• Personality conflicts with project managers
• Hidden agendas that drive inconsistent or confusing decisions

It is important that executive management understand their role in leading by example. They also must understand the impact their leadership can have on the organization if it is not performed at the highest level of integrity, professionalism, and cooperation among themselves and with those reporting to them. It is also important that they understand their actions are seen not only by those reporting to them but by many in the organization; and their leadership can be a large part of the culture established within the organization.

Organizational Culture

When having discussions about the culture of organizations, people can go in several directions to assess, label, and/or stereotype organizations for a perceived culture. When we talk about culture, the general idea is not only the DNA makeup of how the organization structures itself, but also its management style and personality. It is interesting that an organization, in many ways, has a reputation or is known in the industry by its personality and how it conducts business. Some of this personality and management style are a direct result of those who started the organization or are currently senior officers within the organization, whereas other traits of organizational personality might be a result of how the organization conducts its business based on market demands and customer relations. Because these areas are typically seen as high level and generally broad-based perceptions or interpretations of business operations, the same DNA is found at the department and project levels.

It is important that project managers understand the DNA or personality of the organization in the form of a management style so that they can be consistent with the way the organization conducts business internally and externally. This helps project managers be consistent in their management style with the general culture of the organization and can make it easier to gain the approval of senior management. DNA is a complex strand of several elements, and the organization is similar because it is made up of several areas that ultimately define its personality and culture. Some of these areas include

• Type of business and market position
• Senior management experience, personality, and management style
• Hierarchical command structure
• Maturity in customer and supplier relationships
• High-level investment strategies and risk tolerance
• Senior management’s perception of lower-level workforces
• Organizational approach to customer service
• General working conditions and environment within the organization

Understanding what makes up the DNA and personality of an organization can help project managers not only understand their place in the organization, but also understand the importance of a successful management style that is in sync with the culture of the organization. This also allows for managers to be more consistent with other peer management styles. The project managers can also benefit in better understanding the mindset and possible perceptions of the workforce, which can help in the project managers’ management style and approach with their staff. One element of the organization’s DNA is in the type of organization and how it is structured functionally based on the type of business it conducts. The type of management structure used can play a large role in defining how the organization conducts business, its relationships with customers, and the general role project managers will ultimately have.

Organizational Structures

Organizational structure is the foundation of how business is conducted both internally and externally. It plays a large role in how daily operations are carried out and how projects are integrated within daily operations. Some organizations utilize projects at a very low level, accomplishing small tasks, whereas other organizations utilize projects, and their main course of business in the organization is structured with emphasis on these large projects. Depending on how organizations utilize projects within daily operations, organizations are structured using one of three basic structures. These structures are called functional, projectized, and matrix.

• Functional organizations employ the classic structure used to establish managerial hierarchy with the organization divided into traditional functional departments. These departments can include accounting, human resources, purchasing, engineering, manufacturing, quality control, inventory, and warehousing, as well as shipping and receiving. The general idea with this structure is each department has a specific objective with a clear chain of command wherein each department has a manager overseeing the work activities of that department. The manager of each department reports to a higher-level manager who may be overseeing several departments, and the chain of command continues all the way up to the highest level of management in the structure. Although organizations have found this structure to be successful in the general operation of business, it has inherent strengths and weaknesses with regard to efficiency, accountability, and resource management, as well as the management of projects and the role of the project manager.

  The main strength of functional organizations is each department performing its activities as a unit and requiring little or no direct involvement with other departments to achieve its objectives. Each department’s strength builds on the collective knowledge and experience of its members and processes it has developed to maximize the efficiency of work activities in completing its normal objectives. Likewise, projects developed within an individual department are most efficient using only its department members and overseen by the department manager.

  The weakness of this structure is apparent when the organization selects a functional manager to oversee projects and that person may or may not have the experience of a project manager in structuring projects with regard to cost, schedule, resource management, and control. The project can suffer as a result. If a project manager is used in conjunction with this type of project, the project manager carries little or no authority and acts more like an activity expediter.

• Projectized organizations use a completely different type of business structure than that of functional organizations where staff members are grouped into workforces that may include representatives from several traditional departments and are tasked with a unique project objective. This organization only has project groups and very few, if any, functional departments. This type of structure also places a high level of importance on project objectives; therefore, projectized organizations hire project managers to structure and oversee projects. The project manager carries a much higher level of authority with oversight of all resources, budget, and scheduling, and responsibility for completion of the project objective.

  Most projectized organizations were originally structured in this form as a result of their business strategic objectives. These objectives are based on groups of activities that result in unique output deliverables. Another big advantage of projectized organizations is the flexibility available in the business strategy. Because this structure emphasizes large projects as its main output, these organizations can respond quickly to changes in market demand, allowing them to be successful in both stable and unstable market environments.

  Project management within a projectized organization requires management of activities utilizing different types of resources that can be permanently assigned to the project, borrowed from several departments within the organization, and possibly contracted from resources external to the organization. Unlike a specific project designed to accomplish a goal within a single department, projects are now the goal of the entire organization and may require only a few actual departments such as administration and engineering. Because the organization is structured for projects, human resources are assigned tasks based on the requirements of their skill for specific activities on the project. After they complete their activities, they are reassigned to another project to provide their skills for activity requirements on that project. Human resources in this type of organization spend all their employment moving from project to project.

• Matrix organizations are a blend of functional and projectized structures using the benefits of each in completing the organization’s objectives. Matrix organizations typically have a combination of routinely produced deliverables as well as unique and specialized projects. This allows for traditional departments led by functional managers to manage output deliverables of their individual departments; the organization also is able to use these same resources in special projects. The functional manager still holds authority over her department, but the project manager can hold an equal level of authority in overseeing resources from several departments in managing a project.

  Matrix organizations have the advantage of structure and stability found in functional organizations through established departments. They also use key resources within these departments on projects that allow the organizations the flexibility to produce deliverables in response to changing market conditions. This capability gives senior management a unique opportunity to assess market conditions and in parallel create a stable and predictable product delivery environment and a quick response project environment that are both successful in the marketplace.