Project Management
SBU Program Managers
Platform Platform Platform
SBU SBU SBU
FIGURE 3–18. SBU project management using platform management.
● Transfer of power. Some line managers will find it extremely difficult to accept someone else managing their projects, whereas some project managers will find it difficult to give orders to workers who belong to someone else.
● Trust.The secret to a successful transition without formal executive authority will be trust between line managers, between project managers, and between project and line managers. It takes time for trust to develop. Senior management should encour- age it throughout the transition life cycle.
● Policies and procedures.The establishment of well-accepted policies and proce- dures is a slow and tedious process. Trying to establish rigid policies and proce- dures at project initiation will lead to difficulties.
● Hierarchical consideration. During transition, every attempt should be made to minimize hierarchical considerations that could affect successful organizational maturity.
● Priority scheduling.Priorities should be established only when needed, not on a continual basis. If priority shifting is continual, confusion and disenchantment will occur.
● Personnel problems.During transition there will be personnel problems brought on by moving to new locations, status changes, and new informal organizations. These problems should be addressed on a continual basis.
● Communications.During transition, new channels of communications should be built but not at the expense of old ones. Transition phases should show employees that communication can be multidirectional, for example, a project manager talk- ing directly to functional employees.
● Project manager acceptance.Resistance to the project manager position can be con- trolled through proper training. People tend to resist what they do not understand.
● Competition.Although some competition is healthy within an organization, it can be detrimental during transition. Competition should not be encouraged at the ex- pense of the total organization.
● Tools.It is common practice for each line organization to establish its own tools and techniques. During transition, no attempt should be made to force the line or- ganizations to depart from their current practices. Rather, it is better for the project managers to develop tools and techniques that can be integrated with those in the functional groups.
● Contradicting demands. During transition and after maturity, contradicting de- mands will be a way of life. When they first occur during transition, they should be handled in a “working atmosphere” rather than a crisis mode.
● Reporting. If any type of standardization is to be developed, it should be for project status reporting, regardless of the size of the project.
● Teamwork.Systematic planning with strong functional input will produce team- work. Using planning groups during transition will not obtain the necessary func- tional and project commitments.
● Theory X–Theory Y.During transition, functional employees may soon find them- selves managed under either Theory X or Theory Y approaches. People must real- ize (through training) that this is a way of life in project management, especially during crises.
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● Overmanagement costs. A mistake often made by executives is thinking that projects can be managed with fewer resources. This usually leads to disaster be- cause undermanagement costs may be an order of magnitude greater than over- management costs.
Transition to a project-driven matrix organization is not easy. Managers and profes- sionals contemplating such a move should know:
● Proper planning and organization of the transition on a life-cycle basis will facili- tate a successful change.
● Training of the executives, line managers, and employees in project management knowledge, skills, and attitudes is critical to a successful transition and probably will shorten the transition time.
● Employee involvement and acceptance may be the single most important function during transition.
● The strongest driving force of success during transition is a demonstration of com- mitment to and involvement in project management by senior executives.
● Organizational behavior becomes important during transition.
● Commitments made by senior executives prior to transition must be preserved dur- ing and following transition.
● Major concessions by senior management will come slowly.
● Schedule or performance compromises are not acceptable during transition; cost overruns may be acceptable.
● Conflict among participants increases during transition.
● If project managers are willing to manage with only implied authority during tran- sition, then the total transition time may be drastically reduced.
● It is not clear how long transition will take.
Transition from a classical or product organization to a project-driven organization is not easy. With proper understanding, training, demonstrated commitment, and patience, transition will have a good chance for success.
PROBLEMS
3–1 Much has been written about how to identify and interpret signs that indicate that a new organizational form is needed. Grinnell and Apple have identified five signs in addition to those previously described in Section 3.630:
● Management is satisfied with its technical skills, but projects are not meeting time, cost, and other project requirements.
● There is a high commitment to getting project work done, but great fluctuation in how well performance specifications are met.
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30. See note 17.
● Highly talented specialists involved in the project feel exploited and misused.
● Particular technical groups or individuals constantly blame each other for failure to meet specifications or delivery dates.
● Projects are on time and to specification, but groups and individuals aren’t satisfied with the achievement.
Grinnell and Apple state that there is a good chance that a matrix structure will eliminate or al- leviate these problems. Do you agree or disagree? Does your answer depend on the type of pro- ject? Give examples or counterexamples to defend your answers.
3–2 One of the most difficult problems facing management is that of how to minimize the transition time between changeover from a purely traditional organizational form to a project organizational form. Managing the changeover is difficult in that management must consis- tently “provide individual training on teamwork and group problem solving; also, provide the project and functional groups with assignments to help build teamwork.”31
TRW Systems Group tried to make almost an instantaneous conversion from a traditional to a matrix organizational form. Managing the conversion was accomplished through T-groups and special study sessions. Describe the problems associated with new organizational form conversion. Which project form should be easiest to adapt to? State how long a period you might need for conversion from a traditional structure to a product structure, matrix structure, and task force structure. (Note: The TRW Systems Group Studies can be found in cases 9-476- 117, 9-413-066, and 9-413-069 distributed by the Intercollegiate Case Clearing House.) 3–3 Do you think that personnel working in a project organizational structure should undergo
“therapy” sessions or seminars on a regular basis so as to better understand their working en- vironment? If yes, how frequently? Does the frequency depend upon the project organizational form selected, or should they all be treated equally?
3–4 Which organizational form would be best for the following corporate strategies?32
a. Developing, manufacturing, and marketing many diverse but interrelated technologi- cal products and materials
b. Having market interests that span virtually every major industry c. Becoming multinational with a rapidly expanding global business
d. Working in a business environment of rapid and drastic change, together with strong competition
3–5 Robert E. Shannon [“Matrix Management Structures,”Industrial Engineering,March 1972, pp. 27–29. Published and copyright © 1972 by the Institute of Industrial Engineers, 25 Technology Park, Norcross, GA 30092 (770-449-0461), reprinted with permission] made the following remarks:
When operating under a matrix management approach, it is obviously extremely important that the responsibility and authority of each manager be clearly defined, understood, and accepted by both functional and program people. These relationships need to be spelled out in writing. It is essential that in the various operating policies, the specific authority of the program manager be clearly de- fined in terms of program direction, and that the authority of the functional executive be defined in terms of operational direction.
Problems 131
31. See note 17.
32. See note 16.
Do you think that documenting relationships is necessary in order to operate effectively in any project organizational structure? How would you relate Shannon’s remarks to a statement made in the previous chapter that each project can set up its own policies, procedures, rules, and directives as long as they conform to company guidelines?
3–6 In general, how could each of the following parameters influence your choice for an or- ganizational structure? Explain your answers in as much depth as possible.
a. The project cost b. The project schedule c. The project duration d. The technology requirements e. The geographical locations
f. The required working relationships with the customer
3–7 In general, what are the overall advantages and disadvantages of superimposing one or- ganizational form over another?
3–8 In deciding to go to a new organizational form, what impact should the capabilities of the following groups have on your decision?
a. Top management b. Middle management c. Lower-level management
3–9 Should a company be willing to accept a project that requires immediate organizational restructuring? If so, what factors should it consider?
3–10 Figure 2–7 identifies the different life cycles of programs, projects, systems, and prod- ucts. For each of the life cycles’ phases, select a project organizational form that you feel would work best. Defend your answer with examples, advantages, and disadvantages.
3–11 A major steel producer in the United States uses a matrix structure for R&D. Once the product is developed, the product organizational structure is used. Are there any advantages to this setup?
3–12 A major American manufacturer of automobile parts has a division that has successfully existed for the past ten years with multiple products, a highly sophisticated R&D section, and a pure traditional structure. The growth rate for the past five years has been 12 percent. Almost all middle and upper-level managers who have worked in this division have received promotions and transfers to either another division or corporate headquarters. According to “the book,” this division has all the prerequisites signifying that they should have a project organizational form of some sort, and yet they are extremely successful without it. Just from the amount of informa- tion presented, how can you account for their continued success? What do you think would be the major obstacles in convincing the personnel that a new organizational form would be better?
Do you think that continued success can be achieved under the present structure?
3–13 Several authors contend that technology suffers in a pure product organizational form be- cause there is no one group responsible for long-range planning, whereas the pure functional organization tends to sacrifice time and schedule. Do you agree or disagree with this statement?
Defend your choice with examples.
3–14 Below are three statements that are often used to describe the environment of a matrix.
Do you agree or disagree? Defend your answer.
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a. Project management in a matrix allows for fuller utilization of personnel.
b. The project manager and functional manager must agree on priorities.
c. Decision-making in a matrix requires continual trade-offs on time, cost, technical risk, and uncertainty.
3–15 Assume that you have to select a project organizational form for a small company. For each form described in this chapter, discuss the applicability and state the advantages and dis- advantages as they apply to this small company. (You may find it necessary to first determine the business base of the small company.)
3–16 How would each person identified below respond to the question, “How many bosses do you have?”
a. Project manager b. Functional team member c. Functional manager
(Repeat for each organizational form discussed in this chapter.)
3–17 If a project were large enough to contain its own resources, would a matrix organizational form be acceptable?
3–18 One of the most common reasons for not wanting to adopt a matrix is the excessive ad- ministrative costs and accompanying overhead rates. Would you expect the overhead rates to decrease as the matrix matures? (Disregard other factors that can influence the overhead rates, such as business base, growth rate, etc.)
3–19 Which type of organizational structure is best for R&D personnel to keep in touch with other researchers?
3–20 Which type of organizational form fosters teamwork in the best manner?
3–21 Canadian bankers have been using the matrix organizational structure to create “banking general managers” for all levels of a bank. Does the matrix structure readily admit itself to a banking environment in order to create future managers? Can we consider a branch manager as a matrix project manager?
3–22 A major utility company in Cleveland has what is commonly called “fragmented”
project management, where each department maintains project managers through staff posi- tions. The project managers occasionally have to integrate activities that involve departments other than their own. Each project normally requires involvement of several people. The com- pany also has product managers operating out of a rather crude project (product) organizational structure. Recently, the product managers and project managers were competing for resources within the same departments.
To complicate matters further, management has put a freeze on hiring. Last week top man- agement identified 120 different projects that could be undertaken. Unfortunately, under the current structure there are not enough staff project managers available to handle these projects.
Also, management would like to make better use of the scarce functional resources.
Staff personnel contend that the solution to the above problems is the establishment of a project management division under which there will be a project management department and a product management department. The staff people feel that under this arrangement better uti- lization of line personnel will be made, and that each project can be run with fewer staff peo- ple, thus providing the opportunity for more projects. Do you agree or disagree, and what prob- lems do you foresee?
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3–23 Some organizational structures are considered to be “project-driven.” Define what is meant by “project-driven.” Which organizational forms described in this chapter would fall un- der your definition?
3–24 Are there any advantages to having a single project engineer as opposed to having a com- mittee of key functional employees who report to the director of engineering?
3–25 The major difficulty in the selection of a project organizational form involves placement of the project manager. In the evolutionary process, the project manager started out reporting to a department head and ultimately ended up reporting to a senior executive. In general, what were the major reasons for having the project manager report higher and higher in the organi- zational structure?
3–26 Ralph is a department manager who is quite concerned about the performance of the peo- ple beneath him. After several months of analysis, Ralph has won the acceptance of his superi- ors for setting up a project management structure in his department. Out of the twenty-three departments in the company, his will be the only one with formalized project management.
Can this situation be successful even though several projects require interfacing with other departments?
3–27 A large electronics corporation has a multimillion dollar project in which 90 percent of the work stays within one division. The division manager wants to be the project manager. Should this be allowed even though there exists a project management division?
3–28 The internal functioning of an organization must consider:
● The demands imposed on the organization by task complexity
● Available technology
● The external environment
● The needs of the organizational membership
Considering these facts, should an organization search for the one best way to organize under all conditions? Should managers examine the functioning of an organization relative to its needs, or vice versa?
3–29 Project managers, in order to get the job accomplished, need adequate organizational sta- tus and authority. One corporate executive contends that an organizational chart such as that in Figure 3–6 can be modified to show that the project managers have adequate authority by plac- ing the department managers in boxes at the top of the functional responsibility arrowheads.
The executive further contends that, with this approach, the project managers appear to be higher in the organization than their departmental counterparts but are actually equal in status.
Do you agree or disagree with the executive’s idea? Will there be a proper balance of power be- tween project and department managers with this organizational structure?
3–30 Defend or attack the following two statements concerning the operation of a matrix:
● There should be no disruption due to dual accountability.
● A difference in judgment should not delay work in progress.
3–31 A company has fifteen projects going on at once. Three projects are over $5 million, seven projects are between $1 million and $3 million, and five projects are between $500,000 and $700,000. Each project has a full-time project manager. Just based upon this information, which organizational form would be best? Can all the project managers report to the same person?
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3–32 A major insurance company is considering the implementation of project management.
The majority of the projects in the company are two weeks in duration, with very few existing beyond one month. Can project management work here?
3–33 The definition of project management in Section 1.9 identifies project teams and task forces. How would you distinguish between a project team and a task force, and what indus- tries and/or projects would be applicable to each?
3–34 Can informal project management work in a structured environment at the same time as formal project management and share the same resources?
3–35 Several people believe that the matrix structure can be multidimensional (as shown in Figure 3–12). Explain the usefulness of such a structure.
3–36 Many companies have informal project management where work flows horizontally, but in an informal manner. What are the characteristics of informal project management? Which types of companies can operate effectively with informal project management?
3–37 Some companies have tried to develop a matrix within a matrix. Is it possible to have a matrix for formal project control and an internal authority matrix, communication matrix, re- sponsibility matrix, or a combination of several of these?
3–38 Is it possible for a matrix to get out of control because of too many small projects, each competing for the same shared resources? If so, how many projects are too many? How can management control the number of projects? Does your answer depend on whether the organi- zation is project-driven or non–project-driven?
3–39 A government subcontractor operates with a pure specialized product management orga- nizational structure and has four product lines. All employees are required to have a top secret security clearance. The subcontractor’s plant is structured such that each of the four product lines occupies a secured area in the building. Employees wear security badges that give them access to the different areas. Most of the employees are authorized to have access only to their area. Only the executives have access to all four areas. For security reasons, functional em- ployees are not permitted to discuss the product lines with each other.
Many of the projects performed in each of the product lines are identical, and severe du- plication of efforts exist. Management is interested in converting over to a matrix structure to minimize the duplication of effort. What problems must be overcome before and during matrix implementation?
3–40 A company has decided to go to full project management utilizing a matrix structure. Can the implementation be done in stages? Can the matrix be partially implemented, say, in one por- tion of the organization, and then gradually expanded across the rest of the company?
3–41 A company has two major divisions, both housed under the same roof. One division is the aerospace group, where all activities are performed within a formal matrix. The second di- vision is the industrial group, which operates with pure product management, except for the MIS department, which has an informal matrix. If both divisions have to share common cor- porate resources, what problems can occur?
3–42 Several Fortune 100 corporations have a corporate engineering group that assumes the responsibility of the project management–project engineering function for all major capital projects in all divisions worldwide. Explain how the corporate engineering function should work, as well as its advantages and disadvantages.
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