Answer the following questions in 400 days.

Anonymous
timer Asked: Jan 31st, 2019
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Question Description

Read the case study "The Invisible Sponsor" on page 658 and then pick one (1) of the following sets of three (3) questions to answer on page 660:

Set 1 - questions 1-3

Set 2 - question 4-6


Note: Below text book is not the latest version. APA format is must. Please add atleast 2 references.

PROJECT MANAGEMENT A Systems Approach to Planning, Scheduling, and Controlling EIGHTH EDITION HAROLD KERZNER, Division of Business Administration Baldwin-Wallace College Berea, Ohio John Wiley & Sons, Inc. Ph.D. PROJECT MANAGEMENT Dr. Kerzner’s 16 Points to Project Management Maturity 1. Adopt a project management methodology and use it consistently. 2. Implement a philosophy that drives the company toward project management maturity and communicate it to everyone. 3. Commit to developing effective plans at the beginning of each project. 4. Minimize scope changes by committing to realistic objectives. 5. Recognize that cost and schedule management are inseparable. 6. Select the right person as the project manager. 7. Provide executives with project sponsor information, not project management information. 8. Strengthen involvement and support of line management. 9. Focus on deliverables rather than resources. 10. Cultivate effective communication, cooperation, and trust to achieve rapid project management maturity. 11. Share recognition for project success with the entire project team and line management. 12. Eliminate nonproductive meetings. 13. Focus on identifying and solving problems early, quickly, and cost effectively. 14. Measure progress periodically. 15. Use project management software as a tool—not as a substitute for effective planning or interpersonal skills. 16. Institute an all-employee training program with periodic updates based upon documented lessons learned. PROJECT MANAGEMENT A Systems Approach to Planning, Scheduling, and Controlling EIGHTH EDITION HAROLD KERZNER, Division of Business Administration Baldwin-Wallace College Berea, Ohio John Wiley & Sons, Inc. Ph.D. This book is printed on acid-free paper. ∞ Copyright © 2003 by John Wiley & Sons, Inc. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, e-mail: permcoordinator@wiley.com. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Kerzner, Harold. Project management : a systems approach to planning, scheduling, and controlling / Harold Kerzner.--8th ed. p. cm. Includes bibliographical references and indexes. ISBN 0-471-22577-0 (cloth : alk. paper) 1. Project management. I. Title. HD69.P75 K47 2002 658.404--dc21 2002028892 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 To Dr. Herman Krier, my Friend and Guru, who taught me well the meaning of the word “persistence” Contents Preface 1 xix OVERVIEW 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1 Introduction 1 Understanding Project Management 2 Defining Project Success 6 The Project Manager–Line Manager Interface 7 Defining the Project Manager’s Role 9 Defining the Functional Manager’s Role 11 Defining the Functional Employee’s Role 14 Defining the Executive’s Role 14 Working with Executives 15 The Project Manager as the Planning Agent 16 Project Champions 17 The Downside of Project Management 18 Project-Driven versus Non–Project-Driven Organizations 19 Marketing in the Project-Driven Organization 21 Classification of Projects 23 Location of the Project Manager 24 Differing Views of Project Management 26 Concurrent Engineering: A Project Management Approach 27 Problems 27 Case Study Williams Machine Tool Company 30 vii viii CONTENTS 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS 33 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 Introduction 33 General Systems Management 34 Project Management: 1945–1960 34 Project Management: 1960–1985 35 Project Management: 1985–2003 47 Resistance to Change 51 Systems, Programs, and Projects: A Definition 55 Product versus Project Management: A Definition 58 Maturity and Excellence: A Definition 59 Informal Project Management: A Definition 60 The Many Faces of Success 61 The Many Faces of Failure 64 The Stage-Gate Process 67 Project Life Cycles 69 Project Management Methodologies: A Definition 75 Change Management and Corporate Cultures 77 Systems Thinking 82 Problems 3 85 ORGANIZATIONAL STRUCTURES 87 3.0 Introduction 87 3.1 Organizational Work Flow 90 3.2 Traditional (Classical) Organization 91 3.3 Developing Work Integration Positions 94 3.4 Line–Staff Organization (Project Coordinator) 98 3.5 Pure Product (Projectized) Organization 99 3.6 Matrix Organizational Form 102 3.7 Modification of Matrix Structures 111 3.8 Center for Project Management Expertise 115 3.9 Matrix Layering 115 3.10 Selecting the Organizational Form 117 3.11 Structuring the Small Company 124 3.12 Strategic Business Unit (SBU) Project Management 3.13 Transitional Management 128 Problems 130 Case Study Jones and Shephard Accountants, Inc. 136 127 ix Contents 4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 139 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 Introduction 139 The Staffing Environment 140 Selecting the Project Manager: An Executive Decision 142 Skill Requirements for Program Managers 148 Special Cases in Project Manager Selection 153 Selecting the Wrong Project Manager 154 Next Generation Project Managers 157 Duties and Job Descriptions 159 The Organizational Staffing Process 163 The Project Office 168 The Functional Team 174 The Project Organizational Chart 176 Special Problems 179 Selecting the Project Management Implementation Team 181 Problems 5 184 MANAGEMENT FUNCTIONS 191 5.0 Introduction 191 5.1 Controlling 193 5.2 Directing 193 5.3 Project Authority 197 5.4 Interpersonal Influences 205 5.5 Barriers to Project Team Development 208 5.6 Suggestions for Handling the Newly Formed Team 5.7 Team Building as an Ongoing Process 215 5.8 Leadership in a Project Environment 216 5.9 Life-Cycle Leadership 217 5.10 Organizational Impact 220 5.11 Employee–Manager Problems 221 5.12 Management Pitfalls 225 5.13 Communications 227 5.14 Project Review Meetings 237 5.15 Project Management Bottlenecks 237 5.16 Communication Traps 238 5.17 Proverbs 240 5.18 Management Policies and Procedures 240 Problems 243 Case Studies The Trophy Project 253 213 x CONTENTS Leadership Effectiveness (A) 254 Leadership Effectiveness (B) 259 Motivational Questionnaire 265 6 TIME MANAGEMENT AND STRESS 6.0 6.1 6.2 6.3 6.4 6.5 273 Introduction 273 Understanding Time Management 274 Time Robbers 274 Time Management Forms 276 Effective Time Management 277 Stress and Burnout 278 Problems 280 Case Study The Reluctant Workers 7 CONFLICTS 7.0 7.1 7.2 7.3 7.4 7.5 7.6 281 283 Introduction 283 Objectives 284 The Conflict Environment 285 Conflict Resolution 288 Understanding Superior, Subordinate, and Functional Conflicts 289 The Management of Conflicts 291 Conflict Resolution Modes 292 Problems 294 Case Studies Facilities Scheduling at Mayer Manufacturing 297 Telestar International 299 Handling Conflict in Project Management 300 8 SPECIAL TOPICS 8.0 8.1 8.2 8.3 8.4 307 Introduction 307 Performance Measurement 308 Financial Compensation and Rewards 315 Effective Project Management in the Small Business Organization 321 Mega Projects 323 xi Contents 8.5 8.6 8.7 8.8 8.9 Morality, Ethics, and the Corporate Culture Internal Partnerships 327 External Partnerships 328 Training and Education 330 Integrated Product/Project Teams 333 Problems 9 344 352 WORKING WITH EXECUTIVES 10.0 10.1 10.2 10.3 339 Introduction 339 Predicting Project Success 340 Project Management Effectiveness Expectations 345 Force Field Analysis 346 Lessons Learned 351 Problems 10 335 THE VARIABLES FOR SUCCESS 9.0 9.1 9.2 9.3 9.4 9.5 353 Introduction 353 The Project Sponsor 354 Handling Disagreements with the Sponsor The In-House Representatives 363 Problems 324 363 364 Case Study Corwin Corporation 11 PLANNING 11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 368 377 Introduction 377 General Planning 380 Life-Cycle Phases 382 Proposal Preparation 386 Understanding Participants’ Roles 386 Project Planning 387 The Statement of Work 388 Project Specifications 393 Milestone Schedules 395 Work Breakdown Structure 396 WBS Decomposition Problems 402 Role of the Executive in Project Selection 406 xii CONTENTS 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 Role of the Executive in Planning 410 The Planning Cycle 411 Work Planning Authorization 412 Why Do Plans Fail? 413 Stopping Projects 414 Handling Project Phaseouts and Transfers 415 Detailed Schedules and Charts 416 Master Production Scheduling 419 Program Plan 421 Total Project Planning 426 The Project Charter 430 Management Control 431 The Project Manager–Line Manager Interface 434 Fast-Tracking 436 Configuration Management 437 Problems 12 438 NETWORK SCHEDULING TECHNIQUES 12.0 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 449 Introduction 449 Network Fundamentals 452 Graphical Evaluation and Review Technique (GERT) Dependencies 456 Slack Time 457 Network Replanning 463 Estimating Activity Time 467 Estimating Total Program Time 468 Total PERT/CPM Planning 469 Crash Times 471 PERT/CPM Problem Areas 475 Alternative PERT/CPM Models 476 Precedence Networks 478 Lag 481 Understanding Project Management Software 482 Software Features Offered 482 Software Classification 484 Implementation Problems 485 Problems 486 Case Study Crosby Manufacturing Corporation 494 456 xiii Contents 13 PROJECT GRAPHICS 13.0 13.1 13.2 13.3 13.4 Introduction 497 Customer Reporting 498 Bar (Gantt) Chart 499 Other Conventional Presentation Techniques Logic Diagrams/Networks 509 Problems 14 497 510 PRICING AND ESTIMATING 14.0 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 506 511 Introduction 511 Global Pricing Strategies 512 Types of Estimates 513 Pricing Process 516 Organizational Input Requirements 519 Labor Distributions 520 Overhead Rates 524 Materials/Support Costs 526 Pricing Out the Work 529 Smoothing Out Department Man-Hours 530 The Pricing Review Procedure 532 Systems Pricing 534 Developing the Supporting/Backup Costs 535 The Low-Bidder Dilemma 539 Special Problems 539 Estimating Pitfalls 540 Estimating High-Risk Projects 541 Project Risks 542 The Disaster of Applying the 10 Percent Solution to Project Estimates Life-Cycle Costing (LCC) 548 Logistics Support 553 Economic Project Selection Criteria: Capital Budgeting 554 Payback Period 554 The Time Value of Money 555 Net Present Value (NPV) 556 Internal Rate of Return (IRR) 557 Comparing IRR, NPV, and Payback 558 Risk Analysis 558 Capital Rationing 559 Problems 560 546 xiv CONTENTS 15 COST CONTROL 15.0 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 565 Introduction 565 Understanding Control 569 The Operating Cycle 572 Cost Account Codes 573 Budgets 580 Variance and Earned Value 580 Recording Material Costs Using Earned Value Measurement The Material Accounting Criterion 601 Material Variances: Price and Usage 602 Summary Variances 603 Status Reporting 604 Cost Control Problems 610 Problems 612 Case Study The Bathtub Period 16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT 16.0 16.1 16.2 16.3 16.4 17 623 Introduction 625 Methodology for Trade-off Analysis 628 Contracts: Their Influence on Projects 645 Industry Trade-off Preferences 646 Conclusion 649 RISK MANAGEMENT 17.0 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 17.13 17.14 17.15 651 Introduction 651 Definition of Risk 653 Tolerance for Risk 654 Definition of Risk Management 655 Certainty, Risk, and Uncertainty 656 Risk Management Process 661 Risk Planning 662 Risk Assessment 663 Risk Identification 664 Risk Analysis 668 The Monte Carlo Process 675 Risk Handling 681 Selecting the Appropriate Response Mechanism Risk Monitoring 686 Some Implementation Considerations 687 The Use of Lessons Learned 688 685 625 598 xv Contents 17.16 Dependencies between Risks 692 17.17 The Impact of Risk Handling Measures 696 17.18 Risk and Concurrent Engineering 699 Problems 703 Case Studies Teloxy Engineering (A) Teloxy Engineering (B) 18 LEARNING CURVES 18.0 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12 18.13 18.14 716 733 MODERN DEVELOPMENTS IN PROJECT MANAGEMENT 19.0 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 20 711 Introduction 711 General Theory 712 The Learning Curve Concept 712 Graphic Representation 714 Key Words Associated with Learning Curves The Cumulative Average Curve 718 Sources of Experience 720 Developing Slope Measures 723 Unit Costs and Use of Midpoints 724 Selection of Learning Curves 724 Follow-on Orders 726 Manufacturing Breaks 726 Learning Curve Limitations 727 Prices and Experience 729 Competitive Weapon 730 Problems 19 709 710 Introduction 735 The Project Management Maturity Model (PMMM) 736 Developing Effective Procedural Documentation 740 Project Management Methodologies 744 Continuous Improvement 745 Capacity Planning 750 Competency Models 751 Managing Multiple Projects 754 End-of-Phase Review Meetings 755 QUALITY MANAGEMENT 20.0 20.1 735 Introduction 758 Definition of Quality 757 759 xvi CONTENTS 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14 20.15 20.16 20.17 20.18 21 CONTRACTS AND PROCUREMENT 21.0 21.1 21.2 21.3 21.4 21.5 21.6 21.7 21.8 21.9 21.10 21.11 21.12 22 The Quality Movement 761 Comparison of the Quality Pioneers 764 The Taguchi Approach 765 The Malcolm Baldrige National Quality Award ISO 9000 769 Quality Management Concepts 771 The Cost of Quality 774 The Seven Quality Control Tools 777 Process Capability (Cp) 794 Acceptance Sampling 796 Operating Characteristic Curves 796 Implementing Six Sigma 799 Quality Leadership 802 Responsibility for Quality 803 Quality Circles 803 Just-in-Time Manufacturing (JIT) 804 Total Quality Management (TQM) 806 811 Introduction 811 Procurement 812 Requirement Cycle 813 Requisition Cycle 815 Solicitation Cycle 815 Award Cycle 817 Types of Contracts 818 Incentive Contracts 823 Contract Type versus Risk 825 Contract Administration Cycle 826 Using a Checklist 829 Proposal-Contractual Interaction 830 Summary 833 CRITICAL CHAIN PROJECT MANAGEMENT 22.0 22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8 768 835 Introduction 835 Anatomy of a Task Estimate 837 Task Execution 841 Protection in a Critical Chain Project 842 Buffer Management 847 Managing the Execution of a Critical Chain Project 848 Critical Chain Multiproject Problem and Solution 849 Implementing Multiproject Critical Chain 852 How Critical Chain Extends Critical Path 852 xvii Contents Problems 854 Case Studies Lucent Technologies 855 Elbit Systems Ltd. 857 Seagate Technology 860 Appendix A. Solutions to the Project Management Conflict Exercise Appendix B. Solution to Leadership Exercise 869 Author Index 875 Subject Index 877 863 Preface As we enter the first decade of the twenty-first century, our perception of project management has changed. Project management, once considered nice to have, is now recognized as a necessity. Organizations that were opponents of project management are now advocates. Management educators of the past, who preached that project management could not work, are now staunch supporters. Project management is here to stay. This text discusses the principles of project management. Students who are interested in advanced topics in project management, as well as in best practices in implementation, may wish to read one of my other texts, Applied Project Management (New York: Wiley, 2000). This book is addressed not only to those undergraduate and graduate students who wish to understand and improve upon their project management skills, but also to those functional managers and upper-level executives who must provide continuous support to all projects. During the past several years, management’s knowledge and understanding of project management has matured to the point where almost every company is using project management in one form or another. These companies have come to the realization that project management and productivity are related. Project management coursework is now consuming more of training budgets than ever before. General reference is provided in the text to engineers. However, the reader should not consider project management as strictly engineering-related. The engineering examples are the result of the fact that project management first appeared in the engineering disciplines, and we should be willing to learn from their mistakes. The textbook is designed for undergraduate and graduate courses in both business and engineering. The structure of the text is based upon my belief that project management is much more behavioral than quantitative. The first five chapters are part of the basic core xix xx PREFACE of knowledge needed to understand project management. Chapters 6 through 8 deal with the support functions of time management, conflicts, and other special topics. Chapters 9 and 10 describe executive involvement and the critical success factors for predicting project success. It may seem strange that ten chapters on organizational behavior and structuring are needed prior to the “hard-core” chapters of planning, scheduling, and controlling. These first ten chapters are framework chapters needed to develop the cultural environment for all projects and systems. These chapters are necessary for the reader to understand the difficulties in achieving cross-functional cooperation on projects and why the people involved, all of whom may have different backgrounds, cannot simply be forged into a cohesive work-unit without any friction. Chapters 11 through 15 are the quantitative chapters on planning, scheduling, cost control, and estimating. Chapter 16 deals with trade-offs on time, cost, and performance. Chapters 17 through 22 cover the more advanced topics in project management, as well as future trends. The text contains 14 case studies, and nearly 400 discussion questions. In addition, there is a supplemental workbook (Project Management Workbook to Accompany Project Management, 8th Edition, ISBN: 0-471-22579-7) that contains more than 600 multiple choice questions, additional case studies, challenging problems, and crossword puzzles. There is also a separate book of cases (Project Management Case Studies, ISBN: 0-471-22578-9) that provides real-world examples. This text, the wookbook, and the book of cases are ideal as self-study tools for the Project Management Institute’s Certification exam. Because of this there are tables of cross references on each chapter-opening page detailing the sections from the book of cases, the workbook, and the Project Management Body of Knowledge (PMBOK®) that apply to that chapter’s content. An instructor’s manual is available only to college and university faculty members by contacting your local Wiley sales representative or by visiting the Wiley web site at www.wiley.com/kerzner. This web site includes not only the instructor’s manual but also over 500 PowerPoint slides that follow the content of the book and help organize and execute classroom instruction and group learning. One-day, two-day, and three-day seminars on project management and PMI certification training using the text are offered by contacting me at 216-765-8090 (E-mail address: hkerzner@hotmail.com). The problems and case studies at the ends of chapters cover a variety of industries. Almost all of the case studies are real-world situations taken from my consulting practice. Feedback from colleagues who are using the text has provided me with fruitful criticism, most of which has been incorporated into the eighth edition. The majority of the articles on project management that have become classics have been referenced in the textbook throughout the first eleven chapters. These articles were the basis for most of the modern developments in project management and are therefore identified throughout the text. Valuable criticism was made by many colleagues. In particular, I am indebted to those industrial/government training managers whose dedication and commitment to quality project management education and training have led to valuable changes in this edition. To Dr. Mark Collier, President of Baldwin-Wallace College, I again express my deepest appreciation and respect for his never-ending support and encouragement toward conducting meaningful research for this text. Harold Kerzner Baldwin-Wallace College 1 Overview Related Case Studies (from Kerzner/Project Management Case Studies) • Kombs Engineering • Williams Machine • Tool Company* • Hyten Corporation • Macon, Inc. • Continental Computer Corporation • Jackson Industries Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Garcia Sciences Corporation • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Integration • Management • Scope • Management 1.0 INTRODUCTION Executives will be facing increasingly complex challenges during the next decade. These challenges will be the result of high escalation factors for salaries and raw materials, increased union demands, pressure from stockholders, and the possibility of long-term high inflation accompanied by a mild recession and a lack of borrowing power with financial institutions. These environmental conditions have existed before, but not to the degree that they do today. *Case Study also appears at end of chapter. 1 2 OVERVIEW In the past, executives have attempted to ease the impact of these environmental conditions by embarking on massive cost-reduction programs. The usual results of these programs have been early retirement, layoffs, and a reduction in manpower through attrition. As jobs become vacant, executives pressure line managers to accomplish the same amount of work with fewer resources, either by improving efficiency or by upgrading performance requirements to a higher position on the learning curve. Because people costs are more inflationary than the cost of equipment or facilities, executives are funding more and more capital equipment projects in an attempt to increase or improve productivity without increasing labor. Unfortunately, executives are somewhat limited in how far they can go to reduce manpower without running a high risk to corporate profitability. Capital equipment projects are not always the answer. Thus, executives have been forced to look elsewhere for the solutions to their problems. Almost all of today’s executives are in agreement that the solution to the majority of corporate problems involves obtaining better control and use of existing corporate resources, looking internally rather than externally for the solution. As part of the attempt to achieve an internal solution, executives are taking a hard look at the ways corporate activities are managed. Project management is one of the techniques under consideration. The project management approach is relatively modern. It is characterized by methods of restructuring management and adapting special management techniques, with the purpose of obtaining better control and use of existing resources. Thirty years ago project management was confined to U.S. Department of Defense contractors and construction companies. Today, the concept behind project management is being applied in such diverse industries and organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals, accounting, advertising, law, state and local governments, and the United Nations. The rapid rate of change in both technology and the marketplace has created enormous strains on existing organizational forms. The traditional structure is highly bureaucratic, and experience has shown that it cannot respond rapidly enough to a changing environment. Thus, the traditional structure must be replaced by project management, or other temporary management structures that are highly organic and can respond very rapidly as situations develop inside and outside the company. Project management has long been discussed by corporate executives and academics as one of several workable possibilities for organizational forms of the future that could integrate complex efforts and reduce bureaucracy. The acceptance of project management has not been easy, however. Many executives are not willing to accept change and are inflexible when it comes to adapting to a different environment. The project management approach requires a departure from the traditional business organizational form, which is basically vertical and which emphasizes a strong superior–subordinate relationship. 1.1 UNDERSTANDING PROJECT MANAGEMENT In order to understand project management, one must begin with the definition of a project. A project can be considered to be any series of activities and tasks that: ● ● ● ● ● Have a specific objective to be completed within certain specifications Have defined start and end dates Have funding limits (if applicable) Consume human and nonhuman resources (i.e., money, people, equipment) Are multifunctional (i.e., cut across several functional lines) Understanding Project Management 3 Project management, on the other hand, involves project planning and project monitoring and includes such items as: ● Project planning Definition of work requirements Definition of quantity and quality of work Definition of resources needed Project monitoring ● Tracking progress ● Comparing actual outcome to predicted outcome ● Analyzing impact ● Making adjustments ● ● ● ● Successful project management can then be defined as having achieved the project objectives: ● ● ● ● ● Within time Within cost At the desired performance/technology level While utilizing the assigned resources effectively and efficiently Accepted by the customer The potential benefits from project management are: ● ● ● ● ● ● ● ● Identification of functional responsibilities to ensure that all activities are accounted for, regardless of personnel turnover Minimizing the need for continuous reporting Identification of time limits for scheduling Identification of a methodology for trade-off analysis Measurement of accomplishment against plans Early identification of problems so that corrective action may follow Improved estimating capability for future planning Knowing when objectives cannot be met or will be exceeded Unfortunately, the benefits cannot be achieved without overcoming obstacles such as: ● ● ● ● ● ● Project complexity Customer’s special requirements and scope changes Organizational restructuring Project risks Changes in technology Forward planning and pricing Project management can mean different things to different people. Quite often, people misunderstand the concept because they have ongoing projects within their company and 4 OVERVIEW feel that they are using project management to control these activities. In such a case, the following might be considered an appropriate definition: Project management is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck. Although this might be the way that some companies are running their projects, this is not project management. Project management is designed to make better use of existing resources by getting work to flow horizontally as well as vertically within the company. This approach does not really destroy the vertical, bureaucratic flow of work but simply requires that line organizations talk to one another horizontally so work will be accomplished more smoothly throughout the organization. The vertical flow of work is still the responsibility of the line managers. The horizontal flow of work is the responsibility of the project managers, and their primary effort is to communicate and coordinate activities horizontally between the line organizations. Figure 1–1 shows how many companies are structured. There are always “class or prestige” gaps between various levels of management. There are also functional gaps between working units of the organization. If we superimpose the management gaps on top of the functional gaps, we find that companies are made up of small operational islands that refuse to communicate with one another for fear that giving up information may strengthen their opponents. The project manager’s responsibility is to get these islands to communicate cross-functionally toward common goals and objectives. The following would be an overview definition of project management: Project management is the planning, organizing, directing, and controlling of company resources for a relatively short-term objective that has been established to complete specific goals and objectives. Furthermore, project management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy). The above definition requires further comment. Classical management is usually considered to have five functions or principles: ● ● ● ● ● Planning Organizing Staffing Controlling Directing You will notice that, in the above definition, the staffing function has been omitted. This was intentional because the project manager does not staff the project. Staffing is a line responsibility. The project manager has the right to request specific resources, but the final decision of what resources will be committed rests with the line managers. We should also comment on what is meant by a “relatively” short-term project. Not all industries have the same definition for a short-term project. In engineering, the project might be for six months or two years; in construction, three to five years; in nuclear com- 5 Understanding Project Management TOP MANAGEMENT: POLICY MIDDLE MANAGEMENT: PLANNING + = SUPERVISORS: SCHEDULING LABORERS: OPERATIONS MANAGEMENT GAPS FIGURE 1–1. FUNCTIONAL GAPS: DEPARTMENTIZATION OPERATIONAL ISLANDS Why are systems necessary? ponents, ten years; and in insurance, two weeks. Long-term projects, which consume resources full-time, are usually set up as a separate division (if large enough) or simply as a line organization. Figure 1–2 is a pictorial representation of project management. The objective of the figure is to show that project management is designed to manage or control company resources on a given activity, within time, within cost, and within performance. Time, cost, and performance are the constraints on the project. If the project is to be accomplished for an outside customer, then the project has a fourth constraint: good customer relations. The reader should immediately realize that it is possible to manage a project internally within ST TIM CO E S W USTOMER R OD C EL AT GO IN IO H N IT RESOURCES PERFORMANCE/TECHNOLOGY FIGURE 1–2. Overview of project management. 6 OVERVIEW time, cost, and performance and then alienate the customer to such a degree that no further business will be forthcoming. Executives often select project managers based on who the customer is and what kind of customer relations will be necessary. 1.2 DEFINING PROJECT SUCCESS In the previous section, we defined project success as the completion of an activity within the constraints of time, cost, and performance. This was the definition used for the past twenty years or so. Today, the definition of project success has been modified to include completion: ● ● ● ● ● ● ● Within the allocated time period Within the budgeted cost At the proper performance or specification level With acceptance by the customer/user With minimum or mutually agreed upon scope changes Without disturbing the main work flow of the organization Without changing the corporate culture The last three elements require further explanation. Very few projects are completed within the original scope of the project. Scope changes are inevitable and have the potential to destroy not only the morale on a project, but the entire project. Scope changes must be held to a minimum and those that are required must be approved by both the project manager and the customer/user. Project managers must be willing to manage (and make concessions/trade-offs, if necessary) such that the company’s main work flow is not altered. Most project managers view themselves as self-employed entrepreneurs after project go-ahead, and would like to divorce their project from the operations of the parent organization. This is not always possible. The project manager must be willing to manage within the guidelines, policies, procedures, rules, and directives of the parent organization. All corporations have corporate cultures, and even though each project may be inherently different, the project manager should not expect his assigned personnel to deviate from cultural norms. If the company has a cultural standard of openness and honesty when dealing with customers, then this cultural value should remain in place for all projects, regardless of who the customer/user is or how strong the project manager’s desire for success is. As a final note, it should be understood that simply because a project is a success does not mean that the company as a whole is successful in its project management endeavors. Excellence in project management is defined as a continuous stream of successfully managed projects. Any project can be driven to success through formal authority and strong executive meddling. But in order for a continuous stream of successful projects to occur, there must exist a strong corporate commitment to project management, and this commitment must be visible. The Project Manager–Line Manager Interface 7 1.3 THE PROJECT MANAGER–LINE MANAGER INTERFACE We have stated that the project manager must control company resources within time, cost, and performance. Most companies have six resources: ● ● ● ● ● ● Money Manpower Equipment Facilities Materials Information/technology Actually, the project manager does not control any of these resources directly, except perhaps money (i.e., the project budget).1 Resources are controlled by the line managers, functional managers, or, as they are often called, resources managers. Project managers must, therefore, negotiate with line managers for all project resources. When we say that project managers control project resources, we really mean that they control those resources (which are temporarily loaned to them) through line managers. It should become obvious at this point that successful project management is strongly dependent on: ● ● A good daily working relationship between the project manager and those line managers who directly assign resources to projects The ability of functional employees to report vertically to line managers at the same time that they report horizontally to one or more project managers These two items become critical. In the first item, functional employees who are assigned to a project manager still take technical direction from their line managers. Second, employees who report to multiple managers will always favor the manager who controls their purse strings. Thus, most project managers appear always to be at the mercy of the line managers. Classical management has often been defined as a process in which the manager does not necessarily perform things for himself, but accomplishes objectives through others in a group situation. This basic definition also applies to the project manager. In addition, a project manager must help himself. There is nobody else to help him. If we take a close look at project management, we will see that the project manager actually works for the line managers, not vice versa. Many executives do not realize this. They have a tendency to put a halo around the head of the project manager and give him a bonus at project termination, when, in fact, the credit should go to the line managers, who are continually pressured to make better use of their resources. The project manager is simply the agent through whom this is accomplished. So why do some companies glorify the project management position? 1. Here we are assuming that the line manager and project manager are not the same individual. 8 OVERVIEW To illustrate the role of the project manager, consider the time, cost, and performance constraints shown in Figure 1–2. Many functional managers, if left alone, would recognize only the performance constraint: “Just give me another $50,000 and two more months, and I’ll give you the ideal technology.” The project manager, as part of these communicating, coordinating, and integrating responsibilities, reminds the line managers that there are also time and cost constraints on the project. This is the starting point for better resource control. Project managers depend on line managers. When the project manager gets in trouble, the only place he can go is to the line manager because additional resources are almost always required to alleviate the problems. When a line manager gets in trouble, he usually goes first to the project manager and requests either additional funding or some type of authorization for scope changes. To illustrate this working relationship between the project and line managers, consider the following situation: Project Manager (addressing the line manager): “I have a serious problem. I’m looking at a $150,000 cost overrun on my project and I need your help. I’d like you to do the same amount of work that you are currently scheduled for but in 3,000 fewer man-hours. Since your organization is burdened at $60/hour, this would more than compensate for the cost overrun.” Line Manager: “Even if I could, why should I? You know that good line managers can always make work expand to meet budget. I’ll look over my manpower curves and let you know tomorrow.” The following day . . . Line Manager: “I’ve looked over my manpower curves and I have enough work to keep my people employed. I’ll give you back the 3,000 hours you need, but remember, you owe me one!” Several months later . . . Line Manager: “I’ve just seen the planning for your new project that’s supposed to start two months from now. You’ll need two people from my department. There are two employees that I’d like to use on your project. Unfortunately, these two people are available now. If I don’t pick these people up on your charge number right now, some other project might pick them up in the interim period, and they won’t be available when your project starts.” Project Manager: “What you’re saying is that you want me to let you sandbag against one of my charge numbers, knowing that I really don’t need them.” Line Manager: “That’s right. I’ll try to find other jobs (and charge numbers) for them to work on temporarily so that your project won’t be completely burdened. Remember, you owe me one.” Defining the Project Manager’s Role 9 Project Manager: “O.K. I know that I owe you one, so I’ll do this for you. Does this make us even?” Line Manager: “Not at all! But you’re going in the right direction.” When the project management–line management relationship begins to deteriorate, the project almost always suffers. Executives must promote a good working relationship between line and project management. One of the most common ways of destroying this relationship is by asking, “Who contributes to profits—the line or project manager?” Project managers feel that they control all project profits because they control the budget. The line managers, on the other hand, argue that they must staff with appropriately budgeted-for personnel, supply the resources at the desired time, and supervise performance. Actually, both the vertical and horizontal lines contribute to profits. These types of conflicts can destroy the entire project management system. The previous examples should indicate that project management is more behavioral than quantitative. Effective project management requires an understanding of: ● ● ● Quantitative tools and techniques Organizational structures Organizational behavior Most people understand the quantitative tools for planning, scheduling, and controlling work. It is imperative that project managers understand totally the operations of each line organization. In addition, project managers must understand their own job description, especially where their authority begins and ends. During an in-house seminar on engineering project management, the author asked one of the project engineers to provide a description of his job as a project engineer. During the discussion that followed, several project managers and line managers said that there was a great deal of overlap between their job descriptions and that of the project engineer. Organizational behavior is important because the functional employees at the interface position find themselves reporting to more than one boss—a line manager and one project manager for each project they are assigned to. Executives must provide proper training so functional employees can report effectively to multiple managers. 1.4 DEFINING THE PROJECT MANAGER’S ROLE The project manager is responsible for coordinating and integrating activities across multiple, functional lines. The integration activities performed by the project manager include: ● ● ● Integrating the activities necessary to develop a project plan Integrating the activities necessary to execute the plan Integrating the activities necessary to make changes to the plan These integrative responsibilities are shown in Figure 1–3 where the project manager must convert the inputs (i.e., resources) into outputs of products, services, and ultimately profits. 10 OVERVIEW Resources Integration Management • Capital • Materials Inputs • Equipment • Facilities Products Integrated Processes Services Outputs Profits • Information • Personnel FIGURE 1–3. Integration management. In order to do this, the project manager needs strong communicative and interpersonal skills, must become familiar with the operations of each line organization, and must have knowledge of the technology being used. An executive with a computer manufacturer stated that his company was looking externally for project managers. When asked if he expected candidates to have a command of computer technology, the executive remarked: “You give me an individual who has good communicative skills and interpersonal skills, and I’ll give that individual a job. I can teach people the technology and give them technical experts to assist them in decision making. But I cannot teach somebody how to work with people.” The project manager’s job is not an easy one. Project managers may have increasing responsibility, but very little authority. This lack of authority can force them to “negotiate” with upper-level management as well as functional management for control of company resources. They may often be treated as outsiders by the formal organization. In the project environment, everything seems to revolve about the project manager. Although the project organization is a specialized, task-oriented entity, it cannot exist apart from the traditional structure of the organization. The project manager, therefore, must walk the fence between the two organizations. The term interface management is often used for this role, which can be described as managing relationships: ● ● ● ● Within the project team Between the project team and the functional organizations Between the project team and senior management Between the project team and the customer’s organization, whether an internal or external organization To be effective as a project manager, an individual must have management as well as technical skills. Because engineers often consider their careers limited in the functional Defining the Functional Manager’s Role 11 disciplines, they look toward project management and project engineering as career path opportunities. But becoming a manager entails learning about psychology, human behavior, organizational behavior, interpersonal relations, and communications. MBA programs have come to the rescue of individuals desiring the background to be effective project managers. In the past, executives motivated and retained qualified personnel primarily with financial incentives. Today other ways are being used, such as a change in title or the promise of more challenging work. Perhaps the lowest turnover rates of any professions in the world are in project management and project engineering. In a project environment, the project managers and project engineers get to see their project through from “birth to death.” Being able to see the fruits of one’s efforts is highly rewarding. A senior project manager in a construction company commented on why he never accepted a vice presidency that had been offered to him: “I can take my children and grandchildren into ten countries in the world and show them facilities that I have built as the project manager. What do I show my kids as an executive? The size of my office? My bank account? A stockholder’s report?” The project manager is actually a general manager and gets to know the total operation of the company. In fact, project managers get to know more about the total operation of a company than most executives. That is why project management is often used as a training ground to prepare future general managers who will be capable of filling top management positions. 1.5 DEFINING THE FUNCTIONAL MANAGER’S ROLE Assuming that the project and functional managers are not the same person, we can identify a specific role for the functional manager. There are three elements to this role: ● ● ● The functional manager has the responsibility to define how the task will be done and where the task will be done (i.e., the technical criteria). The functional manager has the responsibility to provide sufficient resources to accomplish the objective within the project’s constraints (i.e., who will get the job done). The functional manager has the responsibility for the deliverable. In other words, once the project manager identifies the requirements for the project (i.e., what work has to be done and the constraints), it becomes the line manager’s responsibility to identify the technical criteria. Except perhaps in R&D efforts, the line manager should be the recognized technical expert. If the line manager believes that certain technical portions of the project manager’s requirements are unsound, then the line manager has the right, by virtue of his expertise, to take exception and plead his case to a higher authority. In Section 1.1 we stated that all resources (including personnel) are controlled by the line manager. The project manager has the right to request specific staff, but the final 12 OVERVIEW appointments rest with line managers. It helps if project managers understand the line manager’s problems: ● ● ● ● ● ● ● ● ● ● ● Unlimited work requests (especially during competitive bidding) Predetermined deadlines All requests having a high priority Limited number of resources Limited availability of resources Unscheduled changes in the project plan Unpredicted lack of progress Unplanned absence of resources Unplanned breakdown of resources Unplanned loss of resources Unplanned turnover of personnel Only in a very few industries will the line manager be able to identify to the project manager in advance exactly what resources will be available when the project is scheduled to begin. It is not important for the project manager to have the best available resources. Functional managers should not commit to certain people’s availability. Rather, the functional manager should commit to achieving his portion of the objective within time, cost, and performance even if he has to use average or below-average personnel. If the project manager is unhappy with the assigned functional resources, then the project manager should closely track that portion of the project. Only if and when the project manager is convinced by the evidence that the assigned resources are unacceptable should he confront the line manager and demand better resources. The fact that a project manager is assigned does not relieve the line manager of his functional responsibility to perform. If a functional manager assigns resources such that the constraints are not met, then both the project and functional managers will be blamed. One company is even considering evaluating line managers for merit increases and promotion based on how often they have lived up to their commitments to the project managers. Therefore, it is extremely valuable to everyone concerned to have all project commitments made visible to all. Some companies carry the concept of commitments to extremes. An aircraft components manufacturer has a Commitment Department headed by a second-level manager. The function of the Commitment Department is to track how well the line managers keep their promises to the project managers. The department manager reports directly to the vice president of the division. In this company, line managers are extremely careful and cautious in making commitments, but do everything possible to meet deliverables. This same company has gone so far as to tell both project and line personnel that they run the risk of being discharged from the company for burying a problem rather than bringing the problem to the surface immediately. Project management is designed to have shared authority and responsibility between the project and line managers. Project managers plan, monitor, and control the project, whereas functional managers perform the work. Table 1–1 shows this shared responsibil- 13 Defining the Functional Manager’s Role TABLE 1–1. DUAL RESPONSIBILITY Responsibility Topic Project Manager Line Manager Rewards Direction Evaluation Measurement Control Give recommendation: Informal Milestone (summary) Summary Summary Summary Provide rewards: Formal Detailed Detailed Detailed Detailed ity. The one exception to Table 1–1 occurs when the project and line managers are the same person. This situation, which happens more often than not, creates a conflict of interest. If a line manager has to assign resources to six projects, one of which is under his direct control, he might save the best resources for his project. In this case, his project will be a success at the expense of all of the other projects. The exact relationship between project and line managers is of paramount importance in project management where multiple-boss reporting prevails. Table 1–2 shows that the relationship between project and line managers is not always in balance and thus, of course, has a bearing on who exerts more influence over the assigned functional employees. TABLE 1–2. REPORTING RELATIONSHIPS Project Manager (PM)/Line Manager (LM)/Employee Relationship Type of Project Manager Type of Matrix Structure* PM Negotiates For Lightweight Weak Deliverables LMs Primarily LMs LMs only with no input from PM Heavyweight Strong People who report informally to PM but formally to LMs PM and LMs Assigned employees who report to LMs LMs with input from PM Tiger teams Very strong People who report entirely to PM full-time for duration of project PM only Assigned employees who now report directly to PM PM only *The types of organizational structures are discussed in Chapter 3. PM Receives Functional Progress From Employee Performance Evaluations Made By Employees Take Technical Direction From 14 OVERVIEW 1.6 DEFINING THE FUNCTIONAL EMPLOYEE’S ROLE Once the line managers commit to the deliverables, it is the responsibility of the assigned functional employees to achieve the functional deliverables. For years the functional employees were called subordinates. Although this term still exists in textbooks, industry prefers to regard the assigned employees as “associates” rather than subordinates. The reason for this is that in project management the associates can be a higher pay grade than the project manager. The associates can even be a higher pay grade than their functional manager. In most organizations, the assigned employees report on a “solid” line to their functional manager, even though they may be working on several projects simultaneously. The employees are usually a “dotted” line to the project but solid to their function. This places the employees in the often awkward position of reporting to multiple individuals. This situation is further complicated when the project manager has more technical knowledge than the line manager. This occurs during R&D projects. The functional employee is expected to accomplish the following activities when assigned to projects: ● ● ● ● ● Accept responsibility for accomplishing the assigned deliverables within the project’s constraints Complete the work at the earliest possible time Periodically inform both the project and line manager of the project’s status Bring problems to the surface quickly for resolution Share information with the rest of the project team 1.7 DEFINING THE EXECUTIVE’S ROLE In a project environment there are new expectations of and for the executives, as well as a new interfacing role.2 Executives are expected to interface a project as follows: ● ● ● ● In project planning and objective-setting In conflict resolution In priority-setting As project sponsor3 Executives are expected to interface with projects very closely at project initiation and planning, but to remain at a distance during execution unless needed for priority-setting and conflict resolution. One reason why executives “meddle” during project execution is that they are not getting accurate information from the project manager as to project status. If project managers provide executives with meaningful status reports, then the socalled meddling may be reduced or even eliminated. 2. The expectations are discussed in Section 9.3. 3. The role of the project sponsor is discussed in Section 10.1. 15 Working with Executives PRIORITY PROJECTS PROJECT SPONSOR: SENIOR MANAGEMENT MAINTENANCE PROJECTS PROJECT SPONSOR: LOWER/MIDDLE MANAGEMENT RELATIONSHIP: PROJECT SPONSOR • OBJECTIVE SETTING • UP-FRONT PLANNING • PROJECT ORGANIZATION • KEY STAFFING • MASTER PLAN • POLICIES • MONITORING EXECUTION • PRIORITY SETTING • CONFLICT RESOLUTION • EXECUTIVE-CLIENT CONTACT PROJECT MANAGER PROJECT TEAM FIGURE 1–4. PROJECT MANAGER The project sponsor interface. 1.8 WORKING WITH EXECUTIVES Success in project management is like a three-legged stool. The first leg is the project manager, the second leg is the line manager, and the third leg is senior management. If any of the three legs fail, then even delicate balancing may not prevent the stool from toppling. The critical node in project management is the project manager–line manager interface. At this interface, the project and line managers must view each other as equals and be willing to share authority, responsibility, and accountability. In excellently managed companies, project managers do not negotiate for resources but simply ask for the line manager’s commitment to executing his portion of the work within time, cost, and performance. Therefore, in excellent companies, it should not matter who the line manager assigns as long as the line manager lives up to his commitments. Since the project and line managers are “equals,” senior management involvement is necessary to provide advice and guidance to the project manager, as well as to provide encouragement to the line managers to keep their promises. When executives act in this capacity, they assume the role of project sponsors, as shown in Figure 1–4,4 which also shows that sponsorship need not always be at the executive levels. The exact person appointed as the project sponsor is based on the dollar value of the project, the priority of the project, and who the customer is. 4. Section 10.1 describes the role of the project sponsor in more depth. 16 OVERVIEW The ultimate objective of the project sponsor is to provide behind-the-scenes assistance to project personnel for projects both “internal” to the company, as well as “external,” as shown in Figure 1–4. Projects can still be successful without this commitment and support, as long as all work flows smoothly. But in time of crisis, having a “big brother” available as a possible sounding board will surely help. When an executive is required to act as a project sponsor, then the executive has the responsibility to make effective and timely project decisions. To accomplish this, the executive needs timely, accurate, and complete data for such decisions. Keeping management informed serves this purpose, while the all-too-common practice of “stonewalling” prevents an executive from making effective project decisions. 1.9 THE PROJECT MANAGER AS THE PLANNING AGENT The major responsibility of the project manager is planning. If project planning is performed correctly, then it is conceivable that the project manager will work himself out of a job because the project can run itself. This rarely happens, however. Few projects are ever completed without some conflict or trade-offs for the project manager to resolve. In most cases, the project manager provides overall or summary definitions of the work to be accomplished, but the line managers (the true experts) do the detailed planning. Although project managers cannot control or assign line resources, they must make sure that the resources are adequate and scheduled to satisfy the needs of the project, not vice versa. As the architect of the project plan, the project manager must provide: ● ● ● ● ● Complete task definitions Resource requirement definitions (possibly skill levels) Major timetable milestones Definition of end-item quality and reliability requirements The basis for performance measurement These factors, if properly established, result in: ● ● ● Assurance that functional units will understand their total responsibilities toward achieving project needs. Assurance that problems resulting from scheduling and allocation of critical resources are known beforehand. Early identification of problems that may jeopardize successful project completion so that effective corrective action and replanning can be taken to prevent or resolve the problems. Project managers are responsible for project administration and, therefore, must have the right to establish their own policies, procedures, rules, guidelines, and directives— provided these policies, guidelines, and so on, conform to overall company policy. Companies with mature project management structures usually have rather loose company 17 Project Champions guidelines, so project managers have some degree of flexibility in how to control their projects. However, project managers cannot make any promises to a functional employee concerning: ● ● ● ● ● ● ● Promotion Grade Salary Bonus Overtime Responsibility Future work assignments These seven items can be administered by line managers only, but the project manager can have indirect involvement by telling the line manager how well an employee is doing (and putting it in writing), requesting overtime because the project budget will permit it, and offering individuals the opportunity to perform work above their current pay grade. However, such work above pay grade can cause severe managerial headaches if not coordinated with the line manager, because the individual will expect immediate rewards if he performs well. Establishing project administrative requirements is part of project planning. Executives must either work with the project managers at project initiation or act as resources later. Improper project administrative planning can create a situation that requires: ● ● ● A continuous revision and/or establishment of company and/or project policies, procedures, and directives A continuous shifting in organizational responsibility and possible unnecessary restructuring A need for staff to acquire new knowledge and skills If these situations occur simultaneously on several projects, there can be confusion throughout the organization. 1.10 PROJECT CHAMPIONS Corporations encourage employees to think up new ideas that, if approved by the corporation, will generate monetary and nonmonetary rewards for the idea generator. One such reward is naming the individual the “project champion.” Unfortunately, the project champion often becomes the project manager, and, although the idea was technically sound, the project fails. Table 1–3 provides a comparison between project managers and project champions. It shows that the project champions may become so attached to the technical side of the project that they become derelict in their administrative responsibilities. Perhaps the project champion might function best as a project engineer rather than the project manager. 18 OVERVIEW TABLE 1–3. PROJECT MANAGERS VERSUS PROJECT CHAMPIONS Project Managers Project Champions • • • • • • • • • • • • Prefer working individually Committed to technology • • • • • • • Committed to the profession Seek to exceed the objective Are unwilling to take risks; try to test everything Seek perfection Think in terms of long time spans Manage things Are committed to and pursue intellectual values Prefer to work in groups Committed to their managerial and technical responsibilities Committed to the corporation Seek to achieve the objective Are willing to take risks Seek what is possible Think in terms of short time spans Manage people Are committed to and pursue material values This comparison does not mean that technically oriented project managers-champions will fail. Rather, it implies that the selection of the “proper” project manager should be based on all facets of the project. 1.11 THE DOWNSIDE OF PROJECT MANAGEMENT Project management is often recognized only as a high-salaried, highly challenging position whereby the project manager receives excellent training in general management. For projects that are done for external sources, the project manager is first viewed as starting out with a pot of gold and then as having to manage the project so that sufficient profits will be made for the stockholders. If the project manager performs well, the project will be successful. But the personal cost may be high for the project manager. There are severe risks that are not always evident. Some project management positions may require a sixty-hour workweek and extensive time away from home. When a project manager begins to fall in love more with the job than with his family, the result is usually lack of friends, a poor home life, and possibly divorce. During the birth of the missile and space programs, companies estimated that the divorce rate among project managers and project engineers was probably twice the national average. Accepting a project management assignment is not always compatible with raising a young family. Characteristics of the workaholic project manager include: ● ● ● ● ● Every Friday he thinks that there are only two more working days until Monday. At 5:00 P.M. he considers the working day only half over. He has no time to rest or relax. He always takes work home from the office. He takes work with him on vacations. Project-Driven versus Non–Project-Driven Organizations 19 1.12 PROJECT-DRIVEN VERSUS NON–PROJECT-DRIVEN ORGANIZATIONS On the micro level, virtually all organizations are either marketing-, engineering-, or manufacturing-driven. But on the macro level, organizations are either project- or non–project-driven. In a project-driven organization, such as construction or aerospace, all work is characterized through projects, with each project as a separate cost center having its own profit-and-loss statement. The total profit to the corporation is simply the summation of the profits on all projects. In a project-driven organization, everything centers around the projects. In the non–project-driven organization, such as low-technology manufacturing, profit and loss are measured on vertical or functional lines. In this type of organization, projects exist merely to support the product lines or functional lines. Priority resources are assigned to the revenue-producing functional line activities rather than the projects. Project management in a non–project-driven organization is generally more difficult for these reasons: ● ● ● ● ● ● Projects may be few and far between. Not all projects have the same project management requirements, and therefore they cannot be managed identically. This difficulty results from poor understanding of project management and a reluctance of companies to invest in proper training. Executives do not have sufficient time to manage projects themselves, yet refuse to delegate authority. Projects tend to be delayed because approvals most often follow the vertical chain of command. As a result, project work stays too long in functional departments. Because project staffing is on a “local” basis, only a portion of the organization understands project management and sees the system in action. There is heavy dependence on subcontractors and outside agencies for project management expertise. Non–project-driven organizations may also have a steady stream of projects, all of which are usually designed to enhance manufacturing operations. Some projects may be customer-requested, such as: ● ● ● The introduction of statistical dimensioning concepts to improve process control The introduction of process changes to enhance the final product The introduction of process change concepts to enhance product reliability If these changes are not identified as specific projects, the result can be: ● ● ● ● ● Poorly defined responsibility areas within the organization Poor communications, both internal and external to the organization Slow implementation A lack of a cost-tracking system for implementation Poorly defined performance criteria 20 OVERVIEW DELEGATION OF AUTHORITY TO PROJECT MANAGER EXECUTIVE MEDDLING LACK OF UNDERSTANDING OF HOW PROJECT MANAGEMENT SHOULD WORK LACK OF TRAINING IN COMMUNICATIONS/INTERPERSONAL SKILLS MANY OF THE PROBLEMS SURFACE MUCH LATER IN THE PROJECT AND RESULT IN A MUCH HIGHER COST TO CORRECT AS WELL AS INCREASE PROJECT RISK FIGURE 1–5. The tip-of-the-iceberg syndrome for matrix implementation. PRODUCT INFLUENCE IN DECISION-MAKING RELATIVE INFLUENCE FIGURE 1–6. FUNCTIONAL INFLUENCE IN DECISION-MAKING DUAL INFLUENCE FUNCTIONAL ORGANIZATION MATRIX PRODUCT ORGANIZATION NON–PROJECT- PROJECT- NON–PROJECT- DRIVEN DRIVEN DRIVEN INFORMAL FORMAL INFORMAL P.M. P.M. P.M. Decision-making influence. Marketing in the Project-Driven Organization 21 Figure 1–5 shows the tip-of-the-iceberg syndrome, which can occur in all types of organizations but is most common in non–project-driven organizations. On the surface, all we see is a lack of authority for the project manager. But beneath the surface we see the causes; there is excessive meddling due to lack of understanding of project management, which, in turn, resulted from an inability to recognize the need for proper training. In the previous sections we stated that project management could be handled on either a formal or an informal basis. As can be seen from Figure 1–6, informal project management most often appears in non–project-driven organizations. It is doubtful that informal project management would work in a project-driven organization where the project manager has profit-and-loss responsibility. 1.13 MARKETING IN THE PROJECT-DRIVEN ORGANIZATION Getting new projects is the lifeblood of any project-oriented business. The practices of the project-oriented company are, however, substantially different from traditional product businesses and require highly specialized and disciplined team efforts among marketing, technical, and operating personnel, plus significant customer involvement. Projects are different from products in many respects, especially marketing. Marketing projects requires the ability to identify, pursue, and capture one-of-a-kind business opportunities, and is characterized by: ● ● ● ● ● ● A systematic effort. A systematic approach is usually required to develop a new program lead into an actual contract. The project acquisition effort is often highly integrated with ongoing programs and involves key personnel from both the potential customer and the performing organization. Custom design. While traditional businesses provide standard products and services for a variety of applications and customers, projects are custom-designed items to fit specific requirements of a single-customer community. Project life cycle. Project-oriented businesses have a well-defined beginning and end and are not self-perpetuating. Business must be generated on a project-byproject basis rather than by creating demand for a standard product or service. Marketing phase. Long lead times often exist between the product definition, startup, and completion phases of a project. Risks. There are risks, especially in the research, design, and production of programs. The program manager not only has to integrate the multidisciplinary tasks and project elements within budget and schedule constraints, but also has to manage inventions and technology while working with a variety of technically oriented prima donnas. The technical capability to perform. Technical ability is critical to the successful pursuit and acquisition of a new project. 22 OVERVIEW In spite of the risks and problems, profits on projects are usually very low in comparison with commerical business practices. One may wonder why companies pursue project businesses. Clearly, there are many reasons why projects are good business: ● ● ● ● Although immediate profits (as a percentage of sales) are usually small, the return on capital investment is often very attractive. Progress payment practices keep inventories and receivables to a minimum and enable companies to undertake projects many times larger in value than the assets of the total company. Once a contract has been secured and is being managed properly, the project may be of relatively low financial risk to the company. The company has little additional selling expenditure and has a predictable market over the life cycle of the project. Project business must be viewed from a broader perspective than motivation for immediate profits. Projects provide an opportunity to develop the company’s technical capabilities and build an experience base for future business growth. Winning one large project often provides attractive growth potential, such as (1) growth with the project via additions and changes; (2) follow-on work; (3) spare parts, maintenance, and training; and (4) being able to compete effectively in the next project phase, such as nurturing a study program into a development contract and finally a production contract. Customers come in various forms and sizes. For small and medium businesses particularly, it is a challenge to compete for contracts from large industrial or governmental organizations. Although the contract to a firm may be relatively small, it is often subcontracted via a larger organization. Selling to such a diversified heterogeneous customer is a marketing challenge that requires a highly sophisticated and disciplined approach. PRELIM. BID DECISION IDENTIFY NEW BUSINESS OPPORTUNITY • SEARCH FOR NEW BUSINESS • ANALYZE AND EVALUATE • SELECT • DEDICATE RESOURCES DEVELOP THE NEW OPPORTUNITY • SIGNIFICANT CUSTOMER CONTACT • OBTAIN & ANALYZE REQUIREMENTS • DEVELOP PROJECT BASELINE • ESTABLISH R&D PROGRAMS • BUILD FAVORABLE IMAGE • ESTABLISH PROJECT ORGANIZATION BID DECISION RFP DEVELOP PROPOSAL & PRICING • PROPOSAL PLANNING • POST SUBMITTAL PLANNING • PROPOSAL TEAM • ORAL REVIEWS, ORGANIZATION FACT FINDING, QUESTIONS & ANSWERS • WIN STRATEGY • RFP ANALYSIS • CATEGORICAL OUTLINE • TEXT & ART GENERATION • COST ESTIMATING & PRICING • REVIEWS • PROPOSAL PUBLICATION • PRICING FIGURE 1–7. NEGOTIATE CONTRACT The phases of winning new contracts in project-oriented businesses. • MARKETING • NEGOTIATIONS WIN 23 Classification of Projects The first step in a new business development effort is to define the market to be pursued. The market segment for a new program opportunity is normally in an area of relevant past experience, technical capability, and customer involvement. Good marketers in the program business have to think as product line managers. They have to understand all dimensions of the business and be able to define and pursue market objectives that are consistent with the capabilities of their organizations. Program businesses operate in an opportunity-driven market. It is a common mistake, however, to believe that these markets are unpredictable and unmanageable. Market planning and strategizing is important. New project opportunities develop over periods of time, sometimes years for larger projects. These developments must be properly tracked and cultivated to form the bases for management actions such as (1) bid decisions, (2) resource commitment, (3) technical readiness, and (4) effective customer liaison. This strategy of winning new business is supported by systematic, disciplined approaches, which are illustrated in Figure 1–7. 1.14 CLASSIFICATION OF PROJECTS The principles of project management can be applied to any type of project and to any industry. However, the relative degree of importance of these principles can vary from project to project and industry to industry. Table 1–4 shows a brief comparison of certain industries/projects. For those industries that are project-driven, such as aerospace and large construction, the high dollar value of the projects mandates a much more rigorous project management approach. For non–project-driven industries, projects may be managed more informally than formally, especially if no immediate profit is involved. TABLE 1–4. CLASSIFICATION OF PROJECTS/CHARACTERISTICS Type of Project/Industry Need for interpersonal skills Importance of organizational structure Time management difficulties Number of meetings Project manager’s supervisor Project sponsor present Conflict intensity Cost control level Level of planning/scheduling In-house R&D Small Construction Large Construction Aerospace/ Defense MIS Engineering Low Low Low Low High Low High Low High High Low Low Low Excessive Middle management Yes Low Low Milestones only Low Low Top management No Low Low Milestones only High Excessive Top management Yes High High Detailed plan High Excessive Top management Yes High High Detailed plan High High Middle management No High Low Milestones only Low Medium Middle management No Low Low Milestones only 24 OVERVIEW 1.15 LOCATION OF THE PROJECT MANAGER The success of project management could easily depend on the location of the project manager within the organization. Two questions must be answered: ● ● What salary should the project manager earn? To whom should the project manager report? Figure 1–8 shows a typical organizational hierarchy (the numbers represent pay grades). Ideally, the project manager should be at the same pay grade as the individuals with whom he must negotiate on a daily basis. Using this criterion, and assuming that the project manager interfaces at the department manager level, the project manager should earn a salary between grades 20 and 25. A project manager earning substantially more or FIGURE 1–8. PRESIDENT 60 VICE PRESIDENT 50 DIRECTOR 40 DIVISION 30 DEPARTMENT 20 SECTION 10 LABORER 1- 9 Organizational hierarchy. PROJECT-DRIVEN NON–PROJECT-DRIVEN 25 Location of the Project Manager less money than the line manager will usually create conflict. The ultimate reporting location of the project manager (and perhaps his salary) is heavily dependent on whether the organization is project- or non–project-driven, and whether the project manager is responsible for profit or loss. Project managers can end up reporting both high and low in an organization during the life cycle of the project. During the planning phase of the project, the project manager may report high, whereas during implementation, he may report low. Likewise, the positioning of the project manager may be dependent on the risk of the project, the size of the project, or the customer. Finally, it should be noted that even if the project manager reports low, he should still have the right to interface with top executives during project planning although there may be two or more reporting levels between the project manager and executives. At the opposite end of the spectrum, the project manager should have the right to go directly into the depths of the organization instead of having to follow the chain of command downward, especially during planning. As an example, see Figure 1–9. The project manager had two weeks to plan and price out a small project. Most of the work was to be accomplished within one section. The project manager was told that all requests for work, even estimating, had to follow the chain of command from the executive down through the section supervisor. By the time the request was received by the section supervisor, twelve of the fourteen days were gone, and only an order-of-magnitude estimate was possible. The lesson to be learned here is: The chain of command should be used for approving projects, not planning them. Forcing the project manager to use the chain of command (in either direction) for project planning can result in a great deal of unproductive time and idle time cost. VICE PRESIDENT ENGINEERING T ON I AT M OR ES QU RE DIVISION MANAGER F IN PROJECT MANAGER DEPARTMENT MANAGER SECTION SUPERVISOR FIGURE 1–9. The organizational hierarchy: for planning and/or approval? 26 OVERVIEW 1.16 DIFFERING VIEWS OF PROJECT MANAGEMENT Many companies, especially those with project-driven organizations, have differing views of project management. Some people view project management as an excellent means to achieving objectives, while others view it as a threat. In project-driven organizations, there are three career paths that lead to executive management: ● ● ● Through project management Through project engineering Through line management In project-driven organizations, the fast-track position is in project management, whereas in a non–project-driven organization, it would be line management. Even though line managers support the project management approach, they resent the project manager because of his promotions and top-level visibility. In one construction company, a department manager was told that he had no chance for promotion above his present department manager position unless he went into project management or project engineering where he could get to know the operation of the whole company. A second construction company requires that individuals aspiring to become a department manager first spend a “tour of duty” as an assistant project manager or project engineer. Executives may dislike project managers because more authority and control must be delegated. However, once executives realize that it is a sound business practice, it becomes important, as shown in the following letter5: In order to sense and react quickly and to insure rapid decision-making, lines of communication should be the shortest possible between all levels of the organization. People with the most knowledge must be available at the source of the problem, and they must have decision-making authority and responsibility. Meaningful data must be available on a timely basis and the organization must be structured to produce this environment. In the aerospace industry, it is a serious weakness to be tied to fixed organization charts, plans, and procedures. With regard to organization, we successfully married the project concept of management with a central function concept. What we came up with is an organization within an organization—one to ramrod the day-to-day problems; the other to provide support for existing projects and to anticipate the requirements for future projects. The project system is essential in getting complicated jobs done well and on time, but it solves only part of the management problem. When you have your nose to the project grindstone, you are often not in a position to see much beyond that project. This is where the central functional organization comes in. My experience has been that you need this central organization to give you depth, flexibility, and perspective. Together, the two parts permit you to see both the woods and the trees. Initiative is essential at all levels of the organization. We try to press the level of decision to the lowest possible rung of the managerial ladder. This type of decision-making provides motivation and permits recognition for the individual and the group at all levels. It stimulates action and breeds dedication. 5. Letter from J. Donald Rath, Vice President of Martin-Marietta Corporation, Denver Division, to J. E. Webb, of NASA, October 18, 1963. 27 Problems With this kind of encouragement, the organization can become a live thing—sensitive to problems and able to move in on them with much more speed and understanding than would be normally expected in a large operation. In this way, we can regroup or reorganize easily as situations dictate and can quickly focus on a “crisis.” In this industry a company must always be able to reorient itself to meet new objectives. In a more staid, old-line organization, frequent reorientation usually accompanied by a corresponding shift of people’s activities, could be most upsetting. However, in the aerospace industry, we must be prepared for change. The entire picture is one of change. 1.17 CONCURRENT ENGINEERING: A PROJECT MANAGEMENT APPROACH In the past decade, organizations have become more aware of the fact that America’s most formidable weapon is its manufacturing ability, and yet more and more work seems to be departing for Southeast Asia and the Far East. If America and other countries are to remain competitive, then survival may depend on the manufacturing of a quality product and a rapid introduction into the marketplace. Today, companies are under tremendous pressure to rapidly introduce new products because product life cycles are becoming shorter. As a result, organizations no longer have the luxury of performing work in series. Concurrent or simultaneous engineering is an attempt to accomplish work in parallel rather than in series. This requires that marketing, R&D, engineering, and production are all actively involved in the early project phases and making plans even before the product design has been finalized. This concept of current engineering will accelerate product development, but it does come with serious and potentially costly risks, the largest one being the cost of rework. Almost everyone agrees that the best way to reduce or minimize risks is for the organization to plan better. Since project management is one of the best methodologies to foster better planning, it is little wonder that more organizations are accepting project management as a way of life. PROBLEMS 1–1 In the project environment, cause-and-effect relationships are almost always readily apparent. Good project management will examine the effect in order to better understand the cause and possibly prevent it from occurring again. Below are causes and effects. For each one of the effects, select the possible cause or causes that may have existed to create this situation: Effects 1. Late completion of activities 2. Cost overruns 3. Substandard performance 4. High turnover in project staff 5. High turnover in functional staff 6. Two functional departments performing the same activities on one project 28 OVERVIEW Causes a. Top management not recognizing this activity as a project b. Too many projects going on at one time c. Impossible schedule commitments d. No functional input into the planning phase e. No one person responsible for the total project f. Poor control of design changes g. Poor control of customer changes h. Poor understanding of the project manager’s job i. Wrong person assigned as project manager j. No integrated planning and control k. Company resources are overcommitted l. Unrealistic planning and scheduling m. No project cost accounting ability n. Conflicting project priorities o. Poorly organized project office (This problem has been adapted from Russell D. Archibald, Managing High-Technology Programs and Projects, New York: John Wiley, 1976, p. 10.) 1–2 Because of the individuality of people, there always exist differing views of what management is all about. Below are lists of possible perspectives and a selected group of organizational members. For each individual select the possible ways that this individual might view project management: Individuals 1. Upper-level manager 2. Project manager 3. Functional manager 4. Project team member 5. Scientist and consultant Perspectives a. A threat to established authority b. A source for future general managers c. A cause of unwanted change in ongoing procedures d. A means to an end e. A significant market for their services f. A place to build an empire g. A necessary evil to traditional management h. An opportunity for growth and advancement i. A better way to motivate people toward an objective j. A source of frustration in authority k. A way of introducing controlled changes l. An area of research m. A vehicle for introducing creativity n. A means of coordinating functional units o. A means of deep satisfaction p. A way of life 29 Problems 1–3 Consider an organization that is composed of upper-level managers, middle- and lowerlevel managers, and laborers. Which of the groups should have first insight that an organizational restructuring toward project management may be necessary? 1–4 How would you defend the statement that a project manager must help himself? 1–5 Will project management work in all companies? If not, identify those companies in which project management may not be applicable and defend your answers. 1–6 In a project organization, do you think that there might be a conflict in opinions over whether the project managers or functional managers contribute to profits? 1–7 What attributes should a project manager have? Can an individual be trained to become a project manager? If a company were changing over to a project management structure, would it be better to promote and train from within or hire from the outside? 1–8 Do you think that functional managers would make good project managers? 1–9 What types of projects might be more appropriate for functional management rather than project management, and vice versa? 1–10 Do you think that there would be a shift in the relative degree of importance of the following terms in a project management environment as opposed to a traditional management environment? a. Time management b. Communications c. Motivation 1–11 Classical management has often been defined as a process in which the manager does not necessarily perform things for himself, but accomplishes objectives through others in a group situation. Does this definition also apply to project management? 1–12 Which of the following are basic characteristics of project management? a. b. c. d. e. f. Customer problem Responsibility identification Systems approach to decision-making Adaptation to a changing environment Multidisciplinary activity in a finite time duration Horizontal and vertical organizational relationships 1–13 Project managers are usually dedicated and committed to the project. Who should be “looking over the shoulder” of the project manager to make sure that the work and requests are also in the best interest of the company? Does your answer depend on the priority of the project? 1–14 Is project management designed to transfer power from the line managers to the project manager? 1–15 Explain how career paths and career growth can differ between project-driven and non–project-driven organizations. In each organization, is the career path fastest in project management, project engineering, or line management? 30 OVERVIEW 1–16 Explain how the following statement can have a bearing on who is ultimately selected as part of the project team: “There comes a time in the life cycle of all projects when one must shoot the design engineers and begin production.” 1–17 How do you handle a situation where the project manager has become a generalist, but still thinks that he is an expert? CASE STUDY WILLIAMS MACHINE TOOL COMPANY For 75 years, the Williams Machine Tool Company had provided quality products to its clients, becoming the third largest U.S.-based machine tool company by 1980. The company was highly profitable and had an extremely low employee turnover rate. Pay and benefits were excellent. Between 1970 and 1980, the company’s profits soared to record levels. The company’s success was due to one product line of standard manufacturing machine tools. Williams spent most of its time and effort looking for ways to improve its bread-and-butter product line rather than to develop new products. The product line was so successful that companies were willing to modify their production lines around these machine tools rather than asking Williams for major modifications to the machine tools. By 1980, Williams Company was extremely complacent, expecting this phenomenal success with one product line to continue for 20 to 25 more years. The recession of 1979–1983 forced management to realign their thinking. Cutbacks in production had decreased the demand for the standard machine tools. More and more customers were asking for either major modifications to the standard machine tools or a completely new product design. The marketplace was changing and senior management recognized that a new strategic focus was necessary. However, lower-level management and the work force, especially engineering, were strongly resisting a change. The employees, many of them with over 20 years of employment at Williams Company, refused to recognize the need for this change in the belief that the glory days of yore would return at the end of the recession. By 1985, the recession had been over for at least two years yet Williams Company had no new product lines. Revenue was down, sales for the standard product (with and without modifications) were decreasing, and the employees were still resisting change. Layoffs were imminent. In 1986, the company was sold to Crock Engineering. Crock had an experienced machine tool division of its own and understood the machine tool business. Williams Company was allowed to operate as a separate entity from 1985 to 1986. By 1986, red ink had appeared on the Williams Company balance sheet. Crock replaced all of the Williams senior managers with its own personnel. Crock then announced to all employees that Williams would become a specialty machine tool manufacturer and that the “good old days” would never return. Customer demand for specialty products had increased threefold in just the last twelve months alone. Crock made it clear that employees who would not support this new direction would be replaced. Case Study 31 The new senior management at Williams Company recognized that 85 years of traditional management had come to an end for a company now committed to specialty products. The company culture was about to change, spearheaded by project management, concurrent engineering, and total quality management. Senior management’s commitment to product management was apparent by the time and money spent in educating the employees. Unfortunately, the seasoned 20-year-plus veterans still would not support the new culture. Recognizing the problems, management provided continuous and visible support for project management in addition to hiring a project management consultant to work with the people. The consultant worked with Williams from 1986 to 1991. From 1986 to 1991, the Williams Division of Crock Engineering experienced losses in 24 consecutive quarters. The quarter ending March 31, 1992, was the first profitable quarter in over six years. Much of the credit was given to the performance and maturity of the project management system. In May 1992, the Williams Division was sold. More than 80% of the employees lost their jobs when the company was relocated over 1,500 miles away. 2 Project Management Growth: Concepts and Definitions Related Case Studies (from Kerzner/Project Management Case Studies) • Goshe Corporation • MIS Project Management • at First National Bank • Cordova Research Group • Cortez Plastics • L. P. Manning Corporation • Project Firecracker • Apache Metals, Inc. • Haller Specialty Manufacturing Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Blue Diamond of Northeast • Ohio • Health Care Associates • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Integration • Management 2.0 INTRODUCTION The growth and acceptance of project management has changed significantly over the past forty years, and these changes are expected to continue well into the twenty-first century, especially in the area of multinational project management. It is interesting to trace the evolution and growth of project management from the early days of systems management to what some people call “modern project management.” The growth of project management can be traced through topics such as roles and responsibilities, organizational structures, delegation of authority and decision-making, and especially corporate profitability. Twenty 33 34 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS years ago, companies had the choice of whether or not to accept the project management approach. Today, some companies foolishly think that they still have the choice. Nothing could be further from the truth. The survival of the firm may very well rest upon how well project management is implemented, and how quickly. 2.1 GENERAL SYSTEMS MANAGEMENT Organizational theory and management philosophies have undergone a dramatic change in recent years with the emergence of the project management approach to management. Because project management is an outgrowth of systems management, it is only fitting that the underlying principles of general systems theory be described. Simply stated, general systems theory can be classified as a management approach that attempts to integrate and unify scientific information across many fields of knowledge. Systems theory attempts to solve problems by looking at the total picture, rather than through an analysis of the individual components. General systems theory has been in existence for more than four decades. Unfortunately, as is often the case with new theory development, the practitioners require years of study and analysis before implementation. General systems theory is still being taught in graduate programs. Today, project management is viewed as applied systems management. In 1951, Ludwig von Bertalanffy, a biologist, described so-called open systems using anatomy nomenclature. The body’s muscles, skeleton, circulatory system, and so on, were all described as subsystems of the total system (the human being). Dr. von Bertalanffy’s contribution was important in that he identified how specialists in each subsystem could be integrated so as to get a better understanding of the interrelationships, thereby contributing to the overall knowledge of the operations of the system. Thus, the foundation was laid for the evolution and outgrowth of project management. In 1956, Kenneth Boulding identified the communications problems that can occur during systems integration. Professor Boulding was concerned with the fact that subsystem specialists (i.e., physicists, economists, chemists, sociologists, etc.) have their own languages. He advocated that, in order for successful integration to take place, all subsystem specialists must speak a common language, such as mathematics. Today we use the PMBOK®, the Project Management Body of Knowledge, to satisfy this need for project management. General systems theory implies the creation of a management technique that is able to cut across many organizational disciplines—finance, manufacturing, engineering, marketing, and so on—while still carrying out the functions of management. This technique has come to be called systems management, project management, or matrix management (the terms are used interchangeably). 2.2 PROJECT MANAGEMENT: 1945–1960 During the 1940s, line managers used the concept of over-the-fence management to manage projects. Each line manager, wearing the hat of a project manager, would perform the work necessitated by their line organization, and when completed, would throw the “ball” over the fence in hopes that someone would catch it. Once the ball was thrown over the Project Management: 1960–1985 35 fence, the line managers would wash their hands of any responsibility for the project because the ball was no longer in their yard. If a project failed, blame was placed on whichever line manager had the ball at that time. The problem with over-the-fence management was that the customer had no single contact point for questions. The filtering of information wasted precious time for both the customer and the contractor. Customers who wanted firsthand information had to seek out the manager in possession of the ball. For small projects, this was easy. But as projects grew in size and complexity, this became more difficult. Following World War II, the United States entered into the Cold War. To win a Cold War, one must compete in the arms race and rapidly build weapons of mass destruction. The victor in a Cold War is the one who can retaliate with such force as to obliterate the enemy. The arms race made it clear that the traditional use of over-the-fence management would not be acceptable to the Department of Defense (DoD) for projects such as the B52 Bomber, the Minuteman Intercontinental Ballistic Missile, and the Polaris Submarine. The government wanted a single point of contact, namely, a project manager who had total accountability through all project phases. The use of project management was then mandated for some of the smaller weapon systems such as jet fighters and tanks. NASA mandated the use of project management for all activities related to the space program. Projects in the aerospace and defense industries were having cost overruns in excess of 200 to 300%. Blame was erroneously placed upon improper implementation of project management when, in fact, the real problem was the inability to forecast technology. Forecasting technology is extremely difficult for projects that could last ten to twenty years. By the late 1950s and early 1960s, the aerospace and defense industries were using project management on virtually all projects, and they were pressuring their suppliers to use it as well. Project management was growing, but at a relatively slow rate except for aerospace and defense. Because of the vast number of contractors and subcontractors, the government needed standardization, especially in the planning process and the reporting of information. The government established a life-cycle planning and control model and a cost monitoring system, and created a group of project management auditors to make sure that the government’s money was being spent as planned. These practices were to be used on all government programs above a certain dollar value. Private industry viewed these practices as an over-management cost and saw no practical value in project management. 2.3 PROJECT MANAGEMENT: 1960–1985 The growth of project management has come about more through necessity than through desire. Its slow growth can be attributed mainly to lack of acceptance of the new management techniques necessary for its successful implementation. An inherent fear of the unknown acted as a deterrent for managers. Between the middle and late 1960s, more executives began searching for new management techniques and organizational structures that could be quickly adapted to a changing 36 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS environment. The table below and Figure 2–1 identify two major variables that executives consider with regard to organizational restructuring. Type of Industry A B C D Tasks Environment Simple Simple Complex Complex Dynamic Static Dynamic Static Almost all type C and most type D industries have project management–related structures. The key variable appears to be task complexity. Companies that have complex tasks and that also operate in a dynamic environment find project management mandatory. Such industries would include aerospace, defense, construction, high-technology engineering, computers, and electronic instrumentation. Other than aerospace, defense, and construction, the majority of the companies in the 1960s maintained an informal method for managing projects. In informal project management, just as the words imply, the projects were handled on an informal basis whereby the DYNAMIC O P E R AT I O N A L E N V I R O N M E N T 1980s (INFORMAL PROJECT MGT.) G R E A TE R N E E D FO R U N D E R S TA N D IN G H U M A N B E H A V IO R 1960s: TOTALLY PROJECT DRIVEN 1970s S TAT I C SIMPLE COMPLEX TYPE OF TASKS FIGURE 2–1. Matrix implementation scheme. 37 Project Management: 1960–1985 authority of the project manager was minimized. Most projects were handled by functional managers and stayed in one or two functional lines, and formal communications were either unnecessary or handled informally because of the good working relationships between line managers. Many organizations today, such as low-technology manufacturing, have line managers who have been working side by side for ten or more years. In such situations, informal project management may be effective on capital equipment or facility development projects. By 1970 and again during the early 1980s, more companies departed from informal project management and restructured to formalize the project management process, mainly because the size and complexity of their activities had grown to a point where they were unmanageable within the current structure. Figure 2–2 shows what happened to one such construction company. The following five questions help determine whether formal project management is necessary: ● ● ● ● ● Are the jobs complex? Are there dynamic environmental considerations? Are the constraints tight? Are there several activities to be integrated? Are there several functional boundaries to be crossed? If any of these questions are answered yes, then some form of formalized project management may be necessary. It is possible for formalized project management to exist in only one functional department or division, such as for R&D or perhaps just for certain types of projects. Some companies have successfully implemented both formal and informal project management concurrently, but these companies are few and far between. Today we realize that the last two questions may be the most important. AV E R AG E VA L U E OF P RO J E C T ($MM) 100 80 60 40 20 1960 '62 FIGURE 2–2. '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 Average project size capability for a construction company, 1960–1984. 38 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS The moral here is that not all industries need project management, and executives must determine whether there is an actual need before making a commitment. Several industries with simple tasks, whether in a static or a dynamic environment, do not need project management. Manufacturing industries with slowly changing technology do not need project management, unless of course they have a requirement for several special projects, such as capital equipment activities, that could interrupt the normal flow of work in the routine manufacturing operations. The slow growth rate and acceptance of project management were related to the fact that the limitations of project management were readily apparent, yet the advantages were not completely recognizable. Project management requires organizational restructuring. The question, of course, is “How much restructuring?” Executives have avoided the subject of project management for fear that “revolutionary” changes must be made in the organization. As will be seen in Chapter 3, project management can be achieved with little departure from the existing traditional structure. Project management restructuring has permitted companies to: ● ● Accomplish tasks that could not be effectively handled by the traditional structure Accomplish onetime activities with minimum disruption of routine business The second item implies that project management is a “temporary” management structure and, therefore, causes minimum organizational disruption. The major problems identified by those managers who endeavored to adapt to the new system all revolved around conflicts in authority and resources. Three major problems were identified by Killian1: ● ● ● Project priorities and competition for talent may interrupt the stability of the organization and interfere with its long-range interests by upsetting the normal business of the functional organization. Long-range planning may suffer as the company gets more involved in meeting schedules and fulfilling the requirements of temporary projects. Shifting people from project to project may disrupt the training of new employees and specialists. This may hinder their growth and development within their fields of specialization. Another major concern was that project management required upper-level managers to relinquish some of their authority through delegation to the middle managers. In several situations, middle managers soon occupied the power positions, even more so than upperlevel managers. Despite these limitations, there were several driving forces behind the project management approach. According to John Kenneth Galbraith, these forces stem from “the imperatives of technology.” The six imperatives are2: 1. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2, 1971, pp. 90–107. 2. Excerpt from John Kenneth Galbraith, The New Industrial State, 3rd ed. Copyright © 1967, 1971, 1978, by John Kenneth Galbraith. Reprinted by permission of Houghton Mifflin Company. All rights reserved. Project Management: 1960–1985 ● ● ● ● ● ● 39 The time span between project initiation and completion appears to be increasing. The capital committed to the project prior to the use of the end item appears to be increasing. As technology increases, the commitment of time and money appears to become inflexible. Technology requires more and more specialized manpower. The inevitable counterpart of specialization is organization. The above five “imperatives” identify the necessity for more effective planning, scheduling, and control. As the driving forces overtook the restraining forces, project management began to mature. Executives began to realize that the approach was in the best interest of the company. Project management, if properly implemented, can make it easier for executives to overcome such internal and external obstacles as: ● ● ● ● ● ● ● ● ● ● Unstable economy Shortages Soaring costs Increased complexity Heightened competition Technological changes Societal concerns Consumerism Ecology Quality of work Project management may not eliminate these problems, but may make it easier for the company to adapt to a changing environment. If these obstacles are not controlled, the results may be: ● ● ● ● ● ● ● ● ● ● Decreased profits Increased manpower needs Cost overruns, schedule delays, and penalty payments occurring earlier and earlier An inability to cope with new technology R&D results too late to benefit existing product lines New products introduced into the marketplace too late Temptation to make hasty decisions that prove to be costly Management insisting on earlier and greater return on investment Greater difficulty in establishing on-target objectives in real time Problems in relating cost to technical performance and scheduling during the execution of the project Project management became a necessity for many companies as they expanded into multiple product lines, many of which were dissimilar, and organizational complexities grew. This growth can be attributed to: ● ● Technology increasing at an astounding rate More money invested in R&D 40 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● More information available Shortening of project life cycles To satisfy the requirements imposed by these four factors, management was “forced” into organizational restructuring; the traditional organizational form that had survived for decades was inadequate for integrating activities across functional “empires.” By 1970, the environment began to change rapidly. Companies in aerospace, defense, and construction pioneered in implementing project management, and other industries soon followed, some with great reluctance. NASA and the Department of Defense “forced” subcontractors into accepting project management. The 1970s also brought much more published data on project management. As an example3: Project teams and task forces will become more common in tackling complexity. There will be more of what some people call temporary management systems as project management systems where the men [and women] who are needed to contribute to the solution meet, make their contribution, and perhaps never become a permanent member of any fixed or permanent management group. The definition simply states that the purpose of project management is to put together the best possible team to achieve the objective, and, at termination, the team is disbanded. Nowhere in the definition do we see the authority of the project manager or his rank, title, or salary. Because current organizational structures are unable to accommodate the wide variety of interrelated tasks necessary for successful project completion, the need for project management has become apparent. It is usually first identified by those lower-level and middle managers who find it impossible to control their resources effectively for the diverse activities within their line organization. Quite often middle managers feel the impact of a changing environment more than upper-level executives. Once the need for change is identified, middle management must convince upper-level management that such a change is actually warranted. If top-level executives cannot recognize the problems with resource control, then project management will not be adopted, at least formally. Informal acceptance, however, is another story. In 1978, the author received a request from an automobile equipment manufacturer who was considering formal project management. The author was permitted to speak with several middle managers. The following comments were made: ● “Here at ABC Company (a division of XYZ Corporation), we have informal project management. By this, I mean that work flows the same as it would in formal project management except that the authority, responsibility, and accountability are implied rather than rigidly defined. We have been very successful with this structure, especially when you consider that the components we sell cost 30 percent more than our competitors, and that our growth rate has been in excess of 12 3. Reprinted from the October 17, 1970, issue of BusinessWeek by special permission, © 1970 by McGraw-Hill, Inc., New York, New York 10020. All rights reserved. Project Management: 1960–1985 ● ● 41 percent each year for the past six years. The secret of our success has been our quality and our ability to meet schedule dates.” “Our informal structure works well because our department managers do not hide problems. They aren’t afraid to go into another department manager’s office and talk about the problems they’re having controlling resources. Our success is based upon the fact that all of our department managers do this. What’s going to happen if we hire just one or two people who won’t go along with this approach? Will we be forced to go to formalized project management?” “This division is a steppingstone to greatness in our corporation. It seems that all of the middle managers who come to this division get promoted either within the division, to higher management positions in other divisions, or to a higher position at corporate headquarters.” Next the author conducted two three-day seminars on engineering project management for seventy-five of the lower-, middle-, and upper-level managers. The seminar participants were asked whether they wanted to adopt formal project management. The following concerns were raised by the participants: ● ● ● ● “Will I have more or less power and/or authority?” “How will my salary be affected?” “Why should I permit a project manager to share the resources in my empire?” “Will I get top management visibility?” Even with these concerns, the majority of the attendees felt that formalized project management would alleviate a lot of their present problems. Although the middle levels of the organization, where resources are actually controlled on a day-to-day basis, felt positive about project management, convincing the top levels of management was another story. If you were the chief executive officer of this division, earning a six-figure salary, and looking at a growth rate of 12 percent per year for the last five years, would you “rock the boat” simply because your middle managers want project management? This example highlights three major points: ● ● ● The final decision for the implementation of project management does (and will always) rest with executive management. Executives must be willing to listen when middle management identifies a crisis in controlling resources. This is where the need for project management should first appear. Executives are paid to look out for the long-range interest of the corporation and should not be swayed by near-term growth rate or profitability. Today, ABC Company is still doing business the way it was done in the past—with informal project management. The company is a classic example of how informal project management can be made to work successfully. The author agrees with the company executives that, in this case, formal project management is not necessary. 42 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS William C. Goggin, board chairman and chief executive officer of Dow Corning, describes a situation in his corporation that was quite different from the one at ABC4: Although Dow Corning was a healthy corporation in 1967, it showed difficulties that troubled many of us in top management. These symptoms were, and still are, common ones in U.S. business and have been described countless times in reports, audits, articles and speeches. Our symptoms took such forms as: ● Executives did not have adequate financial information and control of their operations. ● ● ● ● Marketing managers, for example, did not know how much it cost to produce a product. Prices and margins were set by division managers. Cumbersome communications channels existed between key functions, especially manufacturing and marketing. In the face of stiffening competition, the corporation remained too internalized in its thinking and organizational structure. It was insufficiently oriented to the outside world. Lack of communications between divisions not only created the antithesis of a corporate team effort but also was wasteful of a precious resource—people. Long range corporate planning was sporadic and superficial; this was leading to overstaffing, duplicated effort and inefficiency. Once the need for project management has been defined, the next logical question is, “How long a conversion period will be necessary before a company can operate in a project management environment?” To answer this question we must first look at Figure 2–3. Technology, as expected, has the fastest rate of change, and the overall environment of a business must adapt to rapidly changing technology. In an ideal situation, the organizational structure of a company would immediately adapt to the changing environment. In a real situation, this will not be a smooth transition but more like the erratic line shown in Figure 2–3. This erratic line is a trademark or characteristic of the traditional structure. Project management structures, however, can, and often do, adapt to a rapidly changing environment with a relatively smooth transition. Even though an executive can change the organizational structure with the stroke of a pen, people are responsible for its implementation. However, it can be seen in Figure 2–3 that people have the slowest rate of change. Edicts, documents signed by executives, and training programs will not convince employees that a new organizational form will work. Employees will be convinced only after they see the new system in action, and this takes time. As a general rule, it often takes two to three years to convert from a traditional structure to a project management structure. The major reason for this is that in a traditional structure the line employee has one, and only one, boss; in a project management structure the employee reports vertically to his line manager and horizontally to every project manager to whose activities he is assigned, either temporarily or full-time. This situation often 4. Reprinted by permission of Harvard Business Review. From William C. Goggin, “How the Multidimensional Structure Works at Dow Corning,” Harvard Business Review, January–February 1974, p. 54. Copyright © 1973 by the Harvard Business School Publishing Corporation; all rights reserved. 43 Project Management: 1960–1985 COMPANY BUSINESS SYSTEMS TECHNOLOGY (EACH SLICE REPRESENTS AN UPDATED SYSTEM) RATE OF CHANGE ENVIRONMENT ORGANIZATION BUSINESS GOALS AND OBJECTIVES PEOPLE TIME (YEARS) FIGURE 2–3. Systems in a changing environment. leads to a culture-shock condition. Employees will perform in a new system because they are directed to do so but will not have confidence in it or become dedicated until they have been involved in several different projects and believe that they can effectively report to more than one boss. When an employee is told that he will be working horizontally as well as vertically, his first concern is his take-home pay. Employees always question whether they can be evaluated fairly if they report to several managers during the same time period. One of the major reasons why project management fails is that top-level executives neglect to consider that any organizational change must be explained in terms of the wage and salary administration program.5 This must occur before change is made. If change comes first, and employees are not convinced that they can be evaluated correctly, they may try to sabotage the whole effort. From then on, it will probably be a difficult, if not impossible, task to rectify the situation. However, once the employees accept project management and the procedure of reporting in two directions, the company can effectively and efficiently convert from one project management organizational form to another. After all, weren’t most of us educated throughout our childhood on how to report to two bosses—a mother and a father? Not all companies need two to three years to convert to project management. The ABC Company described earlier would probably have very little trouble in converting because informal project management is well accepted. In the early 1960s, TRW was forced to convert to a project management structure almost overnight. The company was highly successful in this, mainly because of the loyalty and dedication of the employees. The TRW employees were willing to give the system a chance. Any organizational structure, 5. The mechanisms for employee evaluation in a project environment are discussed further in Section 8.1. 44 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS no matter how bad, will work if the employees are willing to make it work. Yet other companies can spend three to five years trying to implement change and fail. The literature describes many cases where project management has failed because: ● ● ● ● ● There was no need for project management. Employees were not informed about how project management should work. Executives did not select the appropriate projects or project managers for the first few projects. There was no attempt to explain the effect of the project management organizational form on the wage and salary administration program. Employees were not convinced that executives totally supported the change. Some companies (and executives) are forced into project management before they realize what has happened, and chaos ensues. As an example, consider a highly traditional company that purchased its first computer. The company had five divisions: engineering, finance, manufacturing, marketing, and human resources. Not knowing where to put the computer, the chief executive officer created an electronic data processing (EDP) department and placed it under finance and accounting. The executive’s rationale was that since the reason for buying the computer was to eliminate repetitive tasks and the majority of these were in accounting and finance, that was where EDP belonged. The vice president for accounting and finance might not be qualified to manage the EDP department, but that seemed beside the point. The EDP department had a staff of scientific and business computer programmers and systems analysts. The scientific programmers spent almost all their time working in the engineering division writing engineering programs; they had to learn engineering in order to do this. In this company, the engineer did not consider himself to be a computer programmer, but did the computer programmer consider himself to be an engineer? The company’s policy was that merit and cost-of-living increases were given out in July of each year. This year the average salary increase would be 7 percent. However, the president wanted the increase given according to merit, and not as a flat rate across the board. After long hours of deliberation, it was decided that engineering, manufacturing, and marketing would receive 8 percent raises, and finance and personnel 5.5 percent. After announcing the salary increases, the scientific programmers began to complain because they felt they were doing engineering-type work and should therefore be paid according to the engineering pay scale. Management tried to resolve this problem by giving each division its own computer and personnel. However, this resulted in duplication of effort and inefficient use of personnel. With the rapid advancements in computer technology, management realized the need for timely access to information for executive decision-making. In a rather bold move, executives created a new division called management information systems (MIS). The MIS division now had full control of all computer operations and the EDP personnel had the opportunity to show that they actually contributed to corporate profits. Elevating the computer to the top levels of the organization was a significant step toward project management. Unfortunately, many executives did not fully realize what had happened. Because of the need for a rapid information retrieval system that could integrate data from a variety of line organizations, the MIS personnel soon found that they were Project Management: 1960–1985 45 working horizontally, not vertically. Today, MIS packages cut across every division of the company. Thus, the project management concept for handling a horizontal flow of work emerged. With the emergence of data processing project management, executives were forced to find immediate answers to such questions as: ● ● ● Can we have project management strictly for data processing projects? Should the project manager be the programmer or the user? How much authority should be delegated to the project manager, and will this delegated authority cause a shift in the organizational equilibrium? The answers to these questions have not been and still are not easy to solve. Today, IBM provides its customers with the opportunity to hire IBM as the in-house data processing project management team. This partially eliminates the necessity for establishing internal project management relationships that could easily become permanent. In TRW Nelson Division,6 data processing project management began with MIS personnel acting as the project leaders. However, after two years, the company felt that the people best qualified to be the project leaders were the technical experts (i.e., users). Therefore, the MIS personnel now act as team members and resource personnel rather than as the project managers. There are many different types of projects. Each of these projects can have its own organizational form and can operate concurrently with other active projects. This diversity of projects has contributed to the implementation of full project management in several industries. J. Robert Fluor, chairman, chief executive officer, and president of the Fluor Corporation, commented on twenty years of operations in a project environment7: The need for flexibility has become apparent since no two projects are ever alike from a project management point of view. There are always differences in technology; in the geographical locations; in the client approach; in the contract terms and conditions; in the schedule; in the financial approach to the project; and in a broad range of international factors, all of which require a different and flexible approach to managing each project. We found the task force concept, with maximum authority and accountability resting with the project manager, to be the most effective means of realizing project objectives. And while basic project management principles do exist at Fluor, there is no single standard project organization or project procedure yet devised that can be rigidly applied to more than one project. Today, our company and others and their project managers are being challenged as never before to achieve what earlier would have been classified as “unachievable” project objectives. Major projects often involve the resources of a large number of organizations located on different continents. The efforts of each must be directed and coordinated toward 6. The TRW Nelson case study is found in the case studies section of the accompanying workbook. 7. J. Robert Fluor, “Development of Project Managers—Twenty Years’ Study at Fluor,” keynote address to the Project Management Institute, Eighth International Seminar Symposium, Chicago, Illinois, October 24, 1977. 46 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS a common set of project objectives of quality performance, cost and time of completion as well as many other considerations. As project management developed, some essential factors in its successful implementation were recognized. The major factor was the role of the project manager, which became the focal point of integrative responsibility. The need for integrative responsibility was first identified in research and development activities8: Recently, R&D technology has broken down the boundaries that used to exist between industries. Once-stable markets and distribution channels are now in a state of flux. The industrial environment is turbulent and increasingly hard to predict. Many complex facts about markets, production methods, costs and scientific potentials are related to investment decisions. All of these factors have combined to produce a king-size managerial headache. There are just too many crucial decisions to have them all processed and resolved through regular line hierarchy at the top of the organization. They must be integrated in some other way. Providing the project manager with integrative responsibility resulted in: ● ● ● ● Total accountability assumed by a single person Project rather than functional dedication A requirement for coordination across functional interfaces Proper utilization of integrated planning and control Without project management, these four elements have to be accomplished by executives, and it is questionable whether these activities should be part of an executive’s job description. An executive in a Fortune 500 corporation stated that he was spending seventy hours a week acting as an executive and as a project manager, and he did not feel that he was performing either job to the best of his abilities. During a presentation to the staff, the executive stated what he expected of the organization after project management implementation: ● ● ● Push decision-making down in the organization Eliminate the need for committee solutions Trust the decisions of peers Those executives who chose to accept project management soon found the advantages of the new technique: ● ● Easy adaptation to an ever-changing environment Ability to handle a multidisciplinary activity within a specified period of time 8. Reprinted by permission of Harvard Business Review. From Paul R. Lawrence and Jay W. Lorsch, “New Management Job: The Integrator,” Harvard Business Review, November–December 1967, p. 142. Copyright © 1967 by the Harvard Business School Publishing Corporation; all rights reserved. 47 Project Management: 1985–2003 ● ● ● ● ● Horizontal as well as vertical work flow Better orientation toward customer problems Easier identification of activity responsibilities A multidisciplinary decision-making process Innovation in organizational design 2.4 PROJECT MANAGEMENT: 1985–2003 By the 1990s, companies had begun to realize that implementing project management was a necessity, not a choice. The question was not how to implement project management, but how fast could it be done? Table 2–1 shows the typical life-cycle phases that an organization goes through to implement project management. In the first phase, the Embryonic Phase, the organization recognizes the apparent need for project management. This recognition normally takes place at the lower and middle levels of management where the project activities actually take place. The executives are then informed of the need and assess the situation. There are six driving forces that lead executives to recognize the need for project management: ● ● Capital projects Customer expectations TABLE 2–1. LIFE-CYCLE PHASES FOR PROJECT MANAGEMENT MATURITY Embryonic Phase Executive Management Acceptance Phase Line Management Acceptance Phase Growth Phase Maturity Phase • • • • • Development of a management cost/ schedule control system Integrating cost and schedule control • • • • Developing an educational program to enhance project management skills • Recognize need • • Visible executive support • • Line management support • • Use of life-cycle phases • Recognize benefits • • Executive understanding of project management • • Line management commitment • • Recognize applications • Project sponsorship • • Line management education • • • • • Development of a project management methodology Commitment to planning • • Recognize what must be done • • • Willingness to change way of doing business • • • • Willingness to release employees for project management training • • Minimization of “creeping scope” • • • Selection of a project tracking system 48 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● ● ● Competitiveness Executive understanding New project development Efficiency and effectiveness Manufacturing companies are driven to project management because of large capital projects or a multitude of simultaneous projects. Executives soon realize the impact on cash flow and that slippages in the schedule could end up idling workers. Companies that sell products or services, including installation, to their clients must have good project management practices. These companies are usually non–project-driven but function as though they were project-driven. These companies now sell solutions to their customers rather than products. It is almost impossible to sell complete solutions to customers without having superior project management practices because what you are actually selling is your project management expertise. There are two situations where competitiveness becomes the driving force: internal projects and external (outside customer) projects. Internally, companies get into trouble when the organization realizes that much of the work can be outsourced for less than it would cost to perform the work themselves. Externally, companies get into trouble when they are no longer competitive on price or quality, or simply cannot increase their market share. Executive understanding is the driving force in those organizations that have a rigid traditional structure that performs routine, repetitive activities. These organizations are quite resistant to change unless driven by the executives. This driving force can exist in conjunction with any of the other driving forces. New product development is the driving force for those organizations that are heavily invested in R&D activities. Given that only a small percentage of R&D projects ever make it into commercialization where the R&D costs can be recovered, project management becomes a necessity. Project management can also be used as an early warning system that a project should be cancelled. Efficiency and effectiveness, as driving forces, can exist in conjunction with any other driving forces. Efficiency and effectiveness take on paramount importance for small companies experiencing growing pains. Project management can be used to help such companies remain competitive during periods of growth and to assist in determining capacity constraints. Because of the interrelatedness of these driving forces, some people contend that the only true driving force is survival. This is illustrated in Figure 2–4. When the company recognizes that survival of the firm is at stake, the implementation of project management becomes easier. The speed by which companies reach some degree of maturity in project management is most often based upon how important they perceive the driving forces to be. This is illustrated generically in Figure 2–5. Non–project-driven and hybrid organizations move quickly to maturity if increased internal efficiencies and effectiveness are needed. Competitiveness is the slowest path because these types of organizations do not recognize that project management affects their competitive position directly. For project-driven organizations, the path is reversed. Competitiveness is the name of the game and the vehicle used is project management. 49 Project Management: 1985–2003 Capital Projects Efficiency and Effectiveness New Product Development Customers’ Expectations SURVIVAL Executive Understanding Competitiveness The components of survival. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management. New York: Wiley, 1998, p. 51. FIGURE 2–4. Once the organization perceives the need for project management, it enters the second life-cycle phase of Table 2–1, Executive Acceptance. Project management cannot be implemented rapidly in the near term without executive support. Furthermore, the support must be visible to all. The third life-cycle phase is Line Management Acceptance. It is highly unlikely that any line manager would actively support the implementation of project management without first recognizing the same support coming from above. Even minimal line management support will still cause project management to struggle. I n t e rn a l E f fi c i e n c i e s & E f f e c t ive n e s s Project-Driven Organizations Customer Expectations Non–Project-Driven and Hybrid Organizations Competitiveness Fast Slow Speed of Maturity FIGURE 2–5. The speed of maturity. 50 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS The fourth life-cycle phase is the Growth Phase, where the organization becomes committed to the development of the corporate tools for project management. This includes the project management methodology for planning, scheduling, and controlling, as well as selection of the appropriate supporting software. Portions of this phase can begin during earlier phases. The fifth life-cycle phase is Maturity. In this phase, the organization begins using the tools developed in the previous phase. Here, the organization must be totally dedicated to project management. The organization must develop a reasonable project management curriculum to provide the appropriate training and education in support of the tools, as well as the expected organizational behavior. By the 1990s, companies finally began to recognize the benefits of project management. Table 2–2 shows the benefits of project management and how our view of project management has changed. Recognizing that the organization can benefit from the implementation of project management is just the starting point. The question now becomes, “How long will it take us to achieve these benefits?” This can be partially answered from Figure 2–6. In the beginning of the implementation process, there will be added expenses to develop the project management methodology and establish the support systems for planning, scheduling, and control. Eventually, the cost will level off and become pegged. The question mark in Figure 2–6 is the point at which the benefits equal the cost of implementation. This point can be pushed to the left through training and education. TABLE 2–2. BENEFITS OF PROJECT MANAGEMENT Past View Present View • Project management will require more people and add to the overhead costs. Profitability may decrease. Project management will increase the amount of scope changes. Project management creates organizational instability and increases conflicts. • • • Project management is really “eye wash” for the customer’s benefit. Project management will create problems. • Only large projects need project management. • • Project management will increase quality problems. Project management will create power and authority problems. Project management focuses on suboptimization by looking at only the project. Project management delivers products to a customer. The cost of project management may make us noncompetitive. • Project management allows us to accomplish more work in less time, with fewer people. Profitability will increase. Project management will provide better control of scope changes. Project management makes the organization more efficient and effective through better organizational behavior principles. Project management will allow us to work more closely with our customers. Project management provides a means for solving problems. All projects will benefit from project management. Project management increases quality. • Project management will reduce power struggles. • • Project management allows people to make good company decisions. Project management delivers solutions. • Project management will increase our business. • • • • • • • • • • • • 51 Resistance to Change Cost of Project Management Additional Profits from Better Project Management $ Pegged ? FIGURE 2–6. Time Project management costs versus benefits. 2.5 RESISTANCE TO CHANGE Why was project management so difficult for companies to accept and implement? The answer is shown in Figure 2–7. Historically, project management resided only in the projectdriven sectors of the marketplace. In these sectors, the project managers were given the responsibility for profit and loss, which virtually forced companies to treat project management as a profession. In the non–project-driven sectors of the marketplace, corporate survival was based upon products and services, rather than upon a continuous stream of projects. Profitability was identified through marketing and sales, with very few projects having an identifiable P&L. As a result, project management in these firms was never viewed as a profession. In reality, most firms that believed that they were non–project-driven were actually hybrids. Hybrid organizations are typically non–project-driven firms with one or two divisions that are project-driven. Historically, hybrids have functioned as though they were non–project-driven, as shown in Figure 2–7, but today they are functioning like projectdriven firms. Why the change? Management has come to the realization that they can most effectively run their organization on a “management by project” basis, and thereby achieve the benefits of both a project management organization and a traditional organization. The rapid growth and acceptance of project management during the last ten years has taken place in the non–project-driven/hybrid sectors. Now, project management is being promoted by marketing, engineering, and production, rather than only by the project-driven departments (see Figure 2–8). A second factor contributing to the acceptance of project management was the economy, specifically the recessions of 1979–1983 and 1989–1993. This can be seen from Table 2–3. By the end of the recession of 1979–1983, companies recognized the benefits of using project management but were reluctant to see it implemented. Companies 52 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Project-Driven • PM has P&L • Primarily production- responsibility • Very few projects • Profitability from driven but with many projects • PM is a recognized • Emphasis on new profession • Multiple career paths Non– Project-Driven Hybrid production product development Present • Income comes from projects • Marketing-oriented • Short product life Past • Large brick walls • Long life-cycle products cycles • Need for rapid development process Project Management FIGURE 2–7. Product Management Program Management Industry classification (by project management utilization). returned to the “status quo” of traditional management. There were no allies or alternative management techniques that were promoting the use of project management. The recession of 1989–1993 finally saw the growth of project management in the non–project-driven sector. This recession was characterized by layoffs in the white collar/management ranks. Allies for project management were appearing and emphasis was being placed upon long-term solutions to problems. Project management was here to stay. The allies for project management began surfacing in 1985 and continued throughout the recession of 1989–1993. This is seen in Figure 2–9. 1960–1990 Hybrid 1990–2003 Hybrid Traditional Project Management Modern Project Management ❖ Entrance via project- driven divisions such as MIS and R&D FIGURE 2–8. From hybrid to project-driven. ❖ Entrance via marketing, engineering, and R&D 53 Resistance to Change TABLE 2–3. RECESSIONARY EFFECTS Characteristics Recession Layoffs R&D Training Solutions Sought Results of the Recessions 1979–1983 Blue collar Eliminated Eliminated Short-term • • • 1989–1993 White collar Focused Focused • Long-term • • ● ● ● ● 1960– 1985 No Allies 1985 1990 1985: Companies recognize that they must compete on the basis of quality as well as cost. Companies begin using the principles of project management for the implementation of total quality management (TQM). The first ally for project management surfaces with the “marriage” of project management and TQM. 1990: During the recession of 1989–1993, companies recognize the importance of schedule compression and being the first to market. Advocates of concurrent engineering begin promoting the use of project management to obtain better scheduling techniques. Another ally for project management is born. 1991–1992: Executives realize that project management works best if decisionmaking and authority are decentralized, but recognize that control can still be achieved at the top by functioning as project sponsors. 1993: As the recession of 1989–1993 comes to an end, companies begin “reengineering” the organization, which really amounts to elimination of organizational “fat.” The organization is now a “lean and mean” machine. People are asked to do more work in less time and with fewer people; executives recognize that being able to do this is a benefit of project management. 1991– 1992 1993 1994 EmpowerTotal LifeQuality Concurrent ment and ReCycle SelfManage- EngineerEngineering Costing Directed ing ment Teams 1995 1996 1997– 1999 1998 2000 2001 Project Scope CoMultiRisk Maturity Offices Change Located National Management and Models Control Teams Teams COEs Increasing Support FIGURE 2–9. Return to status quo No project management support No allies for project management Change way of doing business Risk management Examine lessons learned New processes supporting project management. 2002 2003 2004 2005 Strategic Intranet Capacity Planning Status Planning ???? for Reports Models Project Management 54 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● ● ● ● ● ● ● ● ● 1994: Companies recognize that a good project cost control system (i.e., horizontal accounting) allows for improved estimating and a firmer grasp of the real cost of doing work and developing products. 1995: Companies recognize that very few projects are completed within the framework of the original objectives without scope changes. Methodologies are created for effective change management. 1996: Companies recognize that risk management involves more than padding an estimate or a schedule. Risk management plans are now included in the project plans. 1997–1998: The recognition of project management as a professional career path mandates the consolidation of project management knowledge and a centrally located project management group. Benchmarking for best practices forces the creation of centers for excellence in project management. 1999: Companies that recognize the importance of concurrent engineering and rapid product development find that it is best to have dedicated resources for the duration of the project. The cost of overmanagement may be negligible compared to risks of undermanagement. More organizations begin to use colocated teams all housed together. 2000: Mergers and acquisitions create more multinational companies. Multinational project management becomes a major challenge. 2001: Corporations are under pressure to achieve maturity as quickly as possible. Project management maturity models help companies reach this goal. 2002: The maturity models for project management provide corporations with a basis to perform strategic planning for project management. Project management is now viewed as a strategic competency for the corporation. 2003: Intranet status reporting comes of age. This is particularly important for multinational corporations that must exchange information quickly. 2004: Intranet reporting provides corporations with information on how resources are being committed and utilized. Corporations develop capacity planning models to learn how much additional work the organization can take on. As project management continues to grow and mature, it will have more allies. In the twenty-first century, second and third world nations will come to recognize the benefits and importance of project management. Worldwide standards for project management will be established. If a company wishes to achieve excellence in project management, then it must go through a successful implementation process. This is illustrated in Situation 2–1. Situation 2–1: The aerospace division of a Fortune 500 company had been using project management for more than thirty years. Everyone in the organization had attended courses in the principles of project management. From 1985 to 1994, the division went through a yearly ritual of benchmarking themselves against other aerospace and defense organizations. At the end of the benchmarking period, the staff would hug and kiss one another, believing that they were performing project management as well as could be expected. Systems, Programs, and Projects: A Definition 55 In 1995, the picture changed. The company decided to benchmark itself against organizations that were not in the aerospace or defense sector. It soon learned that there were companies that had been using project management for fewer than six years but whose skills at implementation had surpassed the aerospace/defense firms. It was a rude awakening. Another factor that contributed to resistance to change was senior management’s preference for the status quo. Often this preference was based upon what was in the executives’ best interest rather than the best interest of the organization. It was also common for someone to attend basic project management programs and then discover that the organization would not allow full implementation of project management, leading to frustration for those in the lower and middle levels of management. Consider Situation 2–2: The largest division of a Fortune 500 company recognized the need for project management. Over a three-year period, 200 people were trained in the basics of project management, and 18 people passed the national certification exam for project management. The company created a project management division and developed a methodology. As project management began to evolve in this division, the project managers quickly realized that the organization would not allow their “illusions of grandeur” to materialize. The executive vice president made it clear that the functional areas, rather than the project management division, would have budgetary control. Project managers would not be empowered with authority or critical decision-making opportunities. Simply stated, the project managers were being treated as expediters and coordinators, rather than real project managers. Situation 2–2: Even though project management has been in existence for more than forty years, there are still different views and misconceptions about what it really is. Textbooks on operations research or management science still have chapters entitled “Project Management” that discuss only PERT scheduling techniques. A textbook on organizational design recognized project management as simply another organizational form. All companies sooner or later understand the basics of project management. But companies that have achieved excellence in project management have done so through successful implementation and execution of processes and methodologies. 2.6 SYSTEMS, PROGRAMS, AND PROJECTS: A DEFINITION In the preceding sections the word “systems” has been used rather loosely. The exact definition of a system depends on the users, environment, and ultimate goal. Business practitioners define a system as: A group of elements, either human or nonhuman, that is organized and arranged in such a way that the elements can act as a whole toward achieving some common goal or objective. 56 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Systems are collections of interacting subsystems that, if properly organized, can provide a synergistic output. Systems are characterized by their boundaries or interface conditions. For example, if the business firm system were completely isolated from the environmental system, then a closed system would exist, in which case management would have complete control over all system components. If the business system reacts with the environment, then the system is referred to as open. All social systems, for example, are categorized as open systems. Open systems must have permeable boundaries. If a system is significantly dependent on other systems for its survival, then it is an extended system. Not all open systems are extended systems. Extended systems are everchanging and can impose great hardships on individuals who desire to work in a regimented atmosphere. Military and government organizations were the first to attempt to define the boundaries of systems, programs, and projects. Below are two definitions for systems: ● ● Air Force Definition: A composite of equipment, skills, and techniques capable of performing and/or supporting an operational role. A complete system includes related facilities, equipment, material services, and personnel required for its operation to the degree that it can be considered as a self-sufficient unit in its intended operational and/or support environment. NASA Definition: One of the principal functioning entities comprising the project hardware within a project or program. The meaning may vary to suit a particular project or program area. Ordinarily a “system” is the first major subdivision of project work (spacecraft systems, launch vehicle systems). Programs can be construed as the necessary first-level elements of a system. Two representative definitions of programs are given below: ● ● Air Force Definition: The integrated, time-phased tasks necessary to accomplish a particular purpose. NASA Definition: A relative series of undertakings that continue over a period of time (normally years) and that are designed to accomplish a broad, scientific or technical goal in the NASA long-range plan (lunar and planetary exploration, manned spacecraft systems). Programs can be regarded as subsystems. However, programs are generally defined as time-phased efforts, whereas systems exist on a continuous basis. Projects are also time-phased efforts (much shorter than programs) and are the first level of breakdown of a program. A typical definition would be: ● NASA/Air Force Definition: A project is within a program as an undertaking that has a scheduled beginning and end, and that normally involves some primary purpose. As shown in Table 2–4, the government sector tends to run efforts as programs, headed by a program manager. The majority of the industrial sector, on the other hand, 57 Systems, Programs, and Projects: A Definition TABLE 2–4. DEFINITION SUMMARY Level Sector Title System* Program Project — Government Industry — Program managers Project managers *Definitions, as used here, do not include in-house industrial systems such as management information systems or shop floor control systems. prefers to describe efforts as projects, headed by a project manager. Whether we call our undertaking project management or program management is inconsequential because the same policies, procedures, and guidelines tend to regulate both. For the remainder of this text, programs and projects will be discussed interchangeably. However, the reader should be aware that projects are normally the first-level subdivision of a program. This breakdown will be discussed in more detail in Chapter 11. Once a group of tasks is selected and considered to be a project, the next step is to define the kinds of project units. There are four categories of projects: ● ● ● ● Individual projects: These are short-duration projects normally assigned to a single individual who may be acting as both a project manager and a functional manager. Staff projects: These are projects that can be accomplished by one organizational unit, say a department. A staff or task force is developed from each section involved. This works best if only one functional unit is involved. Special projects: Often special projects occur that require certain primary functions and/or authority to be assigned temporarily to other individuals or units. This works best for short-duration projects. Long-term projects can lead to severe conflicts under this arrangement. Matrix or aggregate projects: These require input from a large number of functional units and usually control vast resources. Project management may now be defined as the process of achieving project objectives through the traditional organizational structure and over the specialties of the individuals concerned. Project management is applicable for any ad hoc (unique, one-time, one-of-a-kind) undertaking concerned with a specific end objective. In order to complete a task, a project manager must: ● ● ● ● ● ● ● Set objectives Establish plans Organize resources Provide staffing Set up controls Issue directives Motivate personnel 58 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● Apply innovation for alternative actions Remain flexible The type of project will often dictate which of these functions a project manager will be required to perform. 2.7 PRODUCT VERSUS PROJECT MANAGEMENT: A DEFINITION For all practical purposes, there is no basic difference between program management and project management. But what about product management? Project management and product management are similar, with one major exception: The project manager focuses on the end date of his project, whereas the product manager is not willing to admit that his product line will ever end. The product manager wants his product to be as long-lived and profitable as possible. Even when the demand for the product diminishes, the product manager will always look for spin-offs to keep his product alive. Figure 2–10 shows the relationship between project and product management. When the project is in the R&D phase, a project manager is involved. Once the product is developed and introduced into the marketplace, the product manager takes control. In some situations, the project manager can become the product manager. Product and project management can, and do, exist concurrently within companies. VICE PRESIDENT GENERAL MANAGER SALES/ MARKETING RESEARCH ONGOING BUSINESS NEW BUSINESS MARKET RESEARCH MANU. ENG. FINANCE PLANNING PROJECT MANAGERS FIGURE 2–10. ADMIN PRODUCTION Organizational chart. A X B Y C Z PRODUCT MANAGERS ADM. PERS. Maturity and Excellence: A Definition 59 Figure 2–10 shows that product management can operate horizontally as well as vertically. When a product is shown horizontally on the organizational chart, the implication is that the product line is not big enough to control its own resources full-time and therefore shares key functional resources. If the product line were large enough to control its own resources full-time, it would be shown as a separate division or a vertical line on the organization chart. Also shown in Figure 2–10 is the remarkable fact that the project manager (or project engineer) is reporting to a marketing-type person. The reason is that technically oriented project leaders get too involved with the technical details of the project and lose sight of when and how to “kill” a project. Remember, most technical leaders have been trained in an academic rather than a business environment. Their commitment to success often does not take into account such important parameters as return on investment, profitability, competition, and marketability. To alleviate these problems, project managers and project engineers, especially on R&D-type projects, are now reporting to marketing so that marketing input will be included in all R&D decisions because of the high costs incurred during R&D. Executives must exercise caution with regard to this structure in which both product and project managers report to the marketing function. The marketing executive could become the focal point of the entire organization, with the capability of building a very large empire. 2.8 MATURITY AND EXCELLENCE: A DEFINITION Some people contend that maturity and excellence in project management are the same. Unfortunately, this is not the case. Consider the following definition: Maturity in project management is the implementation of a standard methodology and accompanying processes such that there exists a high likelihood of repeated successes. This definition is supported by the life-cycle phases shown in Table 2–1. Maturity implies that the proper foundation of tools, techniques, processes, and even culture, exists. When projects come to an end, there is usually a debriefing with senior management to discuss how well the methodology was used and to recommend changes. This debriefing looks at “key performance indicators,” which are shared learning topics, and allows the organization to maximize what it does right and to correct what it did wrong. The definition of excellence can be stated as: Organizations excellent in project management are those that create the environment in which there exists a continuous stream of successfully managed projects and where success is measured by what is in the best interest of both the company and the project (i.e., customer). Excellence goes well beyond maturity. You must have maturity to achieve excellence. Figure 2–11 shows that once the organization completes the first four life-cycle phases in Table 2–1, it may take two years or more to reach some initial levels of maturity. Excellence, if achievable at all, may take an additional five years or more. 60 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Failures Successes Projects MATURITY 2 YEARS EXCELLENCE 5 YEARS Time FIGURE 2–11. The growth of excellence. Figure 2–11 also brings out another important fact. During maturity, more successes than failures occur. During excellence, we obtain a continuous stream of successful projects. Yet, even after having achieved excellence, there will still be some failures. Executives who always make the right decision are not making enough decisions. Likewise, organizations in which all projects are completed successfully are not taking enough risks and are not working on enough projects. It is unrealistic to believe that all projects will be completed successfully. Some people contend that the only true project failures are the ones from which nothing is learned. Failure can be viewed as success if the failure is identified early enough so that the resources can be reassigned to other more opportunistic activities. 2.9 INFORMAL PROJECT MANAGEMENT: A DEFINITION Companies today are managing projects more informally than before. Informal project management does have some degree of formality but emphasizes managing the project with a minimum amount of paperwork. Furthermore, informal project management is based upon guidelines rather than the policies and procedures that are the basis for formal 61 The Many Faces of Success CONVENTIONAL PROJECT MANAGEMENT Life-Cycle Phases 1970s Policy and Procedure Manuals Early 1980s Guidelines per Life-Cycle Phase Mid-1980s General Project Guidelines Late 1980s PROJECT MANAGEMENT WITH CONCURRENT ENGINEERING Checklists with Periodic Review Points 1990s Evolution of policies, procedures, and guidelines. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management. New York: Wiley, 1998, p. 196. FIGURE 2–12. project management. This was shown previously to be a characteristic of a good project management methodology. Informal project management mandates: ● ● ● ● Effective communications Effective cooperation Effective teamwork Trust These four elements are absolutely essential for effective informal project management. Figure 2–12 shows the evolution of project documentation over the years. As companies become mature in project management, emphasis is on guidelines and checklists. Figure 2–13 shows the critical issues as project management matures toward more informality. As a final note, not all companies have the luxury of using informal project management. Customers often have a strong voice in whether formal or informal project management will be used. 2.10 THE MANY FACES OF SUCCESS Historically, the definition of success has been meeting the customer’s expectations regardless of whether or not the customer is internal or external. Success also includes getting the job done within the constraints of time, cost, and quality. Using this standard definition, success is defined as a point on the time, cost, quality/performance grid. But how many projects, especially those requiring innovation, are accomplished at this point? Very few projects are ever completed without trade-offs or scope changes on time, cost, and quality. Therefore, success could still occur without exactly hitting this singular point. In this regard, success could be defined as a cube, such as seen in Figure 2–14. The singular point of time, cost, and quality would be a point within the cube, constituting the convergence of the critical success factors (CSFs) for the project. 62 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS RELATIVE MAGNITUDE OF DOCUMENTATION POLICIES AND PROCEDURES GUIDELINES PER LIFECYCLE PHASE GUIDELINES PER PROJECT CHECKLISTS FOR END-OF-PHASE REVIEWS • HIGHINTENSITY CONFLICTS • RESISTANCE TO MULTIPLE BOSS REPORTING • RELIANCE ON CRITICAL ISSUES POLICIES/ PROCEDURES • INVISIBLE SPONSORS • POWER/ • CONTINUOUS COMPETITION FOR RESOURCES • CONSTANTLY CHANGING PRIORITIES • POOR • DEVELOP• PROTECTION MEMOS • SCHEDULE SLIPPAGES • CREEPING SCOPE MOTIVATION • TRUST • COMMUNI- MENT OF A METHODOLOGY CATION • COOPERATION • TEAMWORK • LIFE-CYCLE PHASES • CORE SKILLS TRAINING AUTHORITY PROBLEMS • CONTINUOUS MEETINGS FORMAL PROJECT MANAGEMENT INFORMAL PROJECT MANAGEMENT GENERAL MATURITY PATH FIGURE 2–13. Maturity path. Another factor to consider is that there may exist both primary and secondary definitions of success, as shown in Table 2–5. The primary definitions of success are seen through the eyes of the customer. The secondary definitions of success are usually internal benefits. If achieving 86 percent of the specification is acceptable to the customer and follow-on work is received, then the original project might very well be considered a success. It is possible for a project management methodology to identify primary and secondary success factors. This could provide guidance to a project manager for the development of a risk management plan and for deciding which risks are worth taking and which are not. 63 Cost The Many Faces of Success lity a Qu (or ) pe o Sc Time FIGURE 2–14. Success: point or cube? Critical success factors identify what is necessary to meet the desired deliverables of the customer. We can also look at key performance indicators (KPIs), which measure the quality of the process used to achieve the end results. KPIs are internal measures or metrics that can be reviewed on a periodic basis throughout the life cycle of the project. Typical KPIs include: ● ● ● ● ● Use of the project management methodology Establishment of the control processes Use of interim metrics Quality of resources assigned versus planned for Client involvement TABLE 2–5. SUCCESS FACTORS Primary Secondary • • • • • • • • • • • • • • • • Within time Within cost Within quality limits Accepted by the customer Follow-on work from this customer Using the customer’s name as a reference on your literature With minimum or mutually agreed upon scope changes Without disturbing the main flow of work Without changing the corporate culture Without violating safety requirements Providing efficiency and effectiveness of operations Satisfying OSHA/EPA requirements Maintaining ethical conduct Providing a strategic alignment Maintaining a corporate reputation Maintaining regulatory agency relations 64 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Key performance indicators answer such questions as: Did we use the methodology correctly? Did we keep management informed, and how frequently? Were the proper resources assigned and were they used effectively? Were there lessons learned that could necessitate updating the methodology or its use? Companies excellent in project management measure success both internally and externally using CSFs and KPIs. 2.11 THE MANY FACES OF FAILURE9 Previously we stated that success might be a cube rather than a point. If we stay within the cube but miss the point, is that a failure? Probably not! The true definition of failure is when the final results are not what were expected, even though the original expectations may or may not have been reasonable. Sometimes customers and even internal executives set performance targets that are totally unrealistic in hopes of achieving 80–90 percent. For simplicity’s sake, let us define failure as unmet expectations. With unmeetable expectations, failure is virtually assured since we have defined failure as unmet expectations. This is called a planning failure and is the difference between what was planned and what was, in fact, achieved. The second component of failure is poor performance or actual failure. This is the difference between what was achievable and what was actually accomplished. Perceived failure is the net sum of actual failure and planning failure. Figures 2–15 and 2–16 illustrate the components of perceived failure. In Figure 2–15, project management has planned a level of accomplishment (C) lower than what is achievable given project circumstances and resources (D). This is a classic underplanning situation. Actual accomplishment (B), however, was less than planned. A slightly different case is illustrated in Figure 2–16. Here, we have planned to accomplish more than is achievable. Planning failure is again assured even if no actual failure occurs. In both of these situations (overplanning and underplanning), the actual failure is the same, but the perceived failure can vary considerably. Today, most project management practitioners focus on the planning failure term. If this term can be compressed or even eliminated, then the magnitude of the actual failure, should it occur, would be diminished. A good project management methodology helps to reduce this term. We now believe that the existence of this term is largely due to the project manager’s inability to perform effective risk management. In the 1980s, we believed that the failure of a project was largely a quantitative failure due to: ● ● ● ● ● Ineffective planning Ineffective scheduling Ineffective estimating Ineffective cost control Project objectives being “moving targets” 9. Adapted from Robert D. Gilbreath, Winning at Project Management. New York: Wiley, 1986, pp. 2–6. 65 The Many Faces of Failure None Actual A Planned B Achievable C D Perfection E Perceived Failure Accomplishment Actual Failure Planning Failure FIGURE 2–15. Components of failure (pessimistic planning). During the 1990s, we changed our view of failure from being quantitatively oriented to qualitatively oriented. A failure in the 1990s was largely attributed to: ● ● ● ● ● Poor morale Poor motivation Poor human relations Poor productivity No employee commitment None Actual A Achievable B Accomplishment C Perceived Failure Actual Failure Planning Failure FIGURE 2–16. Components of failure (optimistic planning). Planned D Perfection 66 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● ● ● No functional commitment Delays in problem solving Too many unresolved policy issues Conflicting priorities between executives, line managers, and project managers Although these quantitative and qualitative approaches still hold true to some degree, today we believe that the major component of planning failure is inappropriate or inadequate risk management, or having a project management methodology that does not provide any guidance for risk management. Sometimes, the risk management component of failure is not readily identified. For example, look at Figure 2–17. The actual performance delivered by the contractor was significantly less than the customer’s expectations. Is the difference due to poor technical ability or a combination of technical inability and poor risk management? Today we believe that it is a combination. When a project is completed, companies perform a lessons-learned review. Sometimes lessons learned are inappropriately labeled and the true reason for the risk event is not known. Figure 2–18 illustrates the relationship between the marketing personnel and technical personnel when undertaking a project to develop a new product. If the project is completed with actual performance being less than customer expectations, is it because of poor risk management by the technical assessment and forecasting personnel or poor marketing risk assessment? The relationship between marketing and technical risk management is not always clear. Figure 2–18 also shows that opportunities for trade-offs diminish as we get further downstream on the project. There are numerous opportunities for trade-offs prior to establishing the final objectives for the project. In other words, if the project fails, it may be because of the timing when the risks were analyzed. Poor Risk Management s on ti cta Performance e E er s Cu xp Technical Inability tom Time FIGURE 2–17. nce rforma l Pe Actua Risk planning. 67 The Stage-Gate Process Technical Risk Asessment and Forecasting Te St chn ra ic teg al y t ke ar t/M gy uc ate d o tr Pr S Financial Risk Assessment Project Objectives Market Risk Assessment and Forecasting Project Execution Schedule Risk Assessment Opportunities for Trade-offs Resulting from Risk Analyses Numerous FIGURE 2–18. Project Planning Limited Mitigation strategies available. 2.12 THE STAGE-GATE PROCESS When companies recognize the need to begin developing processes for project management, the starting point is normally the stage-gate process. The stage-gate process was created because the traditional organizational structure was designed primarily for top-down, centralized management, control, and communications, all of which were no longer practical for organizations that use project management and horizontal work flow. The stagegate process eventually evolved into life-cycle phases. Just as the words imply, the process is composed of stages and gates. Stages are groups of activities that can be performed either in series or parallel based upon the magnitude of the risks the project team can endure. The stages are managed by cross-functional teams. The gates are structured decision points at the end of each stage. Good project management processes usually have no more than six gates. With more than six gates, the project team focuses too much attention on preparing for the gate reviews rather than on the actual management of the project. Project management is used to manage the stages between the gates, and can shorten the time between the gates. This is a critical success factor if the stage-gate process is to be used for the development and launch of new products. A good corporate methodology for project management will provide checklists, forms, and guidelines to make sure that critical steps are not omitted. Checklists for gate reviews are critical. Without these checklists, project managers can waste hours preparing gate review reports. Good checklists focus on answering these questions: ● ● Where are we today (i.e., time and cost)? Where will we end up (i.e., time and cost)? 68 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS ● ● What are the present and future risks? What assistance is needed from management? Project managers are never allowed to function as their own gatekeepers. The gatekeepers are either individuals (i.e., sponsors) or groups of individuals designated by senior management and empowered to enforce the structured decision-making process. The gatekeepers are authorized to evaluate the performance to date against predetermined criteria and to provide the project team with additional business and technical information. Gatekeepers must be willing to make decisions. The four most common decisions are: ● ● ● ● Proceed to the next gate based upon the original objectives Proceed to the next gate based upon revised objectives Delay making a gate decision until further information is obtained Cancel the project Sponsors must also have the courage to terminate a project. The purpose of the gates is not only to obtain authorization to proceed, but to identify failure early enough so that resources will not be wasted but will be assigned to more promising activities. We can now identify the three major benefits of the stage-gate process: ● ● ● Providing structure to project management Providing possible standardization in planning, scheduling, and control (i.e., forms, checklists, and guidelines) Allowing for a structured decision-making process Companies embark upon the stage-gate process with good intentions, but there are pitfalls that may disrupt the process. These include: ● ● ● ● Assigning gatekeepers and not empowering them to make decisions Assigning gatekeepers who are afraid to terminate a project Denying the project team access to critical information Allowing the project team to focus more on the gates than on the stages It should be recognized that the stage-gate process is neither an end result nor a selfsufficient methodology. Instead, it is just one of several processes that provide structure to the overall project management methodology. Today, the stage-gate process appears to have been replaced by life-cycle phases. Although there is some truth in this, the stage-gate process is making a comeback. Since the stage-gate process focuses on decision-making more than life-cycle phases, the stagegate process is being used as an internal, decision-making tool within each of the lifecycle phases. The advantage is that, while life-cycle phases are the same for every project, the stage-gate process can be custom-designed for each project to facilitate decisionmaking and risk management. The stage-gate process is now an integral part of project management, whereas previously it was used primarily for new product development efforts. 69 Project Life Cycles 2.13 PROJECT LIFE CYCLES Every program, project, or product has certain phases of development known as life-cycle phases. A clear understanding of these phases permits managers and executives to better control resources to achieve goals. During the past few years, there has been at least partial agreement about the lifecycle phases of a product. They include: ● ● ● ● ● ● Research and development Market introduction Growth Maturity Deterioration Death Today, there is no agreement among industries, or even companies within the same industry, about the life-cycle phases of a project. This is understandable because of the complex nature and diversity of projects. The theoretical definitions of the life-cycle phases of a system can be applied to a project. These phases include: ● ● ● ● ● Conceptual Planning Testing Implementation Closure The first phase, the conceptual phase, includes the preliminary evaluation of an idea. Most important in this phase is a preliminary analysis of risk and the resulting impact on the time, cost, and performance requirements, together with the potential impact on company resources. The conceptual phase also includes a “first cut” at the feasibility of the effort. The second phase is the planning phase. It is mainly a refinement of the elements in the conceptual phase and requires a firm identification of the resources required and the establishment of realistic time, cost, and performance parameters. This phase also includes the initial preparation of documentation necessary to support the system. For a project based on competitive bidding, the conceptual phase would include the decision of whether to bid, and the planning phase would include the development of the total bid package (i.e., time, schedule, cost, and performance). Because of the amount of estimating involved, analyzing system costs during the conceptual and planning phases is not an easy task. As shown in Figure 2–19, most project or system costs can be broken down into operating (recurring) and implementation (nonrecurring) categories. Implementation costs include one-time expenses such as construction of a new facility, purchasing computer hardware, or detailed planning. Operating costs include recurring expenses such as manpower. The operating costs may be reduced as shown 70 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS COSTS IMPLEMENTATION COST (NONRECURRING) REDUCED COSTS DUE TO IMPROVED POSITION ON LEARNING CURVE SAVINGS OPERATING COSTS (RECURRING—MANPOWER, EQUIPMENT, FACILITIES) TIME FIGURE 2–19. System costs. in Figure 2–19 if personnel perform at a higher position on the learning curve. The identification of a learning curve position is vitally important during the planning phase when firm cost positions must be established. Of course, it is not always possible to know what individuals will be available or how soon they will perform at a higher learning curve position. Once the approximate total cost of the project is determined, a cost-benefit analysis should be conducted (see Figure 2–20) to determine if the estimated value of the information obtained from the system exceeds the cost of obtaining the information. This analysis is often included as part of a feasibility study. There are several situations, such as in competitive bidding, where the feasibility study is actually the conceptual and definition phases. Because of the costs that can be incurred during these two phases, top-management approval is almost always necessary before the initiation of such a feasibility study. The third phase—testing—is predominantly a testing and final standardization effort so that operations can begin. Almost all documentation must be completed in this phase. The fourth phase is the implementation phase, which integrates the project’s product or services into the existing organization. If the project was developed for establishment of a marketable product, then this phase could include the product life-cycle phases of market introduction, growth, maturity, and a portion of deterioration. The final phase is closure and includes the reallocation of resources. Consider a company that sells products to consumers. As one product begins the deterioration and death phases of its life cycle (i.e., the divestment phase of a system), new products or projects must be established. Such a company would, therefore, require a continuous stream of projects to survive, as shown in Figure 2–21. As projects A and B begin their decline, new 71 Project Life Cycles COST AND VALUE OF THE INFORMATION FAVORABLE COST/BENEFIT POSITION ESTIMATED VALUE OF THE INFORMATION COST OF OBTAINING INFORMATION TIME FIGURE 2–20. Cost-benefit analysis. TOTAL REVENUE PROJECT A REVENUE PROJECT B TIME FIGURE 2–21. A stream of projects. PROJECT C 72 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS efforts (project C) must be developed for resource reallocation. In the ideal situation these new projects will be established at such a rate that total revenue will increase and company growth will be clearly visible. The closure phase evaluates the efforts of the total system and serves as input to the conceptual phases for new projects and systems. This final phase also has an impact on other ongoing projects with regard to identifying priorities. Thus far no attempt has been made to identify the size of a project or system. Large projects generally require full-time staffs, whereas small projects, although they undergo the same system life-cycle phases, may require only part-time people. This implies that an individual can be responsible for multiple projects, possibly with each project existing in a different life-cycle phase. The following questions must be considered in multiproject management: ● Are the project objectives the same? For the good of the project? ● For the good of the company? Is there a distinction between large and small projects? How do we handle conflicting priorities? ● Critical versus critical projects ● Critical versus noncritical projects ● Noncritical versus noncritical projects ● ● ● Later chapters discuss methods of resolving conflicts and establishing priorities. The phases of a project and those of a product are compared in Figure 2–22. Notice that the life-cycle phases of a product generally do not overlap, whereas the phases of a project can and often do overlap. Table 2–6 identifies the various life-cycle phases that are commonly used. Even in mature project management industries such as construction, one could survey ten different construction companies and find ten different definitions for the life-cycle phases. The life-cycle phases for computer programming, as listed in Table 2–6, are also shown in Figure 2–23, which illustrates how manpower resources can build up and decline during a project. In Figure 2–23, PMO stands for the present method of operations, and PMO will be the “new” present method of operations after conversion. This life cycle would probably be representative of a twelve-month activity. Most executives prefer short data processing life cycles because computer technology changes rapidly. An executive of a major utility commented that his company was having trouble determining how to terminate a computer programming project to improve customer service because, by the time a package is ready for full implementation, an updated version appears on the scene. Should the original project be canceled and a new project begun? The solution appears to lie in establishing short data processing project life-cycle phases, perhaps through segmented implementation. Top management is responsible for the periodic review of major projects. This should be accomplished, at a minimum, at the completion of each life-cycle phase. RETURN $0 System/product life cycles. PLANNING APPLIED RESEARCH INV ES TM EN T CONCEPTUAL PURE BASIC RESEARCH TESTING MARKET INTRODUCTION FIGURE 2–22. INVESTMENT RESEARCH AND DEVELOPMENT R T FI O PR E EV NU E GROWTH IMPLEMENTATION RO I DETERIORATION CLOSURE BREAKEVEN POINT MATURITY DEATH 73 74 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS TABLE 2–6. LIFE-CYCLE PHASE DEFINITIONS Engineering Manufacturing Computer Programming Construction • • • • • • • • • • • • • • • • • • • • • • • Start-up Definition Main Termination Formation Buildup Production Phase-out Final audit Conceptual Planning Definition and design Implementation Conversion Planning, data gathering, and procedures Studies and basic engineering Major review Detail engineering Detail engineering/ construction overlap Construction Testing and commissioning More companies are preparing procedural manuals for project management and for structuring work using life-cycle phases. There are several reasons for this trend: ● ● ● Clear delineation of the work to be accomplished in each phase may be possible. Pricing and estimating may be easier if well-structured work definitions exist. Key decision points exist at the end of each life-cycle phase so that incremental funding is possible. As a final note, the reader should be aware that not all projects can be simply transposed into life-cycle phases (e.g., R&D). It might be possible (even in the same company) for different definitions of life-cycle phases to exist because of schedule length, complexity, or just the difficulty of managing the phases. PLANNING PHASE DEFINITION AND DESIGN PHASE IMPLEMENTATION CONVERSION PHASE PHASE RESOURCES CONCEPTUAL PHASE REQUIRED RESOURCES PMO PMO T FIGURE 2–23. Definition of a project life cycle. END 75 Project Management Methodologies: A Definition 2.14 PROJECT MANAGEMENT METHODOLOGIES: A DEFINITION Achieving project management excellence, or maturity, is more likely with a repetitive process that can be used on each and every project. This repetitive process is referred to as the project management methodology. If possible, companies should maintain and support a single methodology for project management. Good methodologies integrate other processes into the project management methodology, as shown in Figure 2–24. Companies such as Nortel, Ericsson, and Johnson Controls Automotive have all five of these processes integrated into their project management methodology. During the 1990s, the following processes were integrated into a single methodology: ● ● ● ● ● Project Management: The basic principles of planning, scheduling, and controlling work Total Quality Management: The process of ensuring that the end result will meet the quality expectations of the customer Concurrent Engineering: The process of performing work in parallel rather than series in order to compress the schedule without incurring serious risks Scope Change Control: The process of controlling the configuration of the end result such that value added is provided to the customer Risk Management: The process of identifying, quantifying, and responding to the risks of the project without any material impact on the project’s objectives In the coming years, companies can be expected to integrate more of their business processes in the project management methodology. This is shown in Figure 2–25. Project Management Concurrent Engineering Total Quality Management Change Management Risk Management FIGURE 2–24. Integrated processes for the twenty-first century. 76 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Yrs: 1990–2000 Integrated Processes • Project management Current Integrated Processes Yrs: 2000–2010 Integrated Processes • Supply chain management • Total quality management • Concurrent engineering • Scope change management • Risk management FIGURE 2–25. • Business processes • Feasibility studies • Cost-benefit analyses (ROI) • Capital budgeting Integrated processes (past, present, and future). Managing off of a single methodology lowers cost, reduces resource requirements for support, minimizes paperwork, and eliminates duplicated efforts. The characteristics of a good methodology based upon integrated processes include: ● ● ● ● ● ● ● ● ● ● ● A recommended level of detail Use of templates Standardized planning, scheduling, and cost control techniques Standardized reporting format for both in-house and customer use Flexibility for application to all projects Flexibility for rapid improvements Easy for the customer to understand and follow Readily accepted and used throughout the entire company Use of standardized life-cycle phases (which can overlap) and end of phase reviews (Section 2.13) Based upon guidelines rather than policies and procedures (Section 2.9) Based upon a good work ethic Methodologies do not manage projects; people do. It is the corporate culture that executes the methodology. Senior management must create a corporate culture that supports project management and demonstrates faith in the methodology. If this is done successfully, then the following benefits can be expected: ● ● ● ● Faster “time to market” through better control of the project’s scope Lower overall project risk Better decision-making process Greater customer satisfaction, which leads to increased business 77 Change Management and Corporate Cultures ● More time available for value-added efforts, rather than internal politics and internal competition One company found that its customers liked its methodology so much and that the projects were so successful, that the relationship between the contractor and the customer improved to the point where the customers began treating the contractor as a partner rather than as a supplier. 2.15 CHANGE MANAGEMENT AND CORPORATE CULTURES It has often been said that the most difficult projects to manage are those that involve the management of change. Figure 2–26 shows the four basic inputs needed to develop a project management methodology. Each has a “human” side that may require that people change. Successful development and implementation of a project management methodology requires: ● ● ● Identification of the most common reasons for change in project management Identification of the ways to overcome the resistance to change Application of the principles of change management to ensure that the desired project management environment will be created and sustained For simplicity’s sake, resistance can be classified as professional resistance and personal resistance to change. Professional resistance occurs when each functional unit as a People Work (Tasks) Project Management Methodology Organization FIGURE 2–26. Methodology inputs. Tools 78 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS whole feels threatened by project management. This is shown in Figure 2–27. Examples include: ● ● ● ● ● Sales: The sales staff’s resistance to change arises from fear that project management will take credit for corporate profits, thus reducing the year-end bonuses for the sales force. Sales personnel fear that project managers may become involved in the sales effort, thus diminishing the power of the sales force. Marketing: Marketing people fear that project managers will end up working so closely with customers that project managers may eventually be given some of the marketing and sales functions. This fear is not without merit because customers often want to communicate with the personnel managing the project rather than those who may disappear after the sale is closed. Finance (and Accounting): These departments fear that project management will require the development of a project accounting system (such as earned value measurement) that will increase the workload in accounting and finance, and that they will have to perform accounting both horizontally (i.e., in projects) and vertically (i.e., in line groups). Procurement: The fear in this group is that a project procurement system will be implemented in parallel with the corporate procurement system, and that the project managers will perform their own procurement, thus bypassing the procurement department. Human Resources Management: The HR department may fear that a project management career path ladder will be created, requiring new training programs. This will increase their workloads. High Neutral Low Sales Finance Marketing FIGURE 2–27. Resistance to change. H.R. Procurement Eng. Manu. I.T. R&D 79 Change Management and Corporate Cultures ● ● Manufacturing: Little resistance is found here because, although the manufacturing segment is not project-driven, there are numerous capital installation and maintenance projects which will have required the use of project management. Engineering, R&D, and Information Technology: These departments are almost entirely project-driven with very little resistance to project management. Getting the support of and partnership with functional management can usually overcome the functional resistance. However, the individual resistance is usually more complex and more difficult to overcome. Individual resistance can stem from: ● ● ● ● Potential changes in work habits Potential changes in the social groups Embedded fears Potential changes in the wage and salary administration program Tables 2–7 through 2–10 show the causes of resistance and possible solutions. Workers tend to seek constancy and often fear that new initiatives will push them outside their comfort zones. Most workers are already pressed for time in their current jobs and fear that new programs will require more time and energy. Some companies feel compelled to continually undertake new initiatives, and people may become skeptical of these programs, especially if previous initiatives have not been successful. The worst case scenario is when employees are asked to undertake new initiatives, procedures, and processes that they do not understand. It is imperative that we understand resistance to change. If individuals are happy with their current environment, there will be resistance to change. But what if people are unhappy? There will still be resistance to change unless (1) people believe that the change is possible, and (2) people believe that they will somehow benefit from the change. Management is the architect of the change process and must develop the appropriate strategies so the organization can change. This is done best by developing a shared understanding with employees by doing the following: ● ● Explaining the reasons for the change and soliciting feedback Explaining the desired outcomes and rationale TABLE 2–7. RESISTANCE: WORK HABITS Cause of Resistance Ways to Overcome • • • • • • • • • New guidelines/processes Need to share “power” information Creation of a fragmented work environment Need to give up established work patterns (learn new skills) Change in comfort zones Dictate mandatory conformance from above Create new comfort zones at an acceptable pace Identify tangible/intangible individual benefits 80 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS TABLE 2–8. RESISTANCE: SOCIAL GROUPS Cause of Resistance Ways to Overcome • • • • • • • Unknown new relationships Multiple bosses Multiple, temporary assignments Severing of established ties ● ● ● Maintain existing relationships Avoid cultural shock Find an acceptable pace for rate of change Championing the change process Empowering the appropriate individuals to institutionalize the changes Investing in training necessary to support the changes For most companies, the change management process will follow the pattern shown in Figure 2–28. Employees initially refuse to admit the need for change. As management begins pursuing the change, the support for the change diminishes and pockets of resistance crop up. Continuous support for the change by management encourages employees to explore the potential opportunities that will result from the change about to take place. Unfortunately, this exploration often causes additional negative information to surface, thus reinforcing the resistance to change. As pressure by management increases, and employees begin to recognize the benefits of the proposed change, support begins to grow. The ideal purpose of change management is to create a superior culture. There are different types of project management cultures based upon the nature of the business, the amount of trust and cooperation, and the competitive environment. Typical types of cultures include: ● ● Cooperative cultures: These are based upon trust and effective communications, internally and externally. Noncooperative cultures: In these cultures, mistrust prevails. Employees worry more about themselves and their personal interests than what’s best for the team, company, or customer. TABLE 2–9. RESISTANCE: EMBEDDED FEARS Cause of Resistance Ways to Overcome • • • • • • • • • • • • Fear of failure Fear of termination Fear of added workload Fear or dislike of uncertainty/unknowns Fear of embarrassment Fear of a “we/they” organization Educate workforce on benefits of changes to the individual/corporation Show willingness to admit/accept mistakes Show willingness to pitch in Transform unknowns into opportunities Share information 81 Change Management and Corporate Cultures TABLE 2–10. RESISTANCE: WAGE AND SALARY ADMINISTRATION Causes of Resistance Ways to Overcome • • • • • • • Shifts in authority and power Lack of recognition after the changes Unknown rewards and punishment Improper evaluation of personal performance Multiple bosses ● ● ● Link incentives to change Identify future advancement opportunities/career path Competitive cultures: These cultures force project teams to compete with one another for valuable corporate resources. In these cultures, project managers often demand that the employees demonstrate more loyalty to the project than to their line managers. This can be disastrous when employees are working on many projects at the same time. Isolated cultures: These occur when a large organization allows functional units to develop their own project management cultures and can result in a culturewithin-a-culture environment. Fragmented cultures: These occur when part of the team is geographically separated from the rest of the team. Fragmented cultures also occur on multinational projects, where the home office or corporate team may have a strong culture for project management but the foreign team has no sustainable project management culture. Cooperative cultures thrive on effective communication, trust, and cooperation. Decisions are based upon the best interest of all of the stakeholders. Executive sponsorship Support for Change Support Denial Exploration Resistance Resistance Time FIGURE 2–28. Change process. 82 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS is passive, and very few problems go to the executive levels for resolution. Projects are managed informally and with minimal documentation and few meetings. This culture takes years to achieve and functions well during favorable and unfavorable economic conditions. Noncooperative cultures are reflections of senior management’s inability to cooperate among themselves and with the workforce. Respect is nonexistent. These cultures are not as successful as a cooperative culture. Competitive cultures can be healthy in the short term, especially if there is abundant work. Long-term effects are usually not favorable. In one instance, an electronics firm regularly bid on projects that required the cooperation of three departments. Management then implemented the unhealthy decision of allowing each of the three departments to bid on every job. The two “losing” departments would be treated as subcontractors. Management believed that this competitiveness was healthy. Unfortunately, the longterm results were disastrous. The three departments refused to talk to one another and stopped sharing information. In order to get the job done for the price quoted, the departments began outsourcing small amounts of work rather than using the other departments that were more expensive. As more work was outsourced, layoffs occurred. Management then realized the disadvantages of the competitive culture it had fostered. 2.16 SYSTEMS THINKING Ultimately, all decisions and policies are made on the basis of judgments; there is no other way, and there never will be. In the end, analysis is but an aid to the judgment and intuition of the decision maker. These principles hold true for project management as well as for systems management. The systems approach may be defined as a logical and disciplined process of problemsolving. The word process indicates an active ongoing system that is fed by input from its parts. The systems approach: ● ● ● ● Forces review of the relationship of the various subsystems Is a dynamic process that integrates all activities into a meaningful total system Systematically assembles and matches the parts of the system into a unified whole Seeks an optimal solution or strategy in solving a problem The systems approach to problem-solving has phases of development similar to the lifecycle phases shown in Figure 2–22. These phases are defined as follows: ● ● ● Translation: Terminology, problem objective, and criteria and constraints are defined and accepted by all participants. Analysis: All possible approaches to or alternatives to the solution of the problem are stated. Trade-off: Selection criteria and constraints are applied to the alternatives to meet the objective. 83 Systems Thinking ● Synthesis: The best solution in reaching the objective of the system is the result of the combination of analysis and trade-off phases. Other terms essential to the systems approach are: ● ● ● ● ● Objective: The function of the system or the strategy that must be achieved. Requirement: A partial need to satisfy the objective. Alternative: One of the selected ways to implement and satisfy a requirement. Selection criteria: Performance factors used in evaluating the alternatives to select a preferable alternative. Constraint: An absolute factor that describes conditions that the alternatives must meet. A common error by potential decision makers (those dissatisfied individuals with authority to act) who base their thinking solely on subjective experience, judgment, and intuition is that they fail to recognize the existence of alternatives. Subjective thinking is inhibited or affected by personal bias. Objective thinking, on the other hand, is a fundamental characteristic of the systems approach and is exhibited or characterized by emphasis on the tendency to view events, phenomena, and ideas as external and apart from self-consciousness. Objective thinking is unprejudiced. The systems analysis process, as shown in Figure 2–29, begins with systematic examination and comparison of those alternative actions that are related to the accomplishment of the desired objective. The alternatives are then compared on the basis of the resource costs and the associated benefits. The loop is then completed using feedback to determine how compatible each alternative is with the objectives of the organization. The above analysis can be arranged in steps: ● ● ● ● ● ● ● Input data to mental process Analyze data Predict outcomes Evaluate outcomes and compare alternatives Choose the best alternative Take action Measure results and compare them with predictions The systems approach is most effective if individuals can be trained to be ready with alternative actions that directly tie in with the prediction of outcomes. The basic tool is the outcome array, which represents the matrix of all possible circumstances. This outcome array can be developed only if the decision maker thinks in terms of the wide scope of possible outcomes. Outcome descriptions force the decision maker to spell out clearly just what he is trying to achieve (i.e., his objectives). Systems thinking is vital for the success of a project. Project management systems urgently need new ways of strategically viewing, questioning, and analyzing project needs for alternative nontechnical and technical solutions. The ability to analyze the total project, rather than the individual parts, is essential for successful project management. 84 FIGURE 2–29. REQUIREMENT REQUIREMENT REQUIREMENT The systems approach. TRANSLATION E V I O B J E C T REQUIREMENT CONSTRAINTS • LEGISLATIVE • FINANCIAL • TIMING • POLICY ANALYSIS FEEDBACK ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE ALTERNATIVE O F F T R A D E TRADE-OFF SELECTION CRITERIA • PERFORMANCE • COST/BENEFIT • RESPONSE TIME • POLICY SYNTHESIS SYSTEM 85 Problems PROBLEMS 2–1 Can the organizational chart of a company be considered as a systems model? If so, what kind of systems model? 2–2 Do you think that someone could be a good systems manager but a poor project manager? What about the reverse situation? State any assumptions that you may have to make. 2–3 Can we consider R&D as a system? If so, under what circumstances? 2–4 For each of the following projects, state whether we are discussing an open, closed, or extended system: a. b. c. d. e. 2–5 A high-technology project New product R&D An on-line computer system for a bank Construction of a chemical plant Developing an in-house cost accounting reporting system Can an entire organization be considered as a model? If so, what type? 2–6 Systems can be defined as a combination or interrelationship of subsystems. Does a project have subsystems? 2–7 If a system can, in fact, be broken down into subsystems, what problems can occur during integration? 2–8 How could suboptimization occur during systems thinking and analysis? 2–9 Would a cost-benefit analysis be easier or harder to perform in a traditional or project management organizational structure? 2–10 What impact could the product life cycle have on the selection of the project organizational structure? 2–11 In the development of a system, what criteria should be used to determine where one phase begins and another ends and where overlap can occur? 2–12 Consider the following expression: “Damn the torpedoes: full-speed ahead.” Is it possible that this military philosophy can be applied to project management and lead to project success? 3 Organizational Structures Related Case Studies (from Kerzner/Project Management Case Studies) • Quasar • Communications, Inc. • Jones and Shephard • Accountants, Inc.* • Fargo Foods • Mohawk National Bank Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Corine Industries • The Struggle with • Implementation • Multiple Choice Exam • TRW Nelson PMBOK® Reference Section for the PMP® Certification Exam • Human Resource • Management 3.0 INTRODUCTION During the past thirty years there has been a so-called hidden revolution in the introduction and development of new organizational structures. Management has come to realize that organizations must be dynamic in nature; that is, they must be capable of rapid restructuring should environmental conditions so dictate. These environmental factors evolved from the increasing competitiveness of the market, changes in *Case Study also appears at end of chapter. 87 88 ORGANIZATIONAL STRUCTURES technology, and a requirement for better control of resources for multiproduct firms. More than thirty years ago, Wallace identified four major factors that caused the onset of the organizational revolution1: ● ● ● ● The technology revolution (complexity and variety of products, new materials and processes, and the effects of massive research) Competition and the profit squeeze (saturated markets, inflation of wage and material costs, and production efficiency) The high cost of marketing The unpredictability of consumer demands (due to high income, wide range of choices available, and shifting tastes) Much has been written about how to identify and interpret those signs that indicate that a new organizational form may be necessary. According to Grinnell and Apple, there are five general indications that the traditional structure may not be adequate for managing projects2: ● ● ● ● ● 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 fluctuations in how well performance specifications are met. 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 specifications, but groups and individuals aren’t satisfied with the achievement. Unfortunately, many companies do not realize the necessity for organizational change until it is too late. Management looks externally (i.e., to the environment) rather than internally for solutions to problems. A typical example would be that new product costs are rising while the product life cycle may be decreasing. Should emphasis be placed on lowering costs or developing new products? If we assume that an organizational system is composed of both human and nonhuman resources, then we must analyze the sociotechnical subsystem whenever organizational changes are being considered. The social system is represented by the organization’s personnel and their group behavior. The technical system includes the technology, materials, and machines necessary to perform the required tasks. Behavioralists contend that there is no one best structure to meet the challenges of tomorrow’s organizations. The structure used, however, must be one that optimizes company performance by achieving a balance between the social and the technical requirements. According to Sadler3: Since the relative influence of these (sociotechnical) factors change from situation to situation, there can be no such thing as an ideal structure making for effectiveness in organizations of all kinds, or even appropriate to a single type of organization at different stages in its development. 1. W. L. Wallace, “The Winchester-Western Division Concept of Product Planning” (New Haven: Olin Mathieson Corporation, January 1963), pp. 2–3. 2. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,” Machine Design, January 1975, pp. 84–87. 3. Philip Sadler, “Designing an Organizational Structure,” Management International Review, Vol. 11, No. 6, 1971, pp. 19–33. Introduction 89 There are often real and important conflicts between the type of organizational structure called for if the tasks are to be achieved with minimum cost, and the structure that will be required if human beings are to have their needs satisfied. Considerable management judgment is called for when decisions are made as to the allocation of work activities to individuals and groups. High standardization of performance, high manpower utilization and other economic advantages associated with a high level of specialization and routinization of work have to be balanced against the possible effects of extreme specialization in lowering employee attitudes and motivation. Organizations can be defined as groups of people who must coordinate their activities in order to meet organizational objectives. The coordination function requires strong communications and a clear understanding of the relationships and interdependencies among people. Organizational structures are dictated by such factors as technology and its rate of change, complexity, resource availability, products and/or services, competition, and decision-making requirements. The reader must keep in mind that there is no such thing as a good or bad organizational structure; there are only appropriate or inappropriate ones. Even the simplest type of organizational change can induce major conflicts. The creation of a new position, the need for better planning, the lengthening or shortening of the span of control, the need for additional technology (knowledge), and centralization or decentralization can result in major changes in the sociotechnical subsystem. Argyris has defined five conditions that form the basis for organizational change requirements4: These requirements . . . depend upon (1) continuous and open access between individuals and groups, (2) free, reliable communication, where (3) independence is the foundation for individual and departmental cohesiveness and (4) trust, risk-taking and helping each other is prevalent so that (5) conflict is identified and managed in such a way that the destructive win-lose stances with their accompanying polarization of views are minimized. . . . Unfortunately these conditions are difficult to create. . . . There is a tendency toward conformity, mistrust and lack of risk-taking among the peers that results in focusing upon individual survival, requiring the seeking out of the scarce rewards, identifying one’s self with a successful venture (be a hero) and being careful to avoid being blamed for or identified with a failure, thereby becoming a “bum.” All these adaptive behaviors tend to induce low interpersonal competence and can lead the organization, over the longrun, to become rigid, sticky, and less innovative, resulting in less than effective decisions with even less internal commitment to the decision on the part of those involved. Organizational restructuring is a compromise between the traditional (classical) and the behavioral schools of thought; management must consider the needs of individuals as well as the needs of the company. Is the organization structured to manage people or to manage work? There is a wide variety of organizational forms for restructuring management. The exact method depends on the people in the organization, the company’s product lines, and management’s philosophy. A poorly restructured organization can sever communication channels that may have taken months or years to cultivate; cause a restructuring of the informal organization, thus creating new power, status, and political positions; and eliminate job satisfaction and motivational factors to such a degree that complete discontent results. Sadler defines three tasks that must be considered because of the varied nature of organizations: control, integration, and external relationships.5 If the company’s position is very sensitive to the environment, then management may be most concerned with the control task. For an organization with multiple products, each requiring a high degree of engineering and technology, the integration task can become primary. Finally, for 4. Chris Argyris, “Today’s Problems with Tomorrow’s Organizations,” The Journal of Management Studies, February 1967, pp. 31–55. 5. See note 3. 90 ORGANIZATIONAL STRUCTURES situations with strong labor unions and repetitive tasks, external relations can predominate, especially in strong technological and scientific environments where strict government regulations must be adhered to. In the sections that follow, a variety of organizational forms will be presented. Obviously, it is an impossible task to describe all possible organizational structures. Each form describes how the project management organization evolved from the classical theories of management. Advantages and disadvantages are listed for technology and social systems. Sadler has prepared a six-question checklist that explores a company’s tasks, social climate, and relationship to the environment.6 ● ● ● ● ● ● To what extent does the task of organization call for close control if it is to be performed efficiently? What are the needs and attitudes of the people performing the tasks? What are the likely effects of control mechanisms on their motivation and performance? What are the natural social groupings with which people identify themselves? To what extent are satisfying social relationships important in relation to motivation and performance? What aspect of the organization’s activities needs to be closely integrated if the overall task is to be achieved? What organizational measures can be developed that will provide an appropriate measure of control and integration of work activities, while at the same time meeting the needs of people and providing adequate motivation? What environmental changes are likely to affect the future trend of company operations? What organizational measures can be taken to insure that the enterprise responds to these effectively? The answers to these questions are not easy. For the most part, they are a matter of the judgment exercised by organizational and behavioral managers. 3.1 ORGANIZATIONAL WORK FLOW Organizations are continually restructured to meet the demands imposed by the environment. Restructuring can change the role of individuals in the formal and the informal organization. Many researchers believe that the greatest usefulness of behavioralists lies in their ability to help the informal organization adapt to changes and resolve the resulting conflicts. Unfortunately, behavioralists cannot be totally effective unless they have input into the formal organization as well. Whatever organizational form is finally selected, formal channels must be developed so that each individual has a clear description of the authority, responsibility, and accountability necessary for the work to proceed. In the discussion of organizational structures, the following definitions will be used: ● ● 6. See note 3. Authority is the power granted to individuals (possibly by their position) so that they can make final decisions. Responsibility is the obligation incurred by individuals in their roles in the formal organization to effectively perform assignments. Traditional (Classical) Organization ● 91 Accountability is being answerable for the satisfactory completion of a specific assignment. (Accountability  authority  responsibility.) Authority and responsibility can be delegated to lower levels in the organization, whereas accountability usually rests with the individual. Yet many executives refuse to delegate and argue that an individual can have total accountability just through responsibility. Even with these clearly definable divisions of authority, responsibility, and accountability, establishing good relationships between project and functional managers can take a great deal of time, especially during the conversion from a traditional to a project organizational form. Trust is the key to success here. The normal progression in the growth of trust is as follows: ● ● ● ● ● Even though a problem exists, both the project and functional managers deny that any problem exists. When the problem finally surfaces, each manager blames the other. As trust develops, both managers readily admit responsibility for the problems. The project and functional managers meet face-to-face to work out the problem. The project and functional managers begin to formally and informally anticipate problems. For each of the organizational structures described in the following sections, advantages and disadvantages are listed. Many of the disadvantages stem from possible conflicts arising from problems in authority, responsibility, and accountability. 3.2 TRADITIONAL (CLASSICAL) ORGANIZATION The traditional management structure has survived for more than two centuries. However, recent business developments, such as the rapid rate of change in technology and increased stockholder demands, have created strains on existing organizational forms. Fifty years ago companies could survive with only one or two product lines. The classical management organization, as shown in Figure 3–1, was satisfactory for control, and conflicts were minimal.7 However, with the passing of time, companies found that survival depended on multiple product lines (i.e., diversification) and vigorous integration of technology into the existing organization. As organizations grew and matured, managers found that company activities were not being integrated effectively, and that new conflicts were arising in the well-established formal and informal channels. Managers began searching for more innovative organizational forms that would alleviate these problems. 7. Many authors refer to classical organizations as pure functional organizations. This can be seen from Figure 3–1. Also note that the department level is below the division level. In some organizations these titles are reversed. 92 ORGANIZATIONAL STRUCTURES EXECUTIVE OFFICE ENGINEERING DIVISION OPERATIONS FINANCIAL ADMINISTRATION MARKETING DEPARTMENT SECTION FUNCTIONAL RESPONSIBILITY FIGURE 3–1. The traditional management structure. Before a valid comparison can be made with the newer forms, the advantages and disadvantages of the traditional structure must be shown. Table 3–1 lists the advantages of the traditional organization. As seen in Figure 3–1, the general manager has all of the functional entities necessary to perform R&D or develop and manufacture a product. All activities are performed within the functional groups and are headed by a department (or, in some cases, a division) head. Each department maintains a strong concentration of technical expertise. Since all projects must flow through the functional departments, each project can benefit from the most advanced technology, thus making this organizational form well suited to mass production. Functional managers can hire a wide variety of specialists and provide them with easily definable paths for career progression. TABLE 3–1. ADVANTAGES OF THE TRADITIONAL (CLASSICAL) ORGANIZATION • • • • • • • • • Easier budgeting and cost control are possible. Better technical control is possible. • Specialists can be grouped to share knowledge and responsibility. • Personnel can be used on many different projects. • All projects will benefit from the most advanced technology (better utilization of scarce personnel). Flexibility in the use of manpower. A broad manpower base to work with. Continuity in the functional disciplines; policies, procedures, and lines of responsibility are easily defined and understandable. Admits mass production activities within established specifications. Good control over personnel, since each employee has one and only one person to report to. Communication channels are vertical and well established. Quick reaction capability exists, but may be dependent upon the priorities of the functional managers. Traditional (Classical) Organization 93 TABLE 3–2. DISADVANTAGES OF THE TRADITIONAL (CLASSICAL) ORGANIZATION • • • • • • • • • No one individual is directly responsible for the total project (i.e., no formal authority; committee solutions). Does not provide the project-oriented emphasis necessary to accomplish the project tasks. Coordination becomes complex, and additional lead time is required for approval of decisions. Decisions normally favor the strongest functional groups. No customer focal point. Response to customer needs is slow. Difficulty in pinpointing responsibility; this is the result of little or no direct project reporting, very little project-oriented planning, and no project authority. Motivation and innovation are decreased. Ideas tend to be functionally oriented with little regard for ongoing projects. The functional managers maintain absolute control over the budget. They establish their own budgets, on approval from above, and specify requirements for additional personnel. Because the functional manager has manpower flexibility and a broad base from which to work, most projects are normally completed within cost. Both the formal and informal organizations are well established, and levels of authority and responsibility are clearly defined. Because each person reports to only one individual, communication channels are well structured. If a structure has this many advantages, then why are we looking for other structures? For each advantage, there is almost always a corresponding disadvantage (see Table 3–2). The majority of these disadvantages are related to the absence of a strong central authority or individual responsible for the total project. As a result, integration of activities that cross functional lines becomes difficult, and top-level executives must get involved with the daily routine. Conflicts occur as each functional group struggles for power. Ideas may remain functionally oriented with very little regard for ongoing projects, and the decision-making process will be slow and tedious. Because there is no customer focal point, all communications must be channeled through upper-level management. Upper-level managers then act in a customer-relations capacity and refer all complex problems down through the vertical chain of command to the functional managers. The response to the customer’s needs therefore becomes a slow and aggravating process. Projects have a tendency to fall behind schedule in the classical organizational structure. Incredibly large lead times are required. Functional managers attend to those tasks that provide better benefits to themselves and their subordinates first. With the growth of project management in the late 1960s, executives began to realize that many of the problems were the result of weaknesses in the traditional structure. William Goggin identified the problems that faced Dow Corning8: Although Dow Corning was a healthy corporation in 1967, it showed difficulties that troubled many of us in top management. These symptoms were, and still are, common ones in 8. Reprinted by permission of Harvard Business Review. From William C. Goggin, “How the Multidimensional Structure Works at Dow Corning,” Harvard Business Review, January–February 1974, p. 54. Copyright © 1973 by the Harvard Business School Publishing Corporation; all rights reserved. 94 ORGANIZATIONAL STRUCTURES U.S. business and have been described countless times in reports, audits, articles and speeches. Our symptoms took such form as: ● Executives did not have adequate financial information and control of their operations. ● ● ● ● Marketing managers, for example, did not know how much it cost to produce a product. Prices and margins were set by division managers. Cumbersome communications channels existed between key functions, especially manufacturing and marketing. In the face of stiffening competition, the corporation remained too internalized in its thinking and organizational structure. It was insufficiently oriented to the outside world. Lack of communications between divisions not only created the antithesis of a corporate team effort but also was wasteful of a precious resource—people. Long-range corporate planning was sporadic and superficial; this was leading to overstaffing, duplicated effort and inefficiency. 3.3 DEVELOPING WORK INTEGRATION POSITIONS As companies grew in size, more emphasis was placed on multiple ongoing programs with high-technology requirements. Organizational pitfalls soon appeared, especially in the integration of the flow of work. As management discovered that the critical point in any program is the interface between functional units, the new theories of “interface management” developed. Because of the interfacing problems, management began searching for innovative methods to coordinate the flow of work between functional units without modification to the existing organizational structure. This coordination was achieved through several integrating mechanisms9: ● ● ● ● Rules and procedures Planning processes Hierarchical referral Direct contact By specifying and documenting management policies and procedures, management attempted to eliminate conflicts between functional departments. Management felt that, even though many of the projects were different, the actions required by the functional personnel were repetitive and predictable. The behavior of the individuals should therefore be easily integrated into the flow of work with minimum communication between individuals or functional groups. 9. Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February 1971, pp. 29–40. Copyright © 1971 by the Board of Trustees at Indiana University. Galbraith defines a fifth mechanism, liaison departments, that will be discussed later in this section. Developing Work Integration Positions 95 Another means of reducing conflicts and minimizing the need for communication was detailed planning. Functional representation would be present at all planning, scheduling, and budget meetings. This method worked best for nonrepetitive tasks and projects. In the traditional organization, one of the most important responsibilities of upperlevel management was the resolution of conflicts through “hierarchical referral.” The continuous conflicts and struggle for power between the functional units consistently required that upper-level personnel resolve those problems resulting from situations that were either nonroutine or unpredictable and for which no policies or procedures existed. The fourth method is direct contact and interactions by the functional managers. The rules and procedures, as well as the planning process method, were designed to minimize ongoing communications between functional groups. The quantity of conflicts that executives had to resolve forced key personnel to spend a great percentage of their time as arbitrators, rather than as managers. To alleviate problems of hierarchical referral, upper-level management requested that all conflicts be resolved at the lowest possible levels. This required that functional managers meet face-to-face to resolve conflicts. In many organizations, these new methods proved ineffective, primarily because there still existed a need for a focal point for the project to ensure that all activities would be properly integrated. When the need for project managers was acknowledged, the next logical question was where in the organization to place them. Executives preferred to keep project managers low in the organization. After all, if they reported to someone high up, they would have to be paid more and would pose a continuous threat to management. The first attempt to resolve this problem was to develop project leaders or coordinators within each functional department, as shown in Figure 3–2. Section-level personnel were temporarily assigned as project leaders and would return to their former positions at project termination. This is why the term “project leader” is used rather than “project manager,” as the word “manager” implies a permanent relationship. This arrangement proved effective for coordinating and integrating work within one department, provided that the correct project leader was selected. Some employees considered this position an increase in power and status, and conflicts occurred about whether assignments should be based on experience, seniority, or capability. Furthermore, the project leaders had almost no authority, and section-level managers refused to take directions from them, fearing that the project leaders might be next in line for the department manager’s position. When the activities required efforts that crossed more than one functional boundary, conflicts arose. The project leader in one department did not have the authority to coordinate activities in any other department. Furthermore, the creation of this new position caused internal conflicts within each department. As a result, many employees refused to become dedicated to project management and were anxious to return to their “secure” jobs. Quite often, especially when cross-functional integration was required, the division manager was forced to act as the project manager. If the employee enjoyed the assignment of project leader, he would try to “stretch out” the project as long as possible. Even though we have criticized this organizational form, it does not mean that it cannot work. Any organizational form will work if the employees want it to work. As an example, a computer manufacturer has a midwestern division with three departments, as in Figure 3–2, and approximately fourteen people per department. When a project comes in, 96 ORGANIZATIONAL STRUCTURES DIVISION MANAGER DEPARTMENT X PROJECT LEADERS SECTION LEVEL FIGURE 3–2. DEPARTMENT Y PROJECT LEADERS SECTION LEVEL DEPARTMENT Z PROJECT LEADERS SECTION LEVEL Departmental project management. the division manager determines which department will handle most of the work. Let us say that the work load is 60 percent department X, 30 percent department Y, and 10 percent department Z. Since most of the effort is in department X, the project leader is selected from that department. When the project leader goes into the other two departments to get resources, he will almost always get the resources he wants. This organizational form works in this case because: ● ● The other department managers know that they may have to supply the project leader on the next activity. There are only three functional boundaries or departments involved (i.e., a small organization). The next step in the evolution of project management was the task force concept. The rationale behind the task force concept was that integration could be achieved if each functional unit placed a representative on the task force. The group could then jointly solve problems as they occurred, provided that budget limitations were still adhered to. Theoretically, decisions could now be made at the lowest possible levels, thus expediting information and reducing, or even eliminating, delay time. The task force was composed of both part-time and full-time personnel from each department involved. Daily meetings were held to review activities and discuss potential problems. Functional managers soon found that their task force employees were spending more 97 Developing Work Integration Positions time in unproductive meetings than in performing functional activities. In addition, the nature of the task force position caused many individuals to shift membership within the informal organization. Many functional managers then placed nonqualified and inexperienced individuals on task forces. The result was that the group soon became ineffective because they either did not have the information necessary to make the decisions, or lacked the authority (delegated by the functional managers) to allocate resources and assign work. Development of the task force concept was a giant step toward conflict resolution: Work was being accomplished on time, schedules were being maintained, and costs were usually within budget. But integration and coordination were still problems because there were no specified authority relationships or individuals to oversee the entire project through completion. Attempts were made to overcome this by placing various people in charge of the task force: Functional managers, division heads, and even upper-level management had opportunities to direct task forces. However, without formal project authority relationships, task force members remained loyal to their functional organizations, and when conflicts came about between the project and functional organization, the project always suffered. Although the task force concept was a step in the right direction, the disadvantages strongly outweighed the advantages. A strength of the approach was that it could be established very rapidly and with very little paperwork. Integration, however, was complicated; work flow was difficult to control; and functional support was difficult to obtain because it was almost always strictly controlled by the functional manager. In addition, task forces were found to be grossly ineffective on long-range projects. The next step in the evolution of work integration was the establishment of liaison departments, particularly in engineering divisions that perform multiple projects involving a high level of technology (see Figure 3–3). The purpose of the liaison department was to ENGINEERING DIVISION LIAISON DEPT ELECTRONICS THERMODYNAMICS STRUCTURES LEGEND FORMAL AUTHORITY FLOW INFORMAL/REPORTING AUTHORITY FLOW FIGURE 3–3. Engineering division with liaison department (The Expeditor). R&D 98 ORGANIZATIONAL STRUCTURES handle transactions between functional units within the (engineering) division. The liaison personnel received their authority through the division head. The liaison department did not actually resolve conflicts. Their prime function was to assure that all departments worked toward the same requirements and goals. Liaison departments are still in existence in many large companies and typically handle engineering changes and design problems. Unfortunately, the liaison department is simply a scaleup of the project coordinator within the department. The authority given to the liaison department extends only to the outer boundaries of the division. If a conflict arose between the manufacturing and engineering divisions, for example, it would still be referred to upper management for resolution. Today, liaison departments are synonymous with project engineering and systems engineering departments, and the individuals in these departments have the authority to span the entire organization. 3.4 LINE–STAFF ORGANIZATION (PROJECT COORDINATOR) It soon became obvious that control of a project must be given to personnel whose first loyalty is directed toward the completion of the project. Thus the project management position must not be controlled by the functional managers. Figure 3–4 shows a typical line–staff organization. Two possible situations can exist with this form of line–staff project control. In the first, the project manager serves only as the focal point for activity control, that is, a center for information. The prime responsibility of the project manager is to keep the division manager informed of the status of the project and to “harass” or attempt to “influence” managers into completing activities on time. Referring to such early project managers, Galbraith stated, “Since these men had no formal authority, they had to resort to their technical competence and their interpersonal skills in order to be effective.”10 The project manager in the first situation maintained monitoring authority only, despite the fact that both he and the functional manager reported to the same individual. Both work assignments and merit reviews were made by the functional managers. Department managers refused to take direction from the project managers because to do so would seem an admission that the project manager was next in line to be the division manager. The amount of authority given to the project manager posed serious problems. Almost all upper-level and division managers were from the classical management schools and therefore maintained serious reservations about how much authority to relinquish. Many of these managers considered it a demotion if they had to give up any of their longestablished powers. In the second situation, the project manager is given more authority; using the authority vested in him by the division manager, he can assign work to individuals in the functional organizations. The functional manager, however, still maintains the authority to 10. Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February 1971, pp. 29–40. Copyright © 1971 by the Board of Trustees at Indiana University. 99 Pure Product (Projectized) Organization DIVISION MANAGER LEGEND FORMAL AUTHORITY PROJECT MANAGER FORMAL OR INFORMAL AUTHORITY OR INFORMATION FLOW DEPARTMENT MANAGER FIGURE 3–4. DEPARTMENT MANAGER Line–staff organization (Project Coordinator). perform merit reviews, but cannot enforce both professional and organizational standards in the completion of an activity. The individual performing the work is now caught in a web of authority relationships, and additional conflicts develop because functional managers are forced to share their authority with the project manager. Although this second situation did occur during the early stages of matrix project management, it did not last because: ● ● ● Upper-level management was not ready to cope with the problems arising from shared authority. Upper-level management was reluctant to relinquish any of its power and authority to project managers. Line–staff project managers who reported to a division head did not have any authority or control over those portions of a project in other divisions; that is, the project manager in the engineering division could not direct activities in the manufacturing division. 3.5 PURE PRODUCT (PROJECTIZED) ORGANIZATION The pure product organization, as shown in Figure 3–5, develops as a division within a division. As long as there exists a continuous flow of projects, work is stable and conflicts are at a minimum. The major advantage of this organizational flow is that one individual, the program manager, maintains complete line authority over the entire project. Not only does he assign work, but he also conducts merit reviews. Because each individual reports 100 ORGANIZATIONAL STRUCTURES GENERAL MANAGER PRODUCT A MANAGER ENG. FIGURE 3–5. MANU. PRODUCT B MANAGER ENG. MANU. PRODUCT C MANAGER ENG. MANU. Pure product or projectized structure. to only one person, strong communication channels develop that result in a very rapid reaction time. In pure product organizations, long lead times became a thing of the past. Trade-off studies could be conducted as fast as time would permit without the need to look at the impact on other projects (unless, of course, identical facilities or equipment were required). Functional managers were able to maintain qualified staffs for new product development without sharing personnel with other programs and projects. The responsibilities attributed to the project manager were entirely new. First, his authority was now granted by the vice president and general manager. The program manager handled all conflicts, both those within his organization and those involving other projects. Interface management was conducted at the program manager level. Upper-level management was now able to spend more time on executive decision-making than on conflict arbitration. The major disadvantage with the pure project form is the cost of maintaining the organization. There is no chance for sharing an individual with another project in order to reduce costs. Personnel are usually attached to these projects long after they are needed because once an employee is given up, the project manager might not be able to get him back. Motivating personnel becomes a problem. At project completion, functional personnel do not “have a home” to return to. Many organizations place these individuals into an overhead labor pool from which selection can be made during new project development. People remaining in the labor pool may be laid off. As each project comes to a close, Pure Product (Projectized) Organization TABLE 3–3. • • • • • • • • • • 101 ADVANTAGES OF THE PRODUCT ORGANIZATIONAL FORM Provides complete line authority over the project (i.e., strong control through a single project authority). Participants work directly for the project manager. Unprofitable product lines are easily identified and can be eliminated. Strong communications channels. Staffs can maintain expertise on a given project without sharing key personnel. Very rapid reaction time is provided. Personnel demonstrate loyalty to the project; better morale with product identification. A focal point develops for out-of-company customer relations. Flexibility in determining time (schedule), cost, and performance trade-offs. Interface management becomes easier as unit size is decreased. Upper-level management maintains more free time for executive decision-making. people become uneasy and often strive to prove their worth to the company by overachieving, a condition that is only temporary. It is very difficult for management to convince key functional personnel that they do, in fact, have career opportunities in this type of organization. In pure functional (traditional) structures, technologies are well developed, but project schedules often fall behind. In the pure project structure, the fast reaction time keeps activities on schedule, but technology suffers because without strong functional groups, which maintain interactive technical communication, the company’s outlook for meeting the competition may be severely hampered. The engineering department for one project might not communicate with its counterpart on other projects, resulting in duplication of efforts. The last major disadvantage of this organizational form lies in the control of facilities and equipment. The most frequent conflict occurs when two projects require use of the same piece of equipment or facilities at the same time. Upper-level management must then assign priorities to these projects. This is normally accomplished by defining certain projects as strategic, tactical, or operational—the same definitions usually given to plans. Tables 3–3 and 3–4 summarize the advantages and disadvantages of this organizational form. TABLE 3–4. DISADVANTAGES OF THE PRODUCT ORGANIZATIONAL FORM • • • • • • Cost of maintaining this form in a multiproduct company would be prohibitive due to duplication of effort, facilities, and personnel; inefficient usage. A tendency to retain personnel on a project long after they are needed. Upper-level management must balance workloads as projects start up and are phased out. Technology suffers because, without strong functional groups, outlook of the future to improve company’s capabilities for new programs would be hampered (i.e., no perpetuation of technology). Control of functional (i.e., organizational) specialists requires top-level coordination. Lack of opportunities for technical interchange between projects. Lack of career continuity and opportunities for project personnel. 102 ORGANIZATIONAL STRUCTURES 3.6 MATRIX ORGANIZATIONAL FORM The matrix organizational form is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is ideally suited for companies, such as construction, that are “project-driven.” Figure 3–6 shows a typical matrix structure. Each project manager reports directly to the vice president and general manager. Since each project represents a potential profit center, the power and authority used by the project manager come directly from the general manager. The project manager has total responsibility and accountability for project success. The functional departments, on the other hand, have functional responsibility to maintain technical excellence on the project. Each functional unit is headed by a department manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for each project. Department managers must also keep their people aware of the latest technical accomplishments in the industry. Project management is a “coordinative” function, whereas matrix management is a collaborative function division of project management. In the coordinative or project organization, work is generally assigned to specific people or units who “do their own thing.” In the collaborative or matrix organization, information sharing may be mandatory, and several people may be required for the same piece of work. In a project organization, authority for decisionmaking and direction rests with the project leader, whereas in a matrix it rests with the team. Certain ground rules exist for matrix development: ● ● ● Participants must spend full time on the project; this ensures a degree of loyalty. Horizontal as well as vertical channels must exist for making commitments. There must be quick and effective methods for conflict resolution. GENERAL MANAGER ENGINEERING PROJECT MGR. Y PROJECT MGR. Z FIGURE 3–6. FUNCTIONAL RESPONSIBILITY PROJECT MGR. X Typical matrix structure. OPERATIONS FINANCIAL PROJECT RESPONSIBILITY OTHERS Matrix Organizational Form ● ● ● ● 103 There must be good communication channels and free access between managers. All managers must have input into the planning process. Both horizontally and vertically oriented managers must be willing to negotiate for resources. The horizontal line must be permitted to operate as a separate entity except for administrative purposes. Before describing the advantages and disadvantages of this structure, the organization concepts must be introduced. The basis for the matrix approach is an attempt to create synergism through shared responsibility between project and functional management. Yet this is easier said than done. No two working environments are the same, and, therefore, no two companies will have the same matrix design. The following questions must be answered before a matrix structure can be successful: ● ● ● If each functional unit is responsible for one aspect of a project, and other parts are conducted elsewhere (possibly subcontracted to other companies), how can a synergistic environment be created? Who decides which element of a project is most important? How can a functional unit (operating in a vertical structure) answer questions and achieve project goals and objectives that are compatible with other projects? The answers to these questions depend on mutual understanding between the project and functional managers. Since both individuals maintain some degree of authority, responsibility, and accountability on each project, they must continuously negotiate. Unfortunately, the program manager might only consider what is best for his project (disregarding all others), whereas the functional manager might consider his organization more important than each project. In order to get the job done, project managers need organizational status and authority. A corporate executive contends that the organization chart shown in Figure 3–6 can be modified to show that the project managers have adequate organizational authority by placing the department manager boxes at the tip of the functional responsibility arrowheads. With this approach, the project managers appear to be higher in the organization than their departmental counterparts but are actually equal in status. Executives who prefer this method must exercise caution because the line and project managers may not feel that there is still a balance of power. Problem-solving in this environment is fragmented and diffused. The project manager acts as a unifying agent for project control of resources and technology. He must maintain open channels of communication to prevent suboptimization of individual projects. In many situations, functional managers have the power to make a project manager look good, if they can be motivated to think about what is best for the project. Unfortunately, this is not always accomplished. As stated by Mantell11: There exists an inevitable tendency for hierarchically arrayed units to seek solutions and to identify problems in terms of scope of duties of particular units rather than looking 11. Leroy H. Mantell, “The Systems Approach and Good Management.” Reprinted with permission from Business Horizons, October 1972 (p. 50). Copyright © 1972 by the Board of Trustees at Indiana University. 104 ORGANIZATIONAL STRUCTURES beyond them. This phenomenon exists without regard for the competence of the executive concerned. It comes about because of authority delegation and functionalism. The project environment and functional environment cannot be separated; they must interact. The location of the project and functional unit interface is the focal point for all activities. The functional manager controls departmental resources (i.e., people). This poses a problem because, although the project manager maintains the maximum control (through the line managers) over all resources including cost and personnel, the functional manager must provide staff for the project’s requirements. It is therefore inevitable that conflicts occur between functional and project managers12: These conflicts revolve about items such as project priority, manpower costs, and the assignment of functional personnel to the project manager. Each project manager will, of course, want the best functional operators assigned to his program. In addition to these problems, the accountability for profit and loss is much more difficult in a matrix organization than in a project organization. Project managers have a tendency to blame overruns on functional managers, stating that the cost of the function was excessive. Whereas functional managers have a tendency to blame excessive costs on project managers with the argument that there were too many changes, more work required than defined initially and other such arguments. The individual placed at the interface position has two bosses: He must take direction from both the project manager and the functional manager. The merit review and hiring and firing responsibilities still rest with the department manager. Merit reviews are normally made by the functional manager after discussions with the program manager. The functional manager may not have the time to measure the progress of this individual continuously. He must rely on the word of the program manager for merit review and promotion. The interface members generally give loyalty to the person signing their merit review. This poses a problem, especially if conflicting orders are given by the functional and project managers. The simplest solution is for the individual at the interface to ask the functional and project managers to communicate with each other to resolve the problem. This type of situation poses a problem for project managers: ● ● How does a project manager motivate an individual working on a project (either part-time or full-time) so that his loyalties are with the project? How does a project manager convince an individual to perform work according to project direction and specifications when these requests may be in conflict with department policy, especially if the individual feels that his functional boss may not regard him favorably? There are many advantages to matrix structures, as shown in Table 3–5. Functional units exist primarily to support a project. Because of this, key people can be shared and 12. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2, 1971, pp. 90–107. Matrix Organizational Form 105 TABLE 3–5. ADVANTAGES OF A PURE MATRIX ORGANIZATIONAL FORM • • • • • • • • • • • • • The project manager maintains maximum project control (through the line managers) over all resources, including cost and personnel. Policies and procedures can be set up independently for each project, provided that they do not contradict company policies and procedures. The project manager has the authority to commit company resources, provided that scheduling does not cause conflicts with other projects. Rapid responses are possible to changes, conflict resolution, and project needs (as technology or schedule). The functional organizations exist primarily as support for the project. Each person has a “home” after project completion. People are susceptible to motivation and end-item identification. Each person can be shown a career path. Because key people can be shared, the program cost is minimized. People can work on a variety of problems; that is, better people control is possible. A strong technical base can be developed, and much more time can be devoted to complex problemsolving. Knowledge is available for all projects on an equal basis. Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved. There is a better balance among time, cost, and performance. Rapid development of specialists and generalists occurs. Authority and responsibility are shared. Stress is distributed among the team (and the functional managers). costs can be minimized. People can be assigned to a variety of challenging problems. Each person, therefore, has a “home” after project completion and a career path. People in these organizations are especially responsive to motivation and end-item identification. Functional managers find it easy to develop and maintain a strong technical base and can, therefore, spend more time on complex problem-solving. Knowledge can be shared for all projects. The matrix structure can provide a rapid response to changes, conflicts, and other project needs. Conflicts are normally minimal, but those requiring resolution are easily resolved using hierarchical referral. This rapid response is a result of the project manager’s authority to commit company resources, provided that scheduling conflicts with other projects can be eliminated. Furthermore, the project manager has the authority independently to establish his own project policies and procedures, provided that they do not conflict with company policies. This can do away with red tape and permit a better balance among time, cost, and performance. The matrix structure provides us with the best of two worlds: the traditional structure and the matrix structure. The advantages of the matrix structure eliminate almost all of the disadvantages of the traditional structure. The word “matrix” often brings fear to the hearts of executives because it implies radical change, or at least they think that it does. If we take a close look at Figure 3–6, we can see that the traditional structure is still there. The matrix is simply horizontal lines superimposed over the traditional structure. The horizontal lines will come and go as projects start up and terminate, but the traditional structure will remain. Matrix structures are not without their disadvantages, as shown in Table 3–6. The first three elements are due to the horizontal and vertical work flow requirements of a matrix. Actually the flow may even be multidimensional if the project manager has to report to 106 ORGANIZATIONAL STRUCTURES TABLE 3–6. DISADVANTAGES OF A PURE MATRIX ORGANIZATIONAL FORM • • • • • • • • • • • • • • • • • Multidimensional information flow. Multidimensional work flow. Dual reporting. Continuously changing priorities. Management goals different from project goals. Potential for continuous conflict and conflict resolution. Difficulty in monitoring and control. Company-wide, the organizational structure is not cost-effective because more people than necessary are required, primarily administrative. Each project organization operates independently. Care must be taken that duplication of efforts does not occur. More effort and time are needed initially to define policies and procedures, compared to traditional form. Functional managers may be biased according to their own set of priorities. Balance of power between functional and project organizations must be watched. Balance of time, cost, and performance must be monitored. Although rapid response time is possible for individual problem resolution, the reaction time can become quite slow. Employees and managers are more susceptible to role ambiguity than in traditional form. Conflicts and their resolution may be a continuous process (possibly requiring support of an organizational development specialist). People do not feel that they have any control over their own destiny when continuously reporting to multiple managers. customers or corporate or other personnel in addition to his superior and the functional line managers. Most companies believe that if they have enough resources to staff all of the projects that come along, then the company is “overstaffed.” As a result of this philosophy, priorities may change continuously, perhaps even daily. Management’s goals for a project may be drastically different from the project’s goals, especially if executive involvement is lacking during the definition of a project’s requirements in the planning phase. In a matrix, conflicts and their resolution may be a continuous process, especially if priorities change continuously. Regardless of how mature an organization becomes, there will always exist difficulty in monitoring and control because of the complex, multidirectional work flow. Another disadvantage of the matrix organization is that more administrative personnel are needed to develop policies and procedures, and therefore both direct and indirect administrative costs will increase. In addition, it is impossible to manage projects with a matrix if there are steep horizontal or vertical pyramids for supervision and reporting, because each manager in the pyramid will want to reduce the authority of the managers operating within the matrix. Each project organization operates independently. Duplication of effort can easily occur; for example, two projects might be developing the same cost accounting procedure, or functional personnel may be doing similar R&D efforts on different projects. Both vertical and horizontal communication is a must in a project matrix organization. One of the advantages of the matrix is a rapid response time for problem resolution. This rapid response generally applies to slow-moving projects where problems occur within each functional unit. On fast-moving projects, the reaction time can become quite slow, especially if the problem spans more than one functional unit. This slow reaction Matrix Organizational Form 107 time exists because the functional employees assigned to the project do not have the authority to make decisions, allocate functional resources, or change schedules. Only the line managers have this authority. Therefore, in times of crisis, functional managers must be actively brought into the “big picture” and invited to team meetings. Middleton has listed four additional undesirable results of matrix organizations, results that can affect company capabilities13: ● ● ● ● Project priorities and competition for talent may interrupt the stability of the organization and interfere with its long-range interests by upsetting the traditional business of functional organizations. Long-range plans may suffer as the company gets more involved in meeting schedules and fulfilling the requirements of temporary projects. Shifting people from project to project may disrupt the training of employees and specialists, thereby hindering the growth and development within their fields of specialization. Lessons learned on one project may not be communicated to other projects. Davis and Lawrence have identified nine additional matrix pathologies14: ● ● ● ● ● ● ● ● ● Power struggles: The horizontal versus vertical hierarchy. Anarchy: Formation of organizational islands during periods of stress. Groupitis: Confusing the matrix as being synonymous with group decision making. Collapse during economic crunch: Flourishing during periods of growth and collapsing during lean times. Excessive overhead: How much matrix supervision is actually necessary? Decision strangulation: Too many people involved in decision-making. Sinking: Pushing the matrix down into the depths of the organization. Layering: A matrix within a matrix. Navel gazing: Becoming overly involved in the internal relationships of the organization. The matrix structure therefore becomes a compromise in an attempt to obtain the best of two worlds. In pure product management, technology suffered because there wasn’t a single group for planning and integration. In the pure functional organization, time and schedule were sacrificed. Matrix project management is an attempt to obtain maximum technology and performance in a cost-effective manner and within time and schedule constraints. We should note that with proper executive-level planning and control, all of the disadvantages can be eliminated. This is the only organizational form where such control is possible. But companies must resist creating more positions in executive management than are 13. Reprinted by permission of Harvard Business Review. From C. J. Middleton, “How to Set Up a Project Organization,” Harvard Business Review, March–April 1967. Copyright © 1967 by the Harvard Business School Publishing Corporation; all rights reserved. 14. Stanley M. Davis and Paul R. Lawrence, Matrix (adapted from pp. 129–144), © 1977. Adapted by permission of Pearson Education, Inc., Upper Saddle River, NJ. 108 ORGANIZATIONAL STRUCTURES actually necessary as this will drive up overhead rates. However, there is a point where the matrix will become mature and fewer people will be required at the top levels of management. Previously we identified the necessity for the project manager to be able to establish his own policies, procedures, rules, and guidelines. Obviously, with personnel reporting in two directions and to multiple managers, conflicts over administration can easily occur. According to Shannon15: When operating under a matrix management approach, it is obviously extremely important that the authority and responsibility 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 direction, and the authority of the functional executive be defined in terms of operational direction. Most practitioners consider the matrix to be a two-dimensional system where each project represents a potential profit center and each functional department represents a cost center. (This interpretation can also create conflict because functional departments may feel that they no longer have an input into corporate profits.) For large corporations with multiple divisions, the matrix is no longer two-dimensional, but multidimensional. William C. Goggin has described geographical area and space and time as the third and fourth dimensions of the Dow Corning matrix16: Geographical areas . . . business development varied widely from area to area, and the profitcenter and cost-center dimensions could not be carried out everywhere in the same manner. . . . Dow Corning area organizations are patterned after our major U.S. organizations. Although somewhat autonomous in their operation, they subscribe to the overall corporate objectives, operating guidelines, and planning criteria. During the annual planning cycle, for example, there is a mutual exchange of sales, expense, and profit projections between the functional and business managers headquartered in the United States and the area managers around the world. Space and time. . . . A fourth dimension of the organization denotes fluidity and movement through time. . . . The multidimensional organization is far from rigid; it is constantly changing. Unlike centralized or decentralized systems that are too often rooted deep in the past, the multidimensional organization is geared toward the future: Long-term planning is an inherent part of its operation. Goggin then went on to describe the advantages that Dow Corning expected to gain from the multidimensional organization: ● Higher profit generation even in an industry (silicones) price-squeezed by competition. (Much of our favorable profit picture seems due to a better overall understanding and practice of expense controls through the company.) 15. Robert Shannon, “Matrix Management Structures,” Industrial Engineering, March 1972, pp. 27–28. Published and copyright © 1972 by the Institute of Industrial Engineers, 25 Technology Park, Norcross, Georgia 30092 (770-449-0461). Reprinted with permission. 16. Reprinted by permission of Harvard Business Review. From William C. Goggin, “How the Multidimensional Structure Works at Dow Corning,” Harvard Business Review, January–February 1974, pp. 56–57. Copyright © 1973 by the Harvard Business School Publishing Corporation; all rights reserved. Matrix Organizational Form ● ● ● ● ● ● ● ● ● 109 Increased competitive ability based on technological innovation and product quality without a sacrifice in profitability. Sound, fast decision-making at all levels in the organization, facilitated by stratified but open channels of communications, and by a totally participative working environment. A healthy and effective balance of authority among the businesses, functions, and areas. Progress in developing short- and long-range planning with the support of all employees. Resource allocations that are proportional to expected results. More stimulating and effective on-the-job training. Accountability that is more closely related to responsibility and authority. Results that are visible and measurable. More top-management time for long-range planning and less need to become involved in day-to-day operations. Obviously, the matrix structure is the most complex of all organizational forms. Grinnell and Apple define four situations where it is most practical to consider a matrix17: ● ● ● ● When complex, short-run products are the organization’s primary output. When a complicated design calls for both innovation and timely completion. When several kinds of sophisticated skills are needed in designing, building, and testing the products—skills then need constant updating and development. When a rapidly changing marketplace calls for significant changes in products, perhaps between the time they are conceived and delivered. Matrix implementation requires: ● ● ● ● ● Training in matrix operations Training in how to maintain open communications Training in problem solving Compatible reward systems Role definitions An excellent report on when the matrix will and will not work was made by Wintermantel18: ● Situational factors conducive to successful matrix applications: Similar products produced in common plants but serving quite different markets. ● 17. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,” Machine Design, January 1975, pp. 84–87. 18. Richard E. Wintermantel, “Application of the Matrix Organization Mode in Industry,” Proceedings of the Tenth Project Management Institute Seminar Symposium, 1979, pp. 493–497. Original data source is General Electric Organization Planning Bulletin, No. 6, November 3, 1976. 110 ORGANIZATIONAL STRUCTURES ● ● Different products produced in different plants but serving the same market or customer and utilizing a common distribution channel. ● Short-cycle contract businesses where each contract is specifically defined and essentially unrelated to other contracts. ● Complex, rapidly changing business environment which required close multifunctional integration of expertise in response to change. ● Intensive customer focus businesses where customer responsiveness and solution of customer problems is considered critical (and where the assigned matrix manager represents a focal point within the component for the customer). ● A large number of products/projects/programs which are scattered over many points on the maturity curve and where limited resources must be selectively allocated to provide maximum leverage. ● Strong requirement for getting into and out of businesses on a timely and low cost basis. May involve fast buildup and short lead times. Frequent situations where you may want to test entrance into a business arena without massive commitment of resources and with ease of exit assured. ● High technology businesses where scarce state-of-the-art technical talent must be spread over many projects in the proposal/advanced design stage, but where less experienced or highly talented personnel are adequate for detailed design and follow-on work. ● Situations where products are unique and discrete but where technology, facilities, or processes have high commonality, are interchangeable, or are interdependent. Situational factors tending toward nonviable matrix applications: ● Single product line or similar products produced in common plants and serving the same market. ● Multiple products produced in several dedicated plants serving different customers and/or utilizing different distribution channels. ● Stable business environment where changes tend to be glacial and relatively predictable. ● Long, high volume runs of a limited number of products utilizing mature technology and processes. ● Little commonality or interdependence in facilities, technology, or processes. ● Situations where only one profit center can be defined and/or small businesses where critical mass considerations are unimportant. ● Businesses following a harvest strategy wherein market share is being consciously relinquished in order to maintain high prices and generate maximum positive cash flow. ● Businesses following a heavy cost take-out strategy where achieving minimum costs is critical. ● Businesses where there is unusual need for rapid decisions, frequently on a sole-source basis, and wherein time is not usually available for integration, negotiation and exploration of a range of action alternatives. ● Heavy geographic dispersion wherein time/distance factors make close interpersonal integration on a face-to-face recurrent basis quite difficult. Modification of Matrix Structures 111 3.7 MODIFICATION OF MATRIX STRUCTURES The matrix can take many forms, but there are basically three common varieties. Each type represents a different degree of authority attributed to the program manager and indirectly identifies the relative size of the company. As an example, in the matrix of Figure 3–6, all program managers report directly to the general manager. This type of arrangement works best for small companies that have few projects and assumes that the general manager has sufficient time to coordinate activities between his project managers. In this type of arrangement, all conflicts between projects are referred to the general manager for resolution. As companies grow in size and the number of projects, the general manager will find it increasingly difficult to act as the focal point for all projects. A new position must be created, that of director of programs, or manager of programs or projects, who is responsible for all program management. See Figure 3–7. Beck has elaborated on the basic role of this new position, the manager of project managers (M.P.M.)19: One difference in the roles of the M.P.M. and the project manager is that the M.P.M. must place a great deal more emphasis on the overview of a project than on the nuts and bolts, tools, networks and the details of managing the project. The M.P.M. must see how the project fits into the overall organizational plan and how projects interrelate. His perspective is a little different from the project manager who is looking at the project on its own merits rather than how it fits into the overall organization. The M.P.M. is a project manager, a people manager, a change manager and a systems manager. In general, one role cannot be considered more important than the other. The M.P.M. has responsibilities for managing the projects, directing and leading people and the project management effort, and planning for change in the organization. The Manager of Project Managers is a liaison between the Project Management Department and upper management as well as functional department management and acts as a systems manager when serving as a liaison. Executives contend that an effective span of control is five to seven people. Does this apply to the director of project management as well? Consider a company that has fifteen projects going on at once. There are three projects over $5 million, seven are between $1 and $3 million, and five projects are under $700,000. Each project has a full-time project manager. Can all fifteen project managers report to the same person? The company solved this problem by creating a deputy director of project management. All projects over $1 million reported to the director, and all projects under $1 million went to the deputy director. The director’s rationale soon fell by the wayside when he found that the more severe problems that were occupying his time were occurring on projects with a smaller dollar volume, where flexibility in time, cost, and performance was nonexistent and trade-offs were almost impossible. If the project manager is actually a general manager, then the director of project management should be able to supervise effectively more than seven project 19. Dale R. Beck, “The Role of the Manager of Project Managers,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. 112 ORGANIZATIONAL STRUCTURES GENERAL MANAGER DIRECTOR: PROJECT MGMT DIRECTOR: ENGINEERING DIRECTOR: OPERATIONS OTHERS PROJECT MGR. X PROJECT MGR. Y PROJECT MGR. Z FIGURE 3–7. Development of a director of project management. managers. The desired span of control, of course, will vary from company to company and must take into account: ● ● ● ● ● The demands imposed on the organization by task complexity Available technology The external environment The needs of the organizational membership The types of customers and/or products As companies expand, it is inevitable that new and more complex conflicts arise. The control of the engineering functions poses such a problem: Should the project manager have ultimate responsibility for the engineering functions of a project, or should there be a deputy project manager who reports to the director of engineering and controls all technical activity? Although there are pros and cons for both arrangements, the problem resolved itself in the company mentioned above when projects grew so large that the project manager became unable to handle both the project management and project engineering functions. Then, as 113 Modification of Matrix Structures GENERAL MANAGER DIRECTOR: PROJECT MGT. DIRECTOR: ENGINEERING PROJECT ENGINEERING MANAGER X X MANAGER Y Y MANAGER Z Z DIRECTOR: OPERATIONS OTHERS OTHER UNITS PROJECT OFFICE CONTROL FIGURE 3–8. Placing project engineering in the project office. shown in Figure 3–8, a chief project engineer was assigned to each project as deputy project manager, but remained functionally assigned to the director of engineering. The project manager was now responsible for time and cost considerations, whereas the project engineer was concerned with technical performance. The project engineer can be either “solid” vertically and “dotted” horizontally, or vice versa. There are also situations where the project engineer may be “solid” in both directions. The decision usually rests with the director of engineering. Of course, in a project where the project engineer would be needed on a part-time basis only, he would be solid vertically and dotted horizontally. Engineering directors usually demand that the project engineer be solid vertically in order to give technical direction. As one director of engineering stated, “Only engineers that report to me will have the authority to give technical direction to other engineers. After all, how else can I be responsible for the technical integrity of the product when direction comes from outside my organization?” This subdivision of functions is necessary in order to control large projects adequately. However, for small projects, say $100,000 or less, it is quite common on R&D projects for an engineer to serve as the project manager as well as the project engineer. Here, the project manager must have technical expertise, not merely understanding. Furthermore, this individual can still be attached to a functional engineering support unit other than project engineering. As an example, a mechanical engineering department receives a government contract for $75,000 to perform tests on a new material. The proposal is written by an engineer attached to the department. When the contract is awarded, this individual, although not in the project engineering department, can fulfill the role of project manager and project engineer while still reporting to the manager of the mechanical engineering department. This 114 ORGANIZATIONAL STRUCTURES TECHNICAL SKILLS HIGH LOW HUMAN SKILLS JUNIOR CLERK FIGURE 3–9. SENIOR SUPERVISOR MIDDLE MANAGER SENIOR PRESIDENT MANAGER OFFICER CLERK Philosophy of management. arrangement works best (and is cost-effective) for short-duration projects that cross a minimum number of functional units. Finally, we must discuss the characteristics of a project engineer. In Figure 3–9, most people would place the project manager to the right of center with stronger human skills than technical skills, and the project engineer to the left of center with stronger technical skills than human skills. How far from the center point will the project manager and project engineer be? Today, many companies are merging project management and project engineering into one position. This can be seen in Table 3–7. The project manager and project TABLE 3–7. PROJECT MANAGEMENT COMPARED TO PROJECT ENGINEERING Project Management • Total project planning • Cost control • Schedule control • System specifications • Logistics support • • • • • • • • Contract control Report preparation and distribution Procurement Identification of reliability and maintainability requirements Staffing Priority scheduling Management information systems Project Engineering Total project planning Cost control Schedule control System specifications Logistics support • • • • • • • • Configuration control Fabrication, testing, and production technical leadership support 115 Matrix Layering engineer have similar functions above the line but different ones below the line.20 The main reason for separating project management from project engineering is so that the project engineer will remain “solid” to the director of engineering in order to have the full authority to give technical direction to engineering. 3.8 CENTER FOR PROJECT MANAGEMENT EXPERTISE In project-driven companies, the creation of a project management division is readily accepted as a necessity to conduct business. Organizational restructuring can quite often occur based on environmental changes and customer needs. In non–project-driven organizations, employees are less tolerant of organizational change. Power, authority, and turf become important. The implementation of a separate division for project management is extremely difficult. Resistance can become so strong that the entire project management process can suffer. Recently, non–project-driven companies have created centers for project management expertise. These centers are not necessarily formal line organizations, but more informal committees whose membership may come from each functional unit of the company. The assignment to the center for expertise can be part-time or full-time; it may be only for six months to a year; and it may or may not require the individual to manage projects. Usually, the center for expertise has as its charter: ● ● ● ● To develop and update a methodology for project management. The methodology usually advocates informal project management. To act as a facilitator or trainer in conducting project management training programs. To provide project management assistance to any employee who is currently managing projects and requires support in planning, scheduling, and controlling projects. To develop or maintain files on “lessons learned” and to see that this information is made available to all project managers. Since these centers pose no threat to the power and authority of line managers, support is usually easy to obtain. 3.9 MATRIX LAYERING Matrix layering can be defined as the creation of one matrix within a second matrix. For example, a company can have a total company matrix, and each division or department (i.e., project engineering) can have its own internalized matrix. In the situation of a matrix within a matrix, all matrices are formal operations. Matrix layering can also be a mix of formal and informal organizations. The formal matrix exists for work flow, but there can also exist an informal matrix for information flow. There are also authority matrices, leadership matrices, reporting matrices, and informal technical di20. Procurement, reliability, and maintainability may fall under the responsibility of the project engineer in some companies. 116 ORGANIZATIONAL STRUCTURES [Image not available in this electronic edition.] The design matrix. Source: Marc S. Caspe, “An Overview of Project Management and Project Management Services,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. FIGURE 3–10. rection matrices. Figures 3–10 and 3–11 identify the design matrix and construction matrix that can exist within the total company matrix. Another example of layering would be the multidimensional matrix, shown in Figure 3–12, where each slice represents either time, distance, or geographic area. For example, a New York bank utilizes a multinational matrix to control operations in foreign countries. In this case, each foreign country would represent a different slice of the total matrix. [Image not available in this electronic edition.] FIGURE 3–11. The construction matrix. Source: Marc S. Caspe, “An Overview of Project Management and Project Management Services,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. 117 Selecting the Organizational Form FIGURE 3–12. or ace sp a ist ,d e Tim e, nc The multidimensional matrix. 3.10 SELECTING THE ORGANIZATIONAL FORM Project management has matured as an outgrowth of the need to develop and produce complex and/or large projects in the shortest possible time, within anticipated cost, with required reliability and performance, and (when applicable) to realize a profit. Granted that organizations have become so complex that traditional organizational structures and relationships no longer allow for effective management, how can executives determine which organizational form is best, especially since some projects last for only a few weeks or months while others may take years? To answer this question, we must first determine whether the necessary characteristics exist to warrant a project management organizational form. Generally speaking, the project management approach can be effectively applied to a onetime undertaking that is21: ● ● ● ● Definable in terms of a specific goal Infrequent, unique, or unfamiliar to the present organization Complex with respect to interdependence of detailed tasks Critical to the company Once a group of tasks is selected and considered to be a project, the next step is to define the kinds of projects, described in Section 2.5. These include individual, staff, special, and matrix or aggregate projects. Unfortunately, many companies do not have a clear definition of what a project is. As a result, large project teams are often constructed for small projects when they could be 21. John M. Stewart, “Making Project Management Work.” Reprinted with permission from Business Horizons, Fall 1965 (p. 54). Copyright © 1964 by the Board of Trustees at Indiana University. 118 ORGANIZATIONAL STRUCTURES handled more quickly and effectively by some other structural form. All structural forms have their advantages and disadvantages, but the project management approach appears to be the best possible alternative. The basic factors that influence the selection of a project organizational form are: ● ● ● ● ● ● ● Project size Project length Experience with project management organization Philosophy and visibility of upper-level management Project location Available resources Unique aspects of the project This last item requires further comment. Project management (especially with a matrix) usually works best for the control of human resources and thus may be more applicable to labor-intensive projects rather than capital-intensive projects. Labor-intensive organizations have formal project management, whereas capital-intensive organizations may use informal project management. Figure 3–13 shows how matrix management was implemented by an electric equipment manufacturer. The company decided to use fragmented matrix management for facility development projects. After observing the success of the fragmented matrix, the executives expanded matrix operations to include interim and ongoing capital equipment projects. The first three levels were easy to implement. The fourth level, ongoing business, was more difficult to convert to matrix because of functional management resistance and the fear of losing authority. Four fundamental parameters must be analyzed when considering implementation of a project organizational form: ● ● ● ● Integrating devices Authority structure Influence distribution Information system Facilities Development Interim Capital Equipment Projects Ongoing Capital Equipment Projects Ongoing Business FIGURE 3–13. Matrix development in manufacturing. Selecting the Organizational Form 119 Project management is a means of integrating all company efforts, especially research and development, by selecting an appropriate organizational form. Two questions arise when we think of designing the organization to facilitate the work of the integrators22: ● ● Is it better to establish a formal integration department, or simply to set up integrating positions independent of one another? If individual integrating positions are set up, how should they be related to the larger structure? Informal integration works best if, and only if, effective collaboration can be achieved between conflicting units. Without any clearly defined authority, the role of the integrator is simply to act as an exchange medium across the interface of two functional units. As the size of the organization increases, formal integration positions must exist, especially in situations where intense conflict can occur (e.g., research and development). Not all organizations need a pure matrix structure to achieve this integration. Many problems can be solved simply through the chain of command, depending on the size of the organization and the nature of the project. The organization needed to achieve project control can vary in size from one person to several thousand people. The organizational structure needed for effective project control is governed by the desires of top management and project circumstances. Unfortunately, integration and specialization appear to be diametrically opposed. As described by Davis23: When organization is considered synonymous with structure, the dual needs of specialization and coordination are seen as inversely related, as opposite ends of a single variable, as the horns of a dilemma. Most managers speak of this dilemma in terms of the centralization–decentralization variable. Formulated in this manner, greater specialization leads to more difficulty in coordinating the differentiated units. This is why the (de)centralization pendulum is always swinging, and no ideal point can be found at which it can come to rest. The division of labor in a hierarchical pyramid means that specialization must be defined either by function, by product, or by area. Firms must select one of these dimensions as primary and then subdivide the other two into subordinate units further down the pyramid. The appropriate choice for primary, secondary and tertiary dimensions is based largely upon the strategic needs of the enterprise. Top management must decide on the authority structure that will control the integration mechanism. The authority structure can range from pure functional authority (traditional management), to product authority (product management), and finally to dual authority (matrix management). This range is shown in Figure 3–14. From a management 22. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2, 1971, pp. 90–107. 23. Reprinted from Stanley M. Davis, “Two Models of Organization: Unity of Command versus Balance of Power,” MIT Sloan Management Review, Fall 1974, p. 30 by permission of the publisher. Copyright © 1974 by Massachusetts Institute of Technology. All rights reserved. 120 ORGANIZATIONAL STRUCTURES PRODUCT INFLUENCE IN DECISION-MAKING RELATIVE INFLUENCE FUNCTIONAL INFLUENCE IN DECISION-MAKING 1 FUNCTIONAL ORGANIZATION A. B. FUNCTIONAL AUTHORITY STRUCTURE PRODUCT TASK FORCES PRODUCT MANAGERS PRODUCT DEPARTMENTS FUNCTIONAL REPORTING SYSTEM 3 DUAL AUTHORITY PRODUCT TEAMS C. 2 MATRIX ORGANIZATION PRODUCT ORGANIZATION PRODUCT AUTHORITY STRUCTURE FUNCTIONAL TASK FORCES FUNCTIONAL TEAMS FUNCTIONAL MANAGERS FUNCTIONAL DEPARTMENTS DUAL INFORMATION AND REPORTING SYSTEM PRODUCT REPORTING SYSTEM FIGURE 3–14. The range of alternatives. Source: Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February 1971 (p. 37). Copyright © 1971 by the Board of Trustees at Indiana University. point of view, organizational forms are often selected based on how much authority top management wishes to delegate or surrender. Integration of activities across functional boundaries can also be accomplished by influence. Influence includes such factors as participation in budget planning and approval, design changes, location and size of offices, salaries, and so on. Influence can also cut administrative red tape and develop a much more unified informal organization. Matrix structures are characterized as strong or weak based on the relative influence that the project manager possesses over the assigned functional resources. When the project manager has more “relative influence” over the performance of the assigned resources than does the line manager, the matrix structure is a strong matrix. In this case, the project manager usually has the knowledge to provide technical direction, assign responsibilities, and may even have a strong input into the performance evaluation of the assigned personnel. If the balance of influence tilts in favor of the line manager, then the matrix is referred to as a weak matrix. Information systems also play an important role. Previously we stated that one of the advantages of several project management structures is the ability to make both rapid and timely decisions with almost immediate response to environmental changes. Information systems are designed to get the right information to the right person at the right time in a cost-effective manner. Organizational functions must facilitate the flow of information through the management network. Selecting the Organizational Form 121 Galbraith has described additional factors that can influence organizational selection. These factors are24: ● ● ● ● ● ● Diversity of product lines Rate of change of the product lines Interdependencies among subunits Level of technology Presence of economies of scale Organizational size A diversity of project lines requires both top-level and functional managers to maintain knowledge in all areas. Diversity makes it more difficult for managers to make realistic estimates concerning resource allocations and the control of time, cost, schedules, and technology. The systems approach to management requires sufficient information and alternatives to be available so that effective trade-offs can be established. For diversity in a high-technology environment, the organizational choice might, in fact, be a trade-off between the flow of work and the flow of information. Diversity tends toward strong product authority and control. Many functional organizations consider themselves companies within a company and pride themselves on their independence. This attitude poses a severe problem in trying to develop a synergistic atmosphere. Successful project management requires that functional units recognize the interdependence that must exist in order for technology to be shared and schedule dates to be met. Interdependency is also required in order to develop strong communication channels and coordination. The use of new technologies poses a serious problem in that technical expertise must be established in all specialties, including engineering, production, material control, and safety. Maintaining technical expertise works best in strong functional disciplines, provided the information is not purchased outside the organization. The main problem, however, is how to communicate this expertise across functional lines. Independent R&D units can be established, as opposed to integrating R&D into each functional department’s routine efforts. Organizational control requirements are much more difficult in high-technology industries with ongoing research and development than with pure production groups. Economies of scale and size can also affect organizational selection. The economies of scale are most often controlled by the amount of physical resources that a company has available. For example, a company with limited facilities and resources might find it impossible to compete with other companies on production or competitive bidding for larger dollar-volume products. Such a company must rely heavily on maintaining multiple projects (or products), each of low cost or volume, whereas a larger organization may need only three or four projects large enough to sustain the organization. The larger the economies of scale, the more the organization tends to favor pure functional management. The size of the organization is important in that it can limit the amount of technical expertise in the economies of scale. While size may have little effect on the organizational structure, it does have a severe impact on the economies of scale. Small companies, for 24. Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February 1971, pp. 29–40. Copyright © 1971 by the Board of Trustees at Indiana University. 122 ORGANIZATIONAL STRUCTURES example, cannot maintain large specialist staffs and, therefore, incur a larger cost for lost specialization and lost economies of scale. The four factors described above for organizational form selections together with the six alternatives of Galbraith can be regarded as universal. Beyond these universal factors, we must look at the company in terms of its product, business base, and personnel. Goodman has defined a set of subfactors related to R&D groups25: ● ● ● ● ● ● ● ● ● ● ● Clear location of responsibility Ease and accuracy of communication Effective cost control Ability to provide good technical supervision Flexibility of staffing Importance to the company Quick reaction capability to sudden changes in the project Complexity of the project Size of the project with relation to other work in-house Form desired by customer Ability to provide a clear path for individual promotion Goodman asked general managers and project managers to select from the above list and rank the factors from most important to least important in designing an organization. With one exception—flexibility of staffing—the response from both groups correlated to a coefficient of 0.811. Clear location of responsibility was seen as the most important factor, and a path for promotion the least important. Middleton conducted a mail survey of aerospace firms in an attempt to determine how well the companies using project management met their objectives. Forty-seven responses were received. Tables 3–8 and 3–9 identify the results. Middleton stated, “In evaluating the results of the survey, it appears that a company taking the project organization approach can be reasonably certain that it will improve controls and customer (out-of-company) relations, but internal operations will be more complex.”26 The way in which companies operate their project organization is bound to affect the organization, both during the operation of the project and after the project has been completed and personnel have been disbanded. The overall effects on the company must be looked at from a personnel and cost control standpoint. This will be accomplished, in depth, in later chapters. Although project management is growing, the creation of a project organization does not necessarily ensure that an assigned objective will be accomplished successfully. Furthermore, weaknesses can develop in the areas of maintaining capability and structural changes. Project management structures have been known to go out of control27: 25. Richard A. Goodman, “Organizational Preference in Research and Development,” Human Relations, Vol. 3, No. 4, 1970, pp. 279–298. 26. Reprinted with permission of Harvard Business Review. From C. J. Middleton, “How to Set Up a Project Organization,” Harvard Business Review, March–April 1967, pp. 73–82. Copyright © 1967 by the Harvard Business School Publishing Corporation; all rights reserved. 27. Adapted from L. E. Greiner and V. E. Schein, “The Paradox of Managing a Project-Oriented Matrix: Establishing Coherence within Chaos,” MIT Sloan Management Review, Winter 1981, p. 17, by permission of the publisher. Copyright © 1981 by Massachusetts Institute of Technology. All rights reserved. 123 Selecting the Organizational Form TABLE 3–8. MAJOR COMPANY ADVANTAGES OF PROJECT MANAGEMENT Advantages • • • • • • • Percent of Respondents Better control of projects Better customer relations Shorter product development time Lower program costs Improved quality and reliability Higher profit margins Better control over program security 92% 80% 40% 30% 26% 24% 13% Other Benefits • • • • Better project visibility and focus on results Improved coordination among company divisions doing work on the project Higher morale and better mission orientation for employees working on the project Accelerated development of managers due to breadth of project responsibilities Source: Reprinted by permission of Harvard Business Review. An exhibit from “How to Set Up a Project Organization,” by C. J. Middleton, March–April, 1967 (pp. 73–82). Copyright © 1967 by the Harvard Business School Publishing Corporation; all rights reserved. When a matrix appears to be going out of control, executives revert to classical management. This results in: ● ● ● ● Reduced authority for the project manager All project decision-making performed at executive levels Increase in executive meddling in projects Creation of endless manuals for job descriptions This can sometimes be prevented by frequently asking for authority/responsibility clarification and by the use of linear responsibility charts. TABLE 3–9. MAJOR COMPANY DISADVANTAGES OF PROJECT MANAGEMENT Disadvantages • • • • • • More complex internal operations Inconsistency in application of company policy Lower utilization of personnel Higher program costs More difficult to manage Lower profit margins Percent of Respondents 51% 32% 13% 13% 13% 2% Other Disadvantages • • • Tendency for functional groups to neglect their job and let the project organization do everything Too much shifting of personnel from project to project Duplication of functional skills in project organization Source: Reprinted by permission of Harvard Business Review. An exhibit from “How to Set Up a Project Organization,” by C. J. Middleton, March–April, 1967 (pp. 73–82). Copyright © 1967 by the Harvard Business School Publishing Corporation; all rights reserved. 124 ORGANIZATIONAL STRUCTURES An almost predictable result of using the project management approach is the increase in management positions. Killian describes the results of two surveys28: One company compared its organization and management structure as it existed before it began forming project units with the structure that existed afterward. The number of departments had increased from 65 to 106, while total employment remained practically the same. The number of employees for every supervisor had dropped from 13.4 to 12.8. The company concluded that a major cause of this change was the project groups [see footnote 26 for reference article]. Another company uncovered proof of its conclusion when it counted the number of second-level and higher management positions. It found that it had 11 more vice presidents and directors, 35 more managers, and 56 more second-level supervisors. Although the company attributed part of this growth to an upgrading of titles, the effect of the project organization was the creation of 60 more management positions. Although the project organization is a specialized, task-oriented entity, it seldom, if ever, exists apart from the traditional structure of the organization.29 All project management structures overlap the traditional structure. Furthermore, companies can have more than one project organizational form in existence at one time. A major steel product, for example, has a matrix structure for R&D and a product structure elsewhere. Accepting a project management structure is a giant step from which there may be no return. The company may have to create more management positions without changing the total employment levels. In addition, incorporation of a project organization is almost always accompanied by the upgrading of jobs. In any event, management must realize that whichever project management structure is selected, a dynamic state of equilibrium will be necessary. 3.11 STRUCTURING THE SMALL COMPANY Small and medium companies generally prefer to have the project manager report fairly high up in the chain of command, even though the project manager may be working on a relatively low-priority project. Project managers are usually viewed as less of a threat in small organizations than in the larger ones, thus creating less of a problem if they report high up. Organizing the small company for projects involves two major questions: ● ● Where should the project manager be placed within the organization? Are the majority of the projects internal or external to the organization? 28. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2, 1971, pp. 90–107. 29. Allen R. Janger, “Anatomy of the Project Organization,” Business Management Record, November 1963, pp. 12–18. 125 Structuring the Small Company These two questions are implicitly related. For either large, complex projects or those involving outside customers, project managers generally report to a high level in the organization. For small or internal projects, the project manager reports to a middle- or lowerlevel manager. Small and medium companies have been very successful in managing internal projects using departmental project management (see Figure 3–2), especially when only a few functional groups must interface with one another. Quite often, line managers are permitted to wear multiple hats and also act as project managers, thereby reducing the need for hiring additional project managers. Customers external to the organization are usually favorably impressed if a small company identifies a project manager who is dedicated and committed to their project, even if only on a part-time basis. Thus outside customers, particularly through a competitive bidding environment, respond favorably to a matrix structure, even if the matrix structure is simply eyewash for the customer. For example, consider the matrix structure shown in Figure 3–15. Both large and small companies that operate on a matrix usually develop a separate organizational chart for each customer. Figure 3–15 represents the organizational chart that would be presented to Alpha Company. The Alpha Company project would be identified with bold lines and would be placed immediately below the vice president, regardless of the priority of the project. After all, if you were the Alpha Company customer, would you want your project to appear at the bottom of the list? PRESIDENT V.P. MARKETING V.P. ENGINEERING ALPHA CO. BOB RAY IBM BETA CO. GAMMA CO. DELTA CO. FIGURE 3–15. Matrix for a small company. V.P. PRODUCTION V.P. ADMINISTRATION 126 ORGANIZATIONAL STRUCTURES Figure 3–15 also identifies two other key points that are important to small companies. First, only the name of the Alpha Company project manager, Bob Ray, need be identified. The reason for this is that Bob Ray may also be the project manager for one or more of the other projects, and it is usually not a good practice to let the customer know that Bob Ray will have loyalties split among several projects. Actually, the organization chart shown in Figure 3–15 is for a machine tool company employing 280 people, with five major and thirty minor projects. The company has only two full-time project managers. Bob Ray manages the projects for Alpha, Gamma, and Delta Companies; the Beta Company project has the second full-time project manager; and the IBM project is being managed personally by the vice president of engineering, who happens to be wearing two hats. The second key point is that small companies generally should not identify the names of functional employees because: ● ● The functional employees are probably part-time. It is usually best in small companies for all communications to be transmitted through the project manager. Another example of how a simple matrix structure can be used to impress customers is shown in Figure 3–16. The company identified here actually employs only thirty-eight people. Very small companies normally assign the estimating department to report directly to the president, as shown in Figure 3–16. In addition, the senior engineers, who appear to PRESIDENT ESTIMATING V.P. ENGINEERING DRAFTING START UP V.P. PRODUCTION DESIGN ENGINEERING SENIOR ENGINEER SENIOR ENGINEER FIGURE 3–16. ACCOUNTING Matrix for a small company. PLANT MANAGER PANELS PLANT MANAGER METALS 127 Strategic Business Unit (SBU) Project Management be acting in the role of project managers, may simply be the department managers for drafting, startup, and/or design engineering. Yet, from an outside customer’s perspective, the company has a dedicated and committed project manager for the project. 3.12 STRATEGIC BUSINESS UNIT (SBU) PROJECT MANAGEMENT During the past ten years, large companies have restructured into strategic business units (SBUs). An SBU is a grouping of functional units that have the responsibility for profit (or loss) of part of the organization’s core businesses. Figure 3–17 shows how one of the automotive suppliers restructured into three SBUs; one each for Ford, Chrysler, and General Motors. Each strategic business unit is large enough to maintain its own project and program managers. The executive in charge of the strategic business unit may act as the sponsor for all of the program and project managers within the SBU. The major benefit of these types of project management SBUs is that it allows the SBU to work more closely with the customer. It is a customer-focused organizational structure. It is possible for some resources to be shared across several SBUs. Manufacturing plants can end up supporting more than one SBU. Also, corporate may provide the resources for cost accounting, human resource management, and training. A more recent organizational structure, and a more complex one, is shown in Figure 3–18. In this structure, each SBU may end up using the same platform (i.e., powertrain, chassis, and other underneath components). The platform managers are responsible for the design and enhancements of each platform, whereas the SBU program managers must SBU Ford Programs SBU GM Programs SBU Chrysler Programs Program Managers FIGURE 3–17. Strategic business unit project management. 128 ORGANIZATIONAL STRUCTURES SBU SBU SBU Platform Project Management SBU Program Managers Platform Platform Platform FIGURE 3–18. SBU project management using platform management. adapt this platform to a new model car. This type of matrix is multidimensional inasmuch as each SBU could already have an internal matrix. Also, each manufacturing plant could be located outside of the continental United States, making this structure a multinational, multidimensional matrix. 3.13 TRANSITIONAL MANAGEMENT Organizational redesign is occurring at a rapid rate because of shorter product life cycles, rapidly changing environments, accelerated development of sophisticated information systems, and increased marketplace competitiveness. Because of these factors, more companies are considering project management organizations as a solution. Why have some companies been able to implement this change in a short period of time while other companies require years? The answer is that successful implementation requires good transitional management. Transitional management is the art and science of managing the conversion period from one organizational design to another. Transitional management necessitates an understanding of the new goals, objectives, roles, expectations, and employees’ fears. A survey was conducted of executives, managers, and employees in thirty-eight companies that had implemented matrix management. Almost all executives felt that the greatest success could be achieved through proper training and education, both during and after transition. In addition to training, executives stated that the following fifteen challenges must be accounted for during transition: Transitional Management ● ● ● ● ● ● ● ● ● ● ● ● ● ● 129 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 encourage it throughout the transition life cycle. Policies and procedures. The establishment of well-accepted policies and procedures is a slow and tedious process. Trying to establish rigid policies and procedures 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 talking directly to functional employees. Project manager acceptance. Resistance to the project manager position can be controlled 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 expense 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 organizations 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 demands 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 teamwork. Using planning groups during transition will not obtain the necessary functional and project commitments. Theory X–Theory Y. During transition, functional employees may soon find themselves managed under either Theory X or Theory Y approaches. People must realize (through training) that this is a way of life in project management, especially during crises. 130 ORGANIZATIONAL STRUCTURES ● Overmanagement costs. A mistake often made by executives is thinking that projects can be managed with fewer resources. This usually leads to disaster because undermanagement costs may be an order of magnitude greater than overmanagement costs. Transition to a project-driven matrix organization is not easy. Managers and professionals contemplating such a move should know: ● ● ● ● ● ● ● ● ● ● ● Proper planning and organization of the transition on a life-cycle basis will facilitate 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 commitment 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 during 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 transition, 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. 30. See note 17. 131 Problems ● 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 alleviate these problems. Do you agree or disagree? Does your answer depend on the type of project? 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 consistently “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 9-476117, 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 environment? 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 technological 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 defined in terms of program direction, and that the authority of the functional executive be defined in terms of operational direction. 31. See note 17. 32. See note 16. 132 ORGANIZATIONAL STRUCTURES 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 organizational structure? Explain your answers in as much depth as possible. a. b. c. d. e. f. The project cost The project schedule The project duration The technology requirements The geographical locations The required working relationships with the customer 3–7 In general, what are the overall advantages and disadvantages of superimposing one organizational 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 products. 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 information 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 because 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. 133 Problems 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 disadvantages 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 administrative 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 positions. The project managers occasionally have to integrate activities that involve departments other than their own. Each project normally requires involvement of several people. The company 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 management 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 utilization of line personnel will be made, and that each project can be run with fewer staff people, thus providing the opportunity for more projects. Do you agree or disagree, and what problems do you foresee? 134 ORGANIZATIONAL STRUCTURES 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 under your definition? 3–24 Are there any advantages to having a single project engineer as opposed to having a committee 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 organizational structure? 3–26 Ralph is a department manager who is quite concerned about the performance of the people beneath him. After several months of analysis, Ralph has won the acceptance of his superiors 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 status 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 placing 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 between 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? Problems 135 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 industries 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, responsibility 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 organization is project-driven or non–project-driven? 3–39 A government subcontractor operates with a pure specialized product management organizational 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 employees 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 duplication 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 portion 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 division 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 corporate 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. 136 ORGANIZATIONAL STRUCTURES CASE STUDY JONES AND SHEPHARD ACCOUNTANTS, INC. By 1970, Jones and Shephard Accountants, Inc. (J&S) was ranked eighteenth in size by the American Association of Accountants. In order to compete with the larger firms, J&S formed an Information Services Division designed primarily for studies and analyses. By 1975, the Information Services Division (ISD) had fifteen employees. In 1977, the ISD purchased three minicomputers. With this increased capacity, J&S expanded its services to help satisfy the needs of outside customers. By September 1978, the internal and external workloads had increased to a point where the ISD now employed over fifty people. The director of the division was very disappointed in the way that activities were being handled. There was no single person assigned to push through a project, and outside customers did not know whom to call to get answers regarding project status. The director found that most of his time was being spent on day-to-day activities such as conflict resolution instead of strategic planning and policy formulation. The biggest problems facing the director were the two continuous internal projects (called Project X and Project Y, for simplicity) that required month-end data collation and reporting. The director felt that these two projects were important enough to require a full-time project manager on each effort. In October 1978, corporate management announced that the ISD director would be reassigned on February 1, 1979, and that the announcement of his replacement would not be made Exhibit 3–1. ISD organizational chart DIRECTOR, ISD SECRETARY ASSOCIATE DIRECTOR SUP., TECH. WRITING SUPERVISOR, PROCEDURES 2* 2 SECRETARY SECRETARY POOL 4 PROJECT X PROJECT Y MANAGER, OPERATIONS MGR., ADMIN. SERVICES 3 SUP., INTERNAL AUDIT 6 SUP., ACCT. SERVICES 8 MGR., COMP. SYSTEMS 10 SUP., GEN. LEDGER SUP., COST ACCOUNTING 3 7 *DENOTES THE NUMBER OF ADDITIONAL FUNCTIONAL EMPLOYEES 137 Case Study until the middle of January. The same week that the announcement was made, two individuals were hired from outside the company to take charge of Project X and Project Y. Exhibit 3–1 shows the organizational structure of the ISD. Within the next thirty days, rumors spread throughout the organization about who would become the new director. Most people felt that the position would be filled from within the division and that the most likely candidates would be the two new project managers. In addition, the associate director was due to retire in December, thus creating two openings. On January 3, 1979, a confidential meeting was held between the ISD director and the systems manager. ISD Director: “Corporate has approved my request to promote you to division director. Unfortunately, your job will not be an easy one. You’re going to have to restructure the organization somehow so that our employees will not have as many conflicts as they are now faced with. My secretary is typing up a confidential memo for you explaining my observations on the problems within our division. “Remember, your promotion should be held in the strictest confidence until the final announcement later this month. I’m telling you this now so that you can begin planning the restructuring. My memo should help you.” (See Exhibit 3–2 for the memo.) Exhibit 3–2. Confidential memo 138 ORGANIZATIONAL STRUCTURES The systems manager read the memo and, after due consideration, decided that some form of matrix would be best. To help him structure the organization properly, an outside consultant was hired to help identify the potential problems with changing over to a matrix. The following problem areas were identified by the consultant: 1. The operations manager controls more than 50 percent of the people resources. You might want to break up his empire. This will have to be done very carefully. 2. The secretary pool is placed too high in the organization. 3. The supervisors who now report to the associate director will have to be reassigned lower in the organization if the associate director’s position is abolished. 4. One of the major problem areas will be trying to convince corporate management that their change will be beneficial. You’ll have to convince them that this change can be accomplished without having to increase division manpower. 5. You might wish to set up a separate department or a separate project for customer relations. 6. Introducing your employees to the matrix will be a problem. Each employee will look at the change differently. Most people have the tendency of looking first at the shift in the balance of power—have I gained or have I lost power and status? The systems manager evaluated the consultant’s comments and then prepared a list of questions to ask the consultant at their next meeting: 1. What should the new organizational structure look like? Where should I put each person, specifically the managers? 2. When should I announce the new organizational change? Should it be at the same time as my appointment or at a later date? 3. Should I invite any of my people to provide input to the organizational restructuring? Can this be used as a technique to ease power plays? 4. Should I provide inside or outside seminars to train my people for the new organizational structure? How soon should they be held? 4 Organizing and Staffing the Project Office and Team Related Case Studies (from Kerzner/Project Management Case Studies) • Government Project • Management • Falls Engineering • White Manufacturing • Martig Construction • Company • Ducor Chemical • The Carlson Project Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Nichols Services • Medico Manufacturing • The Bad Apple • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Human Resource • Management 4.0 INTRODUCTION Successful project management, regardless of the organizational structure, is only as good as the individuals and leaders who are managing the key functions. Project management is not a one-person operation; it requires a group of individuals dedicated to the achievement of a specific goal. Project management includes: ● ● ● ● A project manager An assistant project manager A project (home) office A project team 139 140 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Generally, project office personnel are assigned full-time to the project and work out of the project office, whereas the project team members work out of the functional units and may spend only a small percentage of their time on the project. Normally, project office personnel report directly to the project manager, but they may still be solid to their line function just for administrative control. A project office usually is not required on small projects, and sometimes the project can be accomplished by just one person who may fill all of the project office positions. Before the staffing function begins, five basic questions are usually considered: ● ● ● ● ● What are the requirements for an individual to become a successful project manager? Who should be a member of the project team? Who should be a member of the project office? What problems can occur during recruiting activities? What can happen downstream to cause the loss of key team members? On the surface, these questions may not seem especially complex. But when we apply them to a project environment (which is by definition a “temporary” situation) where a constant stream of projects is necessary for corporate growth, the staffing problems become complex, especially if the organization is understaffed. 4.1 THE STAFFING ENVIRONMENT To understand the problems that occur during staffing, we must first investigate the characteristics of project management, including the project environment, the project management process, and the project manager. Two major kinds of problems are related to the project environment: personnel performance problems and personnel policy problems. Performance is difficult for many individuals in the project environment because it represents a change in the way of doing business. Individuals, regardless of how competent they are, find it difficult to adapt continually to a changing situation in which they report to multiple managers. On the other hand, many individuals thrive on temporary assignments because it gives them a “chance for glory.” Unfortunately, some employees might consider the chance for glory more important than the project. For example, an employee may pay no attention to the instructions of the project manager and instead perform the task his own way. In this situation, the employee wants only to be recognized as an achiever and really does not care if the project is a success or failure, as long as he still has a functional home to return to where he will be identified as an achiever with good ideas. The second major performance problem lies in the project–functional interface, where an individual suddenly finds himself reporting to two bosses, the functional manager and the project manager. If the functional manager and the project manager are in agreement about the work to be accomplished, then performance may not be hampered. But if conflicting directions are received, then the individual may let his performance suffer because of his com- The Staffing Environment 141 promising position. In this case, the employee will “bend” in the direction of the manager who controls his purse strings. Personnel policy problems can create havoc in an organization, especially if the “grass is greener” in a project environment than in the functional environment. Functional organizations normally specify grades and salaries for employees. Project offices, on the other hand, have no such requirements and can promote and pay according to achievement. The difficulty here is that one can distinguish between employees in grades 7, 8, 9, 10, and 11 in a line organization, whereas for a project manager the distinction might appear only in the size of the project or the amount of responsibility. Bonuses are also easier to obtain in the project office but may create conflict and jealousy between the horizontal and vertical elements. Because each project is different, the project management process allows each project to have its own policies, procedures, rules, and standards, provided they fall within broad company guidelines. Each project must be recognized as a project by top management so that the project manager has the delegated authority necessary to enforce the policies, procedures, rules, and standards. Project management is successful only if the project manager and his team are totally dedicated to the successful completion of the project. This requires each team member of the project team and office to have a good understanding of the fundamental project requirements, which include: ● ● ● ● ● ● Customer liaison Project direction Project planning Project control Project evaluation Project reporting Ultimately, the person with the greatest influence during the staffing phase is the project manager. The personal attributes and abilities of project managers will either attract or deter highly desirable individuals. Basic characteristics include: ● ● ● ● ● ● ● ● ● Honesty and integrity Understanding of personnel problems Understanding of project technology Business management competence ● Management principles ● Communications Alertness and quickness Versatility Energy and toughness Decision-making ability Ability to evaluate risk and uncertainty Project managers must exhibit honesty and integrity to foster an atmosphere of trust. They should not make impossible promises, such as immediate promotions for everyone 142 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM if a follow-on contract is received. Also, on temporarily assigned activities, such as a project, managers cannot wait for personnel to iron out their own problems because time, cost, and performance requirements will not be satisfied. Project managers should have both business management and technical expertise. They must understand the fundamental principles of management, especially those involving the rapid development of temporary communication channels. Project managers must understand the technical implications of a problem, since they are ultimately responsible for all decision-making. However, many good technically oriented managers have failed because they have become too involved with the technical side of the project rather than the management side. There are strong arguments for having a project manager who has more than just an understanding of the necessary technology. Because a project has a relatively short time duration, decision-making must be rapid and effective. Managers must be alert and quick in their ability to perceive “red flags” that can eventually lead to serious problems. They must demonstrate their versatility and toughness in order to keep subordinates dedicated to goal accomplishment. Executives must realize that the project manager’s objectives during staffing are to: ● ● ● Acquire the best available assets and try to improve them Provide a good working environment for all personnel Make sure that all resources are applied effectively and efficiently so that all constraints are met, if possible 4.2 SELECTING THE PROJECT MANAGER: AN EXECUTIVE DECISION Probably the most difficult decision facing upper-level management is the selection of project managers. Some managers work best on long-duration projects where decisionmaking can be slow; others may thrive on short-duration projects that can result in a constant-pressure environment. A director was asked whom he would choose for a key project manager position—an individual who had been a project manager on previous programs in which there were severe problems and cost overruns, or a new aggressive individual who might have the capability to be a good project manager but had never had the opportunity. The director responded that he would go with the seasoned veteran assuming that the previous mistakes would not be made again. The argument here is that the project manager must learn from his own mistakes so they will not be made again. The new individual is apt to make the same mistakes the veteran made. However, this may limit career path opportunities for younger personnel. Stewart has commented on the importance of experience1: Though the project manager’s previous experience is apt to have been confined to a single functional area of business, he must be able to function on the project as a kind of general 1. John M. Stewart, “Making Project Management Work.” Reprinted with permission from Business Horizons, Fall 1965, p. 63. Copyright © 1965 by the Board of Trustees at Indiana University. Selecting the Project Manager: An Executive Decision 143 manager in miniature. He must not only keep track of what is happening but also play the crucial role of advocate for the project. Even for a seasoned manager, this task is not likely to be easy. Hence, it is important to assign an individual whose administrative abilities and skills in personal relations have been convincingly demonstrated under fire. The selection process for project managers is not easy. Five basic questions must be considered: ● ● ● ● ● What are the internal and external sources? How do we select? How do we provide career development in project management? How can we develop project management skills? How do we evaluate project management performance? Project management cannot succeed unless a good project manager is at the controls. It is far more likely that project managers will succeed if it is obvious to the subordinates that the general manager has appointed them. Usually, a brief memo to the line managers will suffice. The major responsibilities of the project manager include: ● ● ● ● ● ● To produce the end-item with the available resources and within the constraints of time, cost, and performance/technology To meet contractual profit objectives To make all required decisions whether they be for alternatives or termination To act as the customer (external) and upper-level and functional management (internal) communications focal point To “negotiate” with all functional disciplines for accomplishment of the necessary work packages within the constraints of time, cost, and performance/technology To resolve all conflicts If these responsibilities were applied to the total organization, they might reflect the job description of the general manager. This analogy between project and general managers is one of the reasons why future general managers are asked to perform functions that are implied, rather than spelled out, in the job description. As an example, you are the project manager on a hightechnology project. As the project winds down, an executive asks you to write a paper so that he can present it at a technical meeting in Tokyo. His name will appear first on the paper. Should this be a part of your job? As this author sees it, you really don’t have much of a choice. In order for project managers to fulfill their responsibilities successfully, they are constantly required to demonstrate their skills in interface, resource, and planning and control management. These implicit responsibilities are shown below: ● Interface Management Product interfaces —Performance of parts or subsections —Physical connection of parts or subsections ● Project interfaces ● 144 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● ● ● ● ● Customer Management (functional and upper-level) Change of responsibilities Information flow Material interfaces (inventory control) ● Resource Management ● Time (schedule) ● Manpower ● Money ● Facilities ● Equipment ● Material ● Information/technology Planning and Control Management ● Increased equipment utilization ● Increased performance efficiency ● Reduced risks ● Identification of alternatives to problems ● Identification of alternative resolutions to conflicts Consider the following advertisement for a facilities planning and development project manager (adapted from The New York Times, January 2, 1972): Personable, well-educated, literate individual with college degree in Engineering to work for a small firm. Long hours, no fringe benefits, no security, little chance for advancement are among the inducements offered. Job requires wide knowledge and experience in manufacturing, materials, construction techniques, economics, management and mathematics. Competence in the use of the spoken and written English is required. Must be willing to suffer personal indignities from clients, professional derision from peers in the more conventional jobs, and slanderous insults from colleagues. Job involves frequent extended trips to inaccessible locations throughout the world, manual labor and extreme frustration from the lack of data on which to base decisions. Applicant must be willing to risk personal and professional future on decisions based upon inadequate information and complete lack of control over acceptance of recommendations by clients. Responsibilities for the work are unclear and little or no guidance is offered. Authority commensurate with responsibility is not provided either by the firm or its clients. Applicant should send resume, list of publications, references and other supporting documentation to. . . . Fortunately, these types of job descriptions are very rare today. Finding the person with the right qualifications is not an easy task because the selection of project managers is based more on personal characteristics than on the job description. In Section 4.1 a brief outline of desired characteristics was presented. Russell Archibald defines a broader range of desired personal characteristics2: 2. Russell D. Archibald, Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 55. Copyright © 1976 by John Wiley & Sons, Inc. Reprinted by permission of the publisher. Selecting the Project Manager: An Executive Decision ● ● ● ● ● ● ● ● ● ● ● ● ● ● 145 Flexibility and adaptability Preference for significant initiative and leadership Aggressiveness, confidence, persuasiveness, verbal fluency Ambition, activity, forcefulness Effectiveness as a communicator and integrator Broad scope of personal interests Poise, enthusiasm, imagination, spontaneity Able to balance technical solutions with time, cost, and human factors Well organized and disciplined A generalist rather than a specialist Able and willing to devote most of his time to planning and controlling Able to identify problems Willing to make decisions Able to maintain proper balance in the use of time This ideal project manager would probably have doctorates in engineering, business, and psychology, and experience with ten different companies in a variety of project office positions, and would be about twenty-five years old. Good project managers in industry today would probably be lucky to have 70 to 80 percent of these characteristics. The best project managers are willing and able to identify their own shortcomings and know when to ask for help. Figures 4–1 and 4–2 show the basic knowledge and responsibilities that construction project managers should possess. The apprenticeship program for training construction project managers could easily be ten years. The difficulty in staffing, especially for project managers or assistant project managers, is in determining what questions to ask during an interview to see if an individual has the necessary or desired characteristics. Individuals may be qualified to be promoted vertically but not horizontally. An individual with poor communication skills and interpersonal skills can be promoted to a line management slot because of his technical expertise, but this same individual is not qualified for project management promotion. One of the best ways to interview is to read each element of the job description to the potential candidate. Many individuals want a career path in project management but are totally unaware of what the project manager’s duties are. So far we have discussed the personal characteristics of the project manager. There are also job-related questions to consider, such as: ● ● ● ● ● ● Are feasibility and economic analyses necessary? Is complex technical expertise required? If so, is it within the individual’s capabilities? If the individual is lacking expertise, will there be sufficient backup strength in the line organizations? Is this the company’s or the individual’s first exposure to this type of project and/or client? If so, what are the risks to be considered? What is the priority for this project, and what are the risks? With whom must the project manager interface, both inside and outside the organization? 146 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM [Image not available in this electronic edition.] Project management responsibilities. Source: L. J. Weber, W. Riethmeier, A. F. Westergard, and K. O. Hartley, “The Project Sponser’s View,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. FIGURE 4–1. Most good project managers know how to perform feasibility studies and costbenefit analyses. Sometimes these studies create organizational conflict. A major utility company begins each computer project with a feasibility study in which a cost-benefit analysis is performed. The project managers, all of whom report to a project management division, perform the study themselves without any direct functional support. The functional managers argue that the results are grossly inaccurate because the functional experts are not involved. The project managers, on the other hand, argue that they never have sufficient time or money to perform a complete analysis. Some companies resolve this by having a special group perform these studies. Most companies would prefer to find project managers from within. Unfortunately, this is easier said than done. The following remarks by Robert Fluor illustrate this point3: On-the-job training is probably the most important aspect in the development of a project manager. This includes assignments to progressively more responsible positions in engineering and construction management and project management. It also includes rotational assignments in several engineering department disciplines, in construction, procurement, cost and scheduling, contract administration, and others. . . . We find there are great advantages to developing our project managers from within the company. There are good reasons for this: 3. J. Robert Fluor, “Development of Project Managers—Twenty Years’ Study at Fluor,” Keynote address to Project Management Institute Eighth International Seminar/Symposium, Chicago, Illinois, October 24, 1977. Selecting the Project Manager: An Executive Decision 147 [Image not available in this electronic edition.] FIGURE 4–2. McKee project services. Source: V. E. Cole, W. B. Ball, and D. S. Barrie, “Managing the Project,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. ● They know the corporate organization, policies, procedures, and the key people. This allows them to give us quality performance quicker. ● They have an established performance record which allows us to place them at the maximum level of responsibility and authority. ● Clients prefer a proven track record within the project manager’s present organization. There are also good reasons for recruiting from outside the company. A new project manager hired from the outside would be less likely to have strong informal ties to any one line organization and thus could be impartial. Some companies further require that the individual spend an apprenticeship period of twelve to eighteen months in a line organization to find out how the company functions, to become acquainted with the people, and to understand the company’s policies and procedures. One of the most important but often least understood characteristics of good project managers is the ability to know their own strengths and weaknesses and those of their employees. Managers must understand that in order for employees to perform efficiently: ● ● ● ● ● They must know what they are supposed to do. They must have a clear understanding of authority and its limits. They must know what their relationship with other people is. They should know what constitutes a job well done in terms of specific results. They should know where and when they are falling short. 148 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● ● They must be made aware of what can and should be done to correct unsatisfactory results. They must feel that their superior has an interest in them as individuals. They must feel that their superior believes in them and wants them to succeed. 4.3 SKILL REQUIREMENTS FOR PROGRAM MANAGERS Managing complex programs represents a challenge requiring skills in team building, leadership, conflict resolution, technical expertise, planning, organization, entrepreneurship, administration, management support, and the allocation of resources. This section examines these skills relative to program management effectiveness. A key factor to good program performance is the program manager’s ability to integrate personnel from many disciplines into an effective work team. To get results, the program manager must relate to (1) the people to be managed, (2) the task to be done, (3) the tools available, (4) the organizational structure, and (5) the organizational environment, including the customer community. With an understanding of the interaction of corporate organization and behavior elements, the manager can build an environment conducive to the working team’s needs. The internal and external forces that impinge on the organization of the project must be reconciled to mutual goals. Thus the program manager must be both socially and technically aware to understand how the organization functions and how these functions will affect the program organization of the particular job to be done. In addition, the program manager must understand the culture and value system of the organization he is working with. Effective program management is directly related to proficiency in these ten skills: ● ● ● ● ● ● ● ● ● ● Team building Leadership Conflict resolution Technical expertise Planning Organization Entrepreneurship Administration Management support Resource allocation It is important that the personal management style underlying these skills facilitate the integration of multidisciplinary program resources for synergistic operation. The days of the manager who gets by with technical expertise alone or pure administrative skills are gone. Team-Building Skills Building the program team is one of the prime responsibilities of the program manager. Team building involves a whole spectrum of management skills required to identify, commit, and integrate the various task groups from the traditional functional organization into a single program management system. Skill Requirements for Program Managers 149 To be effective, the program manager must provide an atmosphere conducive to teamwork. He must nurture a climate with the following characteristics: ● ● ● ● ● ● ● ● Team members committed to the program Good interpersonal relations and team spirit The necessary expertise and resources Clearly defined goals and program objectives Involved and supportive top management Good program leadership Open communication among team members and support organizations A low degree of detrimental interpersonal and intergroup conflict Three major considerations are involved in all of the above factors: (1) effective communications, (2) sincere interest in the professional growth of team members, and (3) commitment to the project. Leadership Skills A prerequisite for program success is the program manager’s ability to lead the team within a relatively unstructured environment. It involves dealing effectively with managers and supporting personnel across functional lines and the ability to collect and filter relevant data for decision-making in a dynamic environment. It involves the ability to integrate individual demands, requirements, and limitations into decisions and to resolve intergroup conflicts. As with a general manager, quality leadership depends heavily on the program manager’s personal experience and credibility within the organization. An effective management style might be characterized this way: ● ● ● ● ● ● ● ● ● Clear project leadership and direction Assistance in problem-solving Facilitating the integration of new members into the team Ability to handle interpersonal conflict Facilitating group decisions Capability to plan and elicit commitments Ability to communicate clearly Presentation of the team to higher management Ability to balance technical solutions against economic and human factors The personal traits desirable and supportive of the above skills are: ● ● ● ● ● ● Project management experience Flexibility and change orientation Innovative thinking Initiative and enthusiasm Charisma and persuasiveness Organization and discipline 150 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Conflict Resolution Skills Conflict is fundamental to complex task management. Understanding the determinants of conflicts is important to the program manager’s ability to deal with conflicts effectively. When conflict becomes dysfunctional, it often results in poor program decision-making, lengthy delays over issues, and a disruption of the team’s efforts, all negative influences to program performance. However, conflict can be beneficial when it produces involvement and new information and enhances the competitive spirit. To successfully resolve conflict and improve overall program performance, program managers must: ● ● ● Understand interaction of the organizational and behavioral elements in order to build an environment conducive to their team’s motivational needs. This will enhance active participation and minimize unproductive conflict. Communicate effectively with all organizational levels regarding both project objectives and decisions. Regularly scheduled status review meetings can be an important communication vehicle. Recognize the determinants of conflict and their timing in the project life cycle. Effective project planning, contingency planning, securing of commitments, and involving top management can help to avoid or minimize many conflicts before they impede project performance. The accomplished manager needs a “sixth sense” to indicate when conflict is desirable, what kind of conflict will be useful, and how much conflict is optimal for a given situation. In the final analysis, he has the sole responsibility for his program and how conflict will contribute to its success or failure. Technical Skills The program manager rarely has all the technical, administrative, and marketing expertise needed to direct the program single-handedly. It is essential, however, for the program manager to understand the technology, the markets, and the environment of the business. Without this understanding, the consequences of local decisions on the total program, the potential growth ramifications, and relationships to other business opportunities cannot be foreseen by the manager. Further technical expertise is necessary to evaluate technical concepts and solutions, to communicate effectively in technical terms with the project team, and to assess risks and make trade-offs between cost, schedule, and technical issues. This is why in complex problem-solving situations so many project managers must have an engineering background. Technical expertise is composed of an understanding of the: ● ● ● ● ● ● ● Technology involved Engineering tools and techniques employed Specific markets, their customers, and requirements Product applications Technological trends and evolutions Relationship among supporting technologies People who are part of the technical community Skill Requirements for Program Managers 151 The technical expertise required for effective management of engineering programs is normally developed through progressive growth in engineering or supportive project assignments in a specific technology area. Frequently, the project begins with an exploratory phase leading into a proposal. This is normally an excellent testing ground for the future program manager. It also allows top management to judge the new candidate’s capacity for managing the technological innovations and integration of solutions. Planning Skills Planning skills are helpful for any undertaking; they are absolutely essential for the successful management of large complex programs. The project plan is the road map that defines how to get from the start to the final results. Program planning is an ongoing activity at all organizational levels. However, the preparation of a project summary plan, prior to project start, is the responsibility of the program manager. Effective project planning requires particular skills far beyond writing a document with schedules and budgets. It requires communication and information processing skills to define the actual resource requirements and administrative support necessary. It requires the ability to negotiate the necessary resources and commitments from key personnel in various support organizations with little or no formal authority. Effective planning requires skills in the areas of: ● ● ● ● ● ● ● Information processing Communication Resource negotiations Securing commitments Incremental and modular planning Assuring measurable milestones Facilitating top management involvement In addition, the program manager must assure that the plan remains a viable document. Changes in project scope and depth are inevitable. The plan should reflect necessary changes through formal revisions and should be the guiding document throughout the life cycle of the program. An obsolete or irrelevant plan is useless. Finally, program managers need to be aware that planning can be overdone. If not controlled, planning can become an end in itself and a poor substitute for innovative work. It is the responsibility of the program manager to build flexibility into the plan and police it against misuse. Organizational Skills The program manager must be a social architect; that is, he must understand how the organization works and how to work with the organization. Organizational skills are particularly important during project formation and startup when the program manager is integrating people from many different disciplines into an effective work team. It requires defining the reporting relationships, responsibilities, lines of control, and information needs. A good program plan and a task matrix are useful organizational tools. In addition, the organizational effort is facilitated by clearly 152 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM defined program objectives, open communication channels, good program leadership, and senior management support. The program manager also needs a general management perspective. For example, economic considerations affect the organization’s financial performance, but objectives often are much broader than profits. Customer satisfaction, future growth, cultivation of related market activities, and minimum organizational disruptions of other programs might be equally important goals. The effective program manager is concerned with all these issues. Entrepreneurial skills are developed through actual experience. However, formal MBA-type training, special seminars, and cross-functional training programs can help to develop the entrepreneurial skills needed by program managers. Entrepreneurial Skills Administrative Skills Administrative skills are essential. The program manager must be experienced in planning, staffing, budgeting, scheduling, and other control techniques. In dealing with technical personnel, the problem is seldom to make people understand administrative techniques such as budgeting and scheduling, but to impress on them that costs and schedules are just as important as elegant technical solutions. Particularly on larger programs, managers rarely have all the administrative skills required. While it is important that program managers understand the company’s operating procedures and available tools, it is often necessary for the program manager to free himself from administrative details regardless of his ability to handle them. He has to delegate considerable administrative tasks to support groups or hire a project administrator. Some helpful tools for the manager in the administration of his program include: (1) the meeting, (2) the report, (3) the review, and (4) budget and schedule controls. Program managers must be thoroughly familiar with these available tools and know how to use them effectively. Management Support Building Skills The program manager is surrounded by a myriad of organizations that either support him or control his activities. An understanding of these interfaces is important to program managers as it enhances their ability to build favorable relationships with senior management. Project organizations are shared-power systems with personnel of many diverse interests and “ways of doing things.” Only a strong leader backed by senior management can prevent the development of unfavorable biases. Four key variables influence the project manager’s ability to create favorable relationships with senior management: (1) his ongoing credibility, (2) the visibility of his program, (3) the priority of his program relative to other organizational undertakings, and (4) his own accessibility. Resource Allocation Skills A program organization has many bosses. Functional lines often shield support organizations from direct financial control by the project office. Once a task has been authorized, it is often impossible to control the personnel assignments, Special Cases in Project Manager Selection 153 priorities, and indirect manpower costs. In addition, profit accountability is difficult owing to the interdependencies of various support departments and the often changing work scope and contents. Effective and detailed program planning may facilitate commitment and reinforce control. Part of the plan is the “Statement of Work,” which establishes a basis for resource allocation. It is also important to work out specific agreements with all key contributors and their superiors on the tasks to be performed and the associated budgets and schedules. Measurable milestones are not only important for hardware components, but also for the “invisible” program components such as systems and software tasks. Ideally, these commitments on specs, schedules, and budgets should be established through involvement by key personnel in the early phases of project formation, such as the proposal phase. This is the time when requirements are still flexible, and trade-offs among performance, schedule, and budget parameters are possible. Further, this is normally the time when the competitive spirit among potential contributors is highest, often leading to a more cohesive and challenging work plan. 4.4 SPECIAL CASES IN PROJECT MANAGER SELECTION Thus far we have assumed that the project is large enough for a full-time project manager to be appointed. This is not always the case. There are four major problem areas in staffing projects: ● ● ● ● Part-time versus full-time assignments Several projects assigned to one project manager Projects assigned to functional managers The project manager role retained by the general manager The first problem is generally related to the size of the project. If the project is small (in time duration or cost), a part-time project manager may be selected. Many executives have fallen into the trap of letting line personnel act as part-time project managers while still performing line functions. If the employee has a conflict between what is best for the project and what is best for his line organization, the project will suffer. It is only natural that the employee will favor the place the salary increases come from. It is a common practice for one project manager to control several projects, especially if they are either related or similar. Problems come about when the projects have drastically different priorities. The low-priority efforts will be neglected. If the project is a high-technology effort that requires specialization and can be performed by one department, then it is not unusual for the line manager to take on a dual role and act as project manager as well. This can be difficult to do, especially if the project manager is required to establish the priorities for the work under his supervision. The line manager may keep the best resources for the project, regardless of the priority. Then that project will be a success at the expense of every other project he must supply resources to. Probably the worst situation is that in which an executive fills the role of project manager for a particular effort. The executive may not have the time necessary for total dedication to 154 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM the achievement of the project. He cannot make effective decisions as a project manager while still discharging normal duties. Additionally, the executive may hoard the best resources for his project. 4.5 SELECTING THE WRONG PROJECT MANAGER Even though executives know the personal characteristics and traits that project managers should possess, and even though job descriptions are often clearly defined, management may still select the wrong person because they base their decision on the following criteria. Maturity Some executives consider gray hair to be a sure indication of maturity, but this is not the type of maturity needed for project management. Maturity in project management generally comes from exposure to several types of projects in a variety of project office positions. In aerospace and defense, it is possible for a project manager to manage the same type of project for ten years or more. When placed on a new project, the individual may try to force personnel and project requirements to adhere to the same policies and procedures that existed on the ten-year project. The project manager may know only one way of managing projects. Hard-Nosed Tactics Applying hard-nosed tactics to subordinates can be very demoralizing. Project managers must give people sufficient freedom to get the job done, without providing continuous supervision and direction. A line employee who is given “freedom” by his line manager but suddenly finds himself closely supervised by the project manager will be very unhappy. Line managers, because of their ability to control an employee’s salary, need only one leadership style and can force the employees to adapt. The project manager, on the other hand, cannot control salaries and must have a wide variety of leadership styles. The project manager must adapt a leadership style to the project employees, whereas the reverse is true in the line organization. Availability Executives should not assign individuals as project managers simply because of availability. People have a tendency to cringe when you suggest that project managers be switched halfway through a project. For example, manager X is halfway through his project. Manager Y is waiting for an assignment. A new project comes up, and the executive switches managers X and Y. There are several reasons for this. The most important phase of a project is planning, and, if it is accomplished correctly, the project could conceivably run itself. Therefore, manager Y should be able to handle manager X’s project. There are several other reasons why this switch may be necessary. The new project may have a higher priority and require a more experienced manager. Second, not all project managers are equal, especially when it comes to planning. When an executive finds Selecting the Wrong Project Manager 155 a project manager who demonstrates extraordinary talents at planning, there is a natural tendency for the executive to want this project manager to plan all projects. Executives quite often promote technical line managers without realizing the consequences. Technical specialists may not be able to divorce themselves from the technical side of the house and become project managers rather than project doers. There are also strong reasons to promote technical specialists to project managers. These people often: Technical Expertise ● ● ● ● ● ● ● ● Have better relationships with fellow researchers Can prevent duplication of effort Can foster teamwork Have progressed up through the technical ranks Are knowledgeable in many technical fields Understand the meaning of profitability and general management philosophy Are interested in training and teaching Understand how to work with perfectionists As described by Taylor and Watling4: It is often the case, therefore, that the Project Manager is more noted for his management technique expertise, his ability to “get on with people” than for his sheer technical prowess. However, it can be dangerous to minimize this latter talent when choosing Project Managers dependent upon project type and size. The Project Manager should preferably be an expert either in the field of the project task or a subject allied to it. Promoting an employee to project management because of his technical expertise may be acceptable if, and only if, the project requires this expertise and technical direction, as in R&D efforts. For projects in which a “generalist” is acceptable as a project manager, there may be a great danger in assigning highly technical personnel. According to Wilemon and Cicero5: ● ● ● ● The greater the project manager’s technical expertise, the higher the propensity that he will overly involve himself in the technical details of the project. The greater the project manager’s difficulty in delegating technical task responsibilities, the more likely it is that he will overinvolve himself in the technical details of the project. (Depending upon his expertise to do so.) The greater the project manager’s interest in the technical details of the project, the more likely it is that he will defend the project manager’s role as one of a technical specialist. The lower the project manager’s technical expertise, the more likely it is that he will overstress the nontechnical project functions (administrative functions). 4. W. J. Taylor and T. F. Watling, Successful Project Management (London: Business Books Limited, 1972), p. 32. 5. D. L. Wilemon and J. P. Cicero, “The Project Manager—Anomalies and Ambiguities,” Academy of Management Journal, Vol. 13, 1970, pp. 269–282. 156 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Customer Orientation Executives quite often place individuals as project managers simply to satisfy a customer request. Being able to communicate with the customer does not guarantee project success, however. If the choice of project manager is simply a concession to the customer, then the executive must insist on providing a strong supporting team. New Exposure Executives run the risk of project failure if an individual is appointed project manager simply to gain exposure to project management. An executive of a utility company wanted to rotate his line personnel into project management for twelve to eighteen months and then return them to the line organization where they would be more well-rounded individuals and better understand the working relationship between project management and line management. There are two major problems with this. First, the individual may become technically obsolete after eighteen months in project management. Second, and more important, individuals who get a taste of project management will generally not want to return to the line organization. The mere fact that individuals have worked in a variety of divisions does not guarantee that they will make good project managers. Their working in a variety of divisions may indicate that they couldn’t hold any one job. In that case, they have reached their true level of incompetency, and putting them into project management will only maximize the damage they can do to the company. Some executives contend that the best way to train a project manager is by rotation through the various func- Company Exposure TABLE 4–1. METHODS AND TECHNIQUES FOR DEVELOPING PROJECT MANAGERS I. Experiential training/on-the-job Working with experienced professional leader Working with project team member Assigning a variety of project management responsibilities, consecutively Job rotation Formal on-the-job training Supporting multifunctional activities Customer liaison activities II. Conceptual training/schooling Courses, seminars, workshops Simulations, games, cases Group exercises Hands-on exercises in using project management techniques Professional meetings Conventions, symposia Readings, books, trade journals, professional magazines III. Organizational development Formally established and recognized project management function Proper project organization Project support systems Project charter Project management directives, policies, and procedures 157 Next Generation Project Managers TABLE 4–2. HOW TO TRAIN PROJECT MANAGERS Company Management Say Project Managers Can Be Trained in a Combination of Ways: Experiential learning, on-the-job Formal education and special courses Professional activities, seminars Readings 60% 20% 10% 10% tional disciplines for two weeks to a month in each organization. Other executives maintain that this is useless because the individual cannot learn anything in so short a period of time. Tables 4–1 and 4–2 identify current thinking on methods for training project managers. Finally, there are three special points to consider: ● ● ● Individuals should not be promoted to project management simply because they are at the top of their pay grade. Project managers should be promoted and paid based on performance, not on the number of people supervised. It is not necessary for the project manager to be the highest ranking or salaried individual on the project team with the rationale that sufficient “clout” is needed. 4.6 NEXT GENERATION PROJECT MANAGERS The skills needed to be an effective, twenty-first century project manager have changed from those needed during the 1980s. Historically, only engineers were given the opportunity to become project managers. The belief was that the project manager had to have a command of technology in order to make all of the technical decisions. As projects became larger and more complex, it became obvious that project managers might need simply an understanding rather than a command of technology. The true technical expertise would reside with the line managers, except for special situations such as R&D project management. As project management began to grow and mature, the project manager was converted from a technical manager to a business manager. The primary skills needed to be an effective project manager in the twenty-first century are: ● ● ● Knowledge of the business Risk management Integration skills The critical skill is risk management. However, to perform risk management effectively, a sound knowledge of the business is required. Figure 4-3 shows the changes in project management skills needed between 1985 and 2003. 158 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Year 1985 2003 FIGURE 4–3. Technical Skills Technical Skills Quantitative Skills Quantitative Skills Prob. Solv. Skills Prob. Solv. Skills Behavioral Skills Behavioral Skills Bus. Conceptual Skills Business Conceptual Skills Project management skills. As projects become larger, the complexities of integration management become more pronounced. Figure 4–4 illustrates the importance of integration management. In 1985, project managers spent most of their time planning and replanning with their team. This was necessary because the project manager was the technical expert. Today, line managers are the technical experts and perform the majority of the planning and replanning within their line. The project manager’s efforts are now heavily oriented toward integration of the Planning and Replanning with Team Integration Management Magnitude of Time 1985 2003 Year FIGURE 4–4. How do project managers spend their time? Duties and Job Descriptions 159 function plans into a total project plan. Some people contend that, with the increased risks and complexities of integration management, the project manager of the future will become an expert in damage control. 4.7 DUTIES AND JOB DESCRIPTIONS Since projects, environments, and organizations differ from company to company as well as project to project, it is not unusual for companies to struggle to provide reasonable job descriptions of the project manager and associated personnel. Below is a simple list identifying the duties of a project manager in the construction industry6: ● Planning Become completely familiar with all contract documents Develop the basic plan for executing and controlling the project Direct the preparation of project procedures Direct the preparation of the project budget Direct the preparation of the project schedule Direct the preparation of basic project design criteria and general specifications Direct the preparation of the plan for organizing, executing, and controlling field construction activities ● Review plans and procedures periodically and institute changes if necessary Organizing ● Develop organization chart for project ● Review project position descriptions, outlining duties, responsibilities, and restrictions for key project supervisors ● Participate in the selection of key project supervisors ● Develop project manpower requirements ● Continually review project organization and recommend changes in organizational structure and personnel, if necessary Directing ● Direct all work on the project that is required to meet contract obligations ● Develop and maintain a system for decision-making within the project team whereby decisions are made at the proper level ● Promote the growth of key project supervisors ● Establish objectives for project manager and performance goals for key project supervisors ● Foster and develop a spirit of project team effort ● Assist in resolution of differences or problems between departments or groups on assigned projects ● Anticipate and avoid or minimize potential problems by maintaining current knowledge of overall project status ● ● ● ● ● ● ● ● ● 6. Source unknown. 160 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● Develop clear written strategy guidelines for all major problems with clear definitions of responsibilities and restraints Controlling ● Monitor project activities for compliance with company purpose and philosophy and general corporate policies ● Interpret, communicate, and require compliance with the contract, the approved plan, project procedures, and directives of the client ● Maintain personal control of adherence to contract warranty and guarantee provisions ● Closely monitor project activities for conformity to contract scope provisions. Establish change notice procedure to evaluate and communicate scope changes ● See that the plans for controlling and reporting on costs, schedule, and quality are effectively utilized ● Maintain effective communications with the client and all groups performing project work A more detailed job description of a construction project manager (for a utility company) appears below: DUTIES Under minimum supervision establishes the priorities for and directs the efforts of personnel (including their consultants or contractors) involved or to be involved on project controlled tasks to provide required achievement of an integrated approved set of technical, manpower, cost, and schedule requirements. 1. Directs the development of initial and revised detailed task descriptions and forecasts of their associated technical, manpower, cost, and schedule requirements for tasks assigned to the Division. 2. Directs the regular integration of initial and revised task forecasts into Divisional technical, manpower, cost, and schedule reports and initiates the approval cycle for the reports. 3. Reviews conflicting inter- and extra-divisional task recommendations or actions that may occur from initial task description and forecast development until final task completion and directs uniform methods for their resolution. 4. Evaluates available and planned additions to Division manpower resources, including their tasks applications, against integrated technical and manpower reports and initiates actions to assure that Division manpower resources needs are met by the most economical mix of available qualified consultant and contractor personnel. 5. Evaluates Divisional cost and schedule reports in light of new tasks and changes in existing tasks and initiates actions to assure that increases or decreases in task cost and schedule are acceptable and are appropriately approved. 6. Prioritizes, adjusts, and directs the efforts of Division personnel (including their consultants and contractors) resource allocations as necessary to both assure the scheduled achievement of state and federal regulatory commitments and maintain Divisional adherence to integrated manpower, cost, and schedule reports. 7. Regularly reports the results of Divisional manpower, cost, and schedule evaluations to higher management. Duties and Job Descriptions 161 8. Regularly directs the development and issue of individual task and integrated Project programs reports. 9. Recommends new or revised Division strategies, goals, and objectives in light of anticipated long-term manpower and budget needs. 10. Directly supervises project personnel in the regular preparation and issue of individual task descriptions and their associated forecasts, integrated Division manpower, cost, and schedule reports, and both task and Project progress reports. 11. Establishes basic organizational and personnel qualification requirements for Division (including their consultants or contractors) performance on tasks. 12. Establishes the requirements for, directs the development of, and approves control programs to standardize methods used for controlling similar types of activities in the Project and in other Division Departments. 13. Establishes the requirements for, directs the development of, and approves administrative and technical training programs for Divisional personnel. 14. Approves recommendations for the placement of services or material purchase orders by Division personnel and assures that the cost and schedule data associated with such orders is consistent with approved integrated cost and schedule reports. 15. Promotes harmonious relations among Division organizations involved with Project tasks. 16. Exercises other duties related to Divisional project controls as assigned by the project manager. QUALIFICATIONS 1.8 A Bachelor of Science Degree in Engineering or a Business Degree with a minor in Engineering or Science from an accredited four (4) year college or university. 2.8 a) (For Engineering Graduate) Ten (10) or more years of Engineering and Construction experience including a minimum of five (5) years of supervisory experience and two (2) years of management and electric utility experience. 2.8 b) (For Business Graduate) Ten (10) or more years of management experience including a minimum of five (5) years of supervisory experience in an engineering and construction related management area and two (2) years of experience as the manager or assistant manager of major engineering and construction related projects and two (2) recent years of electric utility experience. 3.8 Working knowledge of state and federal regulations and requirements that apply to major design and construction projects such as fossil and nuclear power stations. 4.8 Demonstrated ability to develop high level management control programs. 5.8 Experience related to computer processing of cost and schedule information. 6.8 Registered Professional Engineer and membership in appropriate management and technical societies is desirable (but not necessary). 7.7 At least four (4) years of experience as a staff management member in an operating nuclear power station or in an engineering support on- or off-site capacity. 8.7 Detailed knowledge of federal licensing requirement for nuclear power stations. 9.7 Reasonably effective public speaker. 7. Qualifications 7 through 9 apply only for Nuclear Project Directors. 162 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM TABLE 4–3. PROJECT MANAGEMENT POSITIONS AND RESPONSIBILITIES Project Management Position Typical Responsibility Skill Requirements • • • Project Administrator Project Coordinator Technical Assistant Coordinating and integrating of subsystem tasks. Assisting in determining technical and manpower requirements, schedules, and budgets. Measuring and analyzing project performance regarding technical progress, schedules, and budgets. • • • • Planning Coordinating Analyzing Understanding the organization • • • Task Manager Project Engineer Assistant Project Manager Same as above, but stronger role in establishing and maintaining project requirements. Conducting trade-offs. Directing the technical implementation according to established schedules and budgets. • • • • Technical expertise Assessing trade-offs Managing task implementation Leading task specialists • • Project Manager Program Manager Same as above, but stronger role in project planning and controlling. Coordinating and negotiating requirements between sponsor and performing organizations. Bid proposal development and pricing. Establishing project organization and staffing. Overall leadership toward implementing project plan. Project profit. New business development. • • • • • • Overall program leadership Team building Resolving conflict Managing multidisciplinary tasks Planning and allocating resources Interfacing with customers/ sponsors • Executive Program Manager Title reserved for very large programs relative to host organization. Responsibilities same as above. Focus is on directing overall program toward desired business results. Customer liaison. Profit performance. New business development. Organizational development. • • Business leadership Managing overall program businesses Building program organizations Developing personnel Developing new business Responsible for managing multiprogram businesses via various project organizations, each led by a project manager. Focus is on business planning and development, profit performance, technology development, establishing policies and procedures, program management guidelines, personnel development, organizational development. • • • • • Director of Programs V.P. Program Development • • • • • • Leadership Strategic planning Directing and managing program businesses Building organizations Selecting and developing key personnel Identifying and developing new business The Organizational Staffing Process 163 Because of the potential overlapping nature of job descriptions in a project management environment, some companies try to define responsibilities for each project management position, as shown in Table 4–3. 4.8 THE ORGANIZATIONAL STAFFING PROCESS Staffing the project organization can become a long and tedious effort, especially on large and complex engineering projects. Three major questions must be answered: ● ● ● What people resources are required? Where will the people come from? What type of project organizational structure will be best? To determine the people resources required, the types of individuals (possibly job descriptions) must be decided on, as well as how many individuals from each job category are necessary and when these individuals will be needed. Consider the following situation: As a project manager, you have an activity that requires three separate tasks, all performed within the same line organization. The line manager promises you the best available resources right now for the first task but cannot make any commitments beyond that. The line manager may have only below-average workers available for the second and third tasks. However, the line manager is willing to make a deal with you. He can give you an employee who can do the work but will only give an average performance. If you accept the average employee, the line manager will guarantee that the employee will be available to you for all three tasks. How important is continuity to you? There is no clearly definable answer to this question. Some people will always want the best resources and are willing to fight for them, whereas others prefer continuity and dislike seeing new people coming and going. The author prefers continuity, provided that the assigned employee has the ability to do the up-front planning needed during the first task. The danger in selecting the best employee is that a higher-priority project may come along, and you will lose the employee; or if the employee is an exceptional worker, he may simply be promoted off your project. Sometimes, a project manager may have to make concessions to get the right people. For example, during the seventh, eighth, and ninth months of your project you need two individuals with special qualifications. The functional manager says that they will be available two months earlier, and that if you don’t pick them up then, there will be no guarantee of their availability during the seventh month. Obviously, the line manager is pressuring you, and you may have to give in. There is also the situation in which the line manager says that he’ll have to borrow people from another department in order to fulfill his commitments for your project. You may have to live with this situation, but be very careful— these employees will be working at a low level on the learning curve, and overtime will not necessarily resolve the problem. You must expect mistakes here. Line managers often place new employees on projects so they can be upgraded. Project managers often resent this and immediately go to top management for help. If 164 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM a line manager says that he can do the work with lower-level people, then the project manager must believe the line manager. After all, the line manager, not the assigned employees, makes the commitment to do the work, and it is the line manager’s neck that is stuck out. Mutual trust between project and line managers is crucial, especially during staffing sessions. Once a project manager has developed a good working relationship with employees, the project manager would like to keep those individuals assigned to his activities. There is nothing wrong with a project manager requesting the same administrative and/or technical staff as before. Line managers realize this and usually agree to it. There must also be mutual trust between the project managers themselves. Project managers must work as a team, recognize each other’s needs, and be willing to make decisions that are in the best interest of the company. Once the resources are defined, the next question must be whether staffing will be from within the existing organization or from outside sources, such as new hires or consultants. Outside consultants are advisable if, and only if, internal manpower resources are being fully utilized on other programs, or if the company does not possess the required project skills. The answer to this question will indicate which organizational form is best for achievement of the objectives. The form might be a matrix, product, or staff project management structure. Not all companies permit a variety of project organizational forms to exist within the main company structure. Those that do, however, consider the basic questions of classical management before making a decision. These include: ● ● ● ● How is labor specialized? What should the span of management be? ● How much planning is required? ● Are authority relationships delegated and understood? ● Are there established performance standards? ● What is the rate of change of the job requirements? Should we have a horizontal or vertical organization? ● What are the economics? ● What are the morale implications? Do we need a unity-of-command position? As in any organization, the subordinates can make the superior look good in the performance of his duties. Unfortunately, the project environment is symbolized by temporary assignments in which the main effort put forth by the project manager is to motivate his (temporary) subordinates toward project dedication and to make them fully understand that: ● ● ● ● ● Teamwork is vital for success. Esprit de corps contributes to success. Conflicts can occur between project and functional tiers. Communication is essential for success. Conflicting orders may be given by the: ● Project manager The Organizational Staffing Process 165 ● ● ● Functional manager Upper-level manager Unsuccessful performance may result in transfer or dismissal from the project as well as disciplinary action. Earlier we stated that a project operates as a separate entity but remains attached to the company through company administration policies and procedures. Although project managers can establish their own policies, procedures, and rules, the criteria for promotion must be based on company standards. Project managers should be careful about making commitments they can’t keep. After unkept promises on previous projects, a project manager will find it very difficult to get top-quality personnel to volunteer for another project. Even if top management orders key individuals to be assigned to his project, they will always be skeptical about any promises that he may make. Selecting the project manager is only one-third of the staffing problem. The next step, selecting the project office personnel and team members, can be a time-consuming chore. The project office consists of personnel who are usually assigned as full-time members of the project. The evaluation process should include active project team members, functional team members available for promotion or transfer, and outside applicants. Upon completion of the evaluation process, the project manager meets with upperlevel management. This coordination is required to assure that: ● ● ● All assignments fall within current policies on rank, salary, and promotion. The individuals selected can work well with both the project manager (formal reporting) and upper-level management (informal reporting). The individuals selected have good working relationships with the functional personnel. Good project office personnel usually have experience with several types of projects and are self-disciplined. The third and final step in the staffing of the project office is a meeting between the project manager, upper-level management, and the project manager on whose project the requested individuals are currently assigned. Project managers are very reluctant to give up qualified personnel to other projects, but unfortunately, this procedure is a way of life in a project environment. Upper-level management attends these meetings to show all negotiating parties that top management is concerned with maintaining the best possible mix of individuals from available resources and to help resolve staffing conflicts. Staffing from within is a negotiation process in which upper-level management establishes the ground rules and priorities. The selected individuals are then notified of the anticipated change and asked their opinions. If individuals have strong resentment to being transferred or reassigned, alternate personnel may be selected to avoid potential problems. Figure 4–5 shows the typical staffing pattern as a function of time. There is a manpower buildup in the early phases and a manpower decline in the later stages. This means that the project manager should bring people on board as needed and release them as early as possible. 166 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM STAFFING TO OTHER PROJECTS OR FUNCTIONAL GROUPS FROM OTHER PROJECTS OR FUNCTIONAL GROUPS I II III IV V VI PROJECT PHASE TIME FIGURE 4–5. Staffing pattern versus time. There are several psychological approaches that the project manager can use during the recruitment and staffing process. Consider the following: ● ● ● ● Line managers often receive no visibility or credit for a job well done. Be willing to introduce line managers to the customer. Be sure to show people how they can benefit by working for you or on your project. Any promises made during recruitment should be documented. The functional organization will remember them long after your project terminates. As strange as it may seem, the project manager should encourage conflicts to take place during recruiting and staffing. These conflicts should be brought to the surface and resolved. It is better for conflicts to be resolved during the initial planning stages than to have major confrontations later. It is unfortunate that recruiting and retaining good personnel are more difficult in a project organizational structure than in a purely traditional one. Clayton Reeser identifies nine potential problems that can exist in project organizations8: ● ● Personnel connected with project forms of organization suffer more anxieties about possible loss of employment than members of functional organizations. Individuals temporarily assigned to matrix organizations are more frustrated by authority ambiguity than permanent members of functional organizations. 8. Clayton Reeser, “Some Potential Human Problems of the Project Form of Organization,” Academy of Management Journal, Vol. XII, 1969, pp. 462–466. The Organizational Staffing Process ● ● ● ● ● ● ● 167 Personnel connected with project forms of organization that are nearing their phase-out are more frustrated by what they perceive to be “make work” assignments than members of functional organizations. Personnel connected with project forms of organization feel more frustrated because of lack of formal procedures and role definitions than members of functional organizations. Personnel connected with project forms of organization worry more about being set back in their careers than members of functional organizations. Personnel connected with project forms of organization feel less loyal to their organization than members of functional organizations. Personnel connected with project forms of organization have more anxieties in feeling that there is no one concerned about their personal development than members of functional organizations. Permanent members of project forms of organization are more frustrated by multiple levels of management than members of functional organizations. Frustrations caused by conflict are perceived more seriously by personnel connected with project forms of organization than members of functional organizations. Grinnell and Apple have identified four additional major problems associated with staffing9: ● ● ● ● People trained in single line-of-command organizations find it hard to serve more than one boss. People may give lip service to teamwork, but not really know how to develop and maintain a good working team. Project and functional managers sometimes tend to compete rather than cooperate with each other. Individuals must learn to do more “managing” of themselves. Thus far we have discussed staffing the project. Unfortunately, there are also situations in which employees must be terminated from the project because of: ● ● ● ● ● Nonacceptance of rules, policies, and procedures Nonacceptance of established formal authority Professionalism being more important to them than company loyalty Focusing on technical aspects at the expense of the budget and schedule Incompetence There are three possible solutions for working with incompetent personnel. First, the project manager can provide an on-the-spot appraisal of the employee. This includes 9. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,” Machine Design, January 1975, pp. 84–87. 168 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM identification of weaknesses, corrective action to be taken, and threat of punishment if the situation continues. A second solution is reassignment of the employee to less critical activities. This solution is usually not preferred by project managers. The third and most frequent solution is the removal of the employee. Although project managers can get project office people (who report to the project manager) removed directly, the removal of a line employee is an indirect process and must be accomplished through the line manager. The removal of the line employee should be made to look like a transfer; otherwise the project manager will be branded as an individual who fires people. Executives must be ready to cope with the staffing problems that can occur in a project environment. C. Ray Gullett has summarized these major problems10: ● ● ● ● ● Staffing levels are more variable in a project environment. Performance evaluation is more complex and more subject to error in a matrix form of organization. Wage and salary grades are more difficult to maintain under a matrix form of organization. Job descriptions are often of less value. Training and development are more complex and at the same time more necessary under a project form of organization. Morale problems are potentially greater in a matrix organization. 4.9 THE PROJECT OFFICE The project team is a combination of the project office and functional employees as shown in Figure 4–6. Although the figure identifies the project office personnel as assistant project managers, some employees may not have any such title. The advantage of such a title is that it entitles the employee to speak directly to the customer. For example, the project engineer might also be called the assistant project manager for engineering. The title is important because when the assistant project manager speaks to the customer, he represents the company, whereas the functional employee represents himself. The project office is an organization developed to support the project manager in carrying out his duties. Project office personnel must have the same dedication toward the project as the project manager and must have good working relationships with both the project and functional managers. The responsibilities of the project office include: ● ● ● Acting as the focal point of information for both in-house control and customer reporting Controlling time, cost, and performance to adhere to contractual requirements Ensuring that all work required is documented and distributed to all key personnel 10. C. Ray Gullett, “Personnel Management in the Project Environment,” Personnel Administration/Public Personnel Review, November–December 1972, pp. 17–22. 169 The Project Office ASSISTANT PROJECT MANAGERS FUNCTIONAL MANAGERS PROJECT MANAGER FUNCTIONAL EMPLOYEES PROJECT OFFICE PROJECT TEAM FIGURE 4–6. ● Project organization. Ensuring that all work performed is both authorized and funded by contractual documentation The major responsibility of the project manager and the project office personnel is the integration of work across the functional lines of the organization. Functional units, such as engineering, R&D, and manufacturing, together with extra-company subcontractors, must work toward the same specifications, designs, and even objectives. The lack of proper integration of these functional units is the most common cause of project failure. The team members must be dedicated to all activities required for project success, not just their own functional responsibilities. The problems resulting from lack of integration can best be solved by full-time membership and participation of project office personnel. Not all team members are part of the project office. Functional representatives, performing at the interface position, also act as integrators but at a closer position to where the work is finally accomplished (i.e., the line organization). One of the biggest challenges facing project managers is determining the size of the project office. The optimal size is determined by a trade-off between the maximum number of members necessary to assure compliance with requirements and the maximum number for keeping the total administrative costs under control. Membership is determined by factors such as project size, internal support requirements, type of project (i.e., R&D, qualification, production), level of technical competency required, and customer support requirements. Membership size is also influenced by how strategic management views the project to be. There is a tendency to enlarge project offices if the project is considered strategic, especially if follow-on work is possible. On large projects, and even on some smaller efforts, it is often impossible to achieve project success without permanently assigned personnel. The four major activities of the project office, shown below, indicate the need for using full-time people: ● ● Integration of activities In-house and out-of-house communication 170 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● Scheduling with risk and uncertainty Effective control These four activities require continuous monitoring by trained project personnel. The training of good project office members may take weeks or even months, and can extend beyond the time allocated for a project. Because key personnel are always in demand, project managers should ask themselves and upper-level management one pivotal question when attempting to staff the project office: Are there any projects downstream that could cause me to lose key members of my team? If the answer to this question is yes, then it might benefit the project to have the secondor third-choice person selected for the position or even to staff the position on a part-time basis. Another alternative, of course, would be to assign the key members to activities that are not so important and that can be readily performed by replacement personnel. This, however, is impractical because such personnel will not be employed efficiently. Program managers would like nothing better than to have all of their key personnel assigned full-time for the duration of the program. Unfortunately, this is undesirable, if not impossible, for many projects because11: ● ● ● ● ● Skills required by the project vary considerably as the project matures through each of its life-cycle phases. Building up large permanently assigned project offices for each project inevitably causes duplication of certain skills (often those in short supply), carrying of people who are not needed on a full-time basis or for a long period, and personnel difficulties in reassignment. The project manager may be diverted from his primary task and become the project engineer, for example, in addition to his duties of supervision, administration, and dealing with the personnel problems of a large office rather than concentrating on managing all aspects of the project itself. Professionally trained people often prefer to work within a group devoted to their professional area, with permanent management having qualifications in the same field, rather than becoming isolated from their specialty peers by being assigned to a project staff. Projects are subject to sudden shifts in priority or even to cancellation, and fulltime members of a project office are thus exposed to potentially serious threats to their job security; this often causes a reluctance on the part of some people to accept a project assignment. All of these factors favor keeping the full-time project office as small as possible and dependent on established functional departments and specialized staffs. The approach places great emphasis on the planning and control procedures used on the project. On the 11. Russell D. Archibald, Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 82. Copyright © 1976 by John Wiley & Sons, Inc. Reprinted by permission of the publisher. 171 The Project Office other hand, there are valid reasons for assigning particular people of various specialties to the project office. These specialties usually include: ● ● Systems analysis and engineering (or equivalent technical discipline) and product quality and configuration control, if the product requires such an effort Project planning, scheduling, control, and administrative support Many times a project office is staffed by promotion of functional specialists. This situation is quite common to engineering firms with a high percentage of technical employees, but is not without problems. In professional firms, personnel are generally promoted to management on the basis of their professional or technical competence rather than their managerial ability. While this practice may be unavoidable, it does tend to promote men with insufficient knowledge of management techniques and creates a frustrating environment for the professional down the line.12 With regard to the training needed by technicians who aspire to high positions in a world of increasing professionalism in management, more than half of the technically trained executives studied . . . wished that they had had “more training in the business skills traditionally associated with the management function.” In fact, 75 percent admitted that there were gaps in their nontechnical education. . . . Essentially, the engineer whose stock in trade has always been “hard skills” will need to recognize the value of such “soft skills” as psychology, sociology, and so forth, and to make serious and sustained efforts to apply them to his current job.13 There is an unfortunate tendency for executives to create an environment where line employees feel that the “grass is greener” in project management and project engineering than in the line organization. How should an executive handle a situation where line specialists continually apply for transfer to project management? One solution is the development of a dual ladder system, as shown in Figure 4–7, with a pay scale called “consultant.” This particular company created the consultant position because: ● ● There were several technical specialists who were worth more money to the company but who refused to accept a management position to get it. Technical specialists could not be paid more money than line managers. Promoting technical specialists to a management slot simply to give them more money can: ● ● ● Create a poor line manager Turn a specialist into a generalist Leave a large technical gap in the line organization 12. William P. Killian, “Project Management—Future Organizational Concept,” Marquette Business Review, 1971, pp. 90–107. 13. Richard A. Koplow, “From Engineer to Manager—And Back Again,” IEEE Transactions on Engineering Management, Vol. EM-14, No. 2, June 1967, pp. 88–92. © 1967 IEEE. 172 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM MANAGEMENT LADDER HOURLY SALARIES 37.68 36.68 35.78 34.98 34.28 25 32.12 30.60 29.00 27.00 26.00 24.92 23.86 26 47.00 44.88 43.38 VICE PRESIDENT DIRECTOR DIVISION DEPT SECTION/STAFF 38.20 36.68 35.16 33.64 32.12 30.60 STAFF 29.00 27.00 26.00 24.92 23.86 23.20 22.54 FIGURE 4–7. 41.88 40.38 38.88 37.68 36.68 40.38 38.88 37.68 36.68 35.78 44.88 43.38 41.88 40.38 38.88 52.40 49.46 47.00 35.16 33.64 32.12 30.60 29.00 27.00 26.00 45.26 42.28 38.20 36.68 CONSULTANT DEPT TECHNICAL LADDER SECTION NOTE: DIVISION, DIRECTOR, AND VICE PRESIDENT GRADES RECEIVE YEAR-END PERFORMANCE BONUSES IN ADDITION TO BASE PAY. 27 28 29 PAY GRADES 30 31 Exempt, upper-level pay structure. Line managers often argue that they cannot perform their managerial duties and control these “prima donnas” who earn more money and have a higher pay grade than the line managers. That is faulty reasoning. Every time the consultants do something well, it reflects on the entire line organization, not merely on themselves. The concept of having functional employees with a higher pay grade than the line manager can also be applied to the horizontal project. It is possible for a junior project manager suddenly to find that the line managers have a higher pay grade than the project manager. It is also possible for assistant project managers (as project engineers) to have a higher pay grade than the project manager. Project management is designed to put together the best mix of people to achieve the objective. If this best mix requires that a grade 7 report to a grade 9 (on a “temporary” project), then so be it. Executives should not let salaries, and pay grades, stand in the way of constructing a good project organization. Another major concern is the relationship that exists between project office personnel and functional managers. In many organizations, membership in the project office is considered to be more important than in the functional department. Functional members have a ten- 173 The Project Office dency to resent an individual who has just been promoted out of a functional department and into project management. Killian has described ways of resolving potential conflicts14: It must be kept in mind that veteran functional managers cannot be expected to accept direction readily from some lesser executive who is suddenly labelled a Project Manager. Management can avoid this problem by: ● Selecting a man who already has a high position of responsibility or placing him high enough in the organization. ● Assigning him a title as important-sounding as those of functional managers. ● Supporting him in his dealings with functional managers. If the Project Manager is expected to exercise project control over the functional departments, then he must report to the same level as the departments, or higher. Executives can severely hinder project managers by limiting their authority to select and organize (when necessary) a project office and team. According to Cleland15: His [project manager’s] staff should be qualified to provide personal administrative and technical support. He should have sufficient authority to increase or decrease his staff as necessary throughout the life of the project. The authorization should include selective augmentation for varying periods of time from the supporting functional areas. Many executives have a misconception concerning the makeup and usefulness of the project office. People who work in the project office should be individuals whose first concern is project management, not the enhancement of their technical expertise. It is almost impossible for individuals to perform for any extended period of time in the project office without becoming cross-trained in a second or third project office function. For example, the project manager for cost could acquire enough expertise eventually to act as the assistant to the assistant project manager for procurement. This technique of project office cross-training is an excellent mechanism for creating good project managers. We have mentioned two important facts concerning the project management staffing process: ● ● The individual who aspires to become a project manager must be willing to give up technical expertise and become a generalist. Individuals can be qualified to be promoted vertically but not horizontally. Once an employee has demonstrated the necessary attributes to be a good project manager, there are three ways the individual can become a project manager or part of the project office. The executive can: ● Promote the individual in salary and grade and transfer him into project management. 14. William P. Killian, “Project Management—Future Organizational Concept,” Marquette Business Review, 1971, pp. 90–107. 15. David I. Cleland, “Why Project Management?” Reprinted with permission from Business Horizons, Winter 1964, p. 85. Copyright © 1964 by the Board of Trustees at Indiana University. 174 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● Laterally transfer the individual into project management without any salary or grade increase. If, after three to six months, the employee demonstrates that he can perform, he will receive an appropriate salary and grade increase. Give the employee a small salary increase without any grade increase or a grade increase without any salary increase, with the stipulation that additional awards will be forthcoming after the observation period, assuming that the employee can handle the position. Many executives believe in the philosophy that once an individual enters the world of project management, there are only two places to go: up in the organization or out the door. If an individual is given a promotion and pay increase and is placed in project management and fails, his salary may not be compatible with that of his previous line organization, and now there is no place for him to go. Most executives, and employees, prefer the second method because it actually provides some protection for the employee. Many companies don’t realize until it is too late that promotions to project management may be based on a different set of criteria from promotions to line management. Promotions on the horizontal line are strongly based on communicative skills, whereas line management promotions are based on technical skills. 4.10 THE FUNCTIONAL TEAM The project team consists of the project manager, the project office (whose members may or may not report directly to the project manager), and the functional or interface members (who must report horizontally as well as vertically for information flow). Functional team members are often shown on organizational charts as project office team members. This is normally done to satisfy customer requirements. Upper-level management can have an input into the selection process for functional team members but should not take an active role unless the project and functional managers cannot agree. Functional management must be represented at all staffing meetings because functional staffing is directly dependent on project requirements and because: ● ● Functional managers generally have more expertise and can identify high-risk areas. Functional managers must develop a positive attitude toward project success. This is best achieved by inviting their participation in the early activities of the planning phase. Functional team members are not always full-time. They can be full-time or part-time for either the duration of the project or only specific phases. The selection process for both the functional team member and the project office must include evaluation of any special requirements. The most common special requirements develop from: 175 The Functional Team ● ● ● ● Changes in technical specifications Special customer requests Organizational restructuring because of deviations from existing policies Compatibility with the customer’s project office A typical project office may include between ten and thirty members, whereas the total project team may be in excess of a hundred people, causing information to be shared slowly. For large projects, it is desirable to have a full-time functional representative from each major division or department assigned permanently to the project, and perhaps even to the project office. Such representation might include: ● ● ● ● ● ● ● ● ● ● Program management Project engineering Engineering operations Manufacturing operations Procurement Quality control Cost accounting Publications Marketing Sales Both the project manager and team members must understand fully the responsibilities and functions of each other team member so that total integration can be achieved rapidly and effectively. On high-technology programs the chief project engineer assumes the role of deputy project manager. Project managers must understand the problems that the line managers have when selecting and assigning the project staff. Line managers try to staff with people who understand the need for teamwork. When employees are attached to a project, the project manager must identify the “star” employees. These are the employees who are vital for the success of the project and who can either make or break the project manager. Most of the time, star employees are found in the line organization, not the project office. As a final point, project managers can assign line employees added responsibilities within the scope of the project. If the added responsibilities can result in upgrading, then the project manager should consult with the line manager before such situations are initiated. Quite often, line managers (or even personnel representatives) send “check” people into the projects to verify that employees are performing at their proper pay grade. This is very important when working with blue-collar workers who, by union contractual agreements, must be paid at the grade level at which they are performing. Also, project managers must be willing to surrender resources when they are no longer required. If the project manager constantly cries wolf in a situation where a problem really does not exist, the line manager will simply pull away the resources (this is the line manager’s right), and a deteriorating working relationship will result. 176 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 4.11 THE PROJECT ORGANIZATIONAL CHART One of the first requirements of the project startup phase is to develop the organizational chart for the project and determine its relationship to the parent organizational structure. Figure 4–8 shows, in abbreviated form, the six major programs at Dalton Corporation. Our concern is with the Midas Program. Although the Midas Program may have the lowest priority of the six programs, it is placed at the top, and in boldface, to give the impression that it is the top priority. This type of representation usually makes the client or customer feel that his program is important to the contractor. The employees shown in Figure 4–8 may be part-time or full-time, depending upon the project’s requirements. Perturbations on Figure 4–8 might include one employee’s name VICE PRESIDENT AND GENERAL MANAGER RICHARD GREEN FIGURE 4–8. PROGRAM MANAGEMENT ARTHUR LENZ DIRECTOR ENGINEERING MANAGEMENT DR. HENRY WICKS DIRECTOR OPERATIONS MANAGEMENT STEVEN KRANSKY DIRECTOR MIDAS PROGRAM PAUL JONES MIDAS PROGRAM AL TANDY MIDAS PROGRAM DON DAVIS AXLE PROGRAM LES WHITE AXLE PROGRAM DR. MAX MOY AXLE PROGRAM AL BLACK LEX PROGRAM GEORGE MAY LEX PROGRAM LEE ABLE LEX PROGRAM SID JONES UMB PROGRAM JOHN TURNER UMB PROGRAM RICHARD LORD UMB PROGRAM ALEX CORD TALON PROGRAM FRED DARK TALON PROGRAM LON CHANK TALON PROGRAM PAUL STERNS MM PROGRAM RALPH DAVIS MM PROGRAM FRED BERN MM PROGRAM LOU BLUHM Dalton Corporation. 177 The Project Organizational Chart DIRECTOR PROGRAM MANAGEMENT DIRECTOR ENGINEERING DIRECTOR OPERATIONS PAUL JONES MIDAS PROGRAM MANAGER DON DAVIS CHIEF OPERATIONS AL TANDY CHIEF ENGINEER ED WHITE ENG DESIGN LOU PEARLY ENG TESTING ANDY LINK Q.A. FERD CAIN PROJECT ENG JOHN ROYAL MANU. ENG REX WHITE PRODUCTION REPORTING LEGEND DIRECT INDIRECT FIGURE 4–9. ERNIE JONES COST ACCT JEAN FLOOD CONTRACTS TED BLACK SCHEDULES Midas Program office. [Image not available in this electronic edition.] FIGURE 4–10. Typical project team organization. Source: F. A. Hollenbach and D. P. Schultz, “The Organization and Controls of Project Management,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. 178 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM identified on two or more vertical positions (i.e., the project engineer on two projects) or the same name in two horizontal boxes (i.e., for a small project, the same person could be the project manager and project engineer). Remember, this type of chart is for the customer’s benefit and may not show the true “dotted/solid” reporting relationships in the company. The next step is to show the program office structure, as illustrated in Figure 4–9. Note that the chief of operations and the chief engineer have dual reporting responsibility; they report directly to the program manager and indirectly to the directors. Again, this may be just for the customer’s benefit with the real reporting structure being reversed. Beneath the chief engineer, there are three positions. Although these positions appear as solid lines, they might actually be dotted lines. For example, Ed White might be working only parttime on the Midas Program but is still shown on the chart as a permanent program office member. Jean Flood, under contracts, might be spending only ten hours per week on the Midas Program. PERCENT TIME ON PROGRAM EXPERTISE: FERD CAIN CHIEF PROJECT ENGINEER 0 20 40 60 80 100 PERCENT TIME ON PROGRAM EXPERTISE: FRED TAYLOR PROJECT ENG. RUBBER 0 20 40 60 80 100 PERCENT TIME ON PROGRAM TONY PALO PH.D. PROJECT ENG. ADHESIVES EXPERTISE: 0 20 40 60 80 100 PERCENT TIME ON PROGRAM TED FLYNN PH.D. PROJECT ENG. STRUCTURES EXPERTISE: 0 20 40 60 80 100 PERCENT TIME ON PROGRAM EXPERTISE: ED MAPLE PROJECT ENG. THERMODYNAMIC 0 20 40 60 80 100 PERCENT TIME ON PROGRAM LOU HAZEL PH.D. PROJECT ENG. CONFIGURATION EXPERTISE: 0 FIGURE 4–11. 20 40 Project engineering department manning for the Midas Program. 60 80 100 179 Special Problems If the function of two positions on the organizational chart takes place at different times, then both positions may be shown as manned by the same person. For example, Ed White may have his name under both engineering design and engineering testing if the two activities are far enough apart that he can perform them independently. The people shown in the project office organizational chart, whether full-time or parttime, may not be physically sitting in the project office. For full-time, long-term assignments, as in construction projects, the employees may be physically sitting side by side (see Figure 4–10), whereas for part-time assignments, it may be imperative for them to sit in their functional group. Remember, these types of charts may simply be eyewash for the customer. Most customers realize that the top-quality personnel may be shared with other programs and projects. Project manning charts, such as the one shown in Figure 4–11, can be used for this purpose. These manning charts are also helpful in preparing the management volume of proposals to show the customer that key personnel will be readily available on his project. 4.12 SPECIAL PROBLEMS There are always special problems that influence the organizational staffing process. For example, the department shown in Figure 4–12 has a departmental matrix. All activities stay within the department. Project X and project Y are managed by line employees who have been temporarily assigned to the projects, whereas project Z is headed by supervisor B. The department’s activities involve high-technology engineering as well as R&D. NOTE: DEPARTMENT MANAGER PROJECT X PROJECT Y PROJECT Z (SUPERVISOR B) TRAINING STAFF PERSON C FIGURE 4–12. NEW EMPLOYEES The training problem. DEPARTMENT MANAGER EVALUATES ALL NEW EMPLOYEES DURING TRAINING. AFTER TRAINING, EMPLOYEE WILL WORK FOR A SECTION SUPERVISOR. STAFF PERSON A STAFF PERSON B STAFF PERSON C SUPERVISOR SECTION A SUPERVISOR SECTION B SUPERVISOR SECTION C 180 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM The biggest problem facing the department managers is that of training their new employees. The training process requires nine to twelve months. The employees become familiar with the functioning of all three sections, and only after training is an employee assigned to one of the sections. Line managers claim that they do not have sufficient time to supervise training. As a result, the department manager in the example found staff person C to be the most competent person to supervise training. A special department training project was set up, as shown in Figure 4–12. Figure 4–13 shows a utility company that has three full-time project managers controlling three projects, all of which cut across the central division. Unfortunately, the three full-time project managers cannot get sufficient resources from the central division because the line managers are also acting as divisional project managers and saving the best resources for their own projects. The obvious solution to the problem is that the central division line managers not be permitted to wear two hats. Instead, one full-time project manager can be added to the left division to manage all three central division projects. It is usually best for all project managers to report to the same division for priority setting and conflict resolution. Line managers have a tendency to feel demoted when they are suddenly told that they can no longer wear two hats. For example, Mr. Adams was a department manager with VICE PRESIDENT DIVISION MANAGER X X DIVISION MANAGER X X X X X X X Y Y Y NOTE: FIGURE 4–13. X INDICATES FULL–TIME FUNCTIONAL MANAGERS Y INDICATES FULL–TIME PROJECT MANAGERS Utility service organization. DIVISION MANAGER X X X X X Selecting the Project Management Implementation Team 181 thirty years of experience in a company. For the last several years, he had worn two hats and acted as both project manager and functional manager on a variety of projects. He was regarded as an expert in his field. The company decided to incorporate formal project management and established a project management department. Mr. Bell, a thirty-year-old employee with three years of experience with the company, was assigned as the project manager. In order to staff his project, Bell asked Adams for Mr. Cane (Bell’s friend) to be assigned to the project as the functional representative. Cane had been with the company for two years. Adams agreed to the request and informed Cane of his new assignment, closing with the remarks, “This project is yours all the way. I don’t want to have anything to do with it. I’ll be busy with paperwork as a result of the new organizational structure. Just send me a memo once in a while telling me what’s happening.” During the project kickoff meeting, it became obvious to everyone that the only person with the necessary expertise was Adams. Without his support, the duration of the project could be expected to double. The real problem here was that Adams wanted to feel important and needed, and was hoping that the project manager would come to him asking for his assistance. The project manager correctly analyzed the situation but refused to ask for the line manager’s help. Instead, the project manager asked an executive to step in and force the line manager to help. The line manager gave his help, but with great reluctance. Today, the line manager provides poor support to the projects that come across his line organization. 4.13 SELECTING THE PROJECT MANAGEMENT IMPLEMENTATION TEAM The implementation of project management within an organization requires strong executive support and an implementation team that is dedicated to making project management work. Selecting the wrong team players can either lengthen the implementation process or reduce employee morale. Some employees may play destructive roles on a project team. These roles, which undermine project management implementation, are shown in Figure 4–14 and described below: ● ● ● The aggressor ● Criticizes everybody and everything on project management ● Deflates the status and ego of other team members ● Always acts aggressively The dominator ● Always tries to take over ● Professes to know everything about project management ● Tries to manipulate people ● Will challenge those in charge for leadership role The devil’s advocate ● Finds fault in all areas of project management ● Refuses to support project management unless threatened ● Acts more of a devil than an advocate 182 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM Aggressor Blocker Dominator Destructive Roles Withdrawer Recognition Seeker FIGURE 4–14. ● ● ● ● Devil's Advocate Topic Jumper Roles people play that undermine project management implementation. The topic jumper ● Must be the first one with a new idea/approach to project management ● Constantly changes topics ● Cannot focus on ideas for a long time unless it is his/her idea ● Tries to keep project management implementation as an action item forever The recognition seeker ● Always argues in favor of his/her own ideas ● Always demonstrates status consciousness ● Volunteers to become the project manager if status is recognized ● Likes to hear himself/herself talk ● Likes to boast rather than provide meaningful information The withdrawer ● Is afraid to be criticized ● Will not participate openly unless threatened ● May withhold information ● May be shy The blocker ● Likes to criticize ● Rejects the views of others ● Cites unrelated examples and personal experiences ● Has multiple reasons why project management will not work These types of people should not be assigned to project management implementation teams. The types of people who should be assigned to implementation teams are shown in Figure 4-15 and described below. Their roles are indicated by their words: 183 Selecting the Project Management Implementation Team Initiators Information Seekers Information Givers Gate Keepers Supportive Roles Consensus Takers Encouragers Harmonizers FIGURE 4–15. ● ● ● ● ● ● Roles people play that support project management implementation. The initiators “Is there a chance that this might work?” “Let’s try this.” The information seekers ● “Have we tried anything like this before?” ● “Do we know other companies where this has worked?” ● “Can we get this information?” The information givers ● “Other companies found that . . .” ● “The literature says that . . .” ● “Benchmarking studies indicate that . . .” The encouragers ● “Your idea has a lot of merit.” ● “The idea is workable, but we may have to make small changes.” ● “What you said will really help us.” The clarifiers ● “Are we saying that . . . ?” ● “Let me state in my own words what I’m hearing from the team.” ● “Let’s see if we can put this into perspective.” The harmonizers ● “We sort of agree, don’t we?” ● “Your ideas and mine are close together.” ● “Aren’t we saying the same thing?” The consensus takers ● “Let’s see if the team is in agreement.” ● ● ● Clarifiers 184 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM ● ● ● “Let’s take a vote on this.” “Let’s see how the rest of the group feels about this.” The gate keepers ● “Who has not given us their opinions on this yet?” ● “Should we keep our options open?” ● “Are we prepared to make a decision or recommendation, or is there additional information to be reviewed?” PROBLEMS 4–1 From S. K. Grinnell and H. P. Apple (“When Two Bosses Are Better Than One,” Machine Design, January 1975, pp. 84–87): ● People trained in single-line-of-command organizations find it hard to serve more than one boss. ● People may give lip service to teamwork, but not really know how to develop and main- tain a good working team. ● Project and functional managers sometimes tend to compete rather than cooperate with each other. ● Individuals must learn to do more “managing” of themselves. The authors identify the above four major problems associated with staffing. Discuss each problem and identify the type of individual most likely to be involved (i.e., engineer, contract administrator, cost accountant, etc.) and in which organizational form this problem would be most apt to occur. 4–2 David Cleland (“Why Project Management?” Reprinted from Business Horizons, Winter 1964, p. 85. Copyright © 1964 by the Foundation for the School of Business at Indiana University. Used with permission) made the following remarks: His [project manager’s] staff should be qualified to provide personal administrative and technical support. He should have sufficient authority to increase or decrease his staff as necessary throughout the life of the project. This authorization should include selective augmentation for varying periods of time from the supporting functional areas. Do you agree or disagree with these statements? Should the type of project or type of organization play a dominant role in your answer? 4–3 The contractor’s project office is often structured to be compatible with the customer’s project office, sometimes on a one-to-one basis. Some customers view the contractor’s project organization merely as an extension of their own company. Below are three statements concerning this relationship. Are these statements true or false? Defend your answers. ● There must exist mutual trust between the customer and contractor together with a close day-to-day working relationship. ● The project manager and the customer must agree on the hierarchy of decision that each must make, either independently or jointly. (Which decisions can each make independently or jointly?) ● Both the customer and contractor’s project personnel must be willing to make decisions as fast as possible. 185 Problems 4–4 C. Ray Gullet (“Personnel Management in the Project Organization,” Personnel Administration/Public Personnel Review, November–December 1972, pp. 17–22) has identified five personnel problems. How would you, as a project manager, cope with each problem? ● Staffing levels are more variable in a project environment. ● Performance evaluation is more complex and more subject to error in a matrix form of organization. ● Wage and salary grades are more difficult to maintain under a matrix form of organiza- tion. Job descriptions are often of less value. ● Training and development are more complex and at the same time more necessary under a project form of organization. ● Morale problems are potentially greater in a matrix organization. 4–5 Some people believe that a project manager functions, in some respects, like a physician. Is there any validity in this? 4–6 Paul is a project manager for an effort that requires twelve months. During the seventh, eighth, and ninth months he needs two individuals with special qualifications. The functional manager has promised that these individuals will be available two months before they are needed. If Paul does not assign them to his project at that time, they will be assigned elsewhere and he will have to do with whomever will be available later. What should Paul do? Do you have to make any assumptions in order to defend your answer? 4–7 are: Some of the strongest reasons for promoting functional engineers to project engineers ● Better relationships with fellow researchers ● Better prevention of duplication of effort ● Better fostering of teamwork These reasons are usually applied to R&D situations. Could they also be applied to product lifecycle phases other than R&D? 4–8 The following have been given as qualifications for a successful advanced-technology project manager: ● ● ● ● ● Career has progressed up through the technical ranks Knowledgeable in many engineering fields Understands general management philosophy and the meaning of profitability Interested in training and teaching his superiors Understands how to work with perfectionists Can these same qualifications be modified for non-R&D project management? If so, how? 4–9 W. J. Taylor and T. F. Watling (Successful Project Management, London: Business Books, 1972, p. 32) state: It is often the case, therefore, that the Project Manager is more noted for his management technique expertise, his ability to “get things done” and his ability to “get on with people” than for his sheer technical prowess. However, it can be dangerous to minimize this latter talent when choosing Project Managers dependent upon project type and size. The Project Manager should preferably be an expert either in the field of the project task or a subject allied to it. How dangerous can it be if this latter talent is minimized? Will it be dangerous under all circumstances? 186 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 4–10 Frank Boone is the most knowledgeable piping engineer in the company. For five years, the company has turned down his application for transfer to project engineering and project management stating that he is too valuable to the company in his current position. If you were a project manager, would you want this individual as part of your functional team? How should an organization cope with this situation? 4–11 Tom Weeks is manager of the insulation group. During a recent group meeting, Tom commented, “The company is in trouble. As you know, we’re bidding on three programs right now. If we win just one of them, we can probably maintain our current work level. If, by some slim chance, we were to win all three, you’ll all be managers tomorrow.” The company won all three programs, but the insulation group did not hire anyone, and there were no promotions. What would you, as a project manager on one of the new projects, expect your working relations to be with the insulation group? 4–12 You are a project engineer on a high-technology program. As the project begins to wind down, your boss asks you to write a paper so that he can present it at a technical meeting. His name goes first on the paper. Should this be part of your job? How do you feel about this situation? 4–13 Research has indicated that the matrix structure is often confusing because it requires multiple roles for people, with resulting confusion about these roles (Keith Davis, Human Relations at Work, New York: McGraw-Hill, 1967, pp. 296–297). Unfortunately, not all program managers, project managers, and project engineers possess the necessary skills to operate in this environment. Stuckenbruck has stated, “The path to success is strewn with the bodies of project managers who were originally functional line managers and then went into project management” (Linn Stuckenbruck, “The Effective Project Manager,” Project Management Quarterly, Vol. VII, No. 1, March 1976, pp. 26–27). What do you feel is the major cause for this downfall of the functional manager? 4–14 For each of the organizational forms shown below, who determines what resources are needed, when they are needed, and how they will be employed? Who has the authority and responsibility to mobilize these resources? a. b. c. d. Traditional organization Matrix organization Product line organization Line/staff project organization 4–15 Do you agree or disagree that project organizational forms encourage peer-to-peer communications and dynamic problem-solving? 4–16 The XYZ Company operates on a traditional structure. The company has just received a contract to develop a new product line for a special group of customers. The company has decided to pull out selected personnel from the functional departments and set up a single product organizational structure to operate in parallel with the functional departments. a. Set up the organizational chart. b. Do you think this setup can work? Does your answer depend on how many years this situation must exist? 4–17 You are the project engineer on a program similar to one that you directed previously. Should you attempt to obtain the same administrative and/or technical staff that you had before? 187 Problems 4–18 A person assigned to your project is performing unsatisfactorily. What should you do? Will it make a difference if he is in the project office or a functional employee? 4–19 You have been assigned to the project office as an assistant project engineer. You are to report to the chief project engineer who reports formally to the project manager and informally to the vice president of engineering. You have never worked with this chief project engineer before. During the execution of the project, it becomes obvious to you that the chief project engineer is making decisions that do not appear to be in the best interest of the project. What should you do about this? 4–20 Should individuals be promoted to project management because they are at the top of their functional pay grade? 4–21 Should one functional department be permitted to “borrow” (on a temporary basis) people from another functional department in order to fulfill project manning requirements? Should this be permitted if overtime is involved? 4–22 Should a project manager be paid for performance or for the number of people he supervises? 4–23 Should a project manager try to upgrade his personnel? 4–24 Why should a functional manager assign his best people to you on a long-term project? 4–25 A coal company has adopted the philosophy that the project manager for new mine startup projects will be the individual who will eventually become the mine superintendent. The coal company believes that this type of “ownership” philosophy is good. Do you agree? 4–26 Can a project manager be considered as a “hired gun”? 4–27 Manufacturing organizations are using project management/project engineering strictly to give new employees exposure to total company operations. After working on one or two projects, each approximately one to two years in duration, the employee is transferred to line management for his career path and opportunities for advancement. Can a situation such as this, where there is no career path in either project management or project engineering, work successfully? Could there be any detrimental effects on the projects? 4–28 Can a project manager create dedication and a true winning spirit and still be hated by all? 4–29 Can anyone be trained to be a project manager? 4–30 A power and light company has part-time project management in which an individual acts as both a project manager and a functional employee at the same time. The utility company claims that this process prevents an employee from becoming “technically obsolete,” and that when the employee returns to full-time functional duties, he is a more well-rounded individual. Do you agree or disagree? What are the arrangement’s advantages and disadvantages? 4–31 Some industries consider the major criterion for promotion and advancement to be gray hair and/or baldness. Is this type of maturity advantageous? 4–32 In Figure 4–9 we showed that Al Tandy and Don Davis (as well as other project office personnel) reported directly to the project manager and indirectly to functional management. Could this situation be reversed, with the project office personnel reporting indirectly to the project manager and directly to functional management? 188 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 4–33 Most organizations have “star” people who are usually identified as those individuals who are the key to success. How does a project manager identify these people? Can they be in the project office, or must they be functional employees or managers? 4–34 Considering your own industry, what job-related or employee-related factors would you wish to know before selecting someone to be a project manager or a project engineer on an effort valued at: a. b. c. d. $30,000? $300,000? $3,000,000? $30,000,000? 4–35 One of the major controversies in project management occurs over whether the project manager needs a command of technology in order to be effective. Consider the following situation: You are the project manager on a research and development project. Marketing informs you that they have found a customer for your product and that you must make major modifications to satisfy the customer’s requirements. The engineering functional managers tell you that these modifications are impossible. Can a project manager without a command of technology make a viable decision as to whether to risk additional funds and support marketing, or should he believe the functional managers, and tell marketing that the modifications are impossible? How can a project manager, either with or without a command of technology, tell whether the functional managers are giving him an optimistic or a pessimistic opinion? 4–36 As a functional employee, you demonstrate that you have exceptionally good writing skills. You are then promoted to the position of special staff assistant to the division manager and told that you are to assume full responsibility for all proposal work that must flow through your division. How do you feel about this? Is it a promotion? Where can you go from here? 4–37 Government policymakers content that only high-ranking individuals (high GS grades) can be project managers because a good project manager needs sufficient “clout” to make the project go. In government, the project manager is generally the highest grade on the project team. How can problems of pay grade be overcome? Is the government’s policy effective? 4–38 A major utility company is worried about the project manager’s upgrading functional employees. On an eight-month project that employs four hundred full-time project employees, the department managers have set up “check” people whose responsibility is to see that functional employees do not have unauthorized (i.e., not approved by the functional manager) work assignments above their current grade level. Can this system work? What if the work is at a position below their grade level? 4–39 A major utility company begins each computer project with a feasibility study in which a cost-benefit analysis is performed. The project managers, all of whom report to a project management division, perform the feasibility study themselves without any functional support. The functional personnel argue that the feasibility study is inaccurate because the functional “experts” are not involved. The project managers, on the other hand, stipulate that they never have sufficient time or money to involve the functional personnel. Can this situation be resolved? 4–40 How would you go about training individuals within your company or industry to be good project managers? What assumptions are you making? 4–41 Should project teams be allowed to evolve by themselves? Problems 189 4–42 At what point or phase in the life cycle of a project should a project manager be appointed? 4–43 Top management generally has two schools of thought concerning project management. One school states that the project manager should be used as a means for coordinating activities that cut across several functional departments. The second school states that the project management position should be used as a means of creating future general managers. Which school of thought is correct? 4–44 Some executives feel that personnel working in a project office should be cross-trained in several assistant project management functions. What do you think about this? 4–45 A company has a policy that employees wishing to be project managers must first spend one to one-and-a-half years in the functional employee side of the house so that they can get to know the employees and company policy. What do you think about this? 4–46 Your project has grown to a point where there now exist openings for three full-time assistant project managers. Unfortunately, there are no experienced assistant project managers available. You are told by upper-level management that you will fill these three positions by promotions from within. Where in the organization should you look? During an interview, what questions should you ask potential candidates? Is it possible that you could find candidates who are qualified to be promoted vertically but not horizontally? 4–47 A functional employee has demonstrated the necessary attributes of a potentially successful project manager. Top management can: ● Promote the individual in salary and grade and transfer him into project management. ● Laterally transfer the employee into project management without any salary or grade increase. If, after three to six months, the employee demonstrates that he can perform, he will receive an appropriate salary and grade increase. ● Give the employee either a grade increase without any salary increase, or a small salary increase without any grade increase, under the stipulation that additional awards will be given at the end of the observation period, assuming that the employee can handle the position. If you were in top management, which method would you prefer? If you dislike the above three choices, develop your own alternative. What are the advantages and disadvantages of each choice? For each choice, discuss the ramifications if the employee cannot handle the project management position. 5 Management Functions Related Case Studies (from Kerzner/Project Management Case Studies) • Wynn Computer • Equipment (WCE) • The Trophy Project* Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • The Communication Problem • Meetings, Meetings, and Meetings • The Empowerment Problem • Project Management Psychology • Multiple Choice Exam • Crossword Puzzle on Human • Resource Management • Crossword Puzzle on • Communications Management PMBOK® Reference Sections for the PMP® Certification Exam • Human Resource • Management • Communications • Management 5.0 INTRODUCTION As we have stated, the project manager measures his success by how well he can negotiate with both upper-level and functional management for the resources necessary to achieve the project objective. Moreover, the project manager may have a great deal of delegated authority but very little power. Hence, *Case Study also appears at end of chapter. 191 192 MANAGEMENT FUNCTIONS the managerial skills he requires for successful performance may be drastically different from those of his functional management counterparts. The difficult aspect of the project management environment is that individuals at the project–functional interface must report to two bosses. Functional managers and project managers, by virtue of their different authority levels and responsibilities, treat their people in different fashions depending on their “management school” philosophies. There are generally five management schools, as described below: ● ● ● ● ● The classical/traditional school: Management is the process of getting things done (i.e., achieving objectives) by working both with and through people operating in organized groups. Emphasis is placed on the end-item or objective, with little regard for the people involved. The empirical school: Managerial capabilities can be developed by studying the experiences of other managers, whether or not the situations are similar. The behavioral school: Two classrooms are considered within this school. First, we have the human relations classroom in which we emphasize the interpersonal relationship between individuals and their work. The second classroom includes the social system of the individual. Management is considered to be a system of cultural relationships involving social change. The decision theory school: Management is a rational approach to decision making using a system of mathematical models and processes, such as operations research and management science. The management systems school: Management is the development of a systems model, characterized by input, processing, and output, and directly identifies the flow of resources (money, equipment, facilities, personnel, information, and material) necessary to obtain some objective by either maximizing or minimizing some objective function. The management systems school also includes contingency theory, which stresses that each situation is unique and must be optimized separately within the constraints of the system. In a project environment, functional managers are generally practitioners of the first three schools of management, whereas project managers utilize the last two. This imposes hardships on both the project managers and functional representatives. The project manager must motivate functional representatives toward project dedication on the horizontal line using management systems theory and quantitative tools, often with little regard for the employee. After all, the employee might be assigned for a very short-term effort, whereas the end-item is the most important objective. The functional manager, however, expresses more concern for the individual needs of the employee using the traditional or behavioral schools of management. Modern practitioners still tend to identify management responsibilities and skills in terms of the principles and functions developed in the early management schools, namely: ● ● ● ● ● Planning Organizing Staffing Controlling Directing Although these management functions have generally been applied to traditional management structures, they have recently been redefined for temporary management positions. Their fundamental meanings remain the same, but the applications are different. 193 Directing 5.1 CONTROLLING Controlling is a three-step process of measuring progress toward an objective, evaluating what remains to be done, and taking the necessary corrective action to achieve or exceed the objectives. These three steps—measuring, evaluating, and correcting—are defined as follows: ● ● ● Measuring: determining through formal and informal reports the degree to which progress toward objectives is being made. Evaluating: determining cause of and possible ways to act on significant deviations from planned performance. Correcting: taking control action to correct an unfavorable trend or to take advantage of an unusually favorable trend. The project manager is responsible for ensuring the accomplishment of group and organizational goals and objectives. To effect this, he must have a thorough knowledge of standards and cost control policies and procedures so that a comparison is possible between operating results and preestablished standards. The project manager must then take the necessary corrective actions. Later chapters provide a more in-depth analysis of control, especially the cost control function. In Chapter 1, we stated that project managers must understand organizational behavior in order to be effective and must have strong interpersonal skills. This is especially important during the controlling function. As stated by Doering1: The team leader’s role is crucial. He is directly involved and must know the individual team members well, not only in terms of their technical capabilities but also in terms of how they function when addressing a problem as part of a group. The technical competence of a potential team member can usually be determined from information about previous assignments, but it is not so easy to predict and control the individual’s interaction within and with a new group, since it is related to the psychological and social behavior of each of the other members of the group as a whole. What the leader needs is a tool to measure and characterize the individual members so that he can predict their interactions and structure his task team accordingly. 5.2 DIRECTING Directing is the implementing and carrying out (through others) of those approved plans that are necessary to achieve or exceed objectives. Directing involves such steps as: ● ● Staffing: seeing that a qualified person is selected for each position. Training: teaching individuals and groups how to fulfill their duties and responsibilities. 1. Robert D. Doering, “An Approach Toward Improving the Creative Output of Scientific Task Teams,” IEEE Transactions on Engineering Management. February 1973, pp. 29–31. © 1973 IEEE. 194 MANAGEMENT FUNCTIONS ● ● ● ● ● Supervising: giving others day-to-day instruction, guidance, and discipline as required so that they can fulfill their duties and responsibilities. Delegating: assigning work, responsibility, and authority so others can make maximum utilization of their abilities. Motivating: encouraging others to perform by fulfilling or appealing to their needs. Counseling: holding private discussions with another about how he might do better work, solve a personal problem, or realize his ambitions. Coordinating: seeing that activities are carried out in relation to their importance and with a minimum of conflict. Directing subordinates is not an easy task because of both the short time duration of the project and the fact that employees might still be assigned to a functional manager while temporarily assigned to your effort. The luxury of getting to “know” one’s subordinates may not be possible in a project environment. Project managers must be decisive and move forward rapidly whenever directives are necessary. It is better to decide an issue and be 10 percent wrong than it is to wait for the last 10 percent of a problem’s input and cause a schedule delay and improper use of resources. Directives are most effective when the KISS (keep it simple, stupid) rule is applied. Directives should be written with one simple and clear objective so that subordinates can work effectively and get things done right the first time. Orders must be issued in a manner that expects immediate compliance. Whether people will obey an order depends mainly on the amount of respect they have for you. Therefore, never issue an order that you cannot enforce. Oral orders and directives should be disguised as suggestions or requests. The requestor should ask the receiver to repeat the oral orders so that there is no misunderstanding. Project managers must understand human behavior in order to motivate people toward successful accomplishment of project objectives. Douglas McGregor advocated that most workers can be categorized according to two theories.2 The first, often referred to as Theory X, assumes that the average worker is inherently lazy and requires supervision. Theory X further assumes that: ● ● ● The average worker dislikes work and avoids work whenever possible. To induce adequate effort, the supervisor must threaten punishment and exercise careful supervision. The average worker avoids increased responsibility and seeks to be directed. The manager who accepts Theory X normally exercises authoritarian-type control over workers and allows little participation during decision-making. Theory X employees generally favor lack of responsibility, especially in decision-making. According to Theory Y, employees are willing to get the job done without constant supervision. Theory Y further assumes that: ● The average worker wants to be active and finds the physical and mental effort on the job satisfying. 2. Douglas McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), pp. 33–34. 195 Directing ● ● Greatest results come from willing participation, which will tend to produce selfdirection toward goals without coercion and control. The average worker seeks opportunity for personal improvement and self-respect. The manager who accepts Theory Y normally advocates participation and a management–employee relationship. However, in working with professionals, especially engineers, special care must be exercised because these individuals often pride themselves on their ability to find a better way to achieve the end result regardless of cost. If this happens, project managers must become authoritarian leaders and treat Theory Y employees as though they are Theory X. Many psychologists have established the existence of a prioritized hierarchy of needs that motivate individuals toward satisfactory performance. Maslow was the first to identify these needs.3 The first level is that of the basic or physiological needs, namely, food, water, clothing, shelter, sleep, and sexual satisfaction. Simply speaking, human primal desire to satisfy these basic needs motivates him to do a good job. After an employee has fulfilled his physiological needs, he turns to the next lower need, safety. Safety needs include economic security and protection from harm, disease, and violence. Safety can also include security. It is important that project managers realize this because these managers may find that as a project nears termination, functional employees are more interested in finding a new role for themselves than in giving their best to the current situation. The next level contains the social needs, including love, belonging, togetherness, approval, and group membership. At this level, the informal organization plays a dominant role. Many people refuse promotions to project management (as project managers, project office personnel, or functional representatives) because they fear that they will lose their “membership” in the informal organization. This problem can occur even on shortduration projects. In a project environment, project managers generally do not belong to any informal organization and, therefore, tend to look outside the organization to fulfill this need. Project managers consider authority and funding to be very important in gaining project support. Functional personnel, however, prefer friendship and work assignments. In other words, the project manager can use the project itself as a means of helping fulfill the third level for the line employees (i.e., team spirit). The two lowest needs are esteem and self-actualization. The esteem need includes self-esteem (self-respect), reputation, the esteem of others, recognition, and selfconfidence. Highly technical professionals are often not happy unless esteem needs are fulfilled. For example, many engineers strive to publish and invent as a means of satisfying these needs. These individuals often refuse promotions to project management because they believe that they cannot satisfy esteem needs in this position. Being called a project manager does not carry as much importance as being considered an expert in one’s field by one’s peers. The lowest need is self-actualization and includes doing what one can do best, desiring to utilize one’s potential, full realization of one’s potential, constant self-development, and a desire to be truly creative. Many good project managers find this level to be the most 3. Abraham Maslow, Motivation and Personality (New York: Harper and Brothers, 1954). 196 MANAGEMENT FUNCTIONS important and consider each new project as a challenge by which they can achieve selfactualization. Project managers must motivate temporarily assigned individuals by appealing to their desires to fulfill the lowest two levels, but not by making promises that cannot be met. Project managers must motivate by providing: ● ● ● ● ● ● ● A feeling of pride or satisfaction for one’s ego Security of opportunity Security of approval Security of advancement, if possible Security of promotion, if possible Security of recognition A means for doing a better job, not a means to keep a job Understanding professional needs is an important factor in helping people realize their true potential. Such needs include: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Interesting and challenging work Professionally stimulating work environment Professional growth Overall leadership (ability to lead) Tangible rewards Technical expertise (within the team) Management assistance in problem-solving Clearly defined objectives Proper management control Job security Senior management support Good interpersonal relations Proper planning Clear role definition Open communications A minimum of changes Motivating employees so that they feel secure on the job is not easy, especially since a project has a finite lifetime. Specific methods for producing security in a project environment include: ● ● ● ● Letting people know why they are where they are Making individuals feel that they belong where they are Placing individuals in positions for which they are properly trained Letting employees know how their efforts fit into the big picture Since project managers cannot motivate by promising material gains, they must appeal to each person’s pride. The guidelines for proper motivation are: 197 Project Authority ● ● ● ● ● Adopt a positive attitude Do not criticize management Do not make promises that cannot be kept Circulate customer reports Give each person the attention he requires There are several ways of motivating project personnel. Some effective ways include: ● ● ● ● ● ● ● Giving assignments that provide challenges Clearly defining performance expectations Giving proper criticism as well as credit Giving honest appraisals Providing a good working atmosphere Developing a team attitude Providing a proper direction (even if Theory Y) 5.3 PROJECT AUTHORITY Project management structures create a web of relationships that can cause chaos in the delegation of authority and the internal authority structure. Four questions must be considered in describing project authority: ● ● ● ● What is project authority? What is power, and how is it achieved? How much project authority should be granted to the project manager? Who settles project authority interface problems? One form of the project manager’s authority can be defined as the legal or rightful power to command, act, or direct the activities of others. The breakdown of the project manager’s authority is shown in Figure 5–1. Authority can be delegated from one’s superiors. Power, on the other hand, is granted to an individual by his subordinates and is a measure of their respect for him. A manager’s authority is a combination of his power and influence such that subordinates, peers, and associates willingly accept his judgment. In the traditional structure, the power spectrum is realized through the hierarchy, whereas in the project structure, power comes from credibility, expertise, or being a sound decision-maker. Authority is the key to the project management process. The project manager must manage across functional and organizational lines by bringing together activities required to accomplish the objectives of a specific project. Project authority provides the way of thinking required to unify all organizational activities toward accomplishment of the project regardless of where they are located. The project manager who fails to build and maintain his alliances will soon find opposition or indifference to his project requirements. 198 MANAGEMENT FUNCTIONS [Image not available in this electronic edition.] FIGURE 5–1. Project authority breakdown. Source: Bill Eglinton, “Matrix Project Management Myths and Realities,” Project Management Institutes Inc., Proceedings of the 13th Annual Seminars and Symposium, Toronto, Canada (1982). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. The amount of authority granted to the project manager varies according to project size, management philosophy, and management interpretation of potential conflicts with functional managers. There do exist, however, certain fundamental elements over which the project manager must have authority in order to maintain effective control. According to Steiner and Ryan4: The project manager should have broad authority over all elements of the project. His authority should be sufficient to permit him to engage all necessary managerial and technical actions required to complete the project successfully. He should have appropriate authority in design and in making technical decisions in development. He should be able to control funds, schedule and quality of product. If subcontractors are used, he should have maximum authority in their selection. Generally speaking, a project manager should have more authority than his responsibility calls for, the exact amount of authority usually depending on the amount of risk that the project manager must take. The greater the risk, the greater the amount of authority. A good project manager knows where his authority ends and does not hold an employee responsible for duties that he (the project manager) does not have the authority to enforce. Some projects are directed by project managers who have only monitoring authority. These project managers are referred to as influence project managers. Failure to establish authority relationships can result in: 4. Reprinted from George A. Steiner and William G. Ryan, Industrial Project Management (1968), p. 24. Copyright © 1968 by the Trustees of Columbia University in the City of New York. Reprinted with permission of The Free Press, a division of Simon and Schuster. 199 Project Authority ● ● ● ● ● Poor communication channels Misleading information Antagonism, especially from the informal organization Poor working relationships with superiors, subordinates, peers, and associates Surprises for the customer The following are the most common sources of power and authority problems in a project environment: ● ● ● ● ● ● ● ● ● ● Poorly documented or no formal authority Power and authority perceived incorrectly Dual accountability of personnel Two bosses (who often disagree) The project organization encouraging individualism Subordinate relations stronger than peer or superior relationships Shifting of personnel loyalties from vertical to horizontal lines Group decision-making based on the strongest group Ability to influence or administer rewards and punishment Sharing resources among several projects The project manager does not have unilateral authority in the project effort. He frequently negotiates with the functional manager. The project manager has the authority to determine the “when” and “what” of the project activities, whereas the functional manager has the authority to determine “how the support will be given.” The project manager accomplishes his objectives by working with personnel who are largely professional. For professional personnel, project leadership must include explaining the rationale of the effort as well as the more obvious functions of planning, organizing, directing, and controlling. Certain ground rules exist for authority control through negotiations: ● ● ● Negotiations should take place at the lowest level of interaction. Definition of the problem must be the first priority: ● The issue ● The impact ● The alternative ● The recommendations Higher-level authority should be used if, and only if, agreement cannot be reached. The critical stage of any project is planning. This includes more than just planning the activities to be accomplished; it also includes the planning and establishment of the authority relationships that must exist for the duration of the project. Because the project management environment is an ever-changing one, each project establishes its own policies and procedures, a situation that can ultimately result in a variety of authority relationships. It is therefore possible for functional personnel to have different responsibilities on different projects, even if the tasks are the same. 200 MANAGEMENT FUNCTIONS During the planning phase the project team develops a responsibility assignment matrix (RAM) that contains such elements as: ● ● ● ● ● ● ● General management responsibility Operations management responsibility Specialized responsibility Who must be consulted Who may be consulted Who must be notified Who must approve The responsibility matrix is often referred to as a linear responsibility chart (LRC) or responsibility assignment matrix (RAM). Linear responsibility charts identify the participants, and to what degree an activity will be performed or a decision will be made. The LRC attempts to clarify the authority relationships that can exist when functional units share common work. As described by Cleland and King5: The need for a device to clarify the authority relationships is evident from the relative unity of the traditional pyramidal chart, which (1) is merely a simple portrayal of the overall functional and authority models and (2) must be combined with detailed position descriptions and organizational manuals to delineate authority relationships and work performance duties. Figure 5–2 shows a typical linear responsibility chart. The rows, which indicate the activities, responsibilities, or functions required, can be all of the tasks in the work breakdown structure. The columns identify either positions, titles, or the people themselves. If the chart will be given to an outside customer, then only the titles should appear, or the customer will call the employees directly without going through the project manager. The symbols indicate the degrees of authority or responsibility existing between the rows and columns. Another example of an LRC is shown in Figure 5–3. In this case, the LRC is used to describe how internal and external communications should take place. This type of chart can be used to eliminate communications conflicts. Consider a customer who is unhappy about having all of his information filtered through the project manager and requests that his line people be permitted to talk to your line people on a one-on-one basis. You may have no choice but to permit this, but you should make sure that the customer understands that: ● ● ● Functional employees cannot make commitments for additional work or resources. Functional employees give their own opinion and not that of the company. Company policy comes through the project office. 5. From David I. Cleland and William Richard King, Systems Analysis and Project Management (New York: McGraw-Hill), p. 271. Copyright © 1968, 1975 McGraw-Hill Inc. Used with permission of McGraw-Hill Book Company. 201 Project Authority T EC OJ OR NS PO TS EC OJ NT PR ME RT ER PA AG DE MAN ER MB ME AM TE ICE FF TO EC OJ R PR GE NA MA PR RAW MATERIAL PROCUREMENT PREPARE BILL OF MATERIALS CONTACT VENDORS VISIT VENDORS PREPARE PURCHASE ORDERS AUTHORIZE EXPENDITURES PLACE PURCHASE ORDERS INSPECT RAW MATERIALS QUALITY CONTROL TESTING UPDATE INVENTORY FILE PREPARE INVENTORY REPORT WITHDRAW MATERIALS LEGEND GENERAL MANAGEMENT RESPONSIBILITY SPECIALIZED RESPONSIBILITY MUST BE CONSULTED MAY BE CONSULTED MUST BE NOTIFIED MUST APPROVE FIGURE 5–2. Linear responsibility chart. Figures 5–4 and 5–5 are examples of modified LRCs. Figure 5–4 is used to show the distribution of data items, and Figure 5–5 identifies the skills distribution in the project office. The responsibility matrix attempts to answer such questions as: “Who has signature authority?” “Who must be notified?” “Who can make the decision?” The questions can only be answered by clear definitions of authority, responsibility, and accountability: ● ● ● Authority is the right of an individual to make the necessary decisions required to achieve his objectives or responsibilities. Responsibility is the assignment for completion of a specific event or activity. Accountability is the acceptance of success or failure. The linear responsibility chart, although a valuable tool for management, does have a weakness in that it does not describe how people interact within the program. The LRC must be considered with the organization for a full understanding of how interactions 202 MANAGEMENT FUNCTIONS REPORTED TO PROJECT MANAGER INITIATED FROM PROJECT OFFICE TEAM MEMBER DEPARTMENT MEMBERS FUNCTIONAL EMPLOYEES DIVISION MANAGERS EXECUTIVE MANAGEMENT • CAN VARY FROM TASK TO TASK AND CAN BE WRITTEN OR ORAL • • DOES NOT INCLUDE REGUARLY SCHEDULED INTERCHANGE MEETINGS LEGEND DAILY WEEKLY MONTHLY AS NEEDED INFORMAL NEVER FIGURE 5–3. Communications responsibility matrix.* PR OJ EC TM PR OJ AN EC AG TO ER TE FF AM I CE ME LIN MB EM ER AN EX AG EC ER UT IVE MA NA GE M EN T CUSTOMER AND CONTRACTOR'S PERSONNEL DATA ITEM DISTRIBUTION MATRIX DATA ITEM FIGURE 5–4. REPORT DESCRIPTION 1 MONTHLY COST SUMMARIES X X 2 MILESTONE REPORTS X X 3 MANPOWER CURVES X X 4 INVENTORY UTILIZATION X X 5 PRESSURE TEST REPORT X X 6 HUMIDITY TESTS X X 7 HOTLINE REPORTS X X X X 8 SCHEDULING SUMMARIES X X X X Data distribution matrix. X X X X X X X X EXECUTIVE MANAGEMENT DIVISION MANAGER FUNCTIONAL EMPLOYEES TEAM MEMBER PROJECT OFFICE PROJECT MANAGER EXECUTIVE MANAGEMENT DIVISION MANAGER FUNCTIONAL EMPLOYEES DEPARTMENT MEMBERS TEAM MEMBER PROJECT OFFICE PROJECT MANAGER DEPARTMENT MEMBERS EXTERNAL (CUSTOMER) • • INTERNAL 203 ABLE, J. g h INSTRUMENTATION PIPING AND DESIGN LAYOUT FIGURE 5–5. Personal skills matrix. SYSTEM DESIGN o m SITE EVALUATION o n l l QUALITY CONTROL SPECIFICATION PREPARATION k h e d k i e d PROJECT REPORTING PROJECT MANAGEMENT j f INDUSTRIAL ENGINEERING PLANNING AND SCHEDULING e c ENVIRONMENTAL IMPACT ASSESSMENT ENERGY SYSTEMS ECONOMIC ANALYSIS b n j i g c o k i h f d b m l j h g b BAKER, P. b COOK, D. COST CONTROL DIRK, L. a EASLEY, P. a PROJECT TEAM FRANKLIN, W. ADMINISTRATIVE MANAGEMENT EXPERTISE AREAS OF FUNCTIONAL GREEN, C. o n l d b HENRY, L. o l k i c a IMHOFF, R. m l k e c JULES, C. o m h f d KLEIN, W. n j g e b a LEDGER, D. o k i b a MAYER, O. n h e d c NEWTON, A. m k i b OLIVER, G. o j g d b a n k i d c PRATT, L. 204 MANAGEMENT FUNCTIONS between individuals and organizations take place. As described by Karger and Murdick, the LRC has merit6: Obviously the chart has weaknesses, of which one of the larger ones is that it is a mechanical aid. Just because it says that something is a fact does not make it true. It is very difficult to discover, except generally, exactly what occurs in a company—and with whom. The chart tries to express in specific terms relationships that cannot always be delineated so clearly; moreover, the degree to which it can be done depends on the specific situation. This is the difference between the formal and informal organizations mentioned. Despite this, the Linear Responsibility Chart is one of the best devices for organization analysis known to the authors. Linear responsibility charts can result from customer-imposed requirements above and beyond normal operations. For example, the customer may require as part of its quality control that a specific engineer supervise and approve all testing of a certain item or that another individual approve all data released to the customer over and above program office approval. Such customer requirements necessitate LRCs and can cause disruptions and conflicts within an organization. Several key factors affect the delegation of authority and responsibility, both from upper-level management to project management and from project management to functional management. These key factors include: ● ● ● ● ● The maturity of the project management function The size, nature, and business base of the company The size and nature of the project The life cycle of the project The capabilities of management at all levels Once agreement has been reached as to the project manager’s authority and responsibility, the results must be documented to clearly delineate his role in regard to: ● ● ● ● ● ● ● ● ● ● ● ● His focal position Conflict between the project manager and functional managers Influence to cut across functional and organizational lines Participation in major management and technical decisions Collaboration in staffing the project Control over allocation and expenditure of funds Selection of subcontractors Rights in resolving conflicts Voice in maintaining integrity of the project team Establishment of project plans Providing a cost-effective information system for control Providing leadership in preparing operational requirements 6. D. W. Karger and R. G. Murdick, Managing Engineering and Research (New York: Industrial Press, 1963), p. 89. 205 Interpersonal Influences ● ● ● ● Maintaining prime customer liaison and contact Promoting technological and managerial improvements Establishment of project organization for the duration Cutting red tape Documenting the project manager’s authority is necessary because: ● ● ● ● All interfacing must be kept as simple as possible. The project manager must have the authority to “force” functional managers to depart from existing standards and possibly incur risk. The project manager must gain authority over those elements of a program that are not under his control. This is normally achieved by earning the respect of the individuals concerned. The project manager should not attempt to fully describe the exact authority and responsibilities of his project office personnel or team members. Instead, he should encourage problem-solving rather than role definition. 5.4 INTERPERSONAL INFLUENCES There exist a variety of relationships (although they are not always clearly definable) between power and authority. These relationships are usually measured by “relative” decision power as a function of the authority structure, and are strongly dependent on the project organizational form. Consider the following statements made by project managers: ● ● “I’ve had good working relations with department X. They like me and I like them. I can usually push through anything ahead of schedule.” “I know it’s contrary to department policy, but the test must be conducted according to these criteria or else the results will be meaningless” (remark made to a team member by a research scientist who was temporarily promoted to project management for an advanced state-of-the-art effort). Project managers are generally known for having a lot of delegated authority but very little formal power. They must, therefore, get jobs done through the use of interpersonal influences. There are five such interpersonal influences: ● ● ● Legitimate power: the ability to gain support because project personnel perceive the project manager as being officially empowered to issue orders. Reward power: the ability to gain support because project personnel perceive the project manager as capable of directly or indirectly dispensing valued organizational rewards (i.e., salary, promotion, bonus, future work assignments). Penalty power: the ability to gain support because the project personnel perceive the project manager as capable of directly or indirectly dispensing penalties that 206 MANAGEMENT FUNCTIONS PERCENTAGE OF REPLIES WHO RANKED POWERBASE AS ONE OF THREE . . . LEAST IMPORTANT FACTORS OF SUPPORT 80 70 60 50 40 30 20 10 MOST IMPORTANT FACTORS OF SUPPORT 10 20 30 40 50 60 70 80 EXPERTISE AUTHORITY WORK CHALLENGE FRIENDSHIP FUTURE WORK ASSIGNMENTS PROMOTION FUND ALLOCATION SALARY PENALTY SUPPORT FROM ASSIGNED PROJECT PERSONNEL SUPPORT FROM SUBORDINATES FIGURE 5–6. Significance of factors of support to project management. Source: Seminar in Project Management Workbook, © 1979 by Hans J. Thamhain. Reproduced by permission. ● they wish to avoid. Penalty power usually derives from the same source as reward power, with one being a necessary condition for the other. Expert power: the ability to gain support because personnel perceive the project manager as possessing special knowledge or expertise (that functional personnel consider as important). 207 Interpersonal Influences ● Referent power: the ability to gain support because project personnel feel personally attracted to the project manager or his project. The following six situations are examples of referent power (the first two are also reward power): ● ● ● ● ● ● The employee might be able to get personal favors from the project manager. The employee feels that the project manager is a winner and the rewards will be passed down to the employee. The employee and the project manager have strong ties, such as the same foursome for golf. The employee likes the project manager’s manner of treating people. The employee wants identification with a specific product or product line. The employee has personal problems and believes that he can get empathy or understanding from the project manager. Figure 5–6 shows how project managers perceive their influence style. Like relative power, interpersonal influences can be identified with various project organizational forms as to their relative value. This is shown in Figure 5–7. For any temporary management structure to be effective, there must exist a rational balance of power between functional and project management. Unfortunately, a balance of equal power is often impossible to obtain because each project is inherently different from others, and the project managers possess different leadership abilities. PRODUCT INFLUENCE IN DECISION MAKING RELATIVE INFLUENCE FUNCTIONAL INFLUENCE IN DECISION MAKING 1 FUNCTIONAL ORGANIZATION A. DUAL AUTHORITY FUNCTIONAL AUTHORITY STRUCTURE B. 2 PRODUCT TASK FORCES PRODUCT TEAMS PRODUCT MANAGERS PRODUCT DEPARTMENTS C. FUNCTIONAL REPORTING SYSTEM 3 PRODUCT ORGANIZATION MATRIX ORGANIZATION PRODUCT AUTHORITY STRUCTURE FUNCTIONAL TASK FORCES FUNCTIONAL TEAMS FUNCTIONAL MANAGERS FUNCTIONAL DEPARTMENTS DUAL INFORMATION AND REPORTING SYSTEM PRODUCT REPORTING SYSTEM The range of alternatives. Source: Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February 1971, p. 37. Copyright © 1971 by the Board of Trustees at Indiana University. FIGURE 5–7. 208 MANAGEMENT FUNCTIONS Achievement of this balance is a never-ending challenge for management. If time and cost constraints on a project cannot be met, the project influence in decision-making increases, as can be seen in Figure 5–7. If the technology or performance constraints need reappraisal, then the functional influence in decision-making will dominate. Regardless of how much authority and power a project manager develops over the course of the project, the ultimate factor in his ability to get the job done is usually his leadership style. Developing bonds of trust, friendship, and respect with the functional workers can promote success. 5.5 BARRIERS TO PROJECT TEAM DEVELOPMENT Most people within project-driven and non–project-driven organizations have differing views of project management. Table 5–1 compares the project and functional viewpoints of project management. These differing views can create severe barriers to successful project management operations. The understanding of barriers to project team building can help in developing an environment conducive to effective teamwork. The following barriers to team building were identified and analyzed in a field study by Thamhain and Wilemon.7 They are typical for many project environments. Differing outlooks, priorities, and interests. A major barrier exists when team members have professional objectives and interests that are different from the project objectives. These problems are compounded when the team relies on support organizations that have different interests and priorities. Role conflicts. Team development efforts are thwarted when role conflicts exist among the team members, such as ambiguity over who does what within the project team and in external support groups. Project objectives/outcomes not clear. Unclear project objectives frequently lead to conflict, ambiguities, and power struggles. It becomes difficult, if not impossible, to define roles and responsibilities clearly. Dynamic project environments. Many projects operate in a continual state of change. For example, senior management may keep changing the project scope, objectives, and resource base. In other situations, regulatory changes or client demands can drastically affect the internal operations of a project team. Competition over team leadership. Project leaders frequently indicated that this barrier most likely occurs in the early phases of a project or if the project runs into severe problems. Obviously, such cases of leadership challenge can result in barriers to team building. Frequently, these challenges are covert challenges to the project leader’s ability. Lack of team definition and structure. Many senior managers complain that teamwork is severely impaired because it lacks clearly defined task responsibilities and reporting 7. For detailed discussion see H. J. Thamhain and D. L. Wilemon, “Team Building in Project Management,” Proceedings of the Annual Symposium of the Project Management Institute, October 1979. 209 Barriers to Project Team Development TABLE 5–1. COMPARISON OF THE FUNCTIONAL AND THE PROJECT VIEWPOINTS Phenomena Project Viewpoint Functional Viewpoint Line–staff organizational dichotomy Vestiges of the hierarchical model remain: the line functions are placed in a support position. A web of authority and responsibility exists. Line functions have direct responsibility for accomplishing the objectives; line commands, and staff advises. Scalar principle Elements of the vertical chain exist, but prime emphasis is placed on horizontal and diagonal work flow. Important business is conducted as the legitimacy of the task requires. The chain of authority relationships is from superior to subordinate throughout the organization. Central, crucial, and important business is conducted up and down the vertical hierarchy. Superior–subordinate relationship Peer-to-peer, manager-to-technical expert, associate-to-associate, etc., relationships are used to conduct much of the salient business. This is the most important relationship; if kept healthy, success will follow. All important business is conducted through a pyramiding structure of superiors and subordinates Organizational objectives Management of a project becomes a joint venture of many relatively independent organizations. Thus, the objective becomes multilateral. Organizational objectives are sought by the parent unit (an assembly of suborganizations) working within its environment. The objective is unilateral. Unity of direction The project manager manages across functional and organizational lines to accomplish a common interorganizational objective. The general manager acts as the one head for a group of activities having the same plan. Parity of authority and responsibility Considerable opportunity exists for the project manager’s responsibility to exceed his authority. Support people are often responsible to other managers (functional) for pay, performance reports, promotions, etc. Consistent with functional management; the integrity of the superior–subordinate relationship is maintained through functional authority and advisory staff services. Time duration The project (and hence the organization) is finite in duration. Tends to perpetuate itself to provide continuing facilitative support. Source: David I. Cleland, “Project Management,” in David I. Cleland and William R. King, eds., Systems Organizations, Analysis, Management: A Book of Readings (New York: McGraw-Hill, Inc., 1969), pp. 281–290. © 1969 by McGraw-Hill Inc. Reprinted with permission of the publisher. 210 MANAGEMENT FUNCTIONS structures. We find this situation is most prevalent in dynamic, organizationally unstructured work environments such as computer systems and R&D projects. A common pattern is that a support department is charged with a task but no one leader is clearly delegated the responsibility. As a consequence, some personnel are working on the project but are not entirely clear on the extent of their responsibilities. In other cases, problems result when a project is supported by several departments without interdisciplinary coordination. Team personnel selection. This barrier develops when personnel feel unfairly treated or threatened during the staffing of a project. In some cases, project personnel are assigned to a team by functional managers, and the project manager has little or no input into the selection process. This can impede team development efforts, especially when the project leader is given available personnel versus the best, hand-picked team members. The assignment of “available personnel” can result in several problems (e.g., low motivation levels, discontent, and uncommitted team members). We’ve found, as a rule, that the more power the project leader has over the selection of his team members, and the more negotiated agreement there is over the assigned task, the more likely it is that team-building efforts will be fruitful. Credibility of project leader. Team-building efforts are hampered when the project leader suffers from poor credibility within the team or from other managers. In such cases, team members are often reluctant to make a commitment to the project or the leader. Credibility problems may come from poor managerial skills, poor technical judgments, or lack of experience relevant to the project. Lack of team member commitment. Lack of commitment can have several sources. For example, the team members having professional interests elsewhere, the feeling of insecurity that is associated with projects, the unclear nature of the rewards that may be forthcoming upon successful completion, and intense interpersonal conflicts within the team can all lead to lack of commitment. Lack of team member commitment may result from suspicious attitudes existing between the project leader and a functional support manager, or between two team members from two warring functional departments. Finally, low commitment levels are likely to occur when a “star” on a team “demands” too much effort from other team members or too much attention from the team leader. One team leader put it this way: “A lot of teams have their prima donnas and you learn to live and function with them. They can be critical to overall success. But some stars can be so demanding on everyone that they’ll kill the team’s motivation.” Communication problems. Not surprisingly, poor communication is a major enemy to effective team development. Poor communication exists on four major levels: problems of communication among team members, between the project leader and the team members, between the project team and top management, and between the project leaders and the client. Often the problem is caused by team members simply not keeping others informed on key project developments. Yet the “whys” of poor communication patterns are far more difficult to determine. The problem can result from low motivation levels, poor morale, or carelessness. It was also discovered that poor communication patterns between the team and support groups result in severe team-building problems, as does poor communication 211 Barriers to Project Team Development with the client. Poor communication practices often lead to unclear objectives and poor project control, coordination, and work flow. Lack of senior management support. Project leaders often indicate that senior management support and commitment is unclear and subject to waxing and waning over the project life cycle. This behavior can result in an uneasy feeling among team members and lead to low levels of enthusiasm and project commitment. Two other common problems are that senior management often does not help set the right environment for the project team at the outset, nor do they give the team timely feedback on their performance and activities during the life of the project. Project managers who are successfully performing their role not only recognize these barriers but also know when in the project life cycle they are most likely to occur. Moreover, these managers take preventive actions and usually foster a work environment that is conducive to effective teamwork. The effective team builder is usually a social architect who understands the interaction of organizational and behavior variables and can foster a climate of active participation and minimal conflict. This requires carefully developed skills in leadership, administration, organization, and technical expertise on the project. However, besides the delicately balanced management skills, the project manager’s sensitivity to the basic issues underlying each barrier can help to increase success in developing an effective project team. Specific suggestions for team building are advanced in Table 5–2. TABLE 5–2. BARRIERS TO EFFECTIVE TEAM BUILDING AND SUGGESTED HANDLING APPROACHES Barrier Suggestions for Effectively Managing Barriers (How to Minimize or Eliminate Barriers) Differing outlooks, priorities, interests, and judgments of team members Make effort early in the project life cycle to discover these conflicting differences. Fully explain the scope of the project and the rewards that may be forthcoming on successful project completion. Sell “team” concept and explain responsibilities. Try to blend individual interests with the overall project objectives. Role conflicts As early in a project as feasible, ask team members where they see themselves fitting into the project. Determine how the overall project can best be divided into subsystems and subtasks (e.g., the work breakdown structure). Assign/negotiate roles. Conduct regular status review meetings to keep team informed on progress and watch for unanticipated role conflicts over the project’s life. Project objectives/outcomes not clear Assure that all parties understand the overall and interdisciplinary project objectives. Clear and frequent communication with senior management and the client becomes critically important. Status review meetings can be used for feedback. Finally, a proper team name can help to reinforce the project objectives. (continues) 212 MANAGEMENT FUNCTIONS TABLE 5–2. BARRIERS TO EFFECTIVE TEAM BUILDING AND SUGGESTED HANDLING APPROACHES (Continued) Barrier Suggestions for Effectively Managing Barriers (How to Minimize or Eliminate Barriers) Dynamic project environments The major challenge is to stabilize external influences. First, key project personnel must work out an agreement on the principal project direction and “sell” this direction to the total team. Also educate senior management and the customer on the detrimental consequences of unwarranted change. It is critically important to forecast the “environment” within which the project will be developed. Develop contingency plans. Competition over team leadership Senior management must help establish the project manager’s leadership role. On the other hand, the project manager needs to fulfill the leadership expectations of team members. Clear role and responsibility definition often minimizes competition over leadership. Lack of team definition and structure Project leaders need to sell the team concept to senior management as well as to their team members. Regular meetings with the team will reinforce the team notion as will clearly defined tasks, roles, and responsibilities. Also, visibility in memos and other forms of written media as well as senior management and client participation can unify the team. Project personnel selection Attempt to negotiate the project assignments with potential team members. Clearly discuss with potential team members the importance of the project, their role in it, what rewards might result on completion, and the general “rules of the road” of project management. Finally, if team members remain uninterested in the project, then replacement should be considered. Credibility of project leader Credibility of the project leader among team members is crucial. It grows with the image of a sound decision-maker in both general management and relevant technical expertise. Credibility can be enhanced by the project leader’s relationship to other key managers who support the team’s efforts. Lack of team member commitment Try to determine lack of team member commitment early in the life of the project and attempt to change possible negative views toward the project. Often, insecurity is a major reason for the lack of commitment; try to determine why insecurity exists, then work on reducing the team members’ fears. Conflicts with other team members may be another reason for lack of commitment. It is important for the project leader to intervene and mediate the conflict quickly. Finally, if a team member’s professional interests lie elsewhere, the project leader should examine ways to satisfy part of the team member’s interests or consider replacement. Communication problems The project leader should devote considerable time communicating with individual team members about their needs and concerns. In addition, the leader should provide a vehicle for timely sessions to encourage communications among the individual team contributors. Tools for enhancing communications are status meetings, reviews, schedules, reporting system, and colocation. Similarly, the project leader should establish regular and thorough communications with the client and senior management. Emphasis is placed on written and oral communications with key issues and agreements in writing. (continues) Suggestions for Handling the Newly Formed Team 213 TABLE 5–2. BARRIERS TO EFFECTIVE TEAM BUILDING AND SUGGESTED HANDLING APPROACHES (Continued) Barrier Lack of senior management support Suggestions for Effectively Managing Barriers (How to Minimize or Eliminate Barriers) Senior management support is an absolute necessity for dealing effectively with interface groups and proper resource commitment. Therefore, a major goal for project leaders is to maintain the continued interest and commitment of senior management in their projects. We suggest that senior management become an integral part of project reviews. Equally important, it is critical for senior management to provide the proper environment for the project to function effectively. Here the project leader needs to tell management at the onset of the program what resources are needed. The project manager’s relationship with senior management and ability to develop senior management support is critically affected by his own credibility and the visibility and priority of his project. 5.6 SUGGESTIONS FOR HANDLING THE NEWLY FORMED TEAM A major problem faced by many project leaders is managing the anxiety that usually develops when a new team is formed. The anxiety experienced by team members is normal and predictable, but is a barrier to getting the team quickly focused on the task. This anxiety may come from several sources. For example, if the team members have never worked with the project leader, they may be concerned about his leadership style. Some team members may be concerned about the nature of the project and whether it will match their professional interests and capabilities, or help or hinder their career aspirations. Further, team members can be highly anxious about life-style/work-style disruptions. As one project manager remarked, “Moving a team member’s desk from one side of the room to the other can sometimes be just about as traumatic as moving someone from Chicago to Manila.” Another common concern among newly formed teams is whether there will be an equitable distribution of the workload among team members and whether each member is capable of pulling his own weight. In some newly formed teams, members not only must do their own work, but also must train other team members. Within reason this is bearable, but when it becomes excessive, anxiety increases. Certain steps taken early in the life of a team can minimize the above problems. First, we recommend that the project leader talk with each team member one-to-one about the following: 1. What the objectives are for the project. 2. Who will be involved and why. 3. The importance of the project to the overall organization or work unit. 214 MANAGEMENT FUNCTIONS 4. Why the team member was selected and assigned to the project. What role he will perform. 5. What rewards might be forthcoming if the project is successfully completed. 6. What problems and constraints are likely to be encountered. 7. The rules of the road that will be followed in managing the project (e.g., regular status review meetings). 8. What suggestions the team member has for achieving success. 9. What the professional interests of the team member are. 10. What challenge the project will present to individual members and the entire team. 11. Why the team concept is so important to project management success and how it should work. Dealing with these anxieties and helping team members feel that they are an integral part of the team can yield rich dividends. First, as noted in Figure 5–8, team members are more likely to openly share their ideas and approaches. Second, it is more likely that the team will be able to develop effective decision-making processes. Third, the team is likely to develop more effective project control procedures, including those traditionally used to monitor project performance (PERT/CPM, networking, work breakdown structures, etc.) and those in which team members give feedback to each other regarding performance. Effective Development of Team Membership Leads to Trust Relationships Among Team Members and Higher Quality Information Exchanges Within the Team Leads to More Effective Team Decision-Making Leads to More Effective Project Control Systems High Project Performance and Feedback Mechanism on Team Member Performance FIGURE 5–8. Team-building outcomes. 215 Team Building as an Ongoing Process 5.7 TEAM BUILDING AS AN ONGOING PROCESS While proper attention to team building is critical during early phases of a project, it is a never-ending process. The project manager is continually monitoring team functioning and performance to see what corrective action may be needed to prevent or correct various team problems. Several barometers (summarized in Table 5–3) provide good clues of potential team dysfunctioning. First, noticeable changes in performance levels for the team and/or for individual team members should always be investigated. Such changes can be symptomatic of more serious problems (e.g., conflict, lack of work integration, communication problems, and unclear objectives). Second, the project leader and team members must be aware of the changing energy levels of team members. These changes, too, may signal more serious problems or that the team is tired and stressed. Sometimes changing the work pace or taking time off can reenergize team members. Third, verbal and nonverbal clues from team members may be a source of information on team functioning. It is important to hear the needs and concerns of team members (verbal clues) and to observe how they act in carrying out their responsibilities (nonverbal clues). Finally, detrimental behavior of one team member toward another can be a signal that a problem within the team warrants attention. We highly recommend that project leaders hold regular meetings to evaluate overall team performance and deal with team functioning problems. The focus of these meetings can be directed toward “what we are doing well as a team” and “what areas need our team’s attention.” This approach often brings positive surprises in that the total team is informed of progress in diverse project areas (e.g., a breakthrough in technology development, a TABLE 5–3. EFFECTIVENESS–INEFFECTIVENESS INDICATORS The Effective Team’s Likely Characteristics • • • • • • • • • • • • • High performance and task efficiency Innovative/creative behavior Commitment Professional objectives of team members coincident with project requirements Team members highly interdependent, interface effectively Capacity for conflict resolution, but conflict encouraged when it can lead to beneficial results Effective communication High trust levels Results orientation Interest in membership High energy levels and enthusiasm High morale Change orientation The Ineffective Team’s Likely Characteristics • • • • • • • • Low performance Low commitment to project objectives Unclear project objectives and fluid commitment levels from key participants Unproductive gamesmanship, manipulation of others, hidden feelings, conflict avoidance at all costs Confusion, conflict, inefficiency Subtle sabotage, fear, disinterest, or foot-dragging Cliques, collusion, isolation of members Lethargy/unresponsiveness 216 MANAGEMENT FUNCTIONS subsystem schedule met ahead of the original target, or a positive change in the client’s behavior toward the project). After the positive issues have been discussed the review session should focus on actual or potential problem areas. The meeting leader should ask each team member for his observations and then open the discussion to ascertain how significant the problems really are. Assumptions should, of course, be separated from the facts of each situation. Next, assignments should be agreed on for best handling these problems. Finally, a plan for problem follow-up should be developed. The process should result in better overall performance and promote a feeling of team participation and high morale. 5.8 LEADERSHIP IN A PROJECT ENVIRONMENT Leadership can be defined as a style of behavior designed to integrate both the organizational requirements and one’s personal interests into the pursuit of some objective. All managers have some sort of leadership responsibility. If time permits, successful leadership techniques and practices can be developed. Leadership is composed of several complex elements, the three most common being: ● ● ● The person leading The people being led The situation (i.e., the project environment) Project managers are often selected or not selected because of their leadership styles. The most common reason for not selecting an individual is his inability to balance the technical and managerial project functions. Wilemon and Cicero have defined four characteristics of this type of situation8: ● ● ● ● The greater the project manager’s technical expertise, the higher his propensity to overinvolve himself in the technical details of the project. The greater the project manager’s difficulty in delegating technical task responsibilities, the more likely it is that he will overinvolve himself in the technical details of the project (depending on his ability to do so). The greater the project manager’s interest in the technical details of the project, the more likely it is that he will defend the project manager’s role as one of a technical specialist. The lower the project manager’s technical expertise, the more likely it is that he will overstress the nontechnical project functions (administrative functions). There have been several surveys to determine what leadership techniques are best. The following are the results of a survey by Richard Hodgetts9: 8. D. L. Wilemon and John P. Cicero, “The Project Manager: Anomalies and Ambiguities,” Academy of Management Journal, Vol. 13, pp. 269–282, 1970. 9. Richard M. Hodgetts, “Leadership Techniques in Project Organizations,” Academy of Management Journal, Vol. 11, pp. 211–219, 1968. 217 Life-Cycle Leadership ● Human relations–oriented leadership techniques project manager must make all the team members feel that their efforts are important and have a direct effect on the outcome of the program.” ● “The project manager must educate the team concerning what is to be done and how important its role is.” ● “Provide credit to project participants.” ● “Project members must be given recognition and prestige of appointment.” ● “Make the team members feel and believe that they play a vital part in the success (or failure) of the team.” ● “By working extremely closely with my team I believe that one can win a project loyalty while to a large extent minimizing the frequency of authority-gap problems.” ● “I believe that a great motivation can be created just by knowing the people in a personal sense. I know many of the line people better than their own supervisor does. In addition, I try to make them understand that they are an indispensable part of the team.” ● “I would consider the most important technique in overcoming the authoritygap to be understanding as much as possible the needs of the individuals with whom you are dealing and over whom you have no direct authority.” Formal authority–oriented leadership techniques ● “Point out how great the loss will be if cooperation is not forthcoming.” ● “Put all authority in functional statements.” ● “Apply pressure beginning with a tactful approach and minimum application warranted by the situation and then increasing it.” ● “Threaten to precipitate high-level intervention and do it if necessary.” ● “Convince the members that what is good for the company is good for them.” ● “Place authority on full-time assigned people in the operating division to get the necessity work done.” ● “Maintain control over expenditures.” ● “Utilize implicit threat of going to general management for resolution.” ● “It is most important that the team members recognize that the project manager has the charter to direct the project.” ● “The ● 5.9 LIFE-CYCLE LEADERSHIP In the opinion of the author, Hersey and Blanchard developed the best model for analyzing leadership in a project management environment.10 The model, which has been expanded by Paul Hersey and is shown in Figure 5–9, is the life-cycle theory of leadership. The model contends that leadership styles must change according to the readiness of the 10. Paul Hersey and Kenneth Blanchard, Management of Organizational Behavior (Englewood Cliffs, New Jersey: Prentice-Hall, 1979), p. 165. 218 MANAGEMENT FUNCTIONS [Image not available in this electronic edition.] Expanded Situational Leadership Model. Adapted from Paul Hersey, Situational Selling (Escondido, California: Center for Leadership Studies, 1985), p. 35. Reproduced by permission of the Center for Leadership Studies. FIGURE 5–9. employees, with readiness defined as job-related experience, willingness to accept job responsibility, and desire to achieve. This definition of readiness is somewhat different from other behavioral management definitions, which define readiness (and maturity) as age or emotional stability. As shown in Figure 5–9, the subordinates enter the organization in quadrant S1, which is high task and low relationship behavior. In this quadrant, the leadership style is almost pure task-oriented behavior and is an autocratic approach, where the leader’s main concern is the accomplishment of the objective, often with very little concern for the employees or their feelings. The leader is very forceful and relies heavily on his own abilities and judgment. Other people’s opinions may be of no concern. In the initial stage, there is anxiety, tension, and confusion among new employees, so that relationship behavior is inappropriate. In quadrant S2, employees begin to understand their tasks and the leader tries to develop strong behavioral relationships. The development of trust and understanding between the leader and subordinates becomes a driving force for the strong behavioral relationships. However, although the leader begins utilizing behavioral relationships, there still 219 Life-Cycle Leadership exists a strong need for high task behavior as well, since employees may not have achieved the level of competency to assume full responsibility. Quadrant S3 is often regarded as pure relationship behavior, where the leader is perhaps more interested in gaining the respect of the employees than in achieving the objectives. Referent power becomes extremely important. This behavior can be characterized by delegation of authority and responsibility (often excessive), participative management, and group decision-making. In this phase, employees no longer need directives and are knowledgeable enough about the job and self-motivated to the extent that they are willing to assume more responsibility for the task. Therefore, the leader can try to strengthen his relationships with subordinates. In quadrant S4, employees are experienced in the job, confident about their own abilities, and trusted to handle the work themselves. The leader demonstrates low task and low relationship behavior as the employees “mature” into a high degree of readiness. This type of life-cycle approach to leadership is extremely important to project managers, because it implies that effective leadership must be dynamic and flexible rather than static and rigid (see Figure 5–10). Effective leaders are neither pure task or relationship behavioralists, but maintain a balance between them. However, in time of crisis, a leader may be required to demonstrate a pure behavioral style or a pure task style. O RG CLIMATE AND POLI ATIONAL CIES ANIZ SUPERIOR'S EXPECTATIONS AND BEHAVIOR PERSONALITY, PAST EXPERIENCES, AND EXPECTATIONS TASK REQUIREMENTS LEADER'S EFFECTIVENESS PEERS' EXPECTATIONS AND BEHAVIOR ORGANIZATIONAL CLIMATE AND POLICIES SUBORDINATES' CHARACTERISTICS, EXPECTATIONS, AND BEHAVIOR Personality and situational factors that influence effective leadership. Source: James A. F. Stoner, Management, 2nd ed. (Englewood Cliffs, New Jersey: Prentice-Hall Inc., 1982) Used by permission. FIGURE 5–10. 220 MANAGEMENT FUNCTIONS In pure project management, the situation is even more complex. Line managers have sufficient time to develop a meaningful relationship with subordinates to the point that they get to know each other quite well. The line manager can then “train” his subordinates to adapt to the line manager’s leadership style. Project managers, on the other hand, are under a severe time constraint and may have to develop a different leadership style for each team member. To illustrate this graphically, the quadrants in Figure 5–9 should be three-dimensional, with the third axis being the lifecycle phase of the project. In other words, the leadership style is dependent not only on the situation, but on the life-cycle phase of the project. 5.10 ORGANIZATIONAL IMPACT In most companies, whether or not project-oriented, the impact of management emphasis on the organization is well known. In the project environment there also exists a definite impact due to leadership emphasis. The leadership emphasis is best seen by employee contributions, organizational order, employee performance, and the project manager’s performance: ● Contributions from People A good project manager encourages active cooperation and responsible participation. The result is that both good and bad information is contributed freely. ● A poor project manager maintains an atmosphere of passive resistance with only responsive participation. This results in information being withheld. Organizational Order ● A good project manager develops policy and encourages acceptance. A low price is paid for contributions. ● A poor project manager goes beyond policies and attempts to develop procedures and measurements. A high price is normally paid for contributions. Employee Performance ● A good project manager keeps people informed and satisfied (if possible) by aligning motives with objectives. Positive thinking and cooperation are encouraged. A good project manager is willing to give more responsibility to those willing to accept it. ● A poor project manager keeps people uninformed, frustrated, defensive, and negative. Motives are aligned with incentives rather than objectives. The poor project manager develops a “stay out of trouble” atmosphere. Performance of the Project Manager ● A good project manager assumes that employee misunderstandings can and will occur, and therefore blames himself. A good project manager constantly attempts to improve and be more communicative. He relies heavily on moral persuasion. ● ● ● ● Employee–Manager Problems ● 221 A poor project manager assumes that employees are unwilling to cooperate and therefore blames subordinates. The poor project manager demands more through authoritarian attitudes and relies heavily on material incentives. Management emphasis also impacts the organization. The following four categories show this management emphasis resulting for both good and poor project management: ● Management Problem-Solving A good project manager performs his own problem-solving at the level for which he is responsible through delegation of problem-solving responsibilities. ● A poor project manager will do subordinate problem-solving in known areas. For areas that he does not know, he requires that his approval be given prior to idea implementation. Organizational Order ● A good project manager develops, maintains, and uses a single integrated management system in which authority and responsibility are delegated to the subordinates. In addition, he knows that occasional slippages and overruns will occur, and simply tries to minimize their effect. ● A poor project manager delegates as little authority and responsibility as possible, and runs the risk of continual slippages and overruns. A poor project manager maintains two management information systems: one informal system for himself and one formal (eyewash) system simply to impress his superiors. Performance of People ● A good project manager finds that subordinates willingly accept responsibility, are decisive in attitude toward the project, and are satisfied. ● A poor project manager finds that his subordinates are reluctant to accept responsibility, are indecisive in their actions, and seem frustrated. Performance of the Project Manager ● A good project manager assumes that his key people can “run the show.” He exhibits confidence in those individuals working in areas in which he has no expertise, and exhibits patience with people working in areas where he has a familiarity. A good project manager is never too busy to help his people solve personal or professional problems. ● A poor project manager considers himself indispensable, is overcautious with work performed in unfamiliar areas, and becomes overly interested in work he knows. A poor project manager is always tied up in meetings. ● ● ● ● 5.11 EMPLOYEE–MANAGER PROBLEMS The two major problem areas in the project environment are the “who has what authority and responsibility” question, and the resulting conflicts associated with the individual at the project–functional interface. Almost all project problems in some way or another 222 MANAGEMENT FUNCTIONS involve these two major areas. Other problem areas found in the project environment include: ● ● ● ● ● ● ● ● ● ● The pyramidal structure Superior–subordinate relationships Departmentalization Scalar chain of command Organizational chain of command Power and authority Planning goals and objectives Decision-making Reward and punishment Span of control The two most common employee problems involve the assignment and resulting evaluation processes. Personnel assignments were discussed in Chapter 4. In summary: ● ● ● People should be assigned to tasks commensurate with their skills. Whenever possible, the same person should be assigned to related tasks. The most critical tasks should be assigned to the most responsible people. The evaluation process in a project environment is difficult for an employee at the functional–project interface, especially if hostilities develop between the functional and project managers. In this situation, the interfacing employee almost always suffers owing to a poor rating by either the project manager or his supervisor. Unless the employee continually keeps his superior abreast of his performance and achievements, the supervisor must rely solely on the input (often flawed) received from project office personnel. Three additional questions must be answered with regard to employee evaluation: ● ● ● Of what value are job descriptions? How do we maintain wage and salary grades? Who provides training and development, especially under conditions where variable manloading can exist? If each project is, in fact, different from all others, then it becomes an almost impossible task to develop accurate job descriptions. In many cases, wage and salary grades are functions of a unit manning document that specifies the number, type, and grade of all employees required on a given project. Although this might be a necessity in order to control costs, it also is difficult to achieve because variable manloading changes project priorities. Variable manloading creates several difficulties for project managers, especially if new employees are included. Project managers like to have seasoned veterans assigned to their activities because there generally does not exist sufficient time for proper and close supervision of the training and development of new employees. Functional managers, however, contend that the training has to be accomplished on someone’s project, and sooner or later all project managers must come to this realization. Employee–Manager Problems 223 On the manager level, the two most common problems involve personal values and conflicts. Personal values are often attributed to the “changing of the guard.” New managers have a different sense of values from that of the older, more experienced managers. Miner identifies some of these personal values attributed to new managers11: ● ● ● ● ● ● ● ● ● ● ● ● Less trust, especially of people in positions of authority. Increased feelings of being controlled by external forces and events, and thus belief that they cannot control their own destinies. This is a kind of change that makes for less initiation of one’s own activities and a greater likelihood of responding in terms of external pressures. There is a sense of powerlessness, although not necessarily a decreased desire for power. Less authoritarian and more negative attitudes toward persons holding positions of power. More independence, often to the point of rebelliousness and defiance. More freedom, less control in expressing feelings, impulses, and emotions. Greater inclination to live in the present and to let the future take care of itself. More self-indulgence. Moral values that are relative to the situation, less absolute, and less tied to formal religion. A strong and increasing identification with their peer and age groups, with the youth culture. Greater social concern and greater desire to help the less fortunate. More negative attitude toward business, the management role in particular. A professional position is clearly preferred to managing. A desire to contribute less to an employing organization and to receive more from the organization. Previously, we defined one of the attributes of a project manager as liking risks. Unfortunately, the amount of risk that today’s managers are willing to accept varies not only with their personal values but also with the impact of current economic conditions and top management philosophies. If top management views a specific project as vital for the growth of the company, then the project manager may be directed to assume virtually no risks during the execution of the project. In this case the project manager may attempt to pass all responsibility to higher or lower management claiming that “his hands are tied.” Wilemon and Cicero identify problems with risk identification12: ● The project manager’s anxiety over project risk varies in relation to his willingness to accept final responsibility for the technical success of his project. Some project managers may be willing to accept full responsibility for the success or failure of 11. John B. Miner, “The OD-Management Development Conflict.” Reprinted with permission from Business Horizons, December 1973, p. 32. Copyright © 1973 by the Board of Trustees at Indiana University. 12. D. L. Wilemon and John P. Cicero, “The Project Manager: Anomalies and Ambiguities,” Academy of Management Journal, Vol. 13, 1970, pp. 269–282. 224 MANAGEMENT FUNCTIONS ● ● their projects. Others, by contrast, may be more willing to share responsibility and risk with their superiors. The greater the length of stay in project management, the greater the tendency for project managers to remain in administrative positions within an organization. The degree of anxiety over professional obsolescence varies with the length of time the project manager spends in project management positions. The amount of risk that managers will accept also varies with age and experience. Older, more experienced managers tend to take few risks, whereas the younger, more aggressive managers may adopt a risk-lover policy in hopes of achieving a name for themselves. Conflicts exist at the project–functional interface regardless of how hard we attempt to structure the work. According to Cleland and King, this interface can be defined by the following relationships13: ● Project Manager What is to be done? When will the task be done? Why will the task be done? How much money is available to do the task? How well has the total project been done? Functional Manager ● Who will do the task? ● Where will the task be done? ● How will the task be done? ● How well has the functional input been integrated into the project? ● ● ● ● ● ● The result of these differing views is inevitable conflict between the functional and project manager, as described by William Killian14: The conflicts revolve about items such as project priority, manpower costs, and the assignment of functional personnel to the project manager. Each project manager will, of course, want the best functional operators assigned to his project. In addition to these problems, the accountability for profit and loss is much more difficult in a matrix organization than in a project organization. Project managers have a tendency to blame overruns on functional managers, stating that the cost of the function was excessive. Whereas functional managers have a tendency to blame excessive costs on project managers with the argument that there were too many changes, more work required than defined initially, and other such arguments. 13. From David I. Cleland and William Richard King, Systems Analysis and Project Management (New York: McGraw-Hill), p. 237. Copyright © 1968, 1975 by McGraw-Hill, Inc. Used with permission of McGraw-Hill Book Company. 14. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2, 1971, pp. 90–107. 225 Management Pitfalls Major conflicts can also arise during problem resolution sessions because the time constraints imposed on the project often prevent both parties from taking a logical approach. One of the major causes of prolonged problem-solving is a lack of pertinent information. The following information should be reported by the project manager15: ● ● ● ● ● The problem The cause The expected impact on schedule, budget, profit, or other pertinent area The action taken or recommended and the results expected of that action What top management can do to help 5.12 MANAGEMENT PITFALLS The project environment offers numerous opportunities for project managers and team members to get into trouble. Common types of management pitfalls are: ● ● ● ● ● ● ● Lack of self-control (knowing oneself) Activity traps Managing versus doing People versus task skills Ineffective communications Time management Management bottlenecks Knowing oneself, especially one’s capabilities, strengths, and weaknesses, is the first step toward successful project management. Too often, managers will assume that they are jacks-of-all-trades, will “bite off more than they can chew,” and then find that insufficient time exists for training additional personnel. The following lines illustrate self-concept: Four Men It chanced upon a winter’s night Safe sheltered from the weather. The board was spread for only one, Yet four men dined together. There sat the man I meant to be In glory, spurred and booted. And close beside him, to the right The man I am reputed. The man I think myself to be His seat was occupying 15. Russell D. Archibald, Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 230. 226 MANAGEMENT FUNCTIONS Hard by the man I really am To hold his own was trying. And all beneath one roof we met Yet none called his fellow brother No sign of recognition passed They knew not one another. Author unknown Activity traps result when the means become the end, rather than the means to achieve the end. The most common activity traps are team meetings, customer–technical interchange meetings, and the development of special schedules and charts that cannot be used for customer reporting but are used to inform upper-level management of project status. Sign-off documents are another activity trap and managers must evaluate whether all this paperwork is worth the effort. We previously defined a characteristic of poor leadership as the inability to obtain a balance between management functions and technical functions. This can easily develop into an activity trap where the individual becomes a doer rather than a manager. Unfortunately, there often exists a very fine line between managing and doing. As an example, consider a project manager who was asked by one of his technical people to make a telephone call to assist him in solving a problem. Simply making the phone call is doing work that should be done by the project team members or even the functional manager. However, if the person being called requires that someone in absolute authority be included in the conversation, then this can be considered managing instead of doing. There are several other cases where one must become a doer in order to be an effective manager and command the loyalty and respect of subordinates. Assume a special situation where you must schedule subordinates to work overtime on holidays or weekends. By showing up at the plant during these times, just to make a brief appearance, you can create a better working atmosphere and understanding with the subordinates. Another major pitfall is the decision to utilize either people skills or task skills. Is it better to utilize subordinates with whom you can obtain a good working relationship or to employ highly skilled people simply to get the job done? Obviously, the project manager would like nothing better than to have the best of both worlds, but this is not always possible. Consider the following situations: ● ● There is a task that will take three weeks to complete. John has worked for you before, but not on such a task as this. John, however, understands how to work with you. Paul is very competent but likes to work alone. He can get the job done within constraints. Should you employ people or task skills? (Would your answer change if the task were three months instead of three weeks?) There exist three tasks, each one requiring two months of work. Richard has the necessary people skills to handle all three tasks, but he will not be able to do so as efficiently as a technical specialist. The alternate choice is to utilize three technical specialists. Based on the amount of information given, the author prefers task skills so as not to hinder the time or performance constraints on the project. Generally speaking, for long- 227 Communications duration projects that require constant communications with the customer, it might be better to have permanently assigned employees who can perform a variety of tasks. Customers dislike seeing a steady stream of new faces. It is often said that a good project manager must be willing to work sixty to eighty hours a week to get the job done. This might be true if he is continually fighting fires or if budgeting constraints prevent employing additional staff. The major reason, however, is the result of ineffective time management. Prime examples might include the continuous flow of paperwork, unnecessary meetings, unnecessary phone calls, and acting as a tour guide for visitors. ● ● To be effective, the project manager must establish time management rules and then ask himself four questions: ● What am I doing that I don’t have to be doing at all? ● What am I doing that can be done better by someone else? ● What am I doing that could be done sufficiently well by someone else? ● Am I establishing the right priorities for my activities? Rules for time management ● Conduct a time analysis (time log) ● Plan solid blocks for important things ● Classify your activities ● Establish priorities ● Establish opportunity cost on activities ● Train your system (boss, subordinate, peers) ● Practice delegation ● Practice calculated neglect ● Practice management by exception ● Focus on opportunities—not on problems 5.13 COMMUNICATIONS Effective project communications ensure that we get the right information to the right person at the right time and in a cost-effective manner. Proper communication is vital to the success of a project. Typical definitions of effective communication include: ● ● ● ● ● An exchange of information An act or instance of transmitting information A verbal or written message A technique for expressing ideas effectively A process by which meanings are exchanged between individuals through a common system of symbols When a breakdown in communications occurs, disaster follows, as Figure 5–11 demonstrates. 228 MANAGEMENT FUNCTIONS AS PROPOSED BY THE PROJECT SPONSOR AS SPECIFIED IN THE PROJECT REQUEST AS PRODUCED BY MANUFACTURING AS INSTALLED AT THE USER'S SITE FIGURE 5–11. AS DESIGNED BY THE ENGINEER WHAT THE USER WANTED A breakdown in communications. (Source unknown) Figures 5–12 and 5–13 show typical communications patterns. Some people consider Figure 5–12 “politically incorrect” because project managers should not be identified as talking “down” to people. Most project managers communicate laterally, whereas line managers communicate vertically downward to subordinates. Figure 5–14 shows the complete communication model. The screens or barriers are from one’s perception, personality, attitudes, emotions, and prejudices. ● ● ● Perception barriers occur because individuals can view the same message in different ways. Factors influencing perception include the individual’s level of education and region of experience. Perception problems can be minimized by using words that have precise meaning. Personality and interests, such as the likes and dislikes of individuals, affect communications. People tend to listen carefully to topics of interest but turn a deaf ear to unfamiliar or boring topics. Attitudes, emotions, and prejudices warp our sense of interpretation. Individuals who are fearful or have strong love or hate emotions will tend to protect themselves by distorting the communication process. Strong emotions rob individuals of their ability to comprehend. Typical barriers that affect the encoding process include: ● ● Communication goals Communication skills 229 Communications UPWARD COMMUNICATION TO MANAGEMENT LATERAL COMMUNICATION TO PEERS, OTHER FUNCTIONAL GROUPS AND CUSTOMERS PROJECT MANAGER LATERAL COMMUNICATION TO FRIENDS, SOCIAL GROUP AND BOTH FORMAL AND INFORMAL ORGANIZATIONS DOWNWARD COMMUNICATION TO SUBORDINATES AND PROJECT OFFICE PERSONNEL Communication channels. Source: D. I. Cleland and H. Kerzner, Engineering Team Management (Melbourne, Florida: Krieger, 1986), p. 39. FIGURE 5–12. CUSTOMER CONTRACTOR PROJECT SPONSOR OR EXECUTIVE INFORMAL PROJECT SPONSOR OR EXECUTIVE PROJECT MANAGER OR CONTRACTS OFFICER FORMAL PROJECT MANAGER OR CONTRACTS OFFICER EMPLOYEES INFORMAL EMPLOYEES FIGURE 5–13. Customer communications. Source: D. I. Cleland and H. Kerzner, Engineering Team Management (Melbourne, Florida: Krieger, 1986), p. 64. 230 MANAGEMENT FUNCTIONS REGION OF EXPERIENCE FOR SOURCE SOURCE ENCODER REGION OF EXPERIENCE FOR RECEIVER MESSAGE DECODER RECEIVER PERCEPTION SCREEN PERSONALITY SCREEN FEEDBACK PERCEPTION SCREEN PERSONALITY SCREEN Total communication process. Source: D. I. Cleland and H. Kerzner, Engineering Team Management (Melbourne, Florida: Krieger, 1986), p. 46. FIGURE 5–14. ● ● ● ● ● ● ● ● ● Frame of reference Sender credibility Needs Personality and interests Interpersonal sensitivity Attitude, emotion, and self-interest Position and status Assumptions (about receivers) Existing relationships with receivers Typical barriers that affect the decoding process include: ● ● ● ● ● ● ● ● ● ● ● ● Evaluative tendency Preconceived ideas Communication skills Frame of reference Needs Personality and interest Attitudes, emotion, and self-interest Position and status Assumptions about sender Existing relationship with sender Lack of responsive feedback Selective listening The receiving of information can be affected by the way the information is received. The most common ways include: 231 Communications ● ● ● ● ● ● Hearing activity Reading skills Visual activity Tactile sensitivity Olfactory sensitivity Extrasensory perception The communications environment is controlled by both the internal and external forces, which can act either individually or collectively. These forces can either assist or restrict the attainment of project objectives. Typical internal factors include: ● ● ● ● ● ● ● ● ● Power games Withholding information Management by memo Reactive emotional behavior Mixed messages Indirect communications Stereotyping Transmitting partial information Blocking or selective perception Typical external factors include: ● ● ● ● ● The business environment The political environment The economic climate Regulatory agencies The technical state-of-the-art The communications environment is also affected by: ● ● ● ● ● ● Logistics/geographic separation Personal contact requirements Group meetings Telephone Correspondence (frequency and quantity) Electronic mail Noise tends to distort or destroy the information within the message. Noise results from our own personality screens, which dictate the way we present the message, and perception screens, which may cause us to “perceive” what we thought was said. Noise therefore can cause ambiguity: 232 MANAGEMENT FUNCTIONS ● ● ● Ambiguity causes us to hear what we want to hear. Ambiguity causes us to hear what the group wants. Ambiguity causes us to relate to past experiences without being discriminatory. In a project environment, a project manager may very well spend 90 percent or more of his or her time communicating. Typical functional applications include: ● Providing project direction Decision-making Authorizing work Directing activities Negotiating Reporting (including briefings) Attending meetings Overall project management Marketing and selling Public relations Records management ● Minutes ● Memos/letters/newsletters ● Reports ● Specifications ● Contract documents ● ● ● ● ● ● ● ● ● ● Project managers are required to provide briefings for both internal and external customers. Visual aids can greatly enhance a presentation. Their advantages include: ● ● ● ● Enlivening a presentation, which helps to capture and hold the interest of an audience. Adding a visual dimension to an auditory one, which permits an audience to perceive a message through two separate senses, thereby strengthening the learning process. Spelling out unfamiliar words by presenting pictures, diagrams, or objects, and by portraying relations graphically, which helps in introducing material that is difficult or new. Remaining in view much longer than oral statements can hang in the air, which can serve the same purpose as repetition in acquainting an audience with the unfamiliar and bringing back listeners who stray from the presentation. Meetings can be classified according to their frequency of occurrence: ● ● ● The daily meeting where people work together on the same project with a common objective and reach decisions informally by general agreement. The weekly or monthly meeting where members work on different but parallel projects and where there is a certain competitive element and greater likelihood that the chairman will make the final decision himself or herself. The irregular, occasional, or special-project meeting, composed of people whose 233 Communications normal work does not bring them into contact and whose work has little or no relationship to that of the others. They are united only by the project the meeting exists to promote and motivated by the desire that the project succeed. Though actual voting is uncommon, every member effectively has a veto. There are three types of written media used in organizations: ● ● ● Individually oriented media: These include letters, memos, and reports. Legally oriented media: These include contracts, agreements, proposals, policies, directives, guidelines, and procedures. Organizationally oriented media: These include manuals, forms, and brochures. Because of the time spent in a communications mode, the project manager may very well have as his or her responsibility the process of communications management. Communications management is the formal or informal process of conducting or supervising the exchange of information either upward, downward, laterally or diagonally. There appears to be a direct correlation between the project manager’s ability to manage the communications process and project performance. The communications process is more than simply conveying a message; it is also a source for control. Proper communications let the employees in on the act because employees need to know and understand. Communication must convey both information and motivation. The problem, therefore, is how to communicate. Below are six simple steps: ● ● ● ● ● ● Think through what you wish to accomplish. Determine the way you will communicate. Appeal to the interest of those affected. Give playback on ways others communicate to you. Get playback on what you communicate. Test effectiveness through reliance on others to carry out your instructions. Knowing how to communicate does not guarantee that a clear message will be generated. There are techniques that can be used to improve communications. These techniques include: ● ● ● ● ● ● ● ● ● Obtaining feedback, possibly in more than one form Establishing multiple communications channels Using face-to-face communications if possible Determining how sensitive the receiver is to your communications Being aware of symbolic meaning such as expressions on people’s faces Communicating at the proper time Reinforcing words with actions Using a simple language Using redundancy (i.e., saying it two different ways) whenever possible With every effort to communicate there are always barriers. The barriers include: ● Receiver hearing what he wants to hear. This results from people doing the same job so long that they no longer listen. 234 MANAGEMENT FUNCTIONS ● ● ● ● ● ● Sender and receiver having different perceptions. This is vitally important in interpreting contractual requirements, statements of work, and proposal information requests. Receiver evaluating the source before accepting the communications. Receiver ignoring conflicting information and doing as he pleases. Words meaning different things to different people. Communicators ignoring nonverbal cues. Receiver being emotionally upset. The scalar chain of command can also become a barrier with regard to in-house communications. The project manager must have the authority to go to the general manager or counterpart to communicate effectively. Otherwise, filters can develop and distort the final message. Three important conclusions can be drawn about communications techniques and barriers: ● ● ● Don’t assume that the message you sent will be received in the form you sent it. The swiftest and most effective communications take place among people with common points of view. The manager who fosters good relationships with his associates will have little difficulty in communicating with them. Communications must be established early in the project. In a project environment, communications are often filtered. There are several reasons for the filtering of upward communications: ● ● ● ● ● ● Unpleasantness for the sender Receiver cannot obtain information from any other source To embarrass a superior Lack of mobility or status for the sender Insecurity Mistrust Communication is also listening. Good project managers must be willing to listen to their employees, both professionally and personally. The advantages of listening properly are that: ● ● ● Subordinates know you are sincerely interested You obtain feedback Employee acceptance is fostered. The successful manager must be willing to listen to an individual’s story from beginning to end, without interruptions, and to see the problem through the eyes of the subordinate. Finally, before making a decision, the manager should ask the subordinate for his solutions to the problem. Project managers should ask themselves four questions: 235 Communications ● ● ● ● Do I make it easy for employees to talk to me? Am I sympathetic to their problems? Do I attempt to improve human relations? Do I make an extra effort to remember names and faces? The project manager’s communication skills and personality screen often dictates the communication style. Typical communication styles include: ● ● ● ● ● ● ● ● ● ● Authoritarian: gives expectations and specific guidance Promotional: cultivates team spirit Facilitating: gives guidance as required, noninterfering Conciliatory: friendly and agreeable, builds compatible team Judicial: uses sound judgment Ethical: honest, fair, by the book Secretive: not open or outgoing (to project detriment) Disruptive: breaks apart unity of group, agitator Intimidating: “tough guy,” can lower morale Combative: eager to fight or be disagreeable Team meetings are often used to exchange valuable and necessary information. The following are general guides for conducting more effective meetings: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Start on time. If you wait for people, you reward tardy behavior. Develop agenda “objectives.” Generate a list and proceed; avoid getting hung up on the order of topics. Conduct one piece of business at a time. Allow each member to contribute in his own way. Support, challenge, and counter; view differences as helpful; dig for reasons or views. Silence does not always mean agreement. Seek opinions: “What’s your opinion on this, Peggy?” Be ready to confront the verbal member: “Okay, we’ve heard from Mike on this matter; now how about some other views?” Test for readiness to make a decision. Make the decision. Test for commitment to the decision. Assign roles and responsibilities (only after decision-making). Agree on follow-up or accountability dates. Indicate the next step for this group. Set the time and place for the next meeting. End on time. Ask yourself if the meeting was necessary. Many times, company policies and procedures can be established for the development of communications channels. Table 5–4 illustrates such communications guidelines. 236 Assures his organization’s compliance with all such program direction received. Functional manager provides the program manager with copies of all “Program” correspondence released by his organization that may affect program performance. Ensures that the program manager is aware of correspondence with unusual content, on an exception basis, through the cognizant program team member or directly if such action is warranted by the gravity of the situation. Participates in program reviews, being aware of and prepared in matters related to his functional specialty. Keeps his line or staff management and cognizant program team member informed of significant problems and events relating to any program in which his personnel are involved. Signs correspondence that provides program direction to functional organizations. Signs correspondence addressed to the customer that pertains to the program except that which has been expressly assigned by the general manager, the function organizations, or higher management in accordance with division policy. Reports program results and accomplishments to the customer and to the general manager, keeping them informed of significant problems and events. Status reporting is the responsibility of functional specialists. The program manager utilizes the specialist organizations. The specialists retain their own channels to the general manager but must keep the program manager informed. In the program manager’s absence, the signature authority is transferred upward to his reporting superior unless an acting program manager has been designated. Signature authority for correspondence will be consistent with established division policy. Program definition must be within the scope of the contract as expressed in the program plan and work breakdown structure. Assures his organization’s compliance with all such program direction received. Approves program plans, subdivided work description, and/or work authorizations, and schedules defining specific program requirements. Relationship Communications up, down, and laterally are essential elements to the success of programs in a multiprogram organization, and to the morale and motivation of supporting functional organizations. In principle, communication from the program manager should be channeled through the program team member to functional managers. Functional Manager The program manager utilizes existing authorized communications media to the maximum extent rather than create new ones. Program Manager TABLE 5–4. COMMUNICATIONS POLICY Project Management Bottlenecks 237 5.14 PROJECT REVIEW MEETINGS Project review meetings are necessary to show that progress is being made on a project. There are three types of review meetings: ● ● ● Project team review meetings Executive management review meetings Customer project review meetings Most projects have weekly, bimonthly, or monthly meetings in order to keep the project manager and his team informed about the project’s status. These meetings are flexible and should be called only if they will benefit the team. Executive management has the right to require monthly status review meetings. However, if the project manager believes that other meeting dates are better (because they occur at a point where progress can be identified), then he should request them. Customer review meetings are often the most critical and most inflexibly scheduled. Project managers must allow time to prepare handouts and literature well in advance of the meeting. 5.15 PROJECT MANAGEMENT BOTTLENECKS Poor communications can easily produce communications bottlenecks. The most common bottleneck occurs when all communications between the customer and the parent organization must flow through the project office. Requiring that all information pass through the project office may be necessary but slows reaction times. Regardless of the qualifications of the project office members, the client always fears that the information he receives will be “filtered” prior to disclosure. Customers not only like firsthand information, but also prefer that their technical specialists be able to communicate directly with the parent organization’s technical specialists. Many project managers dislike this arrangement, for they fear that the technical specialists may say or do something contrary to project strategy or thinking. These fears can be allayed by telling the customer that this situation will be permitted if, and only if, the customer realizes that the remarks made by the technical specialists do not, in any way, shape, or form, reflect the position of the project office or company. For long-duration projects the customer may require that the contractor have an established customer representative office in the contractor’s facilities. The idea behind this is sound in that all information to the customer must flow through the customer’s project office at the contractor’s facility. This creates a problem in that it attempts to sever direct communications channels between the customer and contractor project managers. The result is the establishment of a local project office to satisfy contractual requirements, while actual communications go from customer to contractor as though the local project office did not exist. This creates an antagonistic local customer project office. 238 MANAGEMENT FUNCTIONS STRATEGIC POLICY INFORMATION CONTRACTOR UPPER LEVEL MANAGEMENT CUSTOMER UPPER LEVEL MANAGEMENT CONTRACTOR PROGRAM OFFICE CUSTOMER PROGRAM OFFICE INTERNAL FLOW OF INFORMATION INTERNAL FLOW OF INFORMATION FIGURE 5–15. Information flow pattern from contractor program office. Another bottleneck occurs when the customer’s project manager considers himself to be in a higher position than the contractor’s project manager and, therefore, seeks some higher authority with which to communicate. Project managers who seek status can often jeopardize the success of the project by creating rigid communications channels. Figure 5–15 identifies why communications bottlenecks such as these occur. There almost always exist a minimum of two paths for communications flow to and from the customer, which can cause confusion. 5.16 COMMUNICATION TRAPS Projects are run by communications. The work is defined by the communications tool known as the work breakdown structure. Actually, this is the easy part of communications, where everything is well defined. Unfortunately, project managers cannot document everything they wish to say or relate to other people, regardless of the level in the company. The worst possible situation occurs when an outside customer loses faith in the contractor. When a situation of mistrust prevails, the logical sequence of events would be: ● ● ● More documentation More interchange meetings Customer representation on your site In each of these situations, the project manager becomes severely overloaded with work. This situation can also occur in-house when a line manager begins to mistrust a project manager, or vice versa. There may suddenly appear an exponential increase in the flow of paperwork, and everyone is writing “protection” memos. Previously, everything was verbal. Communication traps occur most frequently with customer–contractor relationships. The following are examples of this: Communication Traps 239 ● Phase I of the program has just been completed successfully. The customer, however, was displeased because he had to wait three weeks to a month after all tests were completed before the data were presented. For Phase II, the customer is insisting that his people be given the raw data at the same time your people receive it. The customer is unhappy with the technical information that is being given by the project manager. As a result, he wants his technical people to be able to communicate with your technical people on an individual basis without having to go through the project office. You are a subcontractor to a prime contractor. The prime contractor is a little nervous about what information you might present during a technical interchange meeting where the customer will be represented, and therefore wants to review all material before the meeting. Functional employees are supposed to be experts. In front of the customer (or even your top management) an employee makes a statement that you, the project manager, do not believe is completely true or accurate. On Tuesday morning, the customer’s project manager calls your project manager and asks him a question. On Tuesday afternoon, the customer’s project engineer calls your project engineer and asks him the same question. ● ● ● ● Communication traps can also occur between the project office and line managers. Below are several examples: ● ● ● The project manager holds too many or too few team meetings. People refuse to make decisions, and ultimately the team meetings are flooded with agenda items that are irrelevant. Last month, Larry completed an assignment as an assistant project manager on an activity where the project manager kept him continuously informed as to project status. Now, Larry is working for a different project manager who tells him only what he needs to know to get the job done. In a project environment, the line manager is not part of any project team; otherwise he would spend forty hours per week simply attending team meetings. Therefore, how does the line manager learn of the true project status? Written memos will not do it. The information must come firsthand from either the project manager or the assigned functional employee. Line managers would rather hear it from the project manager because line employees have the tendency to censor bad news from the respective line manager. Line managers must be provided true status by the project office. Sometimes, project managers expect too much from their employees during problemsolving or brainstorming sessions, and communications become inhibited. There are several possible causes for having unproductive team meetings: ● ● ● ● Because of superior–subordinate relationships (i.e., pecking orders), creativity is inhibited. All seemingly crazy or unconventional ideas are ridiculed and eventually discarded. Contributors do not wish to contribute anything further. Meetings are dominated by upper-level management personnel. Many people are not given adequate notification of meeting time and subject matter. 240 MANAGEMENT FUNCTIONS 5.17 PROVERBS Below are twenty project management proverbs that show you what can go wrong16: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● You cannot produce a baby in one month by impregnating nine women. The same work under the same conditions will be estimated differently by ten different estimators or by one estimator at ten different times. The most valuable and least used word in a project manager’s vocabulary is “NO.” You can con a sucker into committing to an unreasonable deadline, but you can’t bully him into meeting it. The more ridiculous the deadline, the more it costs to try to meet it. The more desperate the situation, the more optimistic the situatee. Too few people on a project can’t solve the problems—too many create more problems than they solve. You can freeze the user’s specs but he won’t stop expecting. Frozen specs and the abominable snowman are alike: They are both myths, and they both melt when sufficient heat is applied. The conditions attached to a promise are forgotten, and the promise is remembered. What you don’t know hurts you. A user will tell you anything you ask about—nothing more. Of several possible interpretations of a communication, the least convenient one is the only correct one. What is not on paper has not been said. No major project is ever installed on time, within budget, with the same staff that started it. Projects progress quickly until they become 90 percent complete; then they remain at 90 percent complete forever. If project content is allowed to change freely, the rate of change will exceed the rate of progress. No major system is ever completely debugged; attempts to debug a system inevitably introduce new bugs that are even harder to find. Project teams detest progress reporting because it vividly demonstrates their lack of progress. Parkinson and Murphy are alive and well—in your project. 5.18 MANAGEMENT POLICIES AND PROCEDURES Although project managers have the authority and responsibility to establish project policies and procedures, they must fall within the general guidelines established by top management. Table 5–5 identifies sample top-management guidelines. Guidelines can also be established for planning, scheduling, controlling, and communications. 16. Source unknown. 241 The functional organization managers are responsible for supporting the program manager in the performance of the contract(s) and in accordance with the terms of the contract(s) and are accountable to their cognizant managers for the total performance. The program manager is responsible for overall program direction, control, and coordination; and is the principal contact with the program management of the customer. To achieve the program objectives, the program manager utilizes the services of the functional organizations in accordance with the prescribed division policies and procedures affecting the functional organizations. The program manager establishes program and technical policy as defined by management policy. The program manager is responsible for the progress being made as well as the effectiveness of the total program. Integrates research, development, production, procurement, quality assurance, product support, test, and financial and contractual aspects. Approves detailed performance specifications, pertinent physical characteristics, and functional design criteria to meet the program’s development or operational requirements. Ensures preparation of, and approves, overall plan, budgets, and work statements essential to the integration of system elements. Directs the preparation and maintenance of a time, cost, and performance schedule to ensure the orderly progress of the program. The functional support organizations perform all work within their functional areas for all programs within the cost, schedule, quality, and specifications established by contract for the program so as to assist the program manager in achieving the program objectives. The functional support organization management seeks out or initiates innovations, methods, improvements, or other means that will enable that function to better schedule commitments, reduce cost, improve quality, or otherwise render exemplary performance as approved by the program manager. Functional Manager Program Manager TABLE 5–5. PROJECT GUIDELINES (continues) The program manager determines what will be done: he obtains, through the assigned program team members, the assistance and concurrence of the functional support organizations in determining the definitive requirements and objectives of the program. The functional organizations determine how the work will be done. The program manager operates within prescribed division policies and procedures except where requirements of a particular program necessitate deviations or modifications as approved by the general manager. The functional support organizations provide strong, aggressive support to the program managers. The program manager relies on the functional support program team members for carrying out specific program assignments. Program managers and the functional support program team members are jointly responsible for ensuring that unresolved conflicts between requirements levied on functional organizations by different program managers are brought to the attention of management. Relationship 242 Coordinates and approves subcontract work statement, schedules, contract type, and price for major “buy” items. Coordinates and approves vendor evaluation and source selections in conjunction with procurement representative to the program team. Program decision authority rests with the program manager for all matters relating to his assigned program, consistent with division policy and the responsibilities assigned by the general manager. Program Manager TABLE 5–5. PROJECT GUIDELINES (Continued) Functional Manager Program managers do not make decisions that are the responsibility of the functional support organizations as defined in division policies and procedures and/or as assigned by the general manager. Functional organization managers do not request decisions of a program manager that are not within the program manager’s delineated authority and responsibility and that do not affect the requirements of the program. Functional organizations do not make program decisions that are the responsibility of the program manager. Joint participation in problem solution is essential to providing satisfactory decisions that fulfill overall program and company objectives, and is accomplished by the program manager and the assigned program team members. In arriving at program decisions, the program manager obtains the assistance and concurrence of cognizant functional support managers, through the cognizant program team member, since they are held accountable for their support of each program and for overall division functional performance. Relationship 243 Problems PROBLEMS 5–1 A project manager finds that he does not have direct reward power over salaries, bonuses, work assignments, or project funding for members of the project team with whom he interfaces. Does this mean that he is totally deficient in reward power? Explain your answer. 5–2 For each of the remarks made below, what types of interpersonal influences could exist? a. “I’ve had good working relations with department X. They like me and I like them. I can usually push through anything ahead of schedule.” b. A research scientist was temporarily promoted to project management for an advanced state-of-the-art effort. He was overheard making the following remark to a team member: “I know it’s contrary to department policy, but the test must be conducted according to these criteria or else the results will be meaningless.” 5–3 Do you agree or disagree that scientists and engineers are likely to be more creative if they feel that they have sufficient freedom in their work? Can this condition backfire? 5–4 Should the amount of risk and uncertainty in the project have a direct bearing on how much authority is granted to a project manager? 5–5 Some projects are directed by project managers who have only monitoring authority. These individuals are referred to as influence project managers. What kind of projects would be under their control? What organizational structure might be best for this? 5–6 As a project nears termination, the project manager may find that the functional people are more interested in finding a new role for themselves than in giving their best to the current situation. How does this relate to Maslow’s hierarchy of needs, and what should the project manager do? 5–7 Richard M. Hodgetts (“Leadership Techniques in the Project Organization,” Academy of Management Journal, June 1968, pp. 211–219) conducted a survey on aerospace, chemical, construction, and state government workers as to whether they would rate the following leadership techniques as very important, important, or not important: ● ● ● ● Negotiation Personality and/or persuasive ability Competence Reciprocal favors How do you think each industry answered the questionnaires? 5–8 Robert D. Doering (“An Approach Toward Improving the Creative Output of Scientific Task Teams,” IEEE Transactions on Engineering Management, February 1973, pp. 29–31, © 1973 IEEE) commented that: The team leader’s role is crucial. He is directly involved and must know the individual team members well, not only in terms of their technical capabilities but also in terms of how they function when addressing a problem as part of a group. The technical competence of a potential team member can usually be determined from information about previous assignments, but it is not so easy to predict and control the individual’s interaction within and with a new group, since it is related to the psychological and social behavior of each of the other members of the group as a whole. What the leader needs is a tool to measure and characterize the individual members so that he can predict their interactions and structure his task team accordingly. Is such a test possible for people working in a project environment? Are there any project organizational forms that would be conducive for such testing? 244 MANAGEMENT FUNCTIONS 5–9 Project managers consider authority and funding as being very important in gaining support. Functional personnel, however, prefer friendship and work assignments. How can these two outlooks be related to the theories of Maslow and McGregor? 5–10 Lloyd A. Rogers (“Guidelines for Project Management Teams,” Industrial Engineering, December 1974, p. 12. Published and copyright 1974 by the Institute of Industrial Engineers, 25 Technology Park, Norcross, GA 30092, 770-449-0461) has commented that: The technical planners, whether they are engineers or systems analysts, must be experts at designing the system, but seldom do they recognize the need to “put on another hat” when system design specifications are completed and design the project control or implementation plan. If this it not done, setting a project completion target date or a set of management checkpoint milestones is done by guesswork at best. Management will set the checkpoint milestones, and the technical planners will hope they can meet the schedule. How can this planning problem be effectively resolved on a continuing basis? 5–11 What kind of working relationships would result if the project manager had more reward power than the functional managers? 5–12 For each of the following remarks, state the possible situation and accompanying assumptions that you would make. a. “A good project manager should manage by focusing on keeping people happy.” b. “A good project manager must be willing to manage tension.” c. “The responsibility for the success or failure rests with upper-level management. This is their baby.” d. Remarks by functional employee: “What if I fail on this project? What can he (the project manager) do to me?” 5–13 Can each of the following situations lead to failure? a. b. c. d. Lack of expert power Lack of referent power Lack of reward and punishment power Not having sufficient authority 5–14 One of your people comes into your office and states that he has a technical problem and would like your assistance by making a phone call. a. Is this managing or doing? b. Does your answer depend on who must be called? (That is, is it possible that authority relationships may have to be considered?) 5–15 On the LRC, can we structure the responsibility column to primary and secondary responsibilities? 5–16 Discuss the meaning of each of the two poems listed below: We shall have to evolve Problem solvers galore Since each problem they solve Creates ten problems more. Author unknown 245 Problems Jack and Jill went up the hill To fetch a pail of water Jack fell down and broke his crown And Jill came tumbling after. Jack could have avoided this awful lump By seeking alternative choices Like installing some pipe and a great big pump And handing Jill the invoices.17 5–17 What is the correct way for a project manager to invite line managers to attend team meetings? 5–18 Can a project manager sit and wait for things to happen, or should he cause things to happen? 5–19 The company has just hired a fifty-four-year-old senior engineer who holds two masters degrees in engineering disciplines. The engineer is quite competent and has worked well as a loner for the past twenty years. This same engineer has just been assigned to the R&D phase of your project. You, as project manager or project engineer, must make sure that this engineer works as a team member with other functional employees, not as a loner. How do you propose to accomplish this? If the individual persists in wanting to be a loner, should you fire him? 5–20 Suppose the linear responsibility chart is constructed with the actual names of the people involved, rather than just their titles. Should this chart be given to the customer? 5–21 How should a functional manager handle a situation where the project manager: a. Continually cries wolf concerning some aspect of the project when, in fact, the problem either does not exist or is not as severe as the project manager makes it out to be? b. Refuses to give up certain resources that are no longer needed on the project? 5–22 How do you handle a project manager or project engineer who continually tries to “bite off more than he can chew?” If he were effective at doing this, at least temporarily, would your answer change? 5–23 A functional manager says that he has fifteen people assigned to work on your project next week (according to the project plan and schedule). Unfortunately, you have just learned that the prototype is not available and that these fifteen people will have nothing to do. Now what? Who is at fault? 5–24 Manpower requirements indicate that a specific functional pool will increase sharply from eight to seventeen people over the next two weeks and then drop back to eight people. Should you question this? 5–25 Below are several sources from which legal authority can be derived. State whether each source provides the project manager with sufficient authority from which he can effectively manage the project. a. The project or organizational charter b. The project manager’s position in the organization 17. Stacer Holcomb, OSD (SA), as quoted in The C/E Newsletter, publication of the cost effectiveness section of the Operations Research Society of America, Vol. 2, No. 1, January 1967. 246 MANAGEMENT FUNCTIONS c. d. e. f. g. The job description and specifications for project managers Policy documents The project manager’s “executive” rank Dollar value of the contract Control of funds 5–26 Is this managing or doing?18 MANAGING DOING _________ ________ _________ _________ ________ ________ _________ ________ _________ ________ _________ ________ _________ ________ _________ ________ _________ ________ _________ _________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ 1. Making a call with one of your people to assist him in solving a technical problem. 2. Signing a check to approve a routine expenditure. 3. Conducting the initial screening interview of a job applicant. 4. Giving one of your experienced people your solution to a new problem without first asking for his recommendation. 5. Giving your solution to a recurring problem that one of your new people has just asked you about. 6. Conducting a meeting to explain to your people a new procedure. 7. Phoning a department to request help in solving a problem that one of your people is trying to solve. 8. Filling out a form to give one of your people a pay increase. 9. Explaining to one of your people why he is receiving a merit pay increase. 10. Deciding whether to add a position. 11. Asking one of your people what he thinks about an idea you have that will affect your people. 12. Transferring a desirable assignment from employee A to employee B because employee A did not devote the necessary effort. 13. Reviewing regular written reports to determine your people’s progress toward their objectives. 14. Giving a regular progress report by phone to your supervisor. 15. Giving a tour to an important visitor from outside of your organization. 16. Drafting an improved layout of facilities. 17. Discussing with your key people the extent to which they should use staff services during the next year. 18. Deciding what your expense-budget request will be for your area of responsibility. 18. From Raymond O. Leon, Manage More by Doing Less (New York: McGraw-Hill), p. 4. Copyright © 1971 by McGraw-Hill, Inc., New York. Used with permission of McGraw-Hill Book Company. 247 Problems ________ ________ ________ ________ 19. Attending a professional or industrial meeting to learn detailed technical developments. 20. Giving a talk on your work activities to a local community group. 5–27 Below are three broad statements describing the functions of management. For each statement, are we referring to upper-level management, project management, or functional management? a. Acquire the best available assets and try to improve them. b. Provide a good working environment for all personnel. c. Make sure that all resources are applied effectively and efficiently such that all constraints are met, if possible. 5–28 Decide whether you agree or disagree that, in the management of people, the project manager: ● Must convert mistakes into learning experiences. ● Acts as the lubricant that eases the friction (i.e., conflicts) between the functioning parts. 5–29 Functional employees are supposed to be the experts. A functional employee makes a statement that the project manager does not believe is completely true or accurate. Should the project manager support the team member? If so, for how long? Does your answer depend on to whom the remarks are being addressed, such as upper-level management or the customer? At what point should a project manager stop supporting his team members? 5–30 Below are four statements: two statements describe a function, and two others describe a purpose. Which statements refer to project management and which refer to functional management? ● Function ● Reduce or eliminate uncertainty ● Minimize and assess risk ● Purpose ● Create the environment (using transformations) ● Perform decision-making in the transformed environment 5–31 Manager A is a department manager with thirty years of experience in the company. For the last several years, he has worn two hats and acted as both project manager and functional manager on a variety of projects. He is an expert in his field. The company has decided to incorporate formal project management and has established a project management department. Manager B, a thirty-year-old employee with three years of experience with the company, has been assigned as project manager. In order to staff his project, manager B has requested from manager A that manager C (a personal friend of manager B) be assigned to the project as the functional representative. Manager C is twenty-six years old and has been with the company for two years. Manager A agrees to the request and informs manager C of his new assignment, closing with the remarks, “This project is yours all the way. I don’t want to have anything to do with it. I’ll be too busy with paperwork as the result of our new organizational structure. Just send me a memo once in a while telling me what’s happening.” During the project kickoff meeting it became obvious to both manager B and manager C that the only person with the necessary expertise was manager A. Without the support of manager A, the time duration for project completion could be expected to double. 248 MANAGEMENT FUNCTIONS This situation is ideal for role playing. Put yourself in the place of managers A, B, and C and discuss the reasons for your actions. How can this problem be overcome? How do you get manager A to support the project? Who should inform upper-level management of this situation? When should upper-level management be informed? Would any of your answers change if manager B and manager C were not close friends? 5–32 Is it possible for a product manager to have the same degree of tunnel vision that a project manager has? If so, under what circumstances? 5–33 Your company has a policy that employees can participate in an educational tuition reimbursement program, provided that the degree obtained will benefit the company and that the employee’s immediate superior gives his permission. As a project manager, you authorize George, your assistant project manager who reports directly to you, to take courses leading to an MBA degree. Midway through your project, you find that overtime is required on Monday and Wednesday evenings, the same two evenings that George has classes. George cannot change the evenings that his classes are offered. You try without success to reschedule the overtime to early mornings or other evenings. According to company policy, the project office must supervise all overtime. Since the project office consists of only you and George, you must perform the overtime if George does not. How should you handle this situation? Would your answer change if you thought that George might leave the company after receiving his degree? 5–34 Establishing good interface relationships between the project manager and functional manager can take a great deal of time, especially during the conversion from a traditional to a project organizational form. Below are five statements that represent the different stages in the development of a good interface relationship. Place these statements in the proper order and discuss the meaning of each one. a. The project manager and functional manager meet face-to-face and try to work out the problem. b. Both the project and functional managers deny that any problems exist between them. c. The project and functional managers begin formally and informally to anticipate the problems that can occur. d. Both managers readily admit responsibility for several of the problems. e. Each manager blames the other for the problem. 5–35 John is a functional support manager with fourteen highly competent individuals beneath him. John’s main concern is performance. He has a tendency to leave scheduling and cost problems up to the project managers. During the past two months, John has intermittently received phone calls and casual visits from upper-level management and senior executives asking him about his department’s costs and schedules on a variety of projects. Although he can answer almost all of the performance questions, he has experienced great difficulty in responding to time and cost questions. John is a little apprehensive that if this situation continues, it may affect his evaluation and merit pay increase. What are John’s alternatives? 5–36 Projects have a way of providing a “chance for glory” for many individuals. Unfortunately, they quite often give the not-so-creative individual an opportunity to demonstrate his incompetence. Examples would include the designer who always feels that he has a better way of laying out a blueprint, or the individual who intentionally closes a door when asked to open it, or vice versa. How should a project manager handle this situation? Would your answer change if the individual were quite competent but always did the opposite just to show his individuality? Should these individuals be required to have close supervision? If close supervision is required, should it be the responsibility of the functional manager, the project office, or both? 249 Problems 5–37 Are there situations in which a project manager can wait for long-term changes instead of an immediate response to actions? 5–38 Is it possible for functional employees to have performed a job so long or so often that they no longer listen to the instructions given by the project or functional managers? 5–39 On Tuesday morning, the customer’s project manager calls the subcontractor’s project manager and asks him a question. On Tuesday afternoon, the customer’s project engineer calls the contractor’s project engineer and asks him the same question. How do you account for this? Could this be “planned” by the customer? 5–40 Below are eight common methods that project and functional employees can use to provide communications: a. b. c. d. Counseling sessions Telephone conversation Individual conversation Formal letter e. f. g. h. Project office memo Project office directive Project team meeting Formal report For each of the following actions, select one and only one means of communication from the above list that you would utilize in accomplishing the action: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Defining the project organizational structure to functional managers Defining the project organizational structure to team members Defining the project organizational structure to executives Explaining to a functional manager the reasons for conflict between his employee and your assistant project managers Requesting overtime because of schedule slippages Reporting an employee’s violation of company policy Reporting an employee’s violation of project policy Trying to solve a functional employee’s grievance Trying to solve a project office team member’s grievance Directing employees to increase production Directing employees to perform work in a manner that violates company policy Explaining the new indirect project evaluation system to project team members Asking for downstream functional commitment of resources Reporting daily status to executives or the customer Reporting weekly status to executives or the customer Reporting monthly or quarterly status to executives or the customer Explaining the reason for the cost overrun Establishing project planning guidelines Requesting a vice president to attend your team meeting Informing functional managers of project status Informing functional team members of project status Asking a functional manager to perform work not originally budgeted for Explaining customer grievances to your people Informing employees of the results of customer interchange meetings Requesting that a functional employee be removed from your project because of incompetence 5–41 Last month, Larry completed an assignment as chief project engineering on project X. It was a pleasing assignment. Larry, and all of the other project personnel, were continually kept 250 MANAGEMENT FUNCTIONS informed (by the project manager) concerning all project activities. Larry is now working for a new project manager who tells his staff only what they have to know in order to get their job done. What can Larry do about this situation? Can this be a good situation? 5–42 Phase I of a program has just been completed successfully. The customer, however, was displeased because he always had to wait three weeks to a month after all tests were complete before data were supplied by the contractor. For Phase II of the program, the customer is requiring that advanced quality control procedures be adhered to. This permits the customer’s quality control people to observe all testing and obtain all of the raw data at the same time the contractor does. Is there anything wrong with this arrangement? 5–43 You are a subcontractor to company Z, who in turn is the prime contractor to company Q. Before any design review or technical interchange meeting, company Z requires that they review all material to be presented both in-house and with company Q prior to the meeting. Why would a situation such as this occur? Is it beneficial? 5–44 Referring to Problem 5–43, during contract negotiations between company Q and company Z, you, as project manager for the subcontractor, are sitting in your office when the phone rings. It is company Q requesting information to support its negotiation position. Should you provide the information? 5–45 How does a project manager find out if the project team members from the functional departments have the authority to make decisions? 5–46 One of your functional people has been assigned to perform a certain test and document the results. For two weeks you “hound” this individual only to find out that he is continually procrastinating on work in another program. You later find out from one of his co-workers that he hates to write. What should you do? 5–47 During a crisis, you find that all of the functional managers as well as the team members are writing letters and memos to you, whereas previously everything was verbal. How do you account for this? 5–48 Below are several problems that commonly occur in project organizations. State, if possible, the effect that each problem could have on communications and time management: a. b. c. d. e. People tend to resist exploration of new ideas. People tend to mistrust each other in temporary management situations. People tend to protect themselves. Functional people tend to look at day-to-day activities rather than long-range efforts. Both functional and project personnel often look for individual rather than group recognition. f. People tend to create win-or-lose positions. 5–49 How can executives obtain loyalty and commitments from horizontal and vertical personnel in a project organizational structure? 5–50 What is meant by polarization of communications? What are the most common causes? 5–51 Many project managers contend that project team meetings are flooded with agenda items, many of which may be irrelevant. How do you account for this? 251 Problems 5–52 Paul O. Gaddis (“The Project Manager,” Harvard Business Review, May–June 1959, p. 90, copyright © 1959 by the President and Fellows of Harvard College. All rights reserved) has stated that: In learning to manage a group of professional employees, the usual boss–subordinate relationship must be modified. Of special importance, the how—the details or methods of work performance by a professional employee—should be established by the employee. It follows that he must be given the facts necessary to permit him to develop a rational understanding of the why of tasks assigned to him. How would you relate this information to the employee? 5–53 The customer has asked to have a customer representative office set up in the same building as the project office. As project manager, you put the customer’s office at the opposite end of the building from where you are, and on a different floor. The customer states that he wants his office next to yours. Should this be permitted, and, if so, under what conditions? 5–54 During an interchange meeting from the customer, one of the functional personnel makes a presentation stating that he personally disagrees with the company’s solution to the particular problem under discussion and that the company is “all wet” in its approach. How do you, as a project manager, handle this situation? 5–55 Do you agree or disagree with the statement that documenting results “forces” people to learn? 5–56 Should a project manager encourage the flow of problems to him? If yes, should he be selective in which ones to resolve? 5–57 Is it possible for a project manager to hold too few project review meetings? 5–58 If all projects are different, should there exist a uniform company policies and procedures manual? 5–59 Of the ten items below, which are considered as part of directing and which are controlling? a. b. c. d. e. f. g. h. i. j. Supervising Communicating Delegating Evaluating Measuring Motivating Coordinating Staffing Counseling Correcting 5–60 Which of the following items is not considered to be one of the seven Ms of management? a. Manpower b. Money 252 MANAGEMENT FUNCTIONS c. d. e. f. g. Machines Methods Materials Minutes Mission 5–61 Match the following leadership styles (source unknown): 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Management by inaction Management by detail Management by invisibility Management by consensus Management by manipulation Management by rejection Management by survival Management by depotism Management by creativity Management by leadership _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ a. Has an executive who manages with flair, wisdom, and vision. He listens to his people, prods them, and leads them. b. Grows out of fear and anxiety. c. Can be fair or unfair, effective or ineffective, legitimate or illegitimate. Some people are manipulators of others for power. People are not puppets. d. Is the roughly negative style. Executive always has ideas; devil’s advocate. Well-prepared proponents can win—so such a boss can be stimulating. e. Has an executive who needs every conceivable fact; is methodical and orderly; often is timid, inappropriate, or late. f. Is good as long as it is based on reality. The executive has a trained instinct. g. Has an executive who will do anything to survive—the jungle fighter. If it is done constructively, the executive will build instead of destroy. h. Is totalitarian. There are no clashes of ideas. The organization moves. Creative people flee. Employees always know who is boss. i. Has an executive who is not around, has good subordinates, and works in an office, offstage. j. Can be important in dealing with the unknown (R&D projects). Subordinates are independent and powerful. This style could be a substitute for decision-making. It is important for setting policy. 253 Case Studies CASE STUDIES THE TROPHY PROJECT The ill-fated Trophy Project was in trouble right from the start. Reichart, who had been an assistant project manager, was involved with the project from its conception. When the Trophy Project was accepted by the company, Reichart was assigned as the project manager. The program schedules started to slip from day one, and expenditures were excessive. Reichart found that the functional managers were charging direct labor time to his project but working on their own “pet” projects. When Reichart complained of this, he was told not to meddle in the functional manager’s allocation of resources and budgeted expenditures. After approximately six months, Reichart was requested to make a progress report directly to corporate and division staffs. Reichart took this opportunity to bare his soul. The report substantiated that the project was forecasted to be one complete year behind schedule. Reichart’s staff, as supplied by the line managers, was inadequate to stay at the required pace, let alone make up any time that had already been lost. The estimated cost at completion at this interval showed a cost overrun of at least 20 percent. This was Reichart’s first opportunity to tell his story to people who were in a position to correct the situation. The result of Reichart’s frank, candid evaluation of the Trophy Project was very predictable. Nonbelievers finally saw the light, and the line managers realized that they had a role to play in the completion of the project. Most of the problems were now out in the open and could be corrected by providing adequate staffing and resources. Corporate staff ordered immediate remedial action and staff support to provide Reichart a chance to bail out his program. The results were not at all what Reichart had expected. He no longer reported to the project office; he now reported directly to the operations manager. Corporate staff’s interest in the project became very intense, requiring a 7:00 A.M. meeting every Monday morning for complete review of the project status and plans for recovery. Reichart found himself spending more time preparing paperwork, reports, and projections for his Monday morning meetings than he did administering the Trophy Project. The main concern of corporate was to get the project back on schedule. Reichart spent many hours preparing the recovery plan and establishing manpower requirements to bring the program back onto the original schedule. Group staff, in order to closely track the progress of the Trophy Project, assigned an assistant program manager. The assistant program manager determined that a sure cure for the Trophy Project would be to computerize the various problems and track the progress through a very complex computer program. Corporate provided Reichart with twelve additional staff members to work on the computer program. In the meantime, nothing changed. The functional managers still did not provide adequate staff for recovery, assuming that the additional manpower Reichart had received from corporate would accomplish that task. After approximately $50,000 was spent on the computer program to track the problems, it was found that the program objectives could not be handled by the computer. Reichart discussed this problem with a computer supplier and found that $15,000 more was required for programming and additional storage capacity. It would take two months for installation of the additional storage capacity and the completion of the programming. At this point, the decision was made to abandon the computer program. Reichart was now a year and a half into the program with no prototype units completed. The program was still nine months behind schedule with the overrun projected at 40 percent of 254 MANAGEMENT FUNCTIONS budget. The customer had been receiving his reports on a timely basis and was well aware of the fact that the Trophy Project was behind schedule. Reichart had spent a great deal of time with the customer explaining the problems and the plan for recovery. Another problem that Reichart had to contend with was that the vendors who were supplying components for the project were also running behind schedule. One Sunday morning, while Reichart was in his office putting together a report for the client, a corporate vice president came into his office. “Reichart,” he said, “in any project I look at the top sheet of paper and the man whose name appears at the top of the sheet is the one I hold responsible. For this project your name appears at the top of the sheet. If you cannot bail this thing out, you are in serious trouble in this corporation.” Reichart did not know which way to turn or what to say. He had no control over the functional managers who were creating the problems, but he was the person who was being held responsible. After another three months the customer, becoming impatient, realized that the Trophy Project was in serious trouble and requested that the division general manager and his entire staff visit the customer’s plant to give a progress and “get well” report within a week. The division general manager called Reichart into his office and said, “Reichart, go visit our customer. Take three or four functional line people with you and try to placate him with whatever you feel is necessary.” Reichart and four functional line people visited the customer and gave a four-anda-half-hour presentation defining the problems and the progress to that point. The customer was very polite and even commented that it was an excellent presentation, but the content was totally unacceptable. The program was still six to eight months late, and the customer demanded progress reports on a weekly basis. The customer made arrangements to assign a representative in Reichart’s department to be “on-site” at the project on a daily basis and to interface with Reichart and his staff as required. After this turn of events, the program became very hectic. The customer representative demanded constant updates and problem identification and then became involved in attempting to solve these problems. This involvement created many changes in the program and the product in order to eliminate some of the problems. Reichart had trouble with the customer and did not agree with the changes in the program. He expressed his disagreement vocally when, in many cases, the customer felt the changes were at no cost. This caused a deterioration of the relationship between client and producer. One morning Reichart was called into the division general manager’s office and introduced to Mr. “Red” Baron. Reichart was told to turn over the reins of the Trophy Project to Red immediately. “Reichart, you will be temporarily reassigned to some other division within the corporation. I suggest you start looking outside the company for another job.” Reichart looked at Red and asked, “Who did this? Who shot me down?” Red was program manager on the Trophy Project for approximately six months, after which, by mutual agreement, he was replaced by a third project manager. The customer reassigned his local program manager to another project. With the new team the Trophy Project was finally completed one year behind schedule and at a 40 percent cost overrun. LEADERSHIP EFFECTIVENESS (A) Instructions This tabulation form on page 258 is concerned with a comparison of personal supervisory styles. Indicate your preference to the two alternatives after each item by writing appropriate figures in the blanks. Some of the alternatives may seem equally attractive or unattractive to you. Nevertheless, please attempt to choose the alternative that is relatively more characteristic of you. For each question given, you have three (3) points that you may distribute in any of the following combinations: 255 Case Studies A. If you agree with alternative (a) and disagree with (b), write 3 in the top blank and 0 in bottom blank. a. 3 b. 0 B. If you agree with (b) and disagree with (a), write: a. 0 b. 3 C. If you have a slight preference for (a) over (b), write: a. 2 b. 1 D. If you have a slight preference for (b) over (a), write: a. 1 b. 2 Important—Use only the combinations shown above. Try to relate each item to your own personal experience. Please make a choice from every pair of alternatives. 1. On the job, a project manager should make a decision and . . . a. _____ tell his team to carry it out. b. _____ “tell” his team about the decision and then try to “sell” it. 2. After a project manager has arrived at a decision . . . a. _____ he should try to reduce the team’s resistance to his decision by indicating what they have to gain. b. _____ he should provide an opportunity for his team to get a fuller explanation of his ideas. 3. When a project manager presents a problem to his subordinates . . . a. _____ he should get suggestions from them and then make a decision. b. _____ he should define it and request that the group make a decision. 4. A project manager . . . a. _____ is paid to make all the decisions affecting the work of his team. b. _____ should commit himself in advance to assist in implementing whatever decision his team selects when they are asked to solve a problem. 5. A project manager should . . . a. _____ permit his team an opportunity to exert some influence on decisions but reserve final decisions for himself. b. _____ participate with his team in group decision-making but attempt to do so with a minimum of authority. 256 MANAGEMENT FUNCTIONS 6. In making a decision concerning the work situation, a project manager should . . . a. _____ present his decision and ideas and engage in a “give-and-take” session with his team to allow them to fully explore the implications of the decision. b. _____ present the problem to his team, get suggestions, and then make a decision. 7. A good work situation is one in which the project manager . . . a. _____ “tells” his team about a decision and then tries to “sell” it to them. b. _____ calls his team together, presents a problem, defines the problem, and requests they solve the problem with the understanding that he will support their decision(s). 8. A well-run project will include . . . a. _____ efforts by the project manager to reduce the team’s resistance to his decisions by indicating what they have to gain from them. b. _____ “give-and take” sessions to enable the project manager and team to explore more fully the implications of the project manager’s decisions. 9. A good way to deal with people in a work situation is . . . a. _____ to present problems to your team as they arise, get suggestions, and then make a decision. b. _____ to permit the team to make decisions, with the understanding that the project manager will assist in implementing whatever decision they make. 10. A good project manager is one who takes . . . a. _____ the responsibility for locating problems and arriving at solutions, then tries to persuade his team to accept them. b. _____ the opportunity to collect ideas from his team about problems, then he makes his decision. 11. A project manager . . . a. _____ should make the decisions in his organization and tell his team to carry them out. b. _____ should work closely with his team in solving problems, and attempt to do so with a minimum of authority. 12. To do a good job, a project manager should . . . a. _____ present solutions for his team’s reaction. b. _____ present the problem and collect from the team suggested solutions, then make a decision based on the best solution offered. 257 Case Studies 13. A good method for a project manager is . . . a. _____ to “tell” and then try to “sell” his decision. b. _____ to define the problem for his team, then pass them the right to make decisions. 14. On the job, a project manager . . . a. _____ need not give consideration to what his team will think or feel about his decisions. b. _____ should present his decisions and engage in a “give-and-take” session to enable everyone concerned to explore, more fully, the implications of the decisions. 15. A project manager . . . a. _____ should make all decisions himself. b. _____ should present the problem to his team, get suggestions, and then make a decision. 16. It is good . . . a. _____ to permit the team an opportunity to exert some influence on decisions, but the project manager should reserve final decisions for himself. b. _____ for the project manager to participate with his team in group decisionmaking with as little authority as possible. 17. The project manager who gets the most from his team is the one who . . . a. _____ exercises direct authority. b. _____ seeks possible solutions from them and then makes a decision. 18. An effective project manager should . . . a. _____ make the decisions on his project and tell his team to carry them out. b. _____ make the decisions and then try to persuade his team to accept them. 19. A good way for a project manager to handle work problems is to . . . a. _____ implement decisions without giving any consideration to what his team will think or feel. b. _____ permit the team an opportunity to exert some influence on decisions but reserve the final decision for himself. 20. Project managers . . . a. _____ should seek to reduce the team’s resistance to their decisions by indicating what they have to gain from them. b. _____ should seek possible solutions from their team when problems arise and then make a decision from the list of alternatives. 258 MANAGEMENT FUNCTIONS 259 Case Studies PROJECT MANAGERCENTERED LEADERSHIP 1 2 TEAM-CENTERED LEADERSHIP 3 4 5 27 DEGREE OF AUTHORITY USED BY PROJECT MANAGER 24 21 18 DEGREE OF FREEDOM FOR THE TEAM TO SHARE RESPONSIBILITY 15 12 9 6 3 0 PROJECT MANAGER MAKES DECISION AND ANNOUNCES IT PROJECT MANAGER "SELLS" DECISION PROJECT MANAGER PRESENTS TENTATIVE DECISION AND INVITES QUESTIONS, THEN MAKES DECISION PROJECT MANAGER PRESENTS PROBLEMS, GETS SUGGESTIONS MAKES DECISIONS PROJECT MANAGER DEFINES PROBLEM SHARES DECISIONMAKING RESPONSIBILITY WITH SUBORDINATES LEADERSHIP EFFECTIVENESS (B) The Project Your company has just won a contract for an outside customer. The contract is for one year, broken down as follows: R&D: six months; prototype testing: one month; manufacturing: five months. In addition to the risks involved in the R&D stage, both your management and the customer have stated that there will be absolutely no trade-offs on time, cost, or performance. When you prepared the proposal six months ago, you planned and budgeted for a full-time staff of five people, in addition to the functional support personnel. Unfortunately, due to limited resources, your staff (i.e., the project office) will be as follows: Tom: An excellent engineer, somewhat of a prima donna, but has worked very well with you on previous projects. You specifically requested Tom and were fortunate to have him assigned, although your project is not regarded as a high priority. Tom is recognized as both a technical leader and expert, and is considered as perhaps the best engineer in the company. Tom will be full-time for the duration of the project. Bob: Started with the company a little over a year ago, and may be a little “wet behind the ears.” His line manager has great expectations for him in the future but, for the time being, wants you to give him on-the-job-training as a project office team member. Bob will be full-time on your project. Carol: She has been with the company for twenty years and does an acceptable job. She has never worked on your projects before. She is full-time on the project. 260 MANAGEMENT FUNCTIONS George: He has been with the company for six years, but has never worked on any of your projects. His superior tells you that he will be only half-time on your project until he finishes a crash job on another project. He should be available for full-time work in a month or two. George is regarded as an outstanding employee. Management informs you that there is nobody else available to fill the fifth position. You’ll have to spread the increased workload over the other members. Obviously, the customer may not be too happy about this. In each situation that follows, circle the best answer. The grading system will be provided later. Remember: These staff individuals are “dotted” to you and “solid” to their line manager, although they are in your project office. Situation 1: The project office team members have been told to report to you this morning. They have all received your memo concerning the time and place of the kickoff meeting. However, they have not been provided any specific details concerning the project except that the project will be at least one year in duration. For your company, this is regarded as a longterm project. A good strategy for the meeting would be: A. The team must already be self-motivated or else they would not have been assigned. Simply welcome them and assign homework. B. Motivate the employees by showing them how they will benefit: esteem, pride, selfactualization. Minimize discussion on specifics. C. Explain the project and ask them for their input. Try to get them to identify alternatives and encourage group decision-making. D. Identify the technical details of the project: the requirements, performance standards, and expectations. Situation 2: You give the team members a copy of the winning proposal and a “confidential” memo describing the assumptions and constraints you considered in developing the proposal. You tell your team to review the material and be prepared to perform detailed planning at the meeting you have scheduled for the following Monday. During Monday’s planning meeting, you find that Tom (who has worked with you before) has established a take-charge role and has done some of the planning that should have been the responsibility of other team members. You should: A. Do nothing. This may be a beneficial situation. However, you may wish to ask if the other project office members wish to review Tom’s planning. B. Ask each team member individually how he or she feels about Tom’s role. If they complain, have a talk with Tom. C. Ask each team member to develop his or her own schedules and then compare results. D. Talk to Tom privately about the long-term effects of his behavior. Situation 3: Your team appears to be having trouble laying out realistic schedules that will satisfy the customer’s milestones. They keep asking you pertinent questions and seem to be making the right decisions, but with difficulty. A. Do nothing. If the team is good, they will eventually work out the problem. B. Encourage the team to continue but give some ideas as to possible alternatives. Let them solve the problem. Case Studies 261 C. Become actively involved and help the team solve the problem. Supervise the planning until completion. D. Take charge yourself and solve the problem for the team. You may have to provide continuous direction. Situation 4: Your team has taken an optimistic approach to the schedule. The functional managers have reviewed the schedules and have sent your team strong memos stating that there is no way that they can support your schedules. Your team’s morale appears to be very low. Your team expected the schedules to be returned for additional iterations and trade-offs, but not with such harsh words from the line managers. You should: A. Take no action. This is common to these types of projects and the team must learn to cope. B. Call a special team meeting to discuss the morale problem and ask the team for recommendations. Try to work out the problem. C. Meet with each team member individually to reinforce his or her behavior and performance. Let members know how many other times this has occurred and been resolved through trade-offs and additional iterations. State your availability to provide advice and support. D. Take charge and look for ways to improve morale by changing the schedules. Situation 5: The functional departments have begun working, but are still criticizing the schedules. Your team is extremely unhappy with some of the employees assigned out of one functional department. Your team feels that these employees are not qualified to perform the required work. You should: A. Do nothing until you are absolutely sure (with evidence) that the assigned personnel cannot perform as needed. B. Sympathize with your team and encourage them to live with this situation until an alternative is found. C. Assess the potential risks with the team and ask for their input and suggestions. Try to develop contingency plans if the problem is as serious as the team indicates. D. Approach the functional manager and express your concern. Ask to have different employees assigned. Situation 6: Bob’s performance as a project office team member has begun to deteriorate. You are not sure whether he simply lacks the skills, cannot endure the pressure, or cannot assume part of the additional work that resulted from the fifth position in the project being vacant. You should: A. Do nothing. The problem may be temporary and you cannot be sure that there is a measurable impact on the project. B. Have a personal discussion with Bob, seek out the cause, and ask him for a solution. C. Call a team meeting and discuss how productivity and performance are decreasing. Ask the team for recommendations and hope Bob gets the message. D. Interview the other team members and see if they can explain Bob’s actions lately. Ask the other members to assist you by talking to Bob. 262 MANAGEMENT FUNCTIONS Situation 7: George, who is half-time on your project, has just submitted for your approval his quarterly progress report for your project. After your signature has been attained, the report is sent to senior management and the customer. The report is marginally acceptable and not at all what you would have expected from George. George apologizes to you for the report and blames it on his other project, which is in its last two weeks. You should: A. Sympathize with George and ask him to rewrite the report. B. Tell George that the report is totally unacceptable and will reflect on his ability as a project office team member. C. Ask the team to assist George in redoing the report since a bad report reflects on everyone. D. Ask one of the other team members to rewrite the report for George. Situation 8: You have completed the R&D stage of your project and are entering phase II: prototype testing. You are entering month seven of the twelve-month project. Unfortunately, the results of phase I R&D indicate that you were too optimistic in your estimating for phase II and a schedule slippage of at least two weeks is highly probable. The customer may not be happy. You should: A. Do nothing. These problems occur and have a way of working themselves out. The end date of the project can still be met. B. Call a team meeting to discuss the morale problem resulting from the slippage. If morale is improved, the slippage may be overcome. C. Call a team meeting and seek ways of improving productivity for phase II. Hopefully, the team will come up with alternatives. D. This is a crisis and you must exert strong leadership. You should take control and assist your team in identifying alternatives. Situation 9: Your rescheduling efforts have been successful. The functional managers have given you adequate support and you are back on schedule. You should: A. Do nothing. Your team has matured and is doing what they are paid to do. B. Try to provide some sort of monetary or nonmonetary reward for your team (e.g., management-granted time off or a dinner team meeting). C. Provide positive feedback/reinforcement for the team and search for ideas for shortening phase III. D. Obviously, your strong leadership has been effective. Continue this role for the phase III schedule. Situation 10: You are now at the end of the seventh month and everything is proceeding as planned. Motivation appears high. You should: A. Leave well enough alone. B. Look for better ways to improve the functioning of the team. Talk to them and make them feel important. C. Call a team meeting and review the remaining schedules for the project. Look for contingency plans. D. Make sure the team is still focusing on the goals and objectives of the project. 263 Case Studies Situation 11: The customer unofficially informs you that his company has a problem and may have to change the design specifications before production actually begins. This would be a catastrophe for your project. The customer wants a meeting at your plant within the next seven days. This will be the customer’s first visit to your plant. All previous meetings were informal and at the customer’s facilities, with just you and the customer. This meeting will be formal. To prepare for the meeting, you should: A. Make sure the schedules are updated and assume a passive role since the customer has not officially informed you of his problem. B. Ask the team to improve productivity before the customer’s meeting. This should please the customer. C. Call an immediate team meeting and ask the team to prepare an agenda and identify the items to be discussed. D. Assign specific responsibilities to each team member for preparation of handout material for the meeting. Situation 12: Your team is obviously not happy with the results of the customer interface meeting because the customer has asked for a change in design specifications. The manufacturing plans and manufacturing schedules must be developed anew. You should: A. Do nothing. The team is already highly motivated and will take charge as before. B. Reemphasize the team spirit and encourage your people to proceed. Tell them that nothing is impossible for a good team. C. Roll up your shirt sleeves and help the team identify alternatives. Some degree of guidance is necessary. D. Provide strong leadership and close supervision. Your team will have to rely on you for assistance. Situation 13: You are now in the ninth month. While your replanning is going on (as a result of changes in the specifications), the customer calls and asks for an assessment of the risks in cancelling this project right away and starting another one. You should: A. B. C. D. Wait for a formal request. Perhaps you can delay long enough for the project to finish. Tell the team that their excellent performance may result in a follow-on contract. Call a team meeting to assess the risks and look for alternatives. Accept strong leadership for this and with minimum, if any, team involvement. Situation 14: One of the functional managers has asked for your evaluation of all of his functional employees currently working on your project (excluding project office personnel). Your project office personnel appear to be working more closely with the functional employees than you are. You should: A. Return the request to the functional manager since this is not part of your job description. B. Talk to each team member individually, telling them how important their input is, and ask for their evaluations. C. As a team, evaluate each of the functional team members, and try to come to some sort of agreement. D. Do not burden your team with this request. You can do it yourself. 264 MANAGEMENT FUNCTIONS Situation 15: You are in the tenth month of the project. Carol informs you that she has the opportunity to be the project leader for an effort starting in two weeks. She has been with the company for twenty years and this is her first opportunity as a project leader. She wants to know if she can be released from your project. You should: A. Let Carol go. You do not want to stand in the way of her career advancement. B. Ask the team to meet in private and conduct a vote. Tell Carol you will abide by the team vote. C. Discuss the problem with the team since they must assume the extra workload, if necessary. Ask for their input into meeting the constraints. D. Counsel her and explain how important it is for her to remain. You are already shorthanded. Situation 16: Your team informs you that one of the functional manufacturing managers has built up a brick wall around his department and all information requests must flow through him. The brick wall has been in existence for two years. Your team members are having trouble with status reporting, but always get the information after catering to the functional manager. You should: A. Do nothing. This is obviously the way the line manager wants to run his department. Your team is getting the information they need. B. Ask the team members to use their behavioral skills in obtaining the information. C. Call a team meeting to discuss alternative ways of obtaining the information. D. Assume strong leadership and exert your authority by calling the line manager and asking for the information. Situation 17: The executives have given you a new man to replace Carol for the last two months of the project. Neither you nor your team have worked with this man before. You should: A. Do nothing. Carol obviously filled him in on what he should be doing and what is involved in the project. B. Counsel the new man individually, bring him up to speed, and assign him Carol’s work. C. Call a meeting and ask each member to explain his or her role on the project to the new man. D. Ask each team member to talk to this man as soon as possible and help him come on board. Request that individual conversations be used. Situation 18: One of your team members wants to take a late-afternoon course at the local college. Unfortunately, this course may conflict with his workload. You should: A. Postpone your decision. Ask the employee to wait until the course is offered again. B. Review the request with the team member and discuss the impact on his performance. C. Discuss the request with the team and ask for the team’s approval. The team may have to cover for this employee’s workload. D. Discuss this individually with each team member to make sure that the task requirements will still be adhered to. 265 Case Studies Situation 19: Your functional employees have used the wrong materials in making a production run test. The cost to your project was significant, but absorbed in a small “cushion” that you saved for emergencies such as this. Your team members tell you that the test will be rerun without any slippage of the schedule. You should: A. Do nothing. Your team seems to have the situation well under control. B. Interview the employees that created this problem and stress the importance of productivity and following instructions. C. Ask your team to develop contingency plans for this situation should it happen again. D. Assume a strong leadership role for the rerun test to let people know your concern. Situation 20: All good projects must come to an end, usually with a final report. Your project has a requirement for a final report. This final report may very well become the basis for follow-on work. You should: A. Do nothing. Your team has things under control and knows that a final report is needed. B. Tell your team that they have done a wonderful job and there is only one more task to do. C. Ask your team to meet and provide an outline for the final report. D. You must provide some degree of leadership for the final report, at least the structure. The final report could easily reflect on your ability as a manager. Fill in the table below. The answers appear in Appendix B. Situation Answer Points Situation 1 11 2 12 3 13 4 14 5 15 6 16 7 17 8 18 9 19 10 20 Answer Points Total MOTIVATIONAL QUESTIONNAIRE On the next several pages, you will find forty statements concerning what motivates you and how you try to motivate others. Beside each statement, circle the number that corresponds to your opinion. In the example below, the choice is “Slightly Agree.” 266 MANAGEMENT FUNCTIONS –3 Strongly Disagree –2 Disagree –1 Slightly Disagree 0 Part 1 No Opinion +1 Slightly Agree +2 Agree +3 Strongly Agree The following twenty statements involve what motivates you. Please rate each of the statements as honestly as possible. Circle the rating that you think is correct, not the one you think the instructor is looking for: 1. My company pays me a reasonable salary for the work that I do. 2. My company believes that every job that I do can be considered as a challenge. 3. The company provides me with the latest equipment (i.e., hardware, software, etc.) so I can do my job effectively. 4. My company provides me with recognition for work well done. 5. Seniority on the job, job security, and vested rights are provided by the company. 6. Executives provide managers with feedback of strategic or long-range information that may affect the manager’s job. 7. My company provides off-hour clubs and organizations so that employees can socialize, as well as sponsoring social events. 8. Employees are allowed to either set their own work/performance standards or to at least approve/review standards set for them by management. 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 3 2 1 0 1 2 3 267 Case Studies 3 2 1 0 1 2 3 11. Employees who develop a reputation for “excellence” are allowed to further enhance their reputation, if job related. 3 2 1 0 1 2 3 12. Supervisors encourage a friendly, cooperative working environment for employees. 3 2 1 0 1 2 3 13. My company provides me with a detailed job description, identifying my role and responsibilities. 3 2 1 0 1 2 3 14. My company gives automatic wage and salary increases for the employees. 3 2 1 0 1 2 3 15. My company gives me the opportunity to do what I do best. 3 2 1 0 1 2 3 16. My job gives me the opportunity to be truly creative, to the point where I can solve complex problems. 3 2 1 0 1 2 3 17. My efficiency and effectiveness is improving because the company provided me with better physical working conditions (i.e., lighting, low noise, temperature, restrooms, etc.) 3 2 1 0 1 2 3 18. My job gives me constant selfdevelopment. 3 2 1 0 1 2 3 19. Our supervisors have feelings for employees rather than simply treating them as “inanimate tools.” 3 2 1 0 1 2 3 20. Participation in the company’s stock option/retirement plan is available to employees. 3 2 1 0 1 2 3 9. Employees are encouraged to maintain membership in professional societies and/or attend seminars and symposiums on workrelated subjects. 10. The company often reminds me that the only way to have job security is to compete effectively in the marketplace. 268 Part 2 MANAGEMENT FUNCTIONS Statements 21–40 involve how project managers motivate team members. Again, it is important that your ratings honestly reflect the way you think that you, as project manager, try to motivate employees. Do not indicate the way others or the instructor might recommend motivating the employees. Your thoughts are what are important in this exercise. 21. Project managers should encourage employees to take advantage of company benefits such as stock option plans and retirement plans. 3 2 1 0 1 2 3 22. Project managers should make sure that team members have a good work environment (i.e., heat, lighting, low noise, restrooms, cafeteria, etc.). 3 2 1 0 1 2 3 23. Project managers should assign team members work that can enhance each team member’s reputation. 3 2 1 0 1 2 3 24. Project managers should create a relaxed, cooperative environment for the team members. 3 2 1 0 1 2 3 25. Project managers should continually remind the team that job security is a function of competitiveness, staying within constraints, and good customer relations. 3 2 1 0 1 2 3 26. Project managers should try to convince team members that each new assignment is a challenge. 3 2 1 0 1 2 3 27. Project managers should be willing to reschedule activities, if possible, around the team’s company and out-of-company social functions. 3 2 1 0 1 2 3 28. Project managers should continually remind employees of how they will benefit, monetarily, by successful performance on your project. 3 2 1 0 1 2 3 269 Case Studies 29. Project managers should be willing to “pat people on the back” and provide recognition where applicable. 3 2 1 0 1 2 3 30. Project managers should encourage the team to maintain constant selfdevelopment with each assignment. 3 2 1 0 1 2 3 31. Project managers should allow team members to set their own standards, where applicable. 3 2 1 0 1 2 3 32. Project managers should assign work to functional employees according to seniority on the job. 3 2 1 0 1 2 3 33. Project managers should allow team members to use the informal, as well as formal, organization to get work accomplished. 3 2 1 0 1 2 3 34. As a project manager, I would like to control the salaries of the fulltime employees on my project. 3 2 1 0 1 2 3 35. Project managers should share information with the team. This includes project information that may not be directly applicable to the team member’s assignment. 3 2 1 0 1 2 3 36. Project managers should encourage team members to be creative and to solve their own problems. 3 2 1 0 1 2 3 37. Project managers should provide detailed job descriptions for team members, outlining the team member’s role and responsibility. 3 2 1 0 1 2 3 38. Project managers should give each team member the opportunity to do what the team member can do best. 3 2 1 0 1 2 3 39. Project managers should be willing to interact informally with the team members and get to know them, as long as there exists sufficient time on the project. 40. Most of the employees on my project earn a salary commensurate with their abilities. 3 2 1 0 1 2 3 3 2 1 0 1 2 3 270 MANAGEMENT FUNCTIONS Part 1 Scoring Sheet (What Motivates You?) Place your answers (the numerical values you circled) to questions 1–20 in the corresponding spaces in the chart below. Basic Needs _____ #1 _____ #3 #14 _____ #17 _____ Total _____ Safety Needs _____ #5 #10 _____ #13 _____ #20 _____ Total _____ Esteem/Ego Needs _____ #4 _____ #6 _____ #8 #11 _____ Total _____ Belonging Needs _____ #7 _____ #9 #12 _____ #19 _____ Total _____ Self-Actualization Needs _____ #2 #15 _____ #16 _____ #18 _____ Total _____ Transfer your total score in each category to the table on page 271 by placing an “X” in the appropriate area for motivational needs. Part 2 Scoring Sheet (How Do You Motivate?) Place your answers (the numerical values you circled) to questions 21–40 in the corresponding spaces in the chart below. Basic Needs #22 _____ #28 _____ #34 _____ #40 _____ Total _____ Safety Needs #21 _____ #25 _____ #32 _____ #37 _____ Total _____ Esteem/Ego Needs #23 _____ #29 _____ #31 _____ #35 _____ Total _____ Belonging Needs #24 _____ #27 _____ #33 _____ #39 _____ Total _____ Self-Actualization Needs #26 _____ #30 _____ #36 _____ #38 _____ Total _____ Transfer your total score in each category to the table on page 271 by placing an “X” in the appropriate area for motivational needs. 271 Basic Safety Belonging Esteem/Ego Self-Actualization Needs Points QUESTIONS 21–40 Basic Safety Belonging Esteem/Ego Self-Actualization Needs Points QUESTIONS 1–20 –12 –11 –10 –9 –12 –11 –10 –9 –8 –8 –7 –7 –6 –6 –5 –5 –4 –4 –3 –3 –2 –2 –1 –1 0 0 +1 +1 +2 +2 +3 +3 +4 +4 +5 +5 +6 +6 +7 +7 +8 +8 +9 +10 +11 +12 +9 +10 +11 +12 6 Time Management and Stress Related Case Studies (from Kerzner/Project Management Case Studies) • The Reluctant • Workers* • Time Management • Exercise Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Human Resource • Management 6.0 INTRODUCTION Managing projects within time, cost, and performance is easier said than done. The project management environment is extremely turbulent, and is composed of numerous meetings, report writing, conflict resolution, continuous planning and replanning, communications with the customer, and crisis management. Ideally, the effective project manager is a manager, not a doer, but in the “real world,” project managers often compromise their time by doing both. Disciplined time management is one of the keys to effective project management. It is often said that if the project manager cannot control his own time, then he will control nothing else on the project. *Case Study also appears at end of chapter. 273 274 TIME MANAGEMENT AND STRESS 6.1 UNDERSTANDING TIME MANAGEMENT1 For most people, time is a resource that, when lost or misplaced, is gone forever. For a project manager, however, time is more of a constraint, and effective time management principles must be employed to make it a resource. Most executives prefer to understaff projects, in the mistaken belief that the project manager will assume the additional workload. The project manager may already be heavily burdened with meetings, report preparation, internal and external communications, conflict resolution, and planning/replanning for crises. And yet, most project managers somehow manipulate their time to get the work done. Experienced personnel soon learn to delegate tasks and to employ effective time management principles. The following questions should help managers identify problem areas: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Do you have trouble completing work within the allocated deadlines? How many interruptions are there each day? Do you have a procedure for handling interruptions? If you need a large block of uninterrupted time, is it available? With or without overtime? How do you handle drop-in visitors and phone calls? How is incoming mail handled? Do you have established procedures for routine work? Are you accomplishing more or less than you were three months ago? Six months ago? How difficult is it for you to say no? How do you approach detail work? Do you perform work that should be handled by your subordinates? Do you have sufficient time each day for personal interests? Do you still think about your job when away from the office? Do you make a list of things to do? If yes, is the list prioritized? Does your schedule have some degree of flexibility? The project manager who can deal with these questions has a greater opportunity to convert time from a constraint to a resource. 6.2 TIME ROBBERS The most challenging problem facing the project manager is his inability to say no. Consider the situation in which an employee comes into your office with a problem. The employee may be sincere when he says that he simply wants your advice but, more often 1. Sections 6.1, 6.2, and 6.3 are adapted from David Cleland and Harold Kerzner, Engineering Team Management (Melbourne, Florida: Krieger, 1986), Chapter 8. 275 Time Robbers than not, the employee wants to take the monkey off of his back and put it onto yours. The employee’s problem is now your problem. To handle such situations, first screen out the problems with which you do not wish to get involved. Second, if the situation does necessitate your involvement, then you must make sure that when the employee leaves your office, he realizes that the problem is still his, not yours. Third, if you find that the problem will require your continued attention, remind the employee that all future decisions will be joint decisions and that the problem will still be on the employee’s shoulders. Once employees realize that they cannot put their problems on your shoulders, they learn how to make their own decisions. There are numerous time robbers in the project management environment. These include: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Incomplete work A job poorly done that must be done over Telephone calls, mail, and email Lack of adequate responsibility and commensurate authority Changes without direct notification/explanation Waiting for people Failure to delegate, or unwise delegation Poor retrieval systems Lack of information in a ready-to-use format Day-to-day administration Union grievances Having to explain “thinking” to superiors Too many levels of review Casual office conversations Misplaced information Shifting priorities Indecision at any level Procrastination Setting up appointments Too many meetings Monitoring delegated work Unclear roles/job descriptions Executive meddling Budget adherence requirements Poorly educated customers Not enough proven managers Vague goals and objectives ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Lack of a job description Too many people involved in minor decision-making Lack of technical knowledge Lack of authorization to make decisions Poor functional status reporting Work overload Unreasonable time constraints Too much travel Lack of adequate project management tools Departmental “buck passing” Company politics Going from crisis to crisis Conflicting directives Bureaucratic roadblocks (“ego”) Empire-building line managers No communication between sales and engineering Excessive paperwork Lack of clerical/administrative support Dealing with unreliable subcontractors Personnel not willing to take risks Demand for short-term results Lack of long-range planning Learning new company systems Poor lead time on projects Documentation (reports/red tape) Large number of projects Desire for perfection 276 TIME MANAGEMENT AND STRESS ● ● ● ● ● ● Lack of project organization Constant pressure Constant interruptions Shifting of functional personnel Lack of employee discipline Lack of qualified manpower 6.3 TIME MANAGEMENT FORMS There are two basic forms that project managers and project engineers can use for practicing better time management. The first form is the “to do” pad as shown in Figure 6–1. The project manager or secretary prepares the list of things to do. The project manager then decides which activities he must perform himself and assigns the appropriate priorities. The activities with the highest priorities are then transferred to the “daily calendar log,” as shown in Figure 6–2. The project manager assigns these activities to the appropriate time blocks based on his own energy cycle. Unfilled time blocks are then used for unexpected crises or for lower-priority activities. If there are more priority elements than time slots, the project manager may try to schedule well in advance. This is normally not a good practice, because it creates a backlog of high-priority activities. In addition, an activity that today is a “B” priority could easily become an “A” priority in a day or two. The moral here is do not postpone until tomorrow what you or your team can do today. Date Activities FIGURE 6–1. “To-do” pad. Priority Started In Process Completed 277 Effective Time Management Date Time Activity Priority 8:00-9:00 9:00-10:00 10:00-11:00 11:00-12:00 12:00-1:00 1:00-2:00 2:00-3:00 3:00-4:00 4:00-5:00 FIGURE 6–2. Daily calendar log. 6.4 EFFECTIVE TIME MANAGEMENT There are several techniques that project managers can practice in order to make better use of their time2: ● ● ● ● ● ● ● ● ● ● ● ● ● ● Delegate. Follow the schedule. Decide fast. Decide who should attend. Learn to say no. Start now. Do the tough part first. Travel light. Work at travel stops. Avoid useless memos. Refuse to do the unimportant. Look ahead. Ask: Is this trip necessary? Know your energy cycle. 2. Source unknown. 278 TIME MANAGEMENT AND STRESS ● ● ● ● Control telephone and email time. Send out the meeting agenda. Overcome procrastination. Manage by exception. As we learned in Chapter 5, the project manager, to be effective, must establish time management rules and then ask himself four questions: ● Rules for time management Conduct a time analysis (time log). Plan solid blocks for important things. Classify your activities. Establish priorities. ● Establish opportunity cost on activities. ● Train your system (boss, subordinate, peers). ● Practice delegation. ● Practice calculated neglect. ● Practice management by exception. ● Focus on opportunities—not on problems. Questions ● What am I doing that I don’t have to do at all? ● What am I doing that can be done better by someone else? ● What am I doing that could be done as well by someone else? ● Am I establishing the right priorities for my activities? ● ● ● ● ● 6.5 STRESS AND BURNOUT The factors that serve to make any occupation especially stressful are responsibility without the authority or ability to exert control, a necessity for perfection, the pressure of deadlines, role ambiguity, role conflict, role overload, the crossing of organizational boundaries, responsibility for the actions of subordinates, and the necessity to keep up with the information explosions or technological breakthroughs. Project managers have all of these factors in their jobs. A project manager has his resources controlled by line management, yet the responsibilities of bringing a project to completion by a prescribed deadline are his. A project manager may be told to increase the work output, while the work force is simultaneously being cut. Project managers are expected to get work out on schedule, but are often not permitted to pay overtime. One project manager described it this way: “I have to implement plans I didn’t design, but if the project fails, I’m responsible. Project managers are subject to stress due to several different facets of their jobs. This can manifest itself in a variety of ways, such as: Stress and Burnout 279 1. Being tired. Being tired is a result of being drained of strength and energy, perhaps through physical exertion, boredom, or impatience. The definition here applies more to a short-term, rather than long-term, effect. Typical causes for feeling tired include meetings, report writing, and other forms of document preparation. 2. Feeling depressed. Feeling depressed is an emotional condition usually characterized by discouragement or a feeling of inadequacy. It is usually the result of a situation that is beyond the control or capabilities of the project manager. There are several sources of depression in a project environment: Management or the client considers your report unacceptable, you are unable to get timely resources assigned, the technology is not available, or the constraints of the project are unrealistic and may not be met. 3. Being physically and emotionally exhausted. Project managers are both managers and doers. It is quite common for project managers to perform a great deal of the work themselves, either because they consider the assigned personnel unqualified to perform the work or because they are impatient and consider themselves capable of performing the work faster. In addition, project managers often work a great deal of “self-inflicted” overtime. The most common cause of emotional exhaustion is report writing and the preparation of handouts for interchange meetings. 4. Burned out. Being burned out is more than just a feeling; it is a condition. Being burned out implies that one is totally exhausted, both physically and emotionally, and that rest, recuperation, or vacation time may not remedy the situation. The most common cause is prolonged overtime, or the need thereof, and an inability to endure or perform under continuous pressure and stress. Burnout can occur almost overnight, often with very little warning. The solution is almost always a change in job assignment, preferably with another company. 5. Being unhappy. There are several factors that produce unhappiness in project management. Such factors include highly optimistic planning, unreasonable expectations by management, management cutting resources because of a “buy-in,” or simply customer demands for additional data items. A major source of unhappiness is the frustration caused by having limited authority that is not commensurate with the assigned responsibility. 6. Feeling trapped. The most common situation where project managers feel trapped is when they have no control over the assigned resources on the project and feel as though they are at the mercy of the line managers. Employees tend to favor the manager who can offer them the most rewards, and that is usually the line manager. Providing the project manager with some type of direct reward power can remedy the situation. 7. Feeling worthless. Feeling worthless implies that one is without worth or merit, that is, valueless. This situation occurs when project managers feel that they are managing projects beneath their dignity. Most project managers look forward to the death of their project right from the onset, and expect their next project to be more important, perhaps twice the cost, and more complex. Unfortunately, there are always situations where one must take a step backwards. 8. Feeling resentful and disillusioned about people. This situation occurs most frequently in the project manager’s dealings (i.e., negotiations) with the line managers. 280 TIME MANAGEMENT AND STRESS During the planning stage of a project, line managers often make promises concerning future resource commitments, but renege on their promises during execution. Disillusionment then occurs and can easily develop into serious conflict. Another potential source of these feelings is when line managers appear to be making decisions that are not in the best interest of the project. 9. Feeling hopeless. The most common source of hopelessness are R&D projects where the ultimate objective is beyond the reach of the employee or even of the state-ofthe-art technology. Hopelessness means showing no signs of a favorable outcome. Hopelessness is more a result of the performance constraint than of time or cost. 10. Feeling rejected. Feeling rejected can be the result of a poor working relationship with executives, line managers, or clients. Rejection often occurs when people with authority feel that their options or opinions are better than those of the project manager. Rejection has a demoralizing effect on the project manager because he feels that he is the “president” of the project and the true “champion” of the company. 11. Feeling anxious. Almost all project managers have some degree of “tunnel vision,” where they look forward to the end of the project, even when the project is in its infancy. This anxious feeling is not only to see the project end, but to see it completed successfully. Stress is not always negative, however. Without certain amounts of stress, reports would never get written or distributed, deadlines would never be met, and no one would even get to work on time. But stress can be a powerful force resulting in illness and even fatal disease, and must be understood and managed if it is to be controlled and utilized for constructive purposes. The mind, body, and emotions are not the separate entities they were once thought to be. One affects the other, sometimes in a positive way, and sometimes in a negative way. Stress becomes detrimental when it is prolonged beyond what an individual can comfortably handle. In a project environment, with continually changing requirements, impossible deadlines, and each project being considered as a unique entity in itself, we must ask, How much prolonged stress can a project manager handle comfortably? The stresses of project management may seem excessive for whatever rewards the position may offer. However, the project manager who is aware of the stresses inherent in the job and knows stress management techniques can face this challenge objectively and make it a rewarding experience. PROBLEMS 6–1 Should time robbers be added to direct labor standards for pricing out work? 6–2 Is it possible for a project manager to improve his time management skills by knowing the “energy cycle” of his people? Can this energy cycle be a function of the hour of the day, day of the week, or whether overtime is required? 281 Case Study CASE STUDY THE RELUCTANT WORKERS Tim Aston had changed employers three months ago. His new position was project manager. At first he had stars in his eyes about becoming the best project manager that his company had ever seen. Now, he wasn’t sure if project management was worth the effort. He made an appointment to see Phil Davies, director of project management. Tim Aston: “Phil, I’m a little unhappy about the way things are going. I just can’t seem to motivate my people. Every day, at 4:30 P.M., all of my people clean off their desks and go home. I’ve had people walk out of late afternoon team meetings because they were afraid that they’d miss their car pool. I have to schedule morning team meetings.” Phil Davies: “Look, Tim. You’re going to have to realize that in a project environment, people think that they come first and that the project is second. This is a way of life in our organizational form.” Tim Aston: “I’ve continually asked my people to come to me if they have problems. I find that the people do not think that they need help and, therefore, do not want it. I just can’t get my people to communicate more.” Phil Davies: “The average age of our employees is about forty-six. Most of our people have been here for twenty years. They’re set in their ways. You’re the first person that we’ve hired in the past three years. Some of our people may just resent seeing a thirty-year-old project manager.” Tim Aston: “I found one guy in the accounting department who has an excellent head on his shoulders. He’s very interested in project management. I asked his boss if he’d release him for a position in project management, and his boss just laughed at me, saying something to the effect that as long as that guy is doing a good job for him, he’ll never be released for an assignment elsewhere in the company. His boss seems more worried about his personal empire than he does in what’s best for the company. “We had a test scheduled for last week. The customer’s top management was planning on flying in for firsthand observations. Two of my people said that they had programmed vacation days coming, and that they would not change, under any conditions. One guy was going fishing and the other guy was planning to spend a few days working with fatherless children in our community. Surely, these guys could change their plans for the test.” Phil Davies: “Many of our people have social responsibilities and outside interests. We encourage social responsibilities and only hope that the outside interests do not interfere with their jobs. “There’s one thing you should understand about our people. With an average age of fortysix, many of our people are at the top of their pay grades and have no place to go. They must look elsewhere for interests. These are the people you have to work with and motivate. Perhaps you should do some reading on human behavior.” 7 Conflicts Related Case Studies (from Kerzner/Project Management Case Studies) • Facilities Scheduling • at Mayer Manufacturing* • Scheduling the • Safety Lab • Telestar International* • The Problem with • Priorities Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Human Resource • Management 7.0 INTRODUCTION In discussing the project environment, we have purposely avoided discussion of what may be its single most important characteristic: conflicts. Opponents of project management assert that the major reason why many companies avoid changeover to a project management organizational structure is either fear or an inability to handle the resulting conflicts. Conflicts are a way of life in a project structure and can generally occur at any level in the organization, usually as a result of conflicting objectives. *Case Study also appears at end of chapter. 283 284 CONFLICTS The project manager has often been described as a conflict manager. In many organizations the project manager continually fights fires and crises evolving from conflicts, and delegates the day-to-day responsibility of running the project to the project team members. Although this is not the best situation, it cannot always be prevented, especially after organizational restructuring or the initiation of projects requiring new resources. The ability to handle conflicts requires an understanding of why they occur. Asking and answering these four questions may help handle and prevent conflicts. ● ● ● ● What are the project objectives and are they in conflict with other projects? Why do conflicts occur? How do we resolve conflicts? Is there any type of analysis that could identify possible conflicts before they occur? 7.1 OBJECTIVES Each project must have at least one objective. The objectives of the project must be made known to all project personnel and all managers, at every level of the organization. If this information is not communicated accurately, then it is entirely possible that upper-level managers, project managers, and functional managers may all have a different interpretation of the ultimate objective, a situation that invites conflicts. As an example, company X has been awarded a $100,000 government contract for surveillance of a component that appears to be fatiguing. Top management might view the objective of this project to be discovering the cause of the fatigue and eliminating it in future component production. This might give company X a “jump” on the competition. The division manager might just view it as a means of keeping people employed, with no follow-on possibilities. The department manager can consider the objective as either another job that has to be filled, or a means of establishing new surveillance technology. The department manager, therefore, can staff the necessary positions with any given degree of expertise, depending on the importance and definition of the objective. Project objectives must be: ● ● ● ● ● ● ● ● Specific, not general Not overly complex Measurable, tangible, and verifiable Appropriate level, challenging Realistic and attainable Established within resource bounds Consistent with resources available or anticipated Consistent with organizational plans, policies, and procedures Unfortunately, the above characteristics are not always evident, especially if we consider that the project might be unique to the organization in question. As an example, research and development projects sometimes start out general, rather than specific. Research and development objectives are reestablished as time goes on because the initial The Conflict Environment 285 objective may not be attainable. As an example, company Y believes that they can develop a high-energy rocket-motor propellant. A proposal is submitted to the government, and, after a review period, the contract is awarded. However, as is the case with all R&D projects, there always exists the question of whether the objective is attainable within time, cost, and performance constraints. It might be possible to achieve the initial objective, but at an incredibly high production cost. In this case, the specifications of the propellant (i.e., initial objectives) may be modified so as to align them closer to the available production funds. Many projects are directed and controlled using a management-by-objective (MBO) approach. The philosophy of management by objectives: ● ● ● Is proactive rather than reactive management Is results oriented, emphasizing accomplishment Focuses on change to improve individual and organizational effectiveness Management by objectives is a systems approach for aligning project goals with organizational goals, project goals with the goals of other subunits of the organization, and project goals with individual goals. Furthermore, management by objectives can be regarded as a: ● ● ● Systems approach to planning and obtaining project results for an organization Strategy of meeting individual needs at the same time that project needs are met Method of clarifying what each individual and organizational unit’s contribution to the project should be Whether or not MBO is utilized, project objectives must be set. 7.2 THE CONFLICT ENVIRONMENT In the project environment, conflicts are inevitable. However, as described in Chapter 5, conflicts and their resolution can be planned for. For example, conflicts can easily develop out of a situation where members of a group have a misunderstanding of each other’s roles and responsibilities. Through documentation, such as linear responsibility charts, it is possible to establish formal organizational procedures (either at the project level or companywide). Resolution means collaboration in which people must rely on one another. Without this, mistrust will prevail. The most common types of conflicts involve: ● ● ● ● ● ● Manpower resources Equipment and facilities Capital expenditures Costs Technical opinions and trade-offs Priorities 286 CONFLICTS ● ● ● ● Administrative procedures Scheduling Responsibilities Personality clashes Each of these conflicts can vary in relative intensity over the life cycle of a project. The relative intensity can vary as a function of: ● ● ● ● Getting closer to project constraints Having only two constraints instead of three (i.e., time and performance, but not cost) The project life cycle itself The person with whom the conflict occurs Sometimes conflict is “meaningful” and produces beneficial results. These meaningful conflicts should be permitted to continue as long as project constraints are not violated and beneficial results are being received. An example of this would be two technical specialists arguing that each has a better way of solving a problem, and each trying to find additional supporting data for his hypothesis. Conflicts can occur with anyone and over anything. Some people contend that personality conflicts are the most difficult to resolve. Below are several situations. The reader might consider what he or she would do if placed in the situations. ● ● ● ● Two of your functional team members appear to have personality clashes and almost always assume opposite points of view during decision-making. They are both from the same line organization. Manufacturing says that they cannot produce the end-item according to engineering specifications. R&D quality control and manufacturing operations quality control argue as to who should perform a certain test on an R&D project. R&D postulates that it is their project, and manufacturing argues that it will eventually go into production and that they wish to be involved as early as possible. Mr. X is the project manager of a $65 million project of which $1 million is subcontracted out to another company in which Mr. Y is the project manager. Mr. X does not consider Mr. Y as his counterpart and continually communicates with the director of engineering in Mr. Y’s company. Ideally, the project manager should report high enough so that he can get timely assistance in resolving conflicts. Unfortunately, this is easier said than done. Therefore, project managers must plan for conflict resolution. As examples of this: ● ● The project manager might wish to concede on a low-intensity conflict if he knows that a high-intensity conflict is expected to occur at a later point in the project. Jones Construction Company has recently won a $120 million effort for a local company. The effort includes three separate construction projects, each one begin- The Conflict Environment ● 287 ning at the same time. Two of the projects are twenty-four months in duration, and the third is thirty-six months. Each project has its own project manager. When resource conflicts occur between the projects, the customer is usually called in. Richard is a department manager who must supply resources to four different projects. Although each project has an established priority, the project managers continually argue that departmental resources are not being allocated effectively. Richard now holds a monthly meeting with all four of the project managers and lets them determine how the resources should be allocated. Many executives feel that the best way of resolving conflicts is by establishing priorities. This may be true as long as priorities are not continually shifted around. As an example, Minnesota Power and Light establishes priorities as: ● ● ● ● Level 0: no completion date Level 1: to be completed on or before a specific date Level 2: to be completed in or before a given fiscal quarter Level 3: to be completed within a given year This type of technique will work as long as there are not a large number of projects in any one level. The most common factors influencing the establishment of project priorities include: ● ● ● ● ● ● ● ● The technical risks in development The risks that the company will incur, financially or competitively The nearness of the delivery date and the urgency The penalties that can accompany late delivery dates The expected savings, profit increase, and return on investment The amount of influence that the customer possesses, possibly due to the size of the project The impact on other projects or product lines The impact on affiliated organizations The ultimate responsibility for establishing priorities rests with top-level management. Yet even with priority establishment, conflicts still develop. David Wilemon has identified several reasons why conflicts still occur1: ● ● The greater the diversity of disciplinary expertise among the participants of a project team, the greater the potential for conflict to develop among members of the team. The lower the project manager’s degree of authority, reward, and punishment power over those individuals and organizational units supporting his project, the greater the potential for conflict to develop. 1. David L. Wilemon, “Managing Conflict in Temporary Management Situations,” The Journal of Management Studies, 1973, pp. 282–296. 288 CONFLICTS ● ● ● ● ● ● The less the specific objectives of a project (cost, schedule, and technical performance) are understood by the project team members, the more likely it is that conflict will develop. The greater the role of ambiguity among the participants of a project team, the more likely it is that conflict will develop. The greater the agreement on superordinate goals by project team participants, the lower the potential for detrimental conflict. The more the members of functional areas perceive that the implementation of a project management system will adversely usurp their traditional roles, the greater the potential for conflict. The lower the percent need for interdependence among organizational units supporting a project, the greater the potential for dysfunctional conflict. The higher the managerial level within a project or functional area, the more likely it is that conflicts will be based upon deep-seated parochial resentments. By contrast, at the project or task level, it is more likely that cooperation will be facilitated by the task orientation and professionalism that a project requires for completion. 7.3 CONFLICT RESOLUTION Although each project within the company may be inherently different, the company may wish to have the resulting conflicts resolved in the same manner. The four most common methods are: 1. The development of company-wide conflict resolution policies and procedures 2. The establishment of project conflict resolution procedures during the early planning activities 3. The use of hierarchical referral 4. The requirement of direct contact Many companies have attempted to develop company-wide policies and procedures for conflict resolution, but this method is often doomed to failure because each project and conflict is different. Furthermore, project managers, by virtue of their individuality, and sometimes differing amounts of authority and responsibility, prefer to resolve conflicts in their own fashion. A second method for resolving conflicts, and one that is often very effective, is to “plan” for conflicts during the planning activities. This can be accomplished through the use of linear responsibility charts. Planning for conflict resolution is similar to the first method except that each project manager can develop his own policies, rules, and procedures. Hierarchial referral for conflict resolution, in theory, appears as the best method because neither the project manager nor the functional manager will dominate. Under this arrangement, the project and functional managers agree that for a proper balance to exist their common superior must resolve the conflict to protect the company’s best interest. Understanding Superior, Subordinate, and Functional Conflicts 289 Unfortunately, this is not realistic because the common superior cannot be expected to continually resolve lower-level conflicts and it gives the impression that the functional and project managers cannot resolve their own problems. The last method is direct contact in which conflicting parties meet face-to-face and resolve their disagreement. Unfortunately, this method does not always work and, if continually stressed, can result in conditions where individuals will either suppress the identification of problems or develop new ones during confrontation. Many conflicts can be either reduced or eliminated by constant communication of the project objectives to the team members. This continual repetition may prevent individuals from going too far in the wrong direction. 7.4 UNDERSTANDING SUPERIOR, SUBORDINATE, AND FUNCTIONAL CONFLICTS2 In order for the project manager to be effective, he must understand how to work with the various employees who interface with the project. These employees include upper-level management, subordinate project team members, and functional personnel. Quite often, the project manager must demonstrate an ability for continuous adaptability by creating a different working environment with each group of employees. The need for this was shown in the previous section by the fact that the relative intensity of conflicts can vary in the life cycle of a project. The type and intensity of conflicts can also vary with the type of employee, as shown in Figure 7–1. Both conflict causes and sources are rated according to relative conflict intensity. The data in Figure 7–1 were obtained for a 75 percent confidence level. In the previous section we discussed the basic resolution modes for handling conflicts. The specific mode that a project manager will use might easily depend on whom the conflict is with, as shown in Figure 7–2. The data in Figure 7–2 do not necessarily show the modes that project managers would prefer, but rather identify the modes that will increase or decrease the potential conflict intensity. For example, although project managers consider, in general, that withdrawal is their least favorite mode, it can be used quite effectively with functional managers. In dealing with superiors, project managers would rather be ready for an immediate compromise than for face-to-face confrontation that could favor upper-level management. Figure 7–3 identifies the various influence styles that project managers find effective in helping to reduce potential conflicts. Penalty power, authority, and expertise are considered as strongly unfavorable associations with respect to low conflicts. As expected, work challenge and promotions (if the project manager has the authority) are strongly favorable. 2. The majority of this section, including the figures, was adapted from Seminar in Project Management Workbook, © 1977 by Hans J. Thamhain. Reproduced by permission of Dr. Hans J. Thamhain. 290 CONFLICTS SOURCES: CONFLICTS OCCURRED MOSTLY WITH SUBORDINATES HIGH BETWEEN FUNCTIONAL FUNCTIONAL PROJECT SUPERIORS MANGERS PERSONNEL PERSONNEL SCHEDULES RELATIVE CONFLICT INTENSITY CONFLICT CAUSES PRIORITIES MANPOWER TECHNICAL PROCEDURES LOW PERSONALITY COSTS HIGH FIGURE 7–1. RELATIVE CONFLICT INTENSITY LOW Relationship between conflict causes and sources. (The figure shows only those associations which are statistically significant at the 95 percent level) INTENSITY OF CONFLICT PERCEIVED BY PROJECT MANAGERS (P.M.) ACTUAL CONFLICT RESOLUTION STYLE FORCING CONFRONTATION COMPROMISE SMOOTHING WITHDRAWAL BETWEEN P.M. AND HIS PERSONNEL BETWEEN P.M. AND HIS SUPERIOR BETWEEN P.M. AND FUNCTIONAL SUPPORT DEPARTMENTS STRONGLY FAVORABLE ASSOCIATION WITH REGARD TO LOW CONFLICT (–  ) STRONGLY UNFAVORABLE ASSOCIATION WITH REGARD TO LOW CONFLICT(+  ) • KENDALL  CORRELATION FIGURE 7–2. Association between perceived intensity of conflict and mode of conflict resolution. 291 The Management of Conflicts (The figure shows only those associated which are statistically significant at the 95 percent level) INTENSITY OF CONFLICT PERCEIVED BY PROJECT MANAGER (P.M.) INFLUENCE METHODS AS PERCEIVED BY PROJECT MANAGERS EXPERTISE AUTHORITY WORK CHALLENGE FRIENDSHIP PROMOTION SALARY PENALTY BETWEEN P.M. AND HIS PERSONNEL BETWEEN P.M. AND HIS SUPERIOR BETWEEN P.M. AND FUNCTIONAL SUPPORT DEPARTMENTS STRONGLY FAVORABLE ASSOCIATION WITH REGARD TO LOW CONFLICT (–  ) STRONGLY UNFAVORABLE ASSOCIATION WITH REGARD TO LOW CONFLICT(+  ) • KENDALL  CORRELATION FIGURE 7–3. Association between influence methods of project managers and their perceived con- flict intensity. 7.5 THE MANAGEMENT OF CONFLICTS3 Good project managers realize that conflicts are inevitable, but that good procedures or techniques can help resolve them. Once a conflict occurs, the project manager must: ● ● ● Study the problem and collect all available information Develop a situational approach or methodology Set the appropriate atmosphere or climate If a confrontation meeting is necessary between conflicting parties, then the project manager should be aware of the logical steps and sequence of events that should be taken. These include: ● ● ● ● ● ● Setting the climate: establishing a willingness to participate Analyzing the images: how do you see yourself and others, and how do they see you? Collecting the information: getting feelings out in the open Defining the problem: defining and clarifying all positions Sharing the information: making the information available to all Setting the appropriate priorities: developing working sessions for setting priorities and timetables 3. See note 2. 292 CONFLICTS ● ● ● ● ● Organizing the group: forming cross-functional problem-solving groups Problem-solving: obtaining cross-functional involvement, securing commitments, and setting the priorities and timetable Developing the action plan: getting commitment Implementing the work: taking action on the plan Following up: obtaining feedback on the implementation for the action plan The project manager or team leader should also understand conflict minimization procedures. These include: ● ● ● ● ● ● ● ● ● Pausing and thinking before reacting Building trust Trying to understand the conflict motives Keeping the meeting under control Listening to all involved parties Maintaining a give-and-take attitude Educating others tactfully on your views Being willing to say when you were wrong Not acting as a superman and leveling the discussion only once in a while Thus, the effective manager, in conflict problem-solving situations: ● ● ● ● ● ● ● ● Knows the organization Listens with understanding rather than evaluation Clarifies the nature of the conflict Understands the feelings of others Suggests the procedures for resolving differences Maintains relationships with disputing parties Facilitates the communications process Seeks resolutions 7.6 CONFLICT RESOLUTION MODES The management of conflicts places the project manager in the precarious situation of having to select a conflict resolution mode (previously defined in Section 7.4). Based upon the situation, the type of conflict, and whom the conflict is with, any of these modes could be justified. Confronting (or Collaborating) With this approach, the conflicting parties meet face-to-face and try to work through their disagreements. This approach should focus more on solving the problem and less on being combative. This approach is collaboration and integration where both parties need to win. This method should be used: Conflict Resolution Modes ● ● ● ● ● ● ● ● ● 293 When you and the conflicting party can both get at least what you wanted and maybe more To reduce cost To create a common power base To attack a common foe When skills are complementary When there is enough time When there is trust When you have confidence in the other person’s ability When the ultimate objective is to learn Compromising To compromise is to bargain or to search for solutions so both parties leave with some degree of satisfaction. Compromising is often the result of confrontation. Some people argue that compromise is a “give and take” approach, which leads to a “win-win” position. Others argue that compromise is a “lose-lose” position, since neither party gets everything he/she wants or needs. Compromise should be used: ● ● ● ● ● ● ● ● ● When both parties need to be winners When you can’t win When others are as strong as you are When you haven’t time to win To maintain your relationship with your opponent When you are not sure you are right When you get nothing if you don’t When stakes are moderate To avoid giving the impression of “fighting” Smoothing (or Accommodating) This approach is an attempt to reduce the emotions that exist in a conflict. This is accomplished by emphasizing areas of agreement and deemphasizing areas of disagreement. An example of smoothing would be to tell someone, “We have agreed on three of the five points and there is no reason why we cannot agree on the last two points.” Smoothing does not necessarily resolve a conflict, but tries to convince both parties to remain at the bargaining table because a solution is possible. In smoothing, one may sacrifice one’s own goals in order to satisfy the needs of the other party. Smoothing should be used: ● ● ● ● ● ● To reach an overarching goal To create obligation for a trade-off at a later date When the stakes are low When liability is limited To maintain harmony When any solution will be adequate 294 CONFLICTS ● ● ● To create goodwill (be magnanimous) When you’ll lose anyway To gain time Forcing (or Competing, Being Uncooperative, Being Assertive) This is what happens when one party tries to impose the solution on the other party. Conflict resolution works best when resolution is achieved at the lowest possible levels. The higher up the conflict goes, the greater the tendency for the conflict to be forced, with the result being a “win-lose” situation in which one party wins at the expense of the other. Forcing should be used: ● ● ● ● ● ● ● ● ● ● When you are right When a do-or-die situation exists When stakes are high When important principles are at stake When you are stronger (never start a battle you can’t win) To gain status or to gain power In short-term, one-shot deals When the relationship is unimportant When it’s understood that a game is being played When a quick decision must be made Avoiding (or Withdrawing) Avoidance is often regarded as a temporary solution to a problem. The problem and the resulting conflict can come up again and again. Some people view avoiding as cowardice and an unwillingness to be responsive to a situation. Avoiding should be used: ● ● ● ● ● ● ● ● When you can’t win When the stakes are low When the stakes are high, but you are not ready yet To gain time To unnerve your opponent To preserve neutrality or reputation When you think the problem will go away When you win by delay PROBLEMS 7–1 Is it possible to establish formal organizational procedures (either at the project level or company-wide) for the resolution of conflicts? If a procedure is established, what can go wrong? 7–2 Under what conditions would a conflict result between members of a group over misunderstandings of each other’s roles? 295 Problems 7–3 Is it possible to have a situation in which conflicts are not effectively controlled, and yet have a decision-making process that is not lengthy or cumbersome? 7–4 If conflicts develop into a situation where mistrust prevails, would you expect activity documentation to increase or decrease? Why? 7–5 If a situation occurs that can develop into meaningful conflict, should the project manager let the conflict continue as long as it produces beneficial contributions, or should he try to resolve it as soon as possible? 7–6 Consider the following remarks made by David L. Wilemon (“Managing Conflict in Temporary Management Situations,” Journal of Management Studies, October 1973, p. 296): The value of the conflict produced depends upon the effectiveness of the project manager in promoting beneficial conflict while concomitantly minimizing its potential dysfunctional aspects. A good project manager needs a “sixth sense” to indicate when conflict is desirable, what kind of conflict will be useful, and how much conflict is optimal for a given situation. In the final analysis he has the sole responsibility for his project and how conflict will impact the success or failure of his project. Based upon these remarks, would your answer to Problem 7–5 change? 7–7 Mr. X is the project manager of a $65 million project of which $1 million is subcontracted out to another company in which Mr. Y is project manager. Unfortunately, Mr. X does not consider Mr. Y as his counterpart and continually communicates with the director of engineering in Mr. Y’s company. What type of conflict is that, and how should it be resolved? 7–8 Contract negotiations can easily develop into conflicts. During a disagreement, the vice president of company A ordered his director of finance, the contract negotiator, to break off contract negotiations with company B because the contract negotiator of company B did not report directly to a vice president. How can this situation be resolved? 7–9 For each part below there are two statements; one represents the traditional view and the other the project organizational view. Identify each one. a. Conflict should be avoided; conflict is part of change and is therefore inevitable. b. Conflict is the result of troublemakers and egoists; conflict is determined by the structure of the system and the relationship among components. c. Conflict may be beneficial; conflict is bad. 7–10 Using the modes for conflict resolution defined in Section 7.6, which would be strongly favorable and strongly unfavorable for resolving conflicts between: a. b. c. d. Project manager and his project office personnel? Project manager and the functional support departments? Project manager and his superiors? Project manager and other project managers? 7–11 Which influence methods should increase and which should decrease the opportunities for conflict between the following: ● ● ● ● Project manager and his project office personnel? Project manager and the functional support departments? Project manager and his superiors? Project manager and other project managers? 296 CONFLICTS 7–12 Would you agree or disagree with the statement that “Conflict resolution through collaboration needs trust; people must rely on one another.” 7–13 Davis and Lawrence (Matrix, © 1977. Adapted by permission of Pearson Education Inc., Upper Saddle River, New Jersey) identify several situations common to the matrix that can easily develop into conflicts. For each situation, what would be the recommended cure? a. b. c. d. e. f. g. h. Compatible and incompatible personnel must work together Power struggles break the balance of power Anarchy Groupitis (people confuse matrix behavior with group decision-making) A collapse during economic crunch Decision strangulation processes Forcing the matrix organization to the lower organizational levels Navel-gazing (spending time ironing out internal disputes instead of developing better working relationships with the customer) 7–14 Determine the best conflict resolution mode for each of the following situations: a. Two of your functional team members appear to have personality clashes and almost always assume opposite points of view during decision-making. b. R&D quality control and manufacturing operations quality control continually argue as to who should perform testing on an R&D project. R&D postulates that it’s their project, and manufacturing argues that it will eventually go into production and that they wish to be involved as early as possible. c. Two functional department managers continually argue as to who should perform a certain test. You know that this situation exists, and that the department managers are trying to work it out themselves, often with great pain. However, you are not sure that they will be able to resolve the problem themselves. 7–15 Forcing a confrontation to take place assures that action will be taken. Is it possible that, by using force, a lack of trust among the participants will develop? 7–16 With regard to conflict resolution, should it matter to whom in the organization the project manager reports? 7–17 One of the most common conflicts in an organization occurs with raw materials and finished goods. Why would finance/accounting, marketing/sales, and manufacturing have disagreements? 7–18 Explain how the relative intensity of a conflict can vary as a function of: a. b. c. d. Getting closer to the actual constraints Having only two constraints instead of three (i.e., time and performance, but not cost) The project life cycle The person with whom the conflict occurs 7–19 The conflicts shown in Figure 7–1 are given relative intensities as perceived in projectdriven organizations. Would this list be arranged differently for non–project-driven organizations? 7–20 Consider the responses made by the project managers in Figures 7–1 through 7–3. Which of their choices do you agree with, and which do you disagree with? Justify your answers. 7–21 As a good project manager, you try to plan for conflict avoidance. You now have a lowintensity conflict with a functional manager and, as in the past, handle the conflict with con- 297 Case Studies frontation. If you knew that there would be a high-intensity conflict shortly thereafter, would you be willing to use the withdrawal mode for the low-intensity conflict in order to lay the groundwork for the high-intensity conflict? 7–22 Jones Construction Company has recently won a $120 million effort for a local company. The effort includes three separate construction projects, each one beginning at the same time. Two of the projects are eighteen months in duration and the third one is thirty months. Each project has its own project manager. How do we resolve conflicts when each project may have a different priority but they are all for the same customer? 7–23 Several years ago, Minnesota Power and Light established priorities as follows: Level 0: no priority Level 1: to be completed on or before a specific date Level 2: to be completed in or before a given fiscal quarter Level 3: to be completed within a given year How do you feel about this system of establishing priorities? 7–24 Richard is a department manager who must supply resources to four different projects. Although each project has an established priority, the project managers continually argue that departmental resources are not being allocated effectively. Richard has decided to have a monthly group meeting with all four of the project managers and to let them determine how the resources should be allocated. Can this technique work? If so, under what conditions? CASE STUDIES FACILITIES SCHEDULING AT MAYER MANUFACTURING Eddie Turner was elated with the good news that he was being promoted to section supervisor in charge of scheduling all activities in the new engineering research laboratory. The new laboratory was a necessity for Mayer Manufacturing. The engineering, manufacturing, and quality control directorates were all in desperate need of a new testing facility. Upper-level management felt that this new facility would alleviate many of the problems that previously existed. The new organizational structure (as shown in Exhibit 7–1) required a change in policy over use of the laboratory. The new section supervisor, on approval from his department manager, would have full authority for establishing priorities for the use of the new facility. The new policy change was a necessity because upper-level management felt that there would be inevitable conflict between manufacturing, engineering, and quality control. After one month of operations, Eddie Turner was finding his job impossible, so Eddie has a meeting with Gary Whitehead, his department manager. Eddie: “I’m having a hell of a time trying to satisfy all of the department managers. If I give engineering prime-time use of the facility, then quality control and manufacturing say that I’m playing favorites. Imagine that! Even my own people say that I’m playing favorites with other directorates. I just can’t satisfy everyone.” 298 CONFLICTS Exhibit 7–1. Mayer Manufacturing organizational structure V.P. OTHERS ENGINEERING MANUFACTURING QUALITY CONTROL DIVISION MANAGERS DEPARTMENT MANAGERS GARY WHITEHEAD SECTION SUPERVISORS EDDIE TURNER Gary: “Well, Eddie, you know that this problem comes with the job. You’ll get the job done.” Eddie: “The problem is that I’m a section supervisor and have to work with department managers. These department managers look down on me like I’m their servant. If I were a department manager, then they’d show me some respect. What I’m really trying to say is that I would like you to send out the weekly memos to these department managers telling them of the new priorities. They wouldn’t argue with you like they do with me. I can supply you with all the necessary information. All you’ll have to do is to sign your name.” Gary: “Determining the priorities and scheduling the facilities is your job, not mine. This is a new position and I want you to handle it. I know you can because I selected you. I do not intend to interfere.” During the next two weeks, the conflicts got progressively worse. Eddie felt that he was unable to cope with the situation by himself. The department managers did not respect the authority delegated to him by his superiors. For the next two weeks, Eddie sent memos to Gary in the early part of the week asking whether Gary agreed with the priority list. There was no response to the two memos. Eddie then met with Gary to discuss the deteriorating situation. Eddie: “Gary, I’ve sent you two memos to see if I’m doing anything wrong in establishing the weekly priorities and schedules. Did you get my memos?” Gary: “Yes, I received your memos. But as I told you before, I have enough problems to worry about without doing your job for you. If you can’t handle the work let me know and I’ll find someone who can.” Eddie returned to his desk and contemplated his situation. Finally, he made a decision. Next week he was going to put a signature block under his for Gary to sign, with carbon copies for all division managers. “Now, let’s see what happens,” remarked Eddie. 299 Case Studies TELESTAR INTERNATIONAL On November 15, 1978, the Department of Energy Resources awarded Telestar a $475,000 contract for the developing and testing of two waste treatment plants. Telestar had spent the better part of the last two years developing waste treatment technology under its own R&D activities. This new contract would give Telestar the opportunity to “break into a new field”—that of waste treatment. The contract was negotiated at a firm-fixed price. Any cost overruns would have to be incurred by Telestar. The original bid was priced out at $847,000. Telestar’s management, however, wanted to win this one. The decision was made that Telestar would “buy in” at $475,000 so that they could at least get their foot into the new marketplace. The original estimate of $847,000 was very “rough” because Telestar did not have any good man-hour standards, in the area of waste treatment, on which to base their man-hour projections. Corporate management was willing to spend up to $400,000 of their own funds in order to compensate the bid of $475,000. By February 15, 1979, costs were increasing to such a point where overrun would be occurring well ahead of schedule. Anticipated costs to completion were now $943,000. The project manager decided to stop all activities in certain functional departments, one of which was structural analysis. The manager of the structural analysis department strongly opposed the closing out of the work order prior to the testing of the first plant’s high-pressure pneumatic and electrical systems. Structures Manager: “You’re running a risk if you close out this work order. How will you know if the hardware can withstand the stresses that will be imposed during the test? After all, the test is scheduled for next month and I can probably finish the analysis by then.” Project Manager: “I understand your concern, but I cannot risk a cost overrun. My boss expects me to do the work within cost. The plant design is similar to one that we have tested before, without any structural problems being detected. On this basis I consider your analysis unnecessary.” Structures Manager: “Just because two plants are similar does not mean that they will be identical in performance. There can be major structural deficiencies.” Project Manager: “I guess the risk is mine.” Structures Manager: “Yes, but I get concerned when a failure can reflect on the integrity of my department. You know, we’re performing on schedule and within the time and money budgeted. You’re setting a bad example by cutting off our budget without any real justification.” Project Manager: “I understand your concern, but we must pull out all the stops when overrun costs are inevitable.” Structures Manager: “There’s no question in my mind that this analysis should be completed. However, I’m not going to complete it on my overhead budget. I’ll reassign my people tomorrow. Incidentally, you had better be careful; my people are not very happy to work for a project that can be canceled immediately. I may have trouble getting volunteers next time.” Project Manager: “Well, I’m sure you’ll be able to adequately handle any future work. I’ll report to my boss that I have issued a work stoppage order to your department.” 300 CONFLICTS During the next month’s test, the plant exploded. Postanalysis indicated that the failure was due to a structural deficiency. a. Who is at fault? b. Should the structures manager have been dedicated enough to continue the work on his own? c. Can a functional manager, who considers his organization as strictly support, still be dedicated to total project success? HANDLING CONFLICT IN PROJECT MANAGEMENT The next several pages contain a six-part case study in conflict management. Read the instructions carefully on how to keep score and use the boxes in the table on page 301 as the worksheet for recording your choice and the group’s choice; after the case study has been completed, your instructor will provide you with the proper grading system for recording your scores. Part 1: Facing the Conflict As part of his first official duties, the new department manager informs you by memo that he has changed his input and output requirements for the MIS project (on which you are the project manager) because of several complaints by his departmental employees. This is contradictory to the project plan that you developed with the previous manager and are currently working toward. The department manager states that he has already discussed this with the vice president and general manager, a man to whom both of you report, and feels that the former department manager made a poor decision and did not get sufficient input from the employees who would be using the system as to the best system specifications. You telephone him and try to convince him to hold off on his request for change until a later time, but he refuses. Changing the input–output requirements at this point in time will require a major revision and will set back total system implementation by three weeks. This will also affect other department managers who expect to see this system operational according to the original schedule. You can explain this to your superiors, but the increased project costs will be hard to absorb. The potential cost overrun might be difficult to explain at a later date. At this point you are somewhat unhappy with yourself at having been on the search committee that found this department manager and especially at having recommended him for this position. You know that something must be done, and the following are your alternatives: A. You can remind the department manager that you were on the search committee that recommended him and then ask him to return the favor, since he “owes you one.” B. You can tell the department manager that you will form a new search committee to replace him if he doesn’t change his position. C. You can take a tranquilizer and then ask your people to try to perform the additional work within the original time and cost constraints. D. You can go to the vice president and general manager and request that the former requirements be adhered to, at least temporarily. E. You can send a memo to the department manager explaining your problem and asking him to help you find a solution. 301 Case Studies F. You can tell the department manager that your people cannot handle the request and his people will have to find alternate ways of solving their problems. G. You can send a memo to the department manager requesting an appointment, at his earliest convenience, to help you resolve your problem. H. You can go to the department manager’s office later that afternoon and continue the discussion further. I. You can send the department manager a memo telling him that you have decided to use the old requirements but will honor his request at a later time. Personal Line Group Part Choice 1 1. Facing the Conflict 2 2. Understanding Emotions 3 3. Establishing Communications 4 4. Conflict Resolution 5 5. Understanding Your Choices 6 6. Interpersonal Influences Score Choice Score TOTAL Although other alternatives exist, assume that these are the only ones open to you at the moment. Without discussing the answer with your group, record the letter representing your choice in the appropriate space on line 1 of the worksheet under “Personal.” As soon as all of your group have finished, discuss the problem as a group and determine that alternative that the group considers to be best. Record this answer on line 1 of the worksheet under “Group.” Allow ten minutes for this part. Part 2: Understanding Emotions Never having worked with this department manager before, you try to predict what his reactions will be when confronted with the problem. Obviously, he can react in a variety of ways: A. He can accept your solution in its entirety without asking any questions. B. He can discuss some sort of justification in order to defend his position. 302 CONFLICTS C. He can become extremely annoyed with having to discuss the problem again and demonstrate hostility. D. He can demonstrate a willingness to cooperate with you in resolving the problem. E. He can avoid making any decision at this time by withdrawing from the discussion. Your Choice Group Choice Acc. Def. Host. Coop. With. Acc. Def. Host. Coop. With. A. I’ve given my answer. See the general manager if you’re not happy. B. I understand your problem. Let’s do it your way. C. I understand your problem, but I’m doing what is best for my department. D. Let’s discuss the problem. Perhaps there are alternatives. E. Let me explain to you why we need the new requirements. F. See my section supervisors. It was their recommendation. G. New managers are supposed to come up with new and better ways, aren’t they? In the table above are several possible statements that could be made by the department manager when confronted with the problem. Without discussion with your group, place a check mark beside the appropriate emotion that could describe this statement. When each member of the group has completed his choice, determine the group choice. Numerical values will be assigned to your choices in the discussion that follows. Do not mark the worksheet at this time. Allow ten minutes for this part. Part 3: Establishing Communications Unhappy over the department manager’s memo and the resulting followup phone conversation, you decide to walk in on the department manager. You tell him that you will have a problem trying to honor his request. He tells you that he is too busy with his own problems of restructuring his department and that your schedule and cost problems are of no concern to him at this time. You storm out of his office, 303 Case Studies leaving him with the impression that his actions and remarks are not in the best interest of either the project or the company. The department manager’s actions do not, of course, appear to be those of a dedicated manager. He should be more concerned about what’s in the best interest of the company. As you contemplate the situation, you wonder if you could have received a better response from him had you approached him differently. In other words, what is your best approach to opening up communications between you and the department manager? From the list of alternatives shown below, and working alone, select the alternative that best represents how you would handle this situation. When all members of the group have selected their personal choices, repeat the process and make a group choice. Record your personal and group choices on line 3 of the worksheet. Allow ten minutes for this part. A. Comply with the request and document all results so that you will be able to defend yourself at a later date in order to show that the department manager should be held accountable. B. Immediately send him a memo reiterating your position and tell him that at a later time you will reconsider his new requirements. Tell him that time is of utmost importance, and you need an immediate response if he is displeased. C. Send him a memo stating that you are holding him accountable for all cost overruns and schedule delays. D. Send him a memo stating you are considering his request and that you plan to see him again at a later date to discuss changing the requirements. E. See him as soon as possible. Tell him that he need not apologize for his remarks and actions, and that you have reconsidered your position and wish to discuss it with him. F. Delay talking to him for a few days in hopes that he will cool off sufficiently and then see him in hopes that you can reopen the discussions. G. Wait a day or so for everyone to cool off and then try to see him through an appointment; apologize for losing your temper, and ask him if he would like to help you resolve the problem. Part 4: Conflict Resolution Modes Having never worked with this manager before, you are unsure about which conflict resolution mode would work best. You decide to wait a few days and then set up an appointment with the department manager without stating what subject matter will be discussed. You then try to determine what conflict resolution mode appears to be dominant based on the opening remarks of the department manager. Neglecting the fact that your conversation with the department manager might already be considered as confrontation, for each statement shown below, select the conflict resolution mode that the department manager appears to prefer. After each member of the group has recorded his personal choices in the table on page 304, determine the group choices. Numerical values will be attached to your answers at a later time. Allow ten minutes for this part. A. Withdrawal is retreating from a potential conflict. B. Smoothing is emphasizing areas of agreement and de-emphasizing areas of disagreement. C. Compromising is the willingness to give and take. D. Forcing is directing the resolution in one direction or another, a win-or-lose position. E. Confrontation is a face-to-face meeting to resolve the conflict. 304 CONFLICTS Personal Choice Group Choice With. Smooth. Comp. Forc. Conf. With. Smooth. Comp. Forc. Conf. A. The requirements are my decision, and we’re doing it my way. B. I’ve thought about it and you’re right. We’ll do it your way. C. Let’s discuss the problem. Perhaps there are alternatives. D. Let me again explain why we need the new requirements. E. See my section supervisors; they’re handling it now. F. I’ve looked over the problem and I might be able to ease up on some of the requirements. Part 5: Understanding Your Choices Assume that the department manager has refused to see you again to discuss the new requirements. Time is running out, and you would like to make a decision before the costs and schedules get out of hand. From the list below, select your personal choice and then, after each group member is finished, find a group choice. A. Disregard the new requirements, since they weren’t part of the original project plan. B. Adhere to the new requirements, and absorb the increased costs and delays. C. Ask the vice president and general manager to step in and make the final decision. D. Ask the other department managers who may realize a schedule delay to try to convince this department manager to ease his request or even delay it. Record your answer on line 5 of the worksheet. Allow five minutes for this part. Part 6: Interpersonal Influences Assume that upper-level management resolves the conflict in your favor. In order to complete the original work requirements you will need support from this department manager’s organization. Unfortunately, you are not sure as to which type of interpersonal influence to use. Although you are considered as an expert in your field, you fear that this manager’s functional employees may have a strong allegiance to the department manager and may not want to adhere to your requests. Which of the following interpersonal influence styles would be best under the given set of conditions? 305 Case Studies A. B. C. D. E. F. You threaten the employees with penalty power by telling them that you will turn in a bad performance report to their department manager. You can use reward power and promise the employees a good evaluation, possible promotion, and increased responsibilities on your next project. You can continue your technique of trying to convince the functional personnel to do your bidding because you are the expert in the field. You can try to motivate the employees to do a good job by convincing them that the work is challenging. You can make sure that they understand that your authority has been delegated to you by the vice president and general manager and that they must do what you say. You can try to build up friendships and off-work relationships with these people and rely on referent power. Record your personal and group choices on line 6 of the worksheet. Allow ten minutes for completion of this part. The solution to this exercise appears in Appendix A. 8 Special Topics Related Case Studies (from Kerzner/Project Management Case Studies) • American Electronics • International • The Tylenol Tragedies • Photolite Corporation (A) • Photolite Corporation (B) • Photolite Corporation (C) • Photolite Corporation (D) • First Security Bank of • Cleveland • Jackson Industries Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • The Potential Problem Audit • The Situational Audit • Multiple Choice Exam • Webster Industrial Controls • Project Management at • Liberty Construction • Starr Air Force Base (SAFB) • Project Management at • Costa Pharmaceutical Labs PMBOK® Reference Section for the PMP® Certification Exam • Human Resource • Management • Project Management • Roles and • Responsibilities 8.0 INTRODUCTION There are several situations or special topics that deserve attention. These include: ● ● ● Performance measurement Compensation and rewards Managing small projects 307 308 SPECIAL TOPICS ● ● ● ● ● ● Managing mega projects Morality, ethics and the corporate culture Internal partnerships External partnerships Training and education Integrated project teams 8.1 PERFORMANCE MEASUREMENT A good project manager will make it immediately clear to all new functional employees that if they perform well in the project, then he (the project manager) will inform the functional manager of their progress and achievements. This assumes that the functional manager is not providing close supervision over the functional employees and is, instead, passing on some of the responsibility to the project manager—a common situation in project management organization structures. Many good projects as well as project management structures have failed because of the inability of the system to evaluate properly the functional employee’s performance. In a project management structure, there are basically six ways that a functional employee can be evaluated on a project: ● ● ● The project manager prepares a written, confidential evaluation and gives it to the functional manager. The functional manager will evaluate the validity of the project manager’s comments and prepare his own evaluation. Only the line manager’s evaluation is shown to the employee. The use of confidential forms is not preferred because it may be contrary to government regulations and it does not provide the necessary feedback for an employee to improve. The project manager prepares a nonconfidential evaluation and gives it to the functional manager. The functional manager prepares his own evaluation form and shows both evaluations to the functional employee. This is the technique preferred by most project and functional managers. However, there are several major difficulties with this technique. If the functional employee is an average or belowaverage worker, and if this employee is still to be assigned to this project after his evaluation, then the project manager might rate the employee as above average simply to prevent any sabotage or bad feelings downstream. In this situation, the functional manager might want a confidential evaluation instead, knowing that the functional employee will see both evaluation forms. Functional employees tend to blame the project manager if they receive a below-average merit pay increase, but give credit to the functional manager if the increase is above average. The best bet here is for the project manager periodically to tell the functional employees how well they are doing, and to give them an honest appraisal. Several companies that use this technique allow the project manager to show the form to the line manager first (to avoid conflict later) and then show it to the employee. The project manager provides the functional manager with an oral evaluation of the employee’s performance. Although this technique is commonly used, most 309 Performance Measurement ● ● ● functional managers prefer documentation on employee progress. Again, lack of feedback may prevent the employee from improving. The functional manager makes the entire evaluation without any input from the project manager. In order for this technique to be effective, the functional manager must have sufficient time to supervise each subordinate’s performance on a continual basis. Unfortunately, most functional managers do not have this luxury because of their broad span of control and must therefore rely heavily on the project manager’s input. The project manager makes the entire evaluation for the functional manager. This technique can work if the functional employee spends 100 percent of his time on one project, or if he is physically located at a remote site where he cannot be observed by his functional manager. All project and functional managers jointly evaluate all project functional employees at the same time. This technique should be limited to small companies with fewer than fifty or so employees; otherwise the evaluation process might be time-consuming for key personnel. A bad evaluation will be known by everyone. VERY GOOD (3 OUT OF 15) GOOD (8 OUT OF 15) FAIR (2 OUT OF 15) UNSATISFACTORY (1 OUT OF 15) FAR EXCEEDS JOB REQUIREMENTS EXCEEDS JOB REQUIREMENTS MEETS JOB REQUIREMENTS NEEDS SOME IMPROVEMENT DOES NOT MEET MINIMUM STANDARDS QUALITY LEAPS TALL BUILDINGS WITH A SINGLE BOUND MUST TAKE RUNNING START TO LEAP OVER TALL BUILDING CAN ONLY LEAP OVER A SHORT BUILDING OR MEDIUM ONE WITHOUT SPIRES CRASHES INTO BUILDING CANNOT RECOGNIZE BUILDINGS TIMELINESS IS FASTER THAN A SPEEDING BULLET IS AS FAST AS A SPEEDING BULLET NOT QUITE AS FAST AS A SPEEDING BULLET WOULD YOU BELIEVE A SLOW BULLET? WOUNDS HIMSELF WITH THE BULLET IS STRONGER THAN A LOCOMOTIVE IS STRONGER THAN A BULL ELEPHANT IS STRONGER THAN A BULL SHOOTS THE BULL SMELLS LIKE A BULL WALKS ON WATER CONSISTENTLY WALKS ON WATER IN EMERGENCIES WASHES WITH WATER DRINKS WATER PASSES WATER IN EMERGENCIES TALKS WITH GOD TALKS WITH ANGELS TALKS TO HIMSELF ARGUES WITH HIMSELF LOSES THE ARGUMENT WITH HIMSELF COMMUNICATIONS ADAPTABILITY EXCELLENT (1 OUT OF 15) INITIATIVE PERFORMANCE FACTORS Evaluation forms can be filled out either when the employee is up for evaluation or after the project is completed. If it is to be filled out when the employee is eligible for promotion or a merit increase, then the project manager should be willing to give an honest FIGURE 8–1. Guide to performance appraisal. 310 SPECIAL TOPICS appraisal of the employee’s performance. Of course, the project manager should not fill out the evaluation form if he has not had sufficient time to observe the employee at work. The evaluation form can be filled out at the termination of the project. This, however, may produce a problem in that the project may end the month after the employee is considered for promotion. The advantage of this technique is that the project manager may have been able to find sufficient time both to observe the employee in action and to see the output. Figure 8–1 (see page 309) represents, in a humorous way, how project personnel perceive the evaluation form. Unfortunately, the evaluation process is very serious and can easily have a severe impact on an individual’s career path with the company even though the final evaluation rests with the functional manager. Figure 8–2 shows a simple type of evaluation form on which the project manager identifies the best description of the employee’s performance. This type of form is generally used whenever the employee is up for evaluation. Figure 8–3 shows another typical form that can be used to evaluate an employee. In each category, the employee is rated on a subjective scale. In order to minimize time and paper- EMPLOYEE'S NAME DATE PROJECT TITLE JOB NUMBER EMPLOYEE ASSIGNMENT EMPLOYEE'S TOTAL TIME TO DATE ON PROJECT EMPLOYEE'S REMAINING TIME ON PROJECT TECHNICAL JUDGMENT: Quickly reaches sound conclusions Usually makes sound conclusions Marginal decisionmaking ability Needs technical assistance Makes faulty conclusions Plans well with help Occasionally plans well Needs detailed instructions Cannot plan at all Sometimes needs clarification Always needs clarifications Shows interest most of the time Shows no job interest More interested in other activities Does not care about job Works well until job is completed Usually works well with others Works poorly with others Wants it done his/her way Most often project oriented Usually consistent with requests Works poorly with others Always works alone WORK PLANNING: Good planner COMMUNICATIONS: Always understands instructions Needs follow-up Needs constant instruction ATTITUDE: Always job interested COOPERATION: Always enthusiastic WORK HABITS: Always project oriented ADDITIONAL COMMENTS: FIGURE 8–2. Project work assignment appraisal. 311 Performance Measurement EMPLOYEE'S NAME DATE PROJECT TITLE JOB NUMBER EMPLOYEE ASSIGNMENT INADEQUATE BELOW AVERAGE AVERAGE ABOVE AVERAGE EMPLOYEE'S REMAINING TIME ON PROJECT EXCELLENT EMPLOYEE'S TOTAL TIME TO DATE ON PROJECT TECHNICAL JUDGMENT WORK PLANNING COMMUNICATIONS ATTITUDE COOPERATION WORK HABITS PROFIT CONTRIBUTION ADDITIONAL COMMENTS: FIGURE 8–3. Project work assignment appraisal. work, it is also possible to have a single evaluation form at project termination for evaluation of all employees. This is shown in Figure 8–4. All employees are rated in each category on a scale of 1 to 5. Totals are obtained to provide a relative comparison of employees. Obviously, evaluation forms such as that shown in Figure 8–4 have severe limitations, as a one-to-one comparison of all project functional personnel is of little value if the employees are from different departments. How can a project engineer be compared to a cost accountant? Several companies are using this form by assigning coefficients of importance to each topic. For example, under a topic of technical judgment, the project engineer might have a coefficient of importance of 0.90, whereas the cost accountant’s coefficient might be 0.25. These coefficients could be reversed for a topic on cost consciousness. Unfortunately, such comparisons have questionable validity, and this type of evaluation form is usually of a confidential nature. Even though the project manager fills out an evaluation form, there is no guarantee that the functional manager will believe the project manager’s evaluation. There are always situations in which the project and functional managers disagree as to either quality or direction of work. Another problem may exist in the situation where the project manager is a “generalist,” say at a grade-7 level, and requests that the functional manager assign his best 312 SPECIAL TOPICS PROJECT TITLE JOB NUMBER EMPLOYEE ASSIGNMENT DATE CODE: FIGURE 8–4. TOTAL POINTS SELF MOTIVATION PROFIT CONTRIBUTION WORK HABITS COOPERATION ATTITUDE COMMUNICATIONS WORK PLANNING NAMES TECHNICAL JUDGMENT EXCELLENT = 5 ABOVE AVERAGE = 4 AVERAGE = 3 BELOW AVERAGE = 2 INADEQUATE = 1 Project work assignment appraisal. employee to the project. The functional manager agrees to the request and assigns his best employee, a grade-10 specialist. One solution to this problem is to have the project manager evaluate the expert only in certain categories such as communications, work habits, and problem-solving, but not in the area of his technical expertise. As a final note, it is sometimes argued that functional employees should have some sort of indirect input into a project manager’s evaluation. This raises rather interesting questions as to how far we can go with the indirect evaluation procedure. From a top-management perspective, the indirect evaluation process brings with it several headaches. Wage and salary administrators readily accept the necessity for using different evaluation forms for white-collar and blue-collar workers. But now, we have a situation in which there can be more than one type of evaluation system for white-collar workers alone. Those employees who work in project-driven functional departments will be evaluated directly and indirectly, but based on formal procedures. Employees who charge their time to overhead accounts and non–project-driven departments might simply be evaluated by a single, direct evaluation procedure. Many wage and salary administrators contend that they cannot live with a whitecollar evaluation system and therefore have tried to combine the direct and indirect evaluation forms into one, as shown in Figure 8–5. Some administrators have even gone so far I. II. EMPLOYEE INFORMATION: 1. NAME 2. DATE OF EVALUATION 3. JOB ASSIGNMENT 4. DATE OF LAST EVALUATION 5. PAY GRADE 6. EMPLOYEE'S IMMEDIATE SUPERVISOR 7. SUPERVISOR'S LEVEL: SECTION DEPT. DIVISION EXECUTIVE DEPT. DIVISION EXECUTIVE EVALUATOR'S INFORMATION: 1. EVALUATOR'S NAME 2. EVALUATOR'S LEVEL: 3. RATE THE EMPLOYEE ON THE FOLLOWING: SECTION VERY GOOD EXCELLENT GOOD FAIR POOR ABILITY TO ASSUME RESPONSIBILITY WORKS WELL WITH OTHERS LOYAL ATTITUDE TOWARD COMPANY DOCUMENTS WORK WELL AND IS BOTH COST AND PROFIT CONSCIOUS RELIABILITY TO SEE JOB THROUGH ABILITY TO ACCEPT CRITCISM WILLINGNESS TO WORK OVERTIME PLANS JOB EXECUTION CAREFULLY TECHNICAL KNOWLEDGE COMMUNICATIVE SKILLS OVERALL RATING 4. RATE THE EMPLOYEE IN COMPARISON TO HIS CONTEMPORARIES: LOWER 10% 5. LOWER 25% LOWER 40% MIDWAY UPPER 40% UPPER 25% UPPER 10% RATE THE EMPLOYEE IN COMPARISON TO HIS CONTEMPORARIES: SHOULD BE PROMOTED AT ONCE PROMOTABLE NEXT YEAR NEEDS TO PROMOTABLE MATURE IN ALONG WITH GRADE CONTEMPORARIES DEFINITELY NOT PROMOTABLE 6. EVALUATOR'S COMMENTS: SIGNATURE III. CONCURRENCE SECTION: 1. NAME 2. POSITION: 3. CONCURRENCE 4. COMMENTS: DEPARTMENT DIVISION AGREE EXECUTIVE DISAGREE SIGNATURE IV. PERSONNEL SECTION: (to be completed by the Personnel Department only) 6/79 6/78 6/77 6/76 6/75 6/74 6/73 6/72 6/71 6/70 LOWER 10% LOWER 25% V. EMPLOYEE'S SIGNATURE: FIGURE 8–5. LOWER 40% MIDWAY UPPER 40% UPPER 25% UPPER 10% DATE: Job evaluation. 313 314 SPECIAL TOPICS as to adopt a single form company-wide, regardless of whether an individual is a white- or blue-collar worker. The design of the employee’s evaluation form depends on what evaluation method or procedure is being used. Generally speaking, there are nine methods available for evaluating personnel: ● ● ● ● ● ● ● ● ● Essay appraisal Graphic rating scale Field review Forced-choice review Critical incident appraisal Management by objectives Work standards approach Ranking methods Assessment center Conflict over schedules Conflict over priorities Conflict over technical issues Conflict over administration Personality conflict Conflict over cost Circles define areas where evaluation technique may be difficult to implement. FIGURE 8–6. Rating evaluation techniques against types of conflict. Assessment Center Ranking Methods Work Standards Approach Management By Objectives Critical Incident Appraisal Forced-Choice Review Field Review Graphic Rating Scale Essay Appraisal Descriptions of these methods can be found in almost any text on wage and salary administration. Which method is best suited for a project-driven organizational structure? To answer this question, we must analyze the characteristics of the organizational form as well as those of the personnel who must perform there. An an example, project management can be described as an arena of conflict. Which of the above evaluation procedures can best be used to evaluate an employee’s ability to work and progress in an atmosphere of conflict? Figure 8–6 compares the above nine evaluation procedures against the six most common project conflicts. This type of analysis must be carried out for all variables and characteris- Financial Compensation and Rewards 315 tics that describe the project management environment. Most compensation managers would agree that the management by objectives (MBO) technique offers the greatest promise for a fair and equitable evaluation of all employees. Although MBO implies that functional employees will have a say in establishing their own goals and objectives, this may not be the case. In project management, maybe the project manager or functional manager will set the objectives, and the functional employee will be told that he has to live with that. Obviously, there will be advantages and disadvantages to whatever evaluation procedures are finally selected. 8.2 FINANCIAL COMPENSATION AND REWARDS Proper financial compensation and rewards are important to the morale and motivation of people in any organization. However, there are several issues that often make it necessary to treat compensation practices of project personnel separately from the rest of the organization: ● ● ● ● Job classification and job descriptions for project personnel are usually not compatible with those existing for other professional jobs. It is often difficult to pick an existing classification and adapt it to project personnel. Without proper adjustment, the small amount of formal authority of the project and the small number of direct reports may distort the position level of project personnel in spite of their broad range of business responsibilities. Dual accountability and dual reporting relationships of project personnel raise the question of who should assess performance and control the rewards. Bases for financial rewards are often difficult to establish, quantify, and administer. The criteria for “doing a good job” are difficult to quantify. Special compensations for overtime, extensive travel, or living away from home should be considered in addition to bonus pay for preestablished results. Bonus pay is a particularly difficult and delicate issue because often many people contribute to the results of such incentives. Discretionary bonus practices can be demoralizing to the project team. Some specific guidelines are provided here to help managers establish compensation systems for their project organizations. The foundations of these compensation practices are based on four systems: (1) job classification, (2) base pay, (3) performance appraisals, and (4) merit increases. Job Classifications and Job Descriptions Every effort should be made to fit the new classifications for project personnel into the existing standard classification that has already been established for the organization. The first step is to define job titles for various project personnel and their corresponding responsibilities. Titles are noteworthy because they imply certain responsibilities, 316 SPECIAL TOPICS position power, organizational status, and pay level. Furthermore, titles may indicate certain functional responsibilities, as does, for example, the title of task manager.1 Therefore, titles should be carefully selected and each of them supported by a formal job description. The job description provides the basic charter for the job and the individual in charge of it. A good job description is brief and concise, not exceeding one page. Typically, it is broken down into three sections: (1) overall responsibilities, (2) specific duties, and (3) qualifications. A sample job description is given in Table 8–1. Base-Pay Classifications and Incentives After the job descriptions have been developed, one can delineate pay classes consistent with the responsibilities and accountabilities for business results. If left to the personnel specialist, these pay scales may slip toward the lower end of an equitable compensation. This is understandable because, on the surface, project positions look less senior than their functional counterparts, as formal authority over resources and direct reports are often less necessary for project positions than for traditional functional positions. The impact of such a skewed compensation system is that the project organization will attract less qualified personnel and may be seen as an inferior career path. Many companies that have struggled with this problem have solved it by (1) working out compensation schemes as a team of senior managers and personnel specialists, and (2) applying criteria of responsibility and business/profit accountability to setting pay scales for project personnel in accord with other jobs in their organization. Managers who are hiring can choose a salary from the established range based on their judgment of actual position responsibilities, the candidate’s qualifications, the available budget, and other considerations. Performance Appraisals ● ● ● ● ● Traditionally, the purpose of the performance appraisal is to: Assess the employee’s work performance, preferably against preestablished objectives Provide a justification for salary actions Establish new goals and objectives for the next review period Identify and deal with work-related problems Serve as a basis for career discussions In reality, however, the first two objectives are in conflict. As a result, traditional performance appraisals essentially become a salary discussion with the objective to justify sub- 1. In most organizations the title of task manager indicates being responsible for managing the technical content of a project subsystem within a functional unit, having dual accountabilities to the functional superior and the project office. Financial Compensation and Rewards 317 TABLE 8–1. SAMPLE JOB DESCRIPTION Job Description: Lead Project Engineer of Processor Development Overall Responsibility Responsible for directing the technical development of the new Central Processor including managing the technical personnel assigned to this development. The Lead Project Engineer has dual responsibility, (1) to his/her functional superior for the technical implementation and engineering quality and (2) to the project manager for managing the development within the established budget and schedule. Specific Duties and Responsibilities 1. Provide necessary program direction for planning, organizing, developing and integrating the engineering effort, including establishing the specific objectives, schedules, and budgets for the processor subsystem. 2. Provide technical leadership for analyzing and establishing requirements, preliminary designing, designing, prototyping, and testing of the processor subsystem. 3. Divide the work into discrete and clearly definable tasks. Assign tasks to technical personnel within the Lead Engineer’s area of responsibility and other organizational units. 4. Define, negotiate, and allocate budgets and schedules according to the specific tasks and overall program requirements. 5. Measure and control cost, schedule, and technical performance against program plan. 6. Report deviations from program plan to program office. 7. Replan trade-off and redirect the development effort in case of contingencies such as to best utilize the available resources toward the overall program objectives. 8. Plan, maintain, and utilize engineering facilities to meet the long-range program requirements. Qualifications 1. Strong technical background in state-of-the-art central processor development. 2. Prior task management experience with proven record for effective cost and schedule control of multidisciplinary technology-based task in excess of SIM. 3. Personal skills to lead, direct, and motivate senior engineering personnel. 4. Excellent communication skills, both orally and in writing. sequent managerial actions.2 In addition, discussions dominated by salary actions are usually not conducive for future goal setting, problem-solving, or career planning. In order to get around this dilemma, many companies have separated the salary discussion from the other parts of the performance appraisal. Moreover, successful managers have carefully considered the complex issues involved and have built a performance appraisal system solidly based on content, measurability, and source of information. The first challenge is in content, that is, to decide “what to review” and “how to measure performance.” Modern management practices try to individualize accountability as much as possible. Furthermore, subsequent incentive or merit increases are tied to profit performance. Although most companies apply these principles to their project organizations, they do it with a great deal of skepticism. Practices are often modified to assure balance and equity for jointly performed responsibilities. A similar dilemma exists in the area 2. For detailed discussions, see The Conference Board, Matrix Organizations of Complex Businesses, 1979; plus some basic research by H. H. Meyer, E. Kay, and J. R. P. French, “Split Roles in Performance Appraisal,” Harvard Business Review, January–February 1965. 318 SPECIAL TOPICS of profit accountability. The comment of a project manager at the General Electric Company is typical of the situation faced by business managers: “Although I am responsible for business results of a large program, I really can’t control more than 20 percent of its cost.” Acknowledging the realities, organizations are measuring performance of their project managers, in at least two areas: ● ● Business results as measured by profits, contribution margin, return on investment, new business, and income; also, on-time delivery, meeting contractual requirements, and within-budget performance. Managerial performance as measured by overall project management effectiveness, organization, direction and leadership, and team performance. The first area applies only if the project manager is indeed responsible for business results such as contractual performance or new business acquisitions. Many project managers work with company-internal sponsors, such as a company-internal new product development or a feasibility study. In these cases, producing the results within agreed-on schedule and budget constraints becomes the primary measure of performance. The second area is clearly more difficult to assess. Moreover, if handled improperly, it will lead to manipulation and game playing. Table 8–2 provides some specific measures of project management performance. Whether the sponsor is company-internal or external, project managers are usually being assessed on how long it took to organize the team, whether the project is moving along according to agreed-on schedules and budgets, and how closely they meet the global goals and objectives set by their superiors. On the other side of the project organization, resource managers or project personnel TABLE 8–2. PERFORMANCE MEASURES FOR PROJECT MANAGERS Who Performs Appraisal Functional superior of project manager Source of Performance Data Functional superior, resource managers, general managers Primary Measures 1. Project manager’s success in leading the project toward preestablished global objectives • Target costs • Key milestones • Profit, net income, return on investment, contribution margin • Quality • Technical accomplishments • Market measures, new business, follow-on contract 2. Project manager’s effectiveness in overall project direction and leadership during all phases, including establishing: • Objectives and customer requirements • Budgets and schedules • Policies • Performance measures and controls • Reporting and review system (continues) Financial Compensation and Rewards 319 TABLE 8–2. PERFORMANCE MEASURES FOR PROJECT MANAGERS (Continued) Secondary Measures 1. Ability to utilize organizational resources • Overhead cost reduction • Working with existing personnel • Cost-effective make-buy decisions 2. Ability to build effective project team • Project staffing • Interfunctional communications • Low team conflict complaints and hassles • Professionally satisfied team members • Work with support groups 3. Effective project planning and plan implementation • Plan detail and measurability • Commitment by key personnel and management • Management involvement • Contingency provisions • Reports and reviews 4. Customer/client satisfaction • Perception of overall project performance by sponsor • Communications, liaison • Responsiveness to changes 5. Participation in business management • Keeping mangement informed of new project/product/business opportunities • Bid proposal work • Business planning, policy development Additional Considerations 1. Difficulty of tasks involved • Technical tasks • Administrative and orgnizational complexity • Multidisciplinary nature • Staffing and start-up 2. Scope of the project • Total project budget • Number of personnel involved • Number of organizations and subcontractors involved 3. Changing work environment • Nature and degree of customer changes and redirections • Contingencies are being assessed primarily on their ability to direct the implementation of a specific project subsystem: ● ● Technical implementation as measured against requirements, quality, schedules, and cost targets Team performance as measured by ability to staff, build an effective task group, interface with other groups, and integrate among various functions Specific performance measures are shown in Table 8–3. In addition, the actual project performance of both project managers and their resource personnel should be assessed on the conditions under which it was achieved: the degree of task difficulty, complexity, size, changes, and general business conditions. TABLE 8–3. PERFORMANCE MEASURES FOR PROJECT PERSONNEL Who Performs Appraisal Functional superior of project person Source of Performance Data Project manager and resource managers Primary Measures 1. Success in directing the agreed-on task toward completion • Technical implementation according to requirements • Quality • Key milestones/schedules • Target costs, design-to-cost • Innovation • Trade-offs 2. Effectiveness as a team member or team leader • Building effective task team • Working together with others, participation, involvement • Interfacing with support organizations and subcontractors • Interfunctional coordination • Getting along with others • Change orientation • Making commitments Secondary Measures 1. Success and effectiveness in performing functional tasks in addition to project work in accordance with functional charter • Special assignments • Advancing technology • Developing organization • Resource planning • Functional direction and leadership 2. Administrative support services • Reports and reviews • Special task forces and committees • Project planning • Procedure development 3. New business development • Bid proposal support • Customer presentations 4. Professional development • Keeping abreast in professional field • Publications • Liaison with society, vendors, customers, and educational institutions Additional Considerations 1. Difficulty of tasks involved • Technical challenges • State-of-the-art considerations • Changes and contingencies 2. Managerial responsibilities • Task leader for number of project personnel • Multifunctional integration • Budget responsibility • Staffing responsibility • Specific accountabilities 3. Multiproject involvement • Number of different projects • Number and magnitude of functional task and duties • Overall workload 320 Effective Project Management in the Small Business Organization 321 Finally, one needs to decide who is to perform the performance appraisal and to make the salary adjustment. Where dual accountabilities are involved, good practices call for inputs from both bosses. Such a situation could exist for project managers who report functionally to one superior but are also accountable for specific business results to another person. While dual accountability of project managers is an exception for most organizations, it is common for project resource personnel who are responsible to their functional superior for the quality of the work and to their project manager for meeting the requirements within budget and schedule. Moreover, resource personnel may be shared among many projects. Only the functional or resource manager can judge overall performance of resource personnel. Merit Increases and Bonuses Professionals have come to expect merit increases as a reward for a job well done. However, under inflationary conditions, pay adjustments seldom keep up with cost-of-living increases. To deal with this salary compression and to give incentive for management performance, companies have introduced bonuses. The problem is that these standard plans for merit increases and bonuses are based on individual accountability while project personnel work in teams with shared accountabilities, responsibilities, and controls. It is usually very difficult to credit project success or failure to a single individual or a small group. Most managers with these dilemmas have turned to the traditional remedy of the performance appraisal. If done well, the appraisal should provide particular measures of job performance that assess the level and magnitude at which the individual has contributed to the success of the project, including the managerial performance and team performance components. Therefore, a properly designed and executed performance appraisal that includes input from all accountable management elements, and the basic agreement of the employee with the conclusions, is a sound basis for future salary reviews. 8.3 EFFECTIVE PROJECT MANAGEMENT IN THE SMALL BUSINESS ORGANIZATION The definition of a small project could be: ● ● ● ● ● ● Total duration is usually three to twelve months. Total dollar value is $5,000 to $1.5 million (upper limit is usually capital equipment projects). There is continuous communication between team members, and no more than three or four cost centers are involved. Manual rather than computerized cost control may be acceptable. Project managers work closely with functional personnel and managers on a daily basis, so time-consuming detail reporting is not necessary. The work breakdown structure does not go beyond level three. 322 SPECIAL TOPICS Here, we are discussing project management in both small companies and small organizations within a larger corporation. In small organizations, major differences from large companies must be accounted for: ● In small companies, the project manager has to wear multiple hats and may have to act as a project manager and line manager at the same time. Large companies may have the luxury of a single full-time project manager for the duration of a project. Smaller companies may not be able to afford a full-time project manager and therefore may require that functional managers wear two hats. This poses a problem in that the functional managers may be more dedicated to their own functional unit than to the project, and the project may suffer. There is also the risk that when the line manager also acts as project manager, the line manager may keep the best resources for his own project. The line manager’s project may be a success at the expense of all the other projects that he must supply resources for. In the ideal situation, the project manager works horizontally and has project dedication, whereas the line manager works vertically and has functional (or company) dedication. If the working relationship between the project and functional managers is a good one, then decisions will be made in a manner that is in the best interest of both the project and the company. Unfortunately, this may be difficult to accomplish in small companies when an individual wears multiple hats. ● In a small company, the project manager handles multiple projects, perhaps each with a different priority. In large companies, project managers normally handle only one project at a time. Handling multiple projects becomes a serious problem if the priorities are not close together. For this reason, many small companies avoid the establishment of priorities for fear that the lower-priority activities will never be accomplished. ● In a small company, the project manager has limited resources. In a large company, if the project manager is unhappy with resources that are provided, he may have the luxury of returning to the functional manager to either demand or negotiate for other resources. In a small organization, the resources assigned may be simply the only resources available. ● In a small company, project managers must generally have a better understanding of interpersonal skills than in a larger company. This is a necessity because a project manager in the small company has limited resources and must provide the best motivation that he can. ● In the smaller company, the project manager generally has shorter lines of communications. In small organizations project managers almost always report to a top-level executive, whereas in larger organizations the project managers can report to any level of management. Small companies tend to have fewer levels of management. ● Small companies do not have a project office. Large companies, especially in aerospace or construction, can easily support a project office of twenty to thirty people, whereas in the smaller company the project manager may have to be the entire project office. This implies that the project manager in a small company may be required to have more general and specific information about all company activities, policies, and procedures than his counterparts in the larger companies. ● In a small company, there may be a much greater risk to the total company with the failure of as little as one project. Large companies may be able to afford the loss of a multimillion-dollar program, whereas the smaller company may be in serious financial 323 Mega Projects trouble. Thus many smaller companies avoid bidding on projects that would necessitate hiring additional resources or giving up some of its smaller accounts. ● In a small company, there might be tighter monetary controls but with less sophisticated control techniques. Because the smaller company incurs greater risk with the failure (or cost overrun) of as little as one project, costs are generally controlled much more tightly and more frequently than in larger companies. However, smaller companies generally rely on manual or partially computerized systems, whereas larger organizations rely heavily on sophisticated software packages. ● In a small company, there is usually more upper-level management interference. This is expected because in the small company there is a much greater risk with the failure of a single project. In addition, executives in smaller companies “meddle” more than executives in larger companies, and quite often delegate as little as possible to project managers. ● Evaluation procedures for individuals are usually easier in a smaller company. This holds true because the project manager gets to know the people better, and, as stated above, there exists a greater need for interpersonal skills on the horizontal line in a smaller company. ● In a smaller company, project estimating is usually more precise and based on either history or standards. This type of planning process is usually manual as opposed to computerized. In addition, functional managers in a small company usually feel obligated to live up to their commitments, whereas in larger companies, much more lip service is given. 8.4 MEGA PROJECTS Mega projects may have a different set of rules and guidelines from those of smaller projects. For example, in large projects: ● ● ● ● Vast numbers of people may be required, often for short or intense periods of time. Continuous organizational restructuring may be necessary as each project goes through a different life-cycle phase. The matrix and project organizational form may be used interchangeably. The following elements are critical for success. ● Training in project management ● Rules and procedures clearly defined ● Communications at all levels ● Quality front-end planning Many companies dream of winning mega project contracts only to find disaster rather than a pot of gold. The difficulty in managing mega projects stems mainly from resource restraints: ● ● Lack of available on-site workers (or local labor forces) Lack of skilled workers 324 SPECIAL TOPICS ● ● Lack of properly trained on-site supervision Lack of raw materials As a result of such problems, the company immediately assigns its best employees to the mega project, thus creating severe risks for the smaller projects, many of which could lead to substantial follow-on business. Overtime is usually required, on a prolonged basis, and this results in lower efficiency and unhappy employees. As the project schedule slips, management hires additional home-office personnel to support the project. By the time that the project is finished, the total organization is overstaffed, many smaller customers have taken their business elsewhere, and the company finds itself in the position of needing another mega project in order to survive and support the existing staff. Mega projects are not always as glorious as people think they are. Organizational stability, accompanied by a moderate growth rate, may be more important than quantum steps to mega projects. The lesson here is that mega projects should be left to those companies that have the facilities, expertise, resources, and management know-how to handle the situation. 8.5 MORALITY, ETHICS, AND THE CORPORATE CULTURE Companies that promote morality and ethics in business usually have an easier time developing a cooperative culture than those that encourage unethical or immoral behavior. The adversity generated by unethical acts can be either internally or externally driven. Internally driven adversity occurs when employees or managers in your own company ask you to take action that may be in the best interest of your company but violates your own moral and ethical beliefs. Typical examples might include: ● ● ● ● ● ● ● You are asked to lie to the customer in a proposal in order to win the contract. You are asked to withhold bad news from your own management. You are asked to withhold bad news from the customer. You are instructed to ship a potentially defective unit to the customer in order to maintain production quotas. You are ordered to violate ethical accounting practices to make your numbers “look good” for senior management. You are asked to cover up acts of embezzlement or use the wrong charge numbers. You are asked to violate the confidence of a private personal decision by a team member. External adversity occurs when your customers ask you to take action that may be in the customer’s best interest (and possibly your company’s best interest), but once again violates your personal moral and ethical beliefs. Typical examples might include: ● ● You are asked to hide or destroy information that could be damaging to the customer during legal action against your customer. You are asked to lie to consumers to help maintain your customer’s public image. Morality, Ethics, and the Corporate Culture ● ● 325 You are asked to release unreliable information that would be damaging to one of your customer’s competitors. The customer’s project manager asks you to lie in your proposal so that he/she will have an easier time in approving contract award. Project managers are often placed in positions where an action must be taken for the best interest of the company and its customers, and yet the same action could be upsetting to the workers. Consider the following example as a positive way to handle this: ● A project had a delivery date where a specific number of completed units had to be on the firm’s biggest customer’s receiving dock by January 5. This customer represented 30% of the firm’s sales and 33% of its profits. Because of product development problems and slippages, the project could not be completed early. The employees, many of whom were exempt, were informed that they would be expected to work 12-hour days, including Christmas and New Year’s, to maintain the schedule. The project manager worked the same hours as his manufacturing team and was visible to all. The company allowed family members to visit the workers during the lunch and dinner hours during this period. After delivery was accomplished, the project manager arranged for all of the team members to receive two weeks of paid time off. At completion of the project, the team members were volunteering to work again for this project manager. The project manager realized that asking his team to work these days might be viewed as immoral. Yet, because he also worked, his behavior reinforced the importance of meeting the schedule. The project manager’s actions actually strengthened the cooperative nature of the culture within the firm. Not all changes are in the best interest of both the company and the workers. Sometimes change is needed simply to survive, and this could force employees to depart from their comfort zones. The employees might even view the change as immoral. Consider the following example: ● Because of a recession, a machine tool company switched from a non–projectdriven to a project-driven company. Management recognized the change and tried to convince employees that customers now wanted specialty products rather than standard products, and that the survival of the firm may be at stake. The company hired a project management consulting company to help bring in project management since the business was now project-driven. The employees vigorously resisted both the change and the training with the mistaken belief that, once the recession ended, the customers would once again want the standard, off-the-shelf products and that project management was a waste of time. The company is no longer in business and, as the employees walked out of the plant for the last time, they blamed project management for the loss of employment. Some companies develop “Standard Practice Manuals” that describe in detail what is meant by ethical conduct in dealing with customers and suppliers. Yet, even with the 326 SPECIAL TOPICS existence of these manuals, well-meaning individuals may create unintended consequences that wreak havoc. Consider the following example: ● The executive project sponsor on a government-funded R&D project decided to “massage” the raw data to make the numbers look better before presenting the data to a customer. When the customer realized what had happened, their relationship, which had been based upon trust and open communications, was now based upon mistrust and formal documentation. The entire project team suffered because of the self-serving conduct of one executive. Sometimes, project managers find themselves in situations where the outcome most likely will be a win-lose position rather than a win-win situation. Consider the following three situations: ● ● ● An assistant project manager, Mary, had the opportunity to be promoted and manage a new large project that was about to begin. She needed her manager’s permission to accept the new assignment, but if she left, her manager would have to perform her work in addition to his own for at least three months. The project manager refused to release her, and the project manager developed a reputation of preventing people from being promoted while working on his project. In the first month of a twelve-month project, the project manager realized that the end date was optimistic, but he purposely withheld information from the customer in hopes that a miracle would occur. Ten months later, the project manager was still withholding information waiting for the miracle. In the eleventh month, the customer was told the truth. People then labeled the project manager as an individual who would rather lie than tell the truth because it was easier. To maintain the customer’s schedule, the project manager demanded that employees work excessive overtime, knowing that this often led to more mistakes. The company fired a tired worker who inadvertently withdrew the wrong raw materials from inventory, resulting in a $55,000 manufacturing mistake. In all three situations, the project manager believed that his decision was in the best interest of the company at that time. Yet the final result in each case was that the project manager was labeled as unethical or immoral. It is often said that “money is the root of all evil.” Sometimes companies believe that recognizing the achievements of an individual through a financial reward system is appropriate without considering the impact on the culture. Consider the following example: ● At the end of a highly successful project, the project manager was promoted, given a $5,000 bonus and a paid vacation. The team members who were key to the project’s success and who earned minimum wage, went to a fast food restaurant to celebrate their contribution to the firm and their support of each other. The project manager celebrated alone. 327 Internal Partnerships The company failed to recognize that project management was a team effort. The workers viewed management’s reward policy as immoral and unethical because the project manager was successful due to the efforts of the entire team. Moral and ethical conduct by project managers, project sponsors, and line managers can improve the corporate culture. Likewise, poor decisions can destroy a culture, often in much less time than it took for the culture to be developed. 8.6 INTERNAL PARTNERSHIPS A partnership is a group of two or more individuals working together to achieve a common objective. In project management, maintaining excellent, working relations with internal partners is essential. Internally, the critical relationship is between the project and line manager. In the early days of project management, the selection of the individual to serve as the project manager was most often dependent upon who possessed the greatest command of technology. The result, as shown in Figure 8–7, was a very poor working relationship between the project and line manager. Line managers viewed project managers as a threat, and their relationship developed into a competitive, superior-subordinate relationship. The most common form of organizational structure was a very strong matrix where the project manager, perceived as having a command of technology, had a greater influence over the assigned employees than did their line manager. As the magnitude and technical complexity of the projects grew, it became obvious that the project managers could not maintain a command of technology in all aspects of Partnership Strength Strong n atio ing er oop C as cre In Weak Command of Technology Technical Capability Technical Understanding SuperiorSubordinate Working Relationship Peers Strong FIGURE 8–7. Partnership strength. Matrix Strength Weak 328 SPECIAL TOPICS the project. Project managers were viewed as possessing an understanding of rather than command of technology. They became more dependent upon line managers for technical support. The project manager then found himself in the midst of a weak matrix where the employees were receiving the majority of their technical direction from the line managers. As the partnership between the project and line managers developed, management recognized that partnerships worked best on a peer-to-peer basis. Project and line managers began to view each other as equals and share in the authority, responsibility, and accountability needed to assure project success. Good project management methodologies emphasize the cooperative working relationship that must exist between the project and line managers. 8.7 EXTERNAL PARTNERSHIPS Outsourcing has become a major trend because it allows companies to bring their products to market faster and at a competitive price, and because it provides benefits to both the customer and the supplier. The relationship between the customer and the supplier is referred to as partnering. Joki and Russett identify three categories of partnering3: ● ● ● An approved supplier is the least advanced form of partnering and requires minimal investment in the relationship. The benefits are usually limited, and the suppliers are approved for a project with no guarantees of future work. The group of approved suppliers still competes for the award of the bid, and the establishment and communication of the project objectives is the customer’s primary concern. One benefit is that an approved supplier is already in tune with the company’sculture. A preferred provider is a more comprehensive form of partnering and requires a greater investment. Consequently, the returns and rewards for both parties are increased. A preferred provider creates a single source for services, as work is available. However, the provider is usually not included in the initial planning, which is a potential lost advantage. Although more investment is created on the customer’s side, because the bidding process is gone, the benefits should outweigh the cost. The advantage of lessons learned can be applied to the relationship for continuous improvement since the partners are working together on a continuous basis. Also, the customer typically gets a better product, along with overall cost, schedule, and other savings not associated with an approved supplier relationship. A strategic partnership is the most advanced or complete form of partnering. In this type of relationship, the customer and supplier form a team that may or may not become an entity separate from the originating organizations. The strategic partnership team owns the project from start to finish and sometimes helps to make 3. Adapted from Earl Joki and Rose Russett, “Partnering for Success—Maximizing Project Management Value Through a Strategic Partner,” Project Management Institute Inc., Files of Change: Proceedings of the 29th Annual Seminars and Symposium, Long Beach, California (1998). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. 329 External Partnerships strategic decisions relating to the project or program. The team is involved in the conceptual stage and carries it through to its completion and operation. The benefits of proper outsourcing can be significant. Joki and Russett provide a list of potential benefits of outsourcing and partnering4: ● ● ● ● ● ● ● ● ● ● Cost reduction: External providers with many customers can be more cost effective. In some cases, costs are reduced by 20 to 40 percent. Added expertise: Outsourcing or partnering should provide the company with partners who have proven records of performance. The company can readily tap into additional resources in the form of technical expertise. Continuous improvement capability: External providers are typically up on the latest developments and methodologies, allowing a more effective and efficient delivery of services. This allows the outsourcer to focus on improving the professionalism of the service. Sharpened company strategic focus: Outsourcing improves strategic business planning and accelerates the benefits of reengineering. Ability to penetrate global markets: Broad geographic infrastructure and service capability of a partner can immediately provide delivery options for customers wanting to quickly penetrate new global markets. Minimization of company risks: By sharing risks with vendors, outsourcing not only reduces operating costs for an organization but provides money for capital investments. Partnering also helps mitigate risk of resourcing cycles (ups and downs), yet retains expertise. Alignment of services: Companies are able to more closely align these services by allocating them to the consuming processes or departments on an activity basis to achieve a more effective and efficient alignment between the consuming departments and the outsourced infrastructure. Introduction of proven discipline: A project management partner can introduce a proven discipline to support rigors of using sound project management principles. Many times the outsourcer does not possess the required discipline to operate or maintain a structured program management environment. Breakdown of internal barriers: Outsourcing provides the ability for the partner to break down internal obstacles more freely (third party). It can be more effective for an independent, third party that is not caught up in the politics to objectively monitor the progress of a project or program. Focus on essential items: Outsourcing frees the customer to focus on internal cultures, politics, growth strategies, barriers, and integration issues. The partner’s focus on the project management service allows the customer to focus on core activities, such as engineering or making program decisions. External partnerships, if properly managed, can provide significant long-term benefits to both the customer and supplier. 4. See note 3. 330 SPECIAL TOPICS The Department of Defense has been conducting research into what constitutes an effective supplier relationship.5 Each Chrysler supplier had a Chrysler person knowledgeable about the supplier’s business to contact for all supplier dealings for that commodity. These companies also interacted with key suppliers in close teaming arrangements that facilitated sharing information. Commonly called integrated product teams (IPTs), members worked together so that design, manufacturing, and cost issues were considered together. Team members were encouraged to participate as partners in meeting project goals and to interact frequently. In addition, some companies collocated suppliers with their own people or set up central working facilities with suppliers for working out issues such as how a product might be improved or be made less expensive. Motorola and Xerox saw such teams as a key vehicle for facilitating early supplier involvement in their products—one of their primary strategies. Motorola said key suppliers had building access and came in many times during a week to work with Motorola engineers. These companies also asked suppliers to meet high standards, then differentiated the types of relationships within their pool of suppliers. Many treated key suppliers—those contributing the most to their product, such as critical parts or unique processes—differently than suppliers for noncritical or standard parts. For example, one Corning division categorized suppliers and developed relationships with them based on the extent of their impact on the customer and performance. Level 1 suppliers have a direct impact on customer satisfaction, level 2 suppliers are important to day-to-day operations, and level 3 suppliers provided commonly available products. DuPont differentiated between alliance partners—suppliers with similar goals and objectives that wish to work with DuPont for mutual benefit—and all other suppliers. Perhaps more significantly, Chrysler’s relationships with its suppliers had evolved to the point that it no longer needed to make large investments in some key technology areas. Instead, the suppliers made the technology investment themselves and had enough confidence in their relationship with Chrysler that they did not fear the long-term commitment that this entailed. For its part, Chrysler trusted the suppliers to make investments that would help keep their vehicles competitive. In this case, both supplier and product developer saw their success as that of the final product and a continuing mutually beneficial relationship. 8.8 TRAINING AND EDUCATION Given that most companies use the same basic tools as part of their methodology, what makes one company better than another? The answer lies in the execution of the methodology. Training and education can accelerate not only the project management maturity process but also the ability to execute the methodology. Actual learning takes place in three areas, as shown in Figure 8–8: on-the-job experience, education, and knowledge transfer. Ideal project management knowledge would be obtained by allowing each employee to be educated on the results of the company’s lessons 5. DoD Can Help Suppliers Contribute More to Weapon System Programs, Best Practices Series, GAO/NSIAD98-87, Government Accounting Office, March 1998, pp. 38, 48, 51. 331 Project Management Knowledge Training and Education Benchmarking/ Continuous Improvement Ideal Learning On-the-Job Experience Education Knowledge Transfer Time FIGURE 8–8. Project management learning curve. learned studies including risk management, benchmarking, and continuous improvement efforts. Unfortunately, this is rarely done and ideal learning is hardly ever reached. To make matters worse, actual learning is less than most people believe because of lost knowledge. This lost knowledge is shown in Figure 8–9 and will occur even in companies that maintain low employee turnover ratios. These two figures also illustrate the importance of maintaining the same personnel on the project for the duration of the effort. Companies often find themselves in a position of having to provide a key initiative for a multitude of people, or simply specialized training to a program team about to embark upon a new long-term effort. In such cases, specialized training is required, with targeted goals and results that are specifically planned for. The elements common to training on a key initiative or practice include6: ● ● ● ● ● A front-end analysis of the program team’s needs and training requirements Involvement of the program teams in key decisions Customized training to meet program team’s specific needs Targeted training for the implementation of specific practices Improved training outcomes, including better course depth, timeliness, and reach The front-end analysis is used to determine the needs and requirements of the program office implementing the practice. The analysis is also used to identify and address barriers each program office faces when implementing new practices. According to the director of the benchmarking forum for the American Society of Training and Development, this type of analysis is crucial for an organization to be able to institute performance-improving measures. 6. Adapted from DoD Training Can Do More to Help Weapon System Programs Implement Best Practices, Best Practices Series, GAO/NSIAD-99-206, Government Accounting Office, August 1999, pp. 40–41, 51. 332 Project Management Knowledge SPECIAL TOPICS Ideal Learning Actual Learning Resignation Complacency Lost Knowledge Termination Time FIGURE 8–9. Project management learning curve. Using information from the front-end analysis, the training organizations customize the training to ensure that it directly assists program teams in implementing new practices. To ensure that the training will address the needs of the program teams, the training organizations involve the staff in making important training decisions. Program staff help decide the amount of training to be provided for certain job descriptions, course objectives, and depth of course coverage. Companies doing this believe their training approach, which includes program staff, has resulted in the right amount of course depth, timeliness, and coverage of personnel. Officials at Boeing’s Employee Training and Development organization state that their primary goal is to support their customers, the employees assigned to the Commercial Airplane Group. The training representatives develop a partnership with the staff from the beginning of the program to design and manufacture a new airplane. The training representatives form “drop teams” to collate with the program to conduct a front-end analysis and learn as much as possible about the business process and the staff’s concerns. The analysis allows the drop team to determine what training is needed to support the staff implementing the new practice. Boeing training officials said they worked side by side with the program staff to create a training program that provided team building and conflict resolution techniques and technical skills training that specifically focused on improving work competencies that would change as a result of the 777’s new digital environment. To ensure all 777 staff was equally trained, employees were required to complete training before they reported to the program. For example, the professional employees—engineers and drafters—were required to complete 120 hours of start-up training on several key 777 practices, including design build teams and computer-aided three-dimensional interactive applications software.7 Teams were often trained together at the work location. Boeing officials stated that 7. This application is a computer-based design tool that allows designers the opportunity to view design drawings and the interface of millions of airplane parts as three-dimensional. Integrated Product/Project Teams 333 training was instrumental to the implementation of key practices on the 777 program, such as design build teams—essentially integrated program teams (IPTs). The officials stated that design build teams were at odds with the company’s culture because employees were not accustomed to working in a team environment and sharing information across functional areas. Boeing’s director of learning program development summarized the corporate training strategy for implementing new practices as one that includes a clearly stated vision or mission statement, well-defined goals, and enablers, such as training and good processes, to support the implementers. This philosophy enabled Boeing to take a year to develop the training program tailored to the 777 program—which was intended to change the corporate culture and encourage employees to rethink how they did their jobs. Both Boeing training and program officials believe that the training investment resulted in the successful implementation of the key 777 practices. While the company officials acknowledged that training was instrumental in the implementation of the key practices, everyone also stated that training was just one of the necessary components. Creating the right environment is also key to the successful implementation of new practices, and the quality of the training was dependent on the environment. Boeing officials stressed that strong leadership is often another key force. At the inception of key programs at IBM, top leaders provide sufficient funding for training, well-defined expectations, clear direction, oversight, continued interest, and incentives to ensure that the new practices are possible to implement. The manager for the 777 program stated that Boeing’s management works in teams—a key practice. He believed that it was management’s ability to lead by example that helped prevent a return to the former functional way of operating. These companies believe that other factors, such as an accommodating organizational structure, good internal communication, consistent application, and supportive technology, are needed to foster the implementation of key new practices. 8.9 INTEGRATED PRODUCT/PROJECT TEAMS In recent years, there has been an effort to substantially improve the formation and makeup of teams required to develop a new product or implement a new practice. These teams have membership from across the entire organization and are called integrated product/project teams (IPTs). The IPT consists of a sponsor, program manager, and the core team. For the most part, members of the core team are assigned full-time to the team but may not be on the team for the duration of the entire project. The skills needed to be a member of the core team include: ● ● ● ● ● ● ● Self-starter ability Work without supervision Good communication skills Cooperative Technical understanding Willing to learn backup skills Able to perform feasibility studies and cost/benefit analyses 334 SPECIAL TOPICS TABLE 8–4. EFFECTIVE IPTS Program Cost Status Schedule Status Performance Status Daimler-Chrysler Product cost was lowered Lowered cost by over 60 percent Outperformed cost goals Product unit cost lower than original estimate Decreased development cycle months by 50 percent Shortened development schedule by over 60 percent Product deliveries shortened by 12 to 18 months Ahead of original development schedule Improved vehicle designs Hewlett-Packard 3M Advanced Amphibious Assault Vehicle ● ● ● ● ● Improved system integration and product design Improved performance by 80 percent Demonstrated fivefold increase in speed Able to perform or assist in market research studies Able to evaluate asset utilization Decision-maker Knowledgeable in risk management Understand the need for continuous validation Each IPT is given a project charter that identifies the project’s mission and identifies the assigned project manager. However, unlike traditional charters, the IPT charter can also identify the key members of the IPT by name or job responsibility. Unlike traditional project teams, the IPT thrives on sharing information across the team and collective decision-making. IPTs eventually develop their own culture and, as such, can function in either a formal or informal capacity. Since the concept of an IPT is well suited to large, long-term projects, it is no wonder that the Department of Defense has been researching best practices for an IPT.8 The gov- TABLE 8–5. INEFFECTIVE IPTS Program Cost Status Schedule Status Performance Status CH-60S Helicopter Extended Range Guided Munitions Global Broadcast Service Land Warrior Increased cost but due to additional purchases Increases in development costs Schedule delayed Software and structural difficulties Redesigning due to technical difficulties Experiencing cost growth Schedule slipped 1.5 years Schedule delayed four years Cost increase of about 50 percent Schedule slipped three years Software and hardware design shortfalls Overweight equipment, inadequate battery power and design 8. DoD Teaming Practices Not Achieving Potential Results, Best Practices Series, GOA-01-501, Government Accounting Office, April 2001. 335 Problems S t a k e h o l d e r s Others Customer Sponsor Project Team Life-Cycle Phases FIGURE 8–10. Knowledge and authority. ernment looked at four projects, in both the public and private sectors, which were highly successful using the IPT approach and four government projects that had less than acceptable results. The successful IPT projects are shown in Table 8–4. The unsuccessful IPT projects are shown in Table 8–5. In analyzing the data, the government came up with the results shown in Figure 8–10. Each vertical line in Figure 8–10 is a situation where the IPT must go outside of its own domain to seek information and approvals. Each time this happens, it is referred to as a “hit.” The government research indicated that the greater the number of hits, the more likely it is that the time, cost, and performance constraints will not be achieved. The research confirmed that if the IPT has the knowledge necessary to make decisions, and also has the authority to make the decisions, then the desired performance would be achieved. Hits will delay decisions and cause schedule slippages. PROBLEMS 8–1 Beta Company has decided to modify its wage and salary administration program whereby line managers are evaluated for promotion and merit increases based on how well they have lived up to the commitments that they made to the project managers. What are the advantages and disadvantages of this approach? 8–2 How should a project manager handle a situation in which the functional employee (or functional manager) appears to have more loyalty to his profession, discipline, or expertise than to the project? Can a project manager also have this loyalty, say, on an R&D project? 8–3 Most wage and salary administrators contend that project management organizational structures must be “married” to the personnel evaluation process because personnel are always 336 SPECIAL TOPICS concerned with how they will be evaluated. Furthermore, converting from a traditional structure to a project management structure cannot be accomplished without first considering performance evaluation. What are your feelings on this? 8–4 As part of the evaluation process for functional employees, each project manager submits a written, confidential evaluation report to the employee’s department manager who, in turn, makes the final judgment. The employee is permitted to see only the evaluation from his department manager. Assume that the average department merit increase is 7 percent, and that the employee could receive the merit increases shown in the following table. How would he respond in each case? 8–5 Project Manager’s Evaluation Merit Increase, % Excellent 5 Excellent 7 Excellent 9 Average 5 Average 7 Average 9 Poor 5 Poor 7 Poor 9 Credit or Blame to P.M. Fct. Mgr. Reason Should the evaluation form in Figure 8–4 be shown to the employees? 8–6 Does a functional employee have the right to challenge any items in the project manager’s nonconfidential evaluation form? 8–7 Some people contend that functional employees should be able to evaluate the effectiveness of the project manager after project termination. Design an evaluation form for this purpose. 8–8 Some executives feel that evaluation forms should not include cooperation and attitude. The executives feel that a functional employee will always follow the instructions of the functional manager, and therefore attitude and cooperation are unnecessary topics. Does this kind of thinking also apply to the indirect evaluation forms that are filled out by the project managers? 8–9 Consider a situation in which the project manager (a generalist) is asked to provide an evaluation of a functional employee (a specialist). Can the project manager effectively evaluate the functional employee on technical performance? If not, then on what information can the project manager base his evaluation? Can a grade-7 generalist evaluate a grade-12 specialist? Problems 337 8–10 Gary has been assigned as a part-time, assistant project manager. Gary’s duties are split between assistant project management and being a functional employee. In addition, Gary reports both vertically to his functional manager and horizontally to a project manager. As part of his project responsibilities, Gary must integrate activities between his department and two other departments within his divison. His responsibilities also include writing a nonconfidential performance evaluation for all functional employees from all three departments that are assigned to his project. Can Gary effectively and honestly evaluate functional employees in his own department—people with whom he will be working side by side when the project is over? Should the project manager come to his rescue? Suppose Gary is a part-time project manager instead of a part-time assistant project manager. Can anyone come to his rescue now? 8–11 The following question was asked of executives: How do you know when to cut off research? The answers given: That’s a good question, a very good question, and some people don’t know when to cut it off. You have to have a feel; in some cases it depends on how much resource you have and whether you have enough resources to take a chance on sustaining research that may appear to be heading for a dead end. You don’t know sometimes whether you’re heading down the wrong path or not; sometimes it’s pretty obvious you ought to shift directions—you’ve gone about as far as you can or you’ve taken it far enough that you can demonstrate to your own satisfaction that you just can’t get there from here, or it’s going to be very costly. You may discover that there are more productive ways to get around the barrier; you’re always looking for faster ways. And it depends entirely on how creative the person is, whether he has tunnel vision, a very narrow vision, or whether he is fairly flexible in his conceptual thinking so that he can conceive of better ways to solve the problem. Discuss the validity of these remarks. 8–12 In a small company, can a functional manager act as director of engineering and director of project management at the same time? 8–13 In 1982, an electrical equipment manufacturer decentralized the organization, allowing each division manager to set priorities for the work in his division. The division manager of the R&D division selected as his number one priority project the development of low-cost methods for manufacturing. This project required support from the manufacturing division. The division manager for manufacturing did not assign proper resources, claiming that the results of such a project would not be realized for at least five years, and that he (the manufacturing manager) was worried only about the immediate profits. Can this problem be resolved and divisional decentralization still be maintained? 8–14 The executives of a company that produces electro-optical equipment for military use found it necessary to implement project management using a matrix. The project managers reported to corporate sales, and the engineers with the most expertise were promoted to project engineering. After the first year of operation, it became obvious to the executives that the engineering functional managers were not committed to the projects. The executives then made a critical decision. The functional employees selected by the line managers to serve on projects would report as a solid line to the project engineer and dotted to the line manager. The project engineers, who were selected for their technical expertise, were allowed to give technical direction and monetary rewards to the employees. Can this situation work? What happens if an employee has a technical question? Can he go to his line manager? Should the employees return to their former line managers at project completion? What are the authority/responsibility problems with this structure? What are the long-term implications? 338 SPECIAL TOPICS 8–15 Consider the four items listed on page 123 that describe what happens when a matrix goes out of control. Which of these end up creating the greatest difficulty for the company? for the project managers? for the line managers? for executives? 8–16 As a functional employee, the project manager tells you, “Sign these prints or I’ll fire you from this project.” How should this situation be handled? 8–17 How efficient can project management be in a unionized, immobile manpower environment? 8–18 Corporate salary structures and limited annual raise allocations often prevent proper project management performance rewards. Explain how each of the following could serve as a motivational factor: a. Job satisfaction b. Personal recognition c. Intellectual growth 9 The Variables for Success Related Case Studies (from Kerzner/Project Management Case Studies) • Como Tool and Die (A) • Como Tool and Die (B) Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • All PMBOK® • Processes 9.0 INTRODUCTION Project management cannot succeed unless the project manager is willing to employ the systems approach to project management by analyzing those variables that lead to success and failure. This chapter briefly discusses the dos and don’ts of project management and provides a “skeleton” checklist of the key success variables. The following four topics are included: ● ● ● ● Predicting project success Project management effectiveness Expectations Force field analysis 339 340 THE VARIABLES FOR SUCCESS 9.1 PREDICTING PROJECT SUCCESS One of the most difficult tasks is predicting whether the project will be successful. Most goal-oriented managers look only at the time, cost, and performance parameters. If an outof-tolerance condition exists, then additional analysis is required to identify the cause of the problem. Looking only at time, cost, and performance might identify immediate contributions to profits, but will not identify whether the project itself was managed correctly. This takes on paramount importance if the survival of the organization is based on a steady stream of successfully managed projects. Once or twice a program manager might be able to force a project to success by continually swinging a large baseball bat. After a while, however, either the effect of the big bat will become tolerable, or people will avoid working on his projects. Project success is often measured by the “actions” of three groups: the project manager and team, the parent organization, and the customer’s organization. There are certain actions that the project manager and team can take in order to stimulate project success. These actions include: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Insist on the right to select key project team members. Select key team members with proven track records in their fields. Develop commitment and a sense of mission from the outset. Seek sufficient authority and a projectized organizational form. Coordinate and maintain a good relationship with the client, parent, and team. Seek to enhance the public’s image of the project. Have key team members assist in decision-making and problem-solving. Develop realistic cost, schedule, and performance estimates and goals. Have backup strategies in anticipation of potential problems. Provide a team structure that is appropriate, yet flexible and flat. Go beyond formal authority to maximize influence over people and key decisions. Employ a workable set of project planning and control tools. Avoid overreliance on one type of control tool. Stress the importance of meeting cost, schedule, and performance goals. Give priority to achieving the mission or function of the end-item. Keep changes under control. Seek to find ways of assuring job security for effective project team members. In Chapter 4 we stated that a project cannot be successful unless it is recognized as a project and has the support of top-level management. Top-level management must be willing to commit company resources and provide the necessary administrative support so that the project easily adapts to the company’s day-to-day routine of doing business. Furthermore, the parent organization must develop an atmosphere conducive to good working relationships between the project manager, parent organization, and client organization. With regard to the parent organization, there exist a number of variables that can be used to evaluate parent organization support. These variables include: Predicting Project Success ● ● ● ● ● ● ● ● ● ● 341 A willingness to coordinate efforts A willingness to maintain structural flexibility A willingness to adapt to change Effective strategic planning Rapport maintenance Proper emphasis on past experience External buffering Prompt and accurate communications Enthusiastic support Identification to all concerned parties that the project does, in fact, contribute to parent capabilities The mere identification and existence of these variables do not guarantee project success in dealing with the parent organization. Instead, they imply that there exists a good foundation with which to work so that if the project manager and team, and the parent organization, take the appropriate actions, project success is likely. The following actions must be taken: ● ● ● ● ● ● ● ● ● Select at an early point, a project manager with a proven track record of technical skills, human skills, and administrative skills (in that order) to lead the project team. Develop clear and workable guidelines for the project manager. Delegate sufficient authority to the project manager, and let him make important decisions in conjunction with key team members. Demonstrate enthusiasm for and commitment to the project and team. Develop and maintain short and informal lines of communication. Avoid excessive pressure on the project manager to win contracts. Avoid arbitrarily slashing or ballooning the project team’s cost estimate. Avoid “buy-ins.” Develop close, not meddling, working relationships with the principal client contact and project manager. Both the parent organization and the project team must employ proper managerial techniques to ensure that judicious and adequate, but not excessive, use of planning, controlling, and communications systems can be made. These proper management techniques must also include preconditioning, such as: ● ● ● ● ● Clearly established specifications and designs Realistic schedules Realistic cost estimates Avoidance of “buy-ins” Avoidance of overoptimism The client organization can have a great deal of influence on project success by minimizing team meetings, making rapid responses to requests for information, and simply 342 THE VARIABLES FOR SUCCESS letting the contractor “do his thing” without any interference. The variables that exist for the client organization include: ● ● ● ● ● ● ● ● A willingness to coordinate efforts Rapport maintenance Establishment of reasonable and specific goals and criteria Well-established procedures for changes Prompt and accurate communications Commitment of client resources Minimization of red tape Providing sufficient authority to the client contact (especially for decision-making) With these variables as the basic foundation, it should be possible to: ● ● ● ● ● ● ● ● ● ● ● ● Encourage openness and honesty from the start from all participants Create an atmosphere that encourages healthy competition, but not cutthroat situations or “liars’” contests Plan for adequate funding to complete the entire project Develop clear understandings of the relative importance of cost, schedule, and technical performance goals Develop short and informal lines of communication and a flat organizational structure Delegate sufficient authority to the principal client contact, and allow prompt approval or rejection of important project decisions Reject “buy-ins” Make prompt decisions regarding contract award or go-ahead Develop close, not meddling, working relationships with project participants Avoid arms-length relationships Avoid excessive reporting schemes Make prompt decisions regarding changes By combining the relevant actions of the project team, parent organization, and client organization, we can identify the fundamental lessons for management. These include: ● When starting off in project management, plan to go all the way. Recognize authority conflicts—resolve. Recognize change impact—be a change agent. Match the right people with the right jobs. ● No system is better than the people who implement it. Allow adequate time and effort for laying out the project groundwork and defining work: ● Work breakdown structure ● Network planning Ensure that work packages are the proper size: ● Manageable, with organizational accountability ● Realistic in terms of effort and time ● ● ● ● ● Predicting Project Success ● ● ● ● ● 343 Establish and use planning and control systems as the focal point of project implementation: ● Know where you’re going. ● Know when you’ve gotten there. Be sure information flow is realistic: ● Information is the basis for problem-solving and decision-making. ● Communication “pitfalls” are the greatest contributor to project difficulties. Be willing to replan—do so: ● The best-laid plans can often go astray. ● Change is inevitable. Tie together responsibility, performance, and rewards: ● Management by objectives ● Key to motivation and productivity Long before the project ends, plan for its end: ● Disposition of personnel ● Disposal of material and other resources ● Transfer of knowledge ● Closing out work orders ● Customer/contractor financial payments and reporting The last lesson, project termination, has been the downfall for many good project managers. As projects near completion, there is a natural tendency to minimize costs by transferring people as soon as possible and by closing out work orders. This often leaves the project manager with the responsibility for writing the final report and transferring raw materials to other programs. Many projects require one or two months after work completion simply for administrative reporting and final cost summary. Having defined project success, we can now identify some of the major causes for the failure of project management: ● ● ● ● ● ● Selection of a concept that is not applicable. Since each application is unique, selecting a project that does not have a sound basis, or forcing a change when the time is not appropriate, can lead to immediate failure. Selection of the wrong person as project manager. The individual selected must be more of a manager than a doer. He must place emphasis on all aspects of the work, not merely the technical. Upper management that is not supportive. Upper management must concur in the concept and must behave accordingly. Inadequately defined tasks. There must exist an adequate system for planning and control such that a proper balance between cost, schedule, and technical performance can be maintained. Misused management techniques. There exists the inevitable tendency in technical communities to attempt to do more than is initially required by contract. Technology must be watched, and individuals must buy only what is needed. Project termination that is not planned. By definition, each project must stop. Termination must be planned so that the impact can be identified. 344 THE VARIABLES FOR SUCCESS 9.2 PROJECT MANAGEMENT EFFECTIVENESS1 Project managers interact continually with upper-level management, perhaps more so than with functional managers. Not only the success of the project, but even the career path of the project manager can depend on the working relationships and expectations established with upper-level management. There are four key variables in measuring the effectiveness of dealing with upper-level management. These variables are credibility, priority, accessibility, and visibility: ● Credibility Credibility comes from being a sound decision maker. ● It is normally based on experience in a variety of assignments. ● It is refueled by the manager and the status of his project. ● Making success visible to others increases credibility. ● To be believable, emphasize facts rather than opinions. ● Give credit to others; they may return this favor. Priority ● Sell the specific importance of the project to the objectives of the total organization. ● Stress the competitive aspect, if relevant. ● Stress changes for success. ● Secure testimonial support from others—functional departments, other managers, customers, independent sources. ● Emphasize “spin-offs” that may result from projects. ● Anticipate “priority problems.” ● Sell priority on a one-to-one basis. Accessibility ● Accessibility involves the ability to communicate directly with top management. ● Show that your proposals are good for the total organization, not just the project. ● Weigh the facts carefully; explain the pros and cons. ● Be logical and polished in your presentations. ● Become personally known by members of top management. ● Create a desire in the “customer” for your abilities and your project. ● Make curiosity work for you. Visibility ● Be aware of the amount of visibility you really need. ● Make a good impact when presenting the project to top management. ● ● ● ● 1. This section and Section 9.3 are adapted from Seminar in Project Management Workbook, copyright 1977 by Hans J. Thamhain. Reproduced by permission of Dr. Hans J. Thamhain. 345 Expectations ● ● ● ● Adopt a contrasting style of management when feasible and possible. Use team members to help regulate the visibility you need. Conduct timely “informational” meetings with those who count. Use available publicity media. 9.3 EXPECTATIONS In the project management environment, the project managers, team members, and upperlevel managers each have expectations of what their relationships should be with the other parties. To illustrate this, top management expects project managers to: ● ● ● ● ● ● ● Assume total accountability for the success or failure to provide results Provide effective reports and information Provide minimum organizational disruption during the execution of a project Present recommendations, not just alternatives Have the capacity to handle most interpersonal problems Demonstrate a self-starting capacity Demonstrate growth with each assignment At first glance, it may appear that these qualities are expected of all managers, not necessarily project managers. But this is not true. The first four items are different. The line managers are not accountable for total project success, just for that portion performed by their line organization. Line managers can be promoted on their technical ability, not necessarily on their ability to write effective reports. Line managers cannot disrupt an entire organization, but the project manager can. Line managers do not necessarily have to make decisions, just provide alternatives and recommendations. Just as top management has expectations of project managers, project managers have certain expectations of top management. Project management expects top management to: ● ● ● ● ● ● ● ● ● ● ● Provide clearly defined decision channels Take actions on requests Facilitate interfacing with support departments Assist in conflict resolution Provide sufficient resources/charter Provide sufficient strategic/long-range information Provide feedback Give advice and stage-setting support Define expectations clearly Provide protection from political infighting Provide the opportunity for personal and professional growth 346 THE VARIABLES FOR SUCCESS The project team also has expectations of their leader, the project manager. The project team expects the project manager to: ● ● ● ● ● ● ● ● ● ● ● Assist in the problem-solving process by coming up with ideas Provide proper direction and leadership Provide a relaxed environment Interact informally with team members Stimulate the group process Facilitate adoption of new members Reduce conflicts Defend the team against outside pressure Resist changes Act as the group spokesperson Provide representation with higher management In order to provide high task efficiency and productivity, a project team should have certain traits and characteristics. A project manager expects the project team to: ● ● ● ● ● ● ● ● Demonstrate membership self-development Demonstrate the potential for innovative and creative behavior Communicate effectively Be committed to the project Demonstrate the capacity for conflict resolution Be results oriented Be change oriented Interface effectively and with high morale Team members want, in general, to fill certain primary needs. The project manager should understand these needs before demanding that the team live up to his expectations. Members of the project team need: ● ● ● ● ● ● A sense of belonging Interest in the work itself Respect for the work being done Protection from political infighting Job security and job continuity Potential for career growth Project managers must remember that team members may not always be able to verbalize these needs, but they exist nevertheless. 9.4 FORCE FIELD ANALYSIS Project managers live in a dynamic environment of constant and rapid change. To operate effectively under these circumstances, the project manager must be able to diagnose the situation, design alternatives that will remedy it, provide the necessary leadership so that 347 Force Field Analysis these changes can be implemented, and develop an atmosphere that helps the employees to adapt readily to these changes. One of the early pioneers in developing theories for managing change was Kurt Lewin.2 Lewin believed that at any point during the life cycle of a project there will exist driving forces that will push the project toward success and restraining forces that may induce failure. In a steady-state environment, the driving and restraining forces are in balance. However, if the driving forces increase or the restraining forces decrease, whether they act independently or together, change is likely to take place. The formal analysis of these forces is commonly referred to as force field analysis. This type of analysis can be used to3: ● ● ● ● Monitor the project team and measure potential deficiencies Audit the project on an ongoing basis Involve project personnel, which can be conducive to team building Measure the sensitivity of proposed changes Current studies in force field analysis have been conducted by Dugan et al.,4 whose research involved 125 project managers in approximately seventy different technologyoriented companies. The research study and questionnaire were personally explained to the participating project managers to minimize potential communications problems. The researchers obtained information in several areas, including: ● ● ● ● ● ● ● ● Personal drive, motivation, and leadership Team motivation Management support Functional support Technical expertise Project objectives Financial resources Client support and commitment The research study categorized each of the above areas according to project life-cycle phase. Only a brief synopsis of each of these areas will be presented here. Personal drive, motivation, and leadership were found to provide the strongest driving forces, and were important attributes of the project manager and team members and important in all project life-cycle phases. The lack of personal drive, motivation, and leadership was found to result in strong restraining forces. The force field analysis gave the following results for personal drive, motivation, and leadership: ● Driving forces ● Desire for accomplishment 2. Kurt Lewin, “Frontiers in Group Dynamics,” Human Relations, Vol. 1, No. 1, 1947; Also, Field Theory in Social Science (New York: Harper, 1951). 3. See note 2. 4. H. S. Dugan, H. J. Thamhain, and D. L. Wilemon, “Managing Change in Project Management,” Project Management Institute Inc., Realities in Project Management: Proceedings of the 8th Annual Seminars and Symposium, Chicago, Illinois (1977). All rights reserved. Materials from this publication have been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. 348 THE VARIABLES FOR SUCCESS ● ● ● ● ● ● Interest in project Work challenge Group acceptance Common objectives Experience in task management ● Providing proper direction ● Assistance in problem-solving ● Team builder ● Effective communications Restraining forces ● Inexperienced project leader ● Uncertain roles ● Lack of technical knowledge ● Personality problems ● Lack of self-confidence and credibility ● Poor project control ● First project management experience Team motivation was identified as having the strongest overall influence on project success, and as an important factor in all phases of the project. Team motivation was a strong driver and, if lacking, became a strong restraint. The following results for team motivation were found: ● ● Driving forces ● Good interpersonal relations ● Desire to achieve ● Expertise ● Common goal ● Integration of team and project objectives ● Agreement and distribution of work ● Clear role definition ● Professional interest in project ● Challenge of project ● Project visibility and rewards Restraining forces ● Poor team organization ● Communication barriers ● Poor leadership ● Uncertain rewards ● Uncertain objectives ● Resistance to project management approach ● Little commitment or ownership in project ● Team members overloaded 349 Force Field Analysis ● ● Limited prior team experience Unequal talent distribution Management support was found to have important driving and restraining qualities, and was associated with all project phases. The following results were obtained: ● ● Driving forces ● Sufficient resources ● Proper priorities ● Authority delegation ● Management interest Restraining forces ● Unclear objectives ● Insufficient resources ● Changing priorities ● Insufficient authority/charter ● Management indifference ● Poor direction ● Excessive preoccupation with minor details ● Wanting support ● Unresponsive management ● Continuous change in scope ● Poor project organization Functional support was identified as important during project buildup, main phase, and phaseout, and was essential for successful project completion. Functional support was affected by top-management support, funding, and organizational structure. The forces behind functional support were found to be: ● ● Driving forces ● Clear goals and priorities ● Proper planning ● Adequate task integrators Restraining forces ● Priority conflicts ● Funding restraints ● Poor project organization ● Resistance to project objectives ● Unclear roles Technical expertise was particularly important during project formation and buildup. The forces identified were: ● Driving forces ● Ability to manage technology 350 THE VARIABLES FOR SUCCESS ● ● ● Prior track record Low-risk project Restraining forces ● Lack of technical information ● Unexpected technical problems ● Inability to cope with change Project objectives were most important during project formation and start-up. The forces identified were: ● ● Driving forces ● Clear goals ● Clear expectations/responsibilities ● Clear interface relationships ● Clear specifications ● Workable project plan Restraining forces ● Conflict over objectives (i.e., no project plan) ● Customer uncertainties ● Power plays ● Technical problems The last two items are financial resources and client support and commitment. Under financial resources are: ● ● Driving forces ● Necessary financial resources ● Financial control capability Restraining forces ● Budget restraints ● Lack of authority to commit funds ● Manpower problems ● Facilities unavailable ● Insufficient planning Under client support and commitment are: ● ● Driving forces ● Good working relations ● Clear objectives ● Timely client feedback ● Client support and commitment ● Regular meetings/reviews ● Help and concern Restraining forces 351 Lessons Learned ● ● ● ● ● Lack of information on client needs Lack of sustained interest Conflict within client organization Changing requirements Funding problems The authors summarized their results as follows: ● ● Implications for project managers ● Understand interaction of organizational and behavioral elements to build an effective team. ● Show concern for team members—know their needs. ● Provide work challenge. ● Communicate objectives clearly. ● Plan effectively and early in the project cycle. ● Establish a contingency plan. Implications for top management ● Poor organizational climate has a negative effect on project performance. ● Project leader abilities are crucial to effective project management. Program management selection should be carefully considered. Formal training and development may be necessary. ● Senior management support is important. ● Clearly defined decision channels and priorities may improve operating effectiveness with functional departments. ● Smooth project start-up and phaseout procedures help to ease personnel problems and power plays. 9.5 LESSONS LEARNED Lessons can be learned from each and every project, even if the project is a failure. But many companies do not document lessons learned because employees are reluctant to sign their names to documents that indicate they made mistakes. Thus employees end up repeating the mistakes that others have made. Today, there is increasing emphasis on documenting lessons learned. Boeing maintains diaries of lessons learned on each airplane project. Another company conducts a postimplementation meeting where the team is required to prepare a three- to five-page case study documenting the successes and failures on the project. The case studies are then used by the training department in preparing individuals to become future project managers. Some companies even mandate that project managers keep project notebooks documenting all decisions as well as a project file with all project correspondence. On large projects, this may be impractical. Most companies seem to prefer postimplementation meetings and case study documentation. The problem is when to hold the postimplementation meeting. One company 352 THE VARIABLES FOR SUCCESS uses project management for new product development and production. When the first production run is complete, the company holds a postimplementation meeting to discuss what was learned. Approximately six months later, the company conducts a second postimplementation meeting to discuss customer reaction to the product. There have been situations where the reaction of the customer indicated that what the company thought they did right turned out to be a wrong decision. A follow-up case study is now prepared during the second meeting. PROBLEMS 9–1 What is an effective working relationship between project managers themselves? 9–2 Must everyone in the organization understand the “rules of the game” for project management to be effective? 9–3 Defend the statement that the first step in making project management work must be a complete definition of the boundaries across which the project manager must interact. 10 Working with Executives Related Case Studies (from Kerzner/Project Management Case Studies) • Greyson Corporation • The Blue Spider Project • Corwin Corporation* Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • Multiple Choice Exam PMBOK® Reference Section for the PMP® Certification Exam • Integration • Management • Scope • Management 10.0 INTRODUCTION In any project management environment, project managers must continually interface with executives during both the planning and execution stages. Unless the project manager understands the executive’s role and thought process, a poor working relationship will develop. In order to understand the executive–project interface, two topics are discussed: ● ● The project sponsor The in-house representatives *Case Study also appears at end of chapter. 353 354 WORKING WITH EXECUTIVES 10.1 THE PROJECT SPONSOR For more than two decades, the traditional role of senior management, as far as projects were concerned, has been to function as project sponsors. The project sponsor usually comes from the executive levels and has the primary responsibility of maintaining executive– client contact. The sponsor ensures that the correct information from the contractor’s organization is reaching executives in the customer’s organization, that there is no filtering of information from the contractor to the customer, and that someone at the executive levels is making sure that the customer’s money is being spent wisely. The project sponsor will normally transmit cost and deliverables information to the customer, whereas schedule and performance status data come from the project manager. In addition to executive–client contact, the sponsor also provides guidance on: ● ● ● ● ● ● ● ● ● Objective setting Priority setting Project organizational structure Project policies and procedures Project master planning Up-front planning Key staffing Monitoring execution Conflict resolution The role of the project sponsor takes on different dimensions based on the life-cycle phase the project is in. During the planning/initiation phase of a project, the sponsor normally functions in an active role, which includes such activities as: ● ● ● ● ● Assisting the project manager in establishing the correct objectives for the project Providing the project manager with information on the environmental/political factors that could influence the project’s execution Establishing the priority for the project (either individually or through consultation with other executives) and informing the project manager of the established priority and the reason for the priority Providing guidance for the establishment of policies and procedures by which to govern the project Functioning as the executive–client contact point During the initiation or kickoff phase of a project, the project sponsor must be actively involved in setting objectives and priorities. It is absolutely mandatory that the executives establish the priorities in both business and technical terms. During the execution phase of the project, the role of the executive sponsor is more passive than active. The sponsor will provide assistance to the project manager on an asneeded basis except for routine status briefings. During the execution stage of a project, the sponsor must be selective in the problems that he or she wishes to help resolve. Trying to get involved in every problem will not only 355 The Project Sponsor result in severe micromanagement, but will undermine the project manager’s ability to get the job done. The role of the sponsor is similar to that of a referee. Table 10–1 shows the working relationship between the project manager and the line managers in both mature and immature organizations. When conflicts or problems exist in the project–line interface and cannot be resolved at that level, the sponsor might find it necessary to step in and provide assistance. Table 10–2 shows the mature and immature ways that a sponsor interfaces with the project. It should be understood that the sponsor exists for everyone on the project, including the line managers and their employees. Project sponsors must maintain open-door policies, even though maintaining an open-door policy can have detrimental effects. First, employees may flood the sponsor with trivial items. Second, employees may feel that they can bypass levels of management and converse directly with the sponsor. The moral here is that employees, including the project manager, must be encouraged to be careful about how many times and under what circumstances they “go to the well.” In addition to his/her normal functional job, the sponsor must be available to provide as-needed assistance to the projects. Sponsorship can become a time-consuming effort, especially if problems occur. Therefore, executives are limited as to how many projects they can sponsor effectively at the same time. As an organization matures in project management, executives begin to trust middleand lower-level management to function as sponsors. There are several reasons for supporting this: ● ● ● ● ● Executives do not have time to function as sponsors on each and every project. Not all projects require sponsorship from the executive levels. Middle management is closer to where the work is being performed. Middle management is in a better position to provide advice on certain risks. Project personnel have easier access to middle management. Sometimes executives in large diversified corporations are extremely busy with strategic planning activities and simply do not have the time to properly function as a sponsor. In such cases, sponsorship falls one level below senior management. TABLE 10–1. THE PROJECT–LINE INTERFACE Immature Organization Mature Organization • • • • • • • • • • • • • • • • • • Project manager is vested with power/authority over the line managers. Project manager negotiates for best people. Project manager works directly with functional employees. Project manager has no input into employee performance evaluations. Leadership is project manager-centered. Project and line managers share authority and power. Project manager negotiates for line manager’s commitment. Project manager works through line managers. Project manager makes recommendations to the line managers. Leadership is team-centered. 356 WORKING WITH EXECUTIVES TABLE 10–2. THE EXECUTIVE INTERFACE Immature Organization Mature Organization • • • • • • • • • • Executive is actively involved in projects. Executive acts as the project champion. Executive questions the project manager’s decisions. Priority shifting occurs frequently. Executive views project management as a necessary evil. There is very little project management support. Executive discourages bringing problems upstairs. • • • Executive support exists only during project start-up. Executive encourages project decisions to be made. • • • No procedures exist for assigning project sponsors. Executives seek perfection. Executive discourages use of a project charter. • Executive is not involved in charter preparation. • • • • Executive does not understand what goes into a charter. Executives do not believe that the project team is performing. • • • • • • • • • • • • • • • • • • • • • • Executive involvement is passive. Executive acts as the project sponsor. Executive trusts the project manager’s decisions. Priority shifting is avoided. Executive views project management as beneficial. There is visible, ongoing support. Executive encourages bringing problems upstairs. Executive is committed to sponsorship (and ownership). Executive support exists on a continuous basis. Executive encourages business decisions to be made. Sponsorship assignment procedures are visible. Executives seek what is possible. Executive recognizes the importance of a charter. Executive takes responsibility for charter preparation. Executive understands the content of a charter. • • Executives trust that performance is taking place. Executive is not committed to project sponsorship. Figure 10–1 shows the major functions of a project sponsor. At the onset of a project, a senior committee meets to decide whether a given project should be deemed as priority or nonpriority. If the project is critical or strategic, then the committee may assign a senior manager as the sponsor, perhaps even a member of the committee. It is common practice for steering committee executives to function as sponsors for the projects that the steering committee oversees. For projects that are routine, maintenance, or noncritical, a sponsor could be assigned from the middle-management levels. One organization that strongly prefers to have middle management assigned as sponsors cites the benefit of generating an atmosphere of management buy-in at the critical middle levels. Not all projects need a project sponsor. Sponsorship is generally needed on those projects that require a multitude of resources or a large amount of integration between functional lines or that have the potential for disruptive conflicts or the need for strong customer communications. This last item requires further comment. Quite often customers wish to make sure that the contractor’s project manager is spending funds prudently. Customers therefore like it when an executive sponsor supervises the project manager’s funding allocation. It is common practice for companies that are heavily involved in competitive bidding to identify in their proposal not only the resumé of the project manager, but the resumé of the executive project sponsor as well. This may give the bidder a competitive advantage, 357 The Project Sponsor SELECT PROJECT, PRIORITIZE, AND APPOINT SPONSOR EXECUTIVE COMMITTEE • • • • • PRIORITY PROJECTS NONPRIORITY PROJECTS SPONSOR MIDDLE-MANAGEMENT SPONSOR OBJECTIVE SETTING PRIORITY SETTING PROJECT ORGANIZATION POLICIES EXECUTIVE–CLIENT CONTACT • • • • • MASTER PLAN UP–FRONT PLANNING KEY STAFFING MONITORING EXECUTION CONFLICT RESOLUTION PROJECT MANAGER PROJECT TEAM FIGURE 10–1. Project sponsorship. all other things being equal, because customers believe they have a direct path of communications to executive management. One such contractor identified the functions of the executive project sponsor as follows: ● ● ● ● Major participation in sales effort and contract negotiations Establishes and maintains top-level client relationships Assists project manager in getting the project underway (planning, procedures, staffing, etc.) Maintains current knowledge of major project activities (receives copies of major correspondence and reports, attends major client and project review meetings, visits project regularly, etc.) 358 WORKING WITH EXECUTIVES ● ● ● ● Handles major contractual matters Interprets company policy for the project manager Assists project manager in identifying and solving major problems Keeps general management and company management advised of major problems Consider a project that is broken down into two life-cycle phases: planning and execution. For short-duration projects, say two years or less, it is advisable for the project sponsor to be the same individual for the entire project. For long-term projects of five years or so, it is possible to have a different project sponsor for each life-cycle phase, but preferably from the same level of management. The sponsor does not have to come from the same line organization as the one where the majority of the work will be taking place. Some companies even go so far as demanding that the sponsor come from a line organization that has no vested interest in the project. The project sponsor is actually a “big brother” or advisor for the project manager. Under no circumstances should the project sponsor try to function as the project manager. The project sponsor should assist the project manager in solving those problems that the project manager cannot resolve by himself. In one government organization, the project manager wanted to open up a new position on his project, and already had a woman identified to fill the position. Unfortunately, the size of the government project office was constrained by a unit-manning document that dictated the number of available positions. The project manager obtained the assistance of an executive sponsor who, working with human resources, created a new position within thirty days. Without executive sponsorship, the bureaucratic system creating a new position would have taken months. By that time, the project would have been over. In a second case study, the president of a medium-sized manufacturing company, a subsidiary of a larger corporation, wanted to act as sponsor on a special project. The project manager decided to make full use of this high-ranking sponsor by assigning him certain critical functions. As part of the project’s schedule, four months were allocated to obtain corporate approval for tooling dollars. The project manager “assigned” this task to the project sponsor, who reluctantly agreed to fly to corporate headquarters. He returned two days later with authorization for tooling. The company actually reduced project completion time by four months, thanks to the project sponsor. Figure 10–2 represents a situation where there were two project sponsors for one project. Alpha Company received a $25 million prime contractor project from the Air Force and subcontracted out $2 million to Beta Company. The project manager in Alpha Company earned $95,000 per year and refused to communicate directly with the project manager of Beta Company because his salary was only $65,000 per year. After all, as one executive said, “Elephants don’t communicate with mice.” The Alpha Company project manager instead sought out someone at Beta in his own salary range to act as the project sponsor, and the burden fell on the director of engineering. The Alpha Company project manager reported to an Air Force colonel. The Air Force colonel considered his counterpart in Beta Company to be the vice president and general manager. Here, power and title were more important than the $100,000 differential in their salaries. Thus, there was one project sponsor for the prime contractor and a second project sponsor for the customer. 359 The Project Sponsor PRIME P.M. SALARY $95,000 CONTRACT: $25MM P.M. A.P.M. A.P.M. SUBCONTRACTOR VP/GM DIRECTOR ENGINEERING OTHERS P.M. P.M. SALARY $65,000 SUBCONTRACT:$2MM FIGURE 10–2. Multiple project sponsors. In some industries, such as construction, the project sponsor is identified in the proposal, and thus everyone knows who it is. Unfortunately, there are situations where the project sponsor is “hidden,” and the project manager may not realize who it is, or know if the customer realizes who it is. This concept of invisible sponsorship occurs most frequently at the executive level and is referred to as absentee sponsorship. There are several ways that invisible sponsorship can occur. The first is when the manager who is appointed as a sponsor refuses to act as a sponsor for fear that poor decisions or an unsuccessful project could have a negative impact on his or her career. The second type results when an executive really does not understand either sponsorship or project management and simply provides lip service to the sponsorship function. The third way involves an executive who is already overburdened and simply does not have the time to perform meaningfully as a sponsor. The fourth way occurs when the project manager refuses to keep the sponsor informed and involved. The sponsor may believe that everything is flowing smoothly and that he is not needed. Some people contend that the best way for the project manager to work with an invisible sponsor is for the project manager to make a decision and then send a memo to the sponsor stating “This is the decision that I have made and, unless I hear from you in the next 48 hours, I will assume that you agree with my decision.” The opposite extreme is the sponsor who micromanages. One way for the project manager to handle this situation is to bury the sponsor with work in hopes that he will let go. Unfortunately this could end up reinforcing the sponsor’s belief that what he is doing is correct. 360 WORKING WITH EXECUTIVES The better alternative for handling a micromanaging sponsor is to ask for role clarification. The project manager should try working with the sponsor to define the roles of project manager and project sponsor more clearly. The invisible sponsor and the overbearing sponsor are not as detrimental as the “can’tsay-no” sponsor. In one company, the executive sponsor conducted executive–client communications on the golf course by playing golf with the customer’s sponsor. After every golf game, the executive sponsor would return with customer requests, which were actually scope changes that were considered as no-cost changes by the customer. When a sponsor continuously says “yes” to the customer, everyone in the contractor’s organization eventually suffers. Sometimes the existence of a sponsor can do more harm than good, especially if the sponsor focuses on the wrong objectives around which to make decisions. The following two remarks were made by two project managers at an appliance manufacturer: ● Projects here emphasize time measures: deadlines! We should emphasize milestones reached and quality. We say, “We’ll get you a system by a deadline.” We should be saying, “We’ll get you a good system.” ● Upper management may not allow true project management to occur. Too many executives are “date-driven” rather than “requirements-driven.” Original target dates should be for broad planning only. Specific target dates should be set utilizing the full concept of project management (i.e., available resources, separation of basic requirements from enhancements, technical and hardware constraints, unplanned activities, contingencies, etc.) These comments illustrate the necessity of having a sponsor who understands project management rather than one who simply assists in decision-making. The goals and objectives of the sponsor must be aligned with the goals and objectives of the project, and they must be realistic. If sponsorship is to exist at the executive levels, the sponsor must be visible and constantly informed concerning the project status. Committee Sponsorship For years companies have assigned a single individual as the sponsor for a project. The risk was that the sponsor would show favoritism to his line group and suboptimal decision-making would occur. Recently, companies have begun looking at sponsorship by committee to correct this. Committee sponsorship is common in those organizations committed to concurrent engineering and shortening product development time. Committees are comprised of middle managers from marketing, R&D, and operations. The idea is that the committee will be able to make decisions in the best interest of the company more easily than a single individual could. Committee sponsorship also has its limitations. At the executive levels, it is almost impossible to find time when senior managers can convene. For a company with a large number of projects, committee sponsorship may not be a viable approach. In time of crisis, project managers may need immediate access to their sponsors. If the sponsor is a committee, then how does the project manager get the committee to convene quickly? Also, individual project sponsors may be more dedicated than committees. Committee sponsorship has been shown to work well if one, and only one, member of the committee acts as the prime sponsor for a given project. 361 The Project Sponsor When to Seek Help During status reporting, a project manager can wave either a red, yellow, or green flag. This is known as the “traffic light” reporting system, thanks in part to color printers. For each element in the status report, the project manager will illuminate one of three lights according to the following criteria: ● ● ● Green light: Work is progressing as planned. Sponsor involvement is not necessary. Yellow light: A potential problem may exist. The sponsor is informed but no action by the sponsor is necessary at this time. Red light: A problem exists that may affect time, cost, scope, or quality. Sponsor involvement is necessary. Yellow flags are warnings that should be resolved at the middle levels of management or lower. If the project manager waves a red flag, then the sponsor will probably wish to be actively involved. Red flag problems can affect the time, cost, or performance constraints of the project and an immediate decision must be made. The main function of the sponsor is to assist in making the best possible decision in a timely fashion. Both project sponsors and project managers should not encourage employees to come to them with problems unless the employees also bring alternatives and recommendations. Usually, employees will solve most of their own problems once they prepare alternatives and recommendations. Good corporate cultures encourage people to bring problems to the surface quickly for resolution. The quicker the potential problem is identified, the more opportunities are available for resolution. A current problem plaguing executives is who determines the color of the light. Consider the following problem: A department manager had planned to perform 1000 hours of work in a given time frame but has completed only 500 hours at the end of the period. According to the project manager’s calculation, the project is behind schedule, and he would prefer to have the traffic light colored yellow or red. The line manager, however, feels that he still has enough “wiggle room” in his schedule and that his effort will still be completed within time and cost, so he wants the traffic light colored green. Most executives seem to favor the line manager who has the responsibility for the deliverable. Although the project manager has the final say on the color of traffic light, it is most often based upon the previous working relationship between the two and the level of trust. Some companies use more than three colors to indicate project status. One company also has an orange light for activities that are still being performed after the target milestone date. The New Role of the Executive As project management matures, executives decentralize project sponsorship to middle- and lower-level management. Senior management then takes on new roles such as: ● ● ● Establishing a Center for Excellence in project management Establishing a project office or centralized project management function Creating a project management career path 362 WORKING WITH EXECUTIVES ● ● ● Creating a mentorship program for newly appointed project managers Creating an organization committed to benchmarking best practices in project management in other organizations Providing strategic information for risk management This last bullet requires further comment. Because of the pressure placed upon the project manager for schedule compression, risk management could very well become the single most critical skill for project managers. Executives will find it necessary to provide project management with strategic business intelligence, assist in risk identification, and evaluate or prioritize risk-handling options. Managing Scope Creep Technically oriented team members are motivated not only by meeting specifications, but also by exceeding them. Unfortunately, exceeding specifications can be quite costly. Project managers must monitor scope creep and develop plans for controlling scope changes. But what if it is the project manager who initiates scope creep? The project sponsor must meet periodically with the project manager to review the scope baseline changes or unauthorized changes may occur and significant cost increases will result, as shown in Situation 10–1 below: Situation 10–1: Pine Lake Amusement Park. After six years of debate, the board of directors of Pine Lake Amusement Park finally came to an agreement on the park’s new aquarium. The aquarium would be built, at an estimated cost of $30 million and, between fundraising and bank loans, financing was possible. After the drawings were completed and approved, the project was estimated as a two-year construction effort. Because of the project’s complexity, a decision was made to have the project manager brought on board from the beginning of the design efforts, and to remain until six months after opening day. The project manager assigned was well known for his emphasis on details and his strong feelings for the aesthetic beauty of a ride or show. The drawings were completed and a detailed construction cost estimate was undertaken. When the final cost estimate of $40 million was announced, the board of directors was faced with three alternatives: cancel the project, seek an additional $10 million in financing, or descope (i.e., reduce functionality of) the project. Additional funding was unacceptable and years of publicity on the future aquarium would be embarrassing for the board if the project were to be canceled. The only reasonable alternative was to reduce the project’s scope. After two months of intensive replanning, the project team proposed a $32 million aquarium. The board of directors agreed to the new design and the construction phase of the project began. The project manager was given specific instructions that cost overruns would not be tolerated. At the end of the first year, more than $22 million had been spent. Not only had the project manager reinserted the scope that had been removed during the descoping efforts, but also additional scope creep had increased to the point where the final cost would now exceed $62 million. The new schedule now indicated a three-year The In-House Representatives 363 effort. By the time that management held its review meetings with the project team, the changes had been made. Executive champions are needed for those activities that require the implementation of change, such as a new corporate methodology for project management. Executive champions “drive” the implementation of project management down into the organization and accelerate its acceptance because their involvement implies executive-level support and interest. The Executive Champion 10.2 HANDLING DISAGREEMENTS WITH THE SPONSOR For years, we believed that the project sponsor had the final say on all decisions affecting the project. The sponsor usually had a vested interest in the project and was responsible for obtaining funding for the project. But what if the project manager believes that the sponsor has made the wrong decision? Should the project manager have a path for recourse action in such a situation? There are several reasons why disagreements between the project manager and project sponsor will occur. First, the project sponsors may not have sufficient technical knowledge or information to evaluate the risks of any potential decision. Second, sponsors may be heavily burdened with other activities and unable to devote sufficient time to sponsorship. Third, some companies prefer to assign sponsors who have no vested interest in the project in hopes of getting impartial decision-making. Finally, sponsorship may be pushed down to a middle-management level where the assigned sponsor may not have all of the business knowledge necessary to make the best decisions. Recognizing that these conflicts can exist, companies are instituting executive steering committees or executive policy board committees to quickly resolve these disputes. Few conflicts ever make it to the executive steering committee, but those that do are usually severe and may expose the company to unwanted risks. A common conflict that may end up at the executive steering committee level is when one party wants to cancel the project and the second party wants to continue. This situation occurred at a telecommunications company where the project manager felt that the project should be canceled but the sponsor wanted the project to continue because its termination would reflect poorly upon him. Unfortunately, the steering committee sided with the sponsor and let the project continue. The company squandered precious resources for several more months before finally terminating the project. 10.3 THE IN-HOUSE REPRESENTATIVES On high-risk, high-priority projects or during periods of mistrust, customers may wish to place in-house representatives in the contractor’s plant. These representatives, if treated properly, are like additional project office personnel who are not supported by your 364 WORKING WITH EXECUTIVES budget. They are invaluable resources for reading rough drafts of reports and making recommendations as to how their company may wish to see the report organized. In-house representatives are normally not situated in or near the contractor’s project office because of the project manager’s need for some degree of privacy. The exception would be in the design phase of a construction project, where it is imperative to design what the customer wants and to obtain quick decisions and approvals. Most in-house representatives know where their authority begins and ends. Some companies demand that in-house representatives have a project office escort when touring the plant, talking to functional employees, or simply observing the testing and manufacturing of components. It is possible to have a disruptive in-house representative removed from the company. This usually requires strong support from the project sponsor in the contractor’s shop. The important point here is that executives and project sponsors must maintain proper contact with and control over the in-house representatives, perhaps more so than the project manager. PROBLEMS 10–1 Should age have a bearing on how long it takes an executive to accept project management? 10–2 You have been called in by the executive management of a major utility company and asked to give a “selling” speech on why the company should go to project management. What are you going to say? What areas will you stress? What questions would you expect the executives to ask? What fears do you think the executives might have? 10–3 Some executives would prefer to have their project managers become tunnel-vision workaholics, with the project managers falling in love with their jobs and living to work instead of working to live. How do you feel about this? 10–4 Project management is designed to make effective and efficient use of resources. Most companies that adopt project management find it easier to underemploy and schedule overtime than to overemploy and either lay people off or drive up the overhead rate. A major electrical equipment manufacturer contends that with proper utilization of the project management concept, the majority of the employees who leave the company through either termination or retirement do not have to be replaced. Is this rationale reasonable? 10–5 The director of engineering services of R. P. Corporation believes that a project organizational structure of some sort would help resolve several of his problems. As part of the discussion, the director has made the following remarks: “All of our activities (or so-called projects if you wish) are loaded with up-front engineering. We have found in the past that time is the important parameter, not quality control or cost. Sometimes we rush into projects so fast that we have no choice but to cut corners, and, of course, quality must suffer.” What questions, if any, would you like to ask before recommending a project organizational form? Which form will you recommend? 10–6 How should a project manager react when he finds inefficiency in the functional lines? Should executive management become involved? 365 Problems 10–7 An electrical equipment manufacturing company has just hired you to conduct a threeday seminar on project management for sixty employees. The president of the company asks you to have lunch with him on the first day of the seminar. During lunch, the executive remarks, “I inherited the matrix structure when I took over. Actually I don’t think it can work here, and I’m not sure how long I’ll support it.” How should you continue at this point? 10–8 Should project managers be permitted to establish prerequisites for top management regarding standard company procedures? 10–9 During the implementation of project management, you find that line managers are reluctant to release any information showing utilization of resources in their line function. How should this situation be handled, and by whom? 10–10 Corporate engineering of a large corporation usually assumes control of all plant expansion projects in each of its plants for all projects over $25 million. For each case below, discuss the ramifications of this, assuming that there are several other projects going on in each plant at the same time as the plant expansion project. a. The project manager is supplied by corporate engineering and reports to corporate engineering, but all other resources are supplied by the plant manager. b. The project manager is supplied by corporate but reports to the plant manager for the duration of the project. c. The plant manager supplies the project manager, and the project manager reports “solid” to corporate and “dotted” to the plant manager for the duration of the project. 10–11 An aircraft company requires seven years from initial idea to full production of a military aircraft. Consider the following facts: engineering design requires a minimum of two years of R&D; manufacturing has a passive role during this time; and engineering builds its own prototype during the third year. a. To whom in the organization should the program manager, project manager, and project engineering report? Does your answer depend on the life-cycle phase? b. Can the project engineers be “solid” to the project manager and still be authorized by the engineering vice president to provide technical direction? c. What should be the role of marketing? d. Should there be a project sponsor? 10–12 Does a project sponsor have the right to have an in-house representative removed from his company? 10–13 An executive once commented that his company was having trouble managing projects, not because of a lack of tools and techniques, but because they (employees) did not know how to manage what they had. How does this relate to project management? 10–14 Ajax National is the world’s largest machine tool equipment manufacturer. Its success is based on the experience of its personnel. The majority of its department managers are fortyfive to fifty-five-year-old, nondegreed people who have come up from the ranks. Ajax has just hired several engineers with bachelors’ and masters’ degrees to control the project management and project engineering functions. Can this pose a problem? Are advanced-degreed people required because of the rapid rate of change of technology? 10–15 When does project management turn into overmanagement? 10–16 Brainstorming at United Central Bank (Part I): As part of the 1989 strategic policy plan for United Central Bank, the president, Joseph P. Keith, decided to embark on weekly 366 WORKING WITH EXECUTIVES “brainstorming meetings” in hopes of developing creative ideas that could lead to solutions to the bank’s problems. The bank’s executive vice president would serve as permanent chairman of the brainstorming committee. Personnel representation would be randomly selected under the constraint that 10 percent must be from division managers, 30 percent from department managers, 30 percent from section-level supervisors, and the remaining 30 percent from clerical and nonexempt personnel. President Keith further decreed that the brainstorming committee would criticize all ideas and submit only those that successfully passed the criticism test to upper-level management for review. After six months, with only two ideas submitted to upper-level management (both ideas were made by division managers), Joseph Keith formed an inquiry committee to investigate the reasons for the lack of interest by the brainstorming committee participants. Which of the following statements might be found in the inquiry committee report? (More than one answer is possible.) a. Because of superior–subordinate relationships (i.e., pecking order), creativity is inhibited. b. Criticism and ridicule have a tendency to inhibit spontaneity. c. Good managers can become very conservative and unwilling to stick their necks out. d. Pecking orders, unless adequately controlled, can inhibit teamwork and problem solving. e. All seemingly crazy or unconventional ideas were ridiculed and eventually discarded. f. Many lower-level people, who could have had good ideas to contribute, felt inferior. g. Meetings were dominated by upper-level management personnel. h. The meetings were held at inappropriate places and times. i. Many people were not given adequate notification of meeting time and subject matter. 10–17 Brainstorming at United Central Bank (Part II): After reading the inquiry committee report, President Keith decided to reassess his thinking about brainstorming by listing the advantages and disadvantages. What are the arguments for and against brainstorming? If you were Joseph Keith, would you vote for or against the continuation of the brainstorming sessions? 10–18 Brainstorming at United Central Bank (Part III): President Keith evaluated all of the data and decided to give the brainstorming committee one more chance. What changes can Joseph Keith implement in order to prevent the previous problems from recurring? 10–19 Explain the meaning of the following proverb: “The first 10 percent of the work is accomplished with 90 percent of the budget. The second 90 percent of the work is accomplished with the remaining 10 percent of the budget.” 10–20 You are a line manager, and two project managers (each reporting to a divisional vice president) enter your office soliciting resources. Each project manager claims that his project is top priority as assigned by his own vice president. How should you, as the line manager, handle this situation? What are the recommended solutions to keep this situation from recurring repeatedly? 10–21 Figure 10–3 shows the organizational structure for a new Environmental Protection Agency project. Alpha Company was one of three subcontractors chosen for the contract. Because this was a new effort, the project manager reported “dotted” to the board chairman, 367 Problems E.P.A. BOARD CHAIRMAN PRIME PRESIDENT V.P. V.P. SUBCONTRACTORS X FIGURE 10–3. Y Z P.M. Organizational chart for EPA project. who was acting as the project sponsor. The vice president was the immediate superior to the project manager. Because the project manager did not believe that Alpha Company maintained the expertise to do the job, he hired an outside consultant from one of the local colleges. Both the EPA and the prime contractor approved of the consultant, and the consultant’s input was excellent. The project manager’s superior, the vice president, disapproved of the consultant, continually arguing that the company had the expertise internally. How should you, the project manager, handle this situation? 10–22 You are the customer for a twelve-month project. You have team meetings scheduled with your subcontractor on a monthly basis. The contract has a contractual requirement to prepare a twenty-five- to thirty-page handout for each team meeting. Are there any benefits for you, the customer, to see these handouts at least three to four days prior to the team meeting? 10–23 You have a work breakdown structure (WBS) that is detailed to level 5. One level-5 work package requires that a technical subcontractor be selected to support one of the technical line organizations. Who should be responsible for customer–contractor communications: the project office or line manager? Does your answer depend on the life-cycle phase? The level of the WBS? Project manager’s “faith” in the line manager? 10–24 Should a client have the right to communicate directly to the project staff (i.e., project office) rather than directly to the project manager, or should this be at the discretion of the project manager? 10–25 Your company has assigned one of its vice presidents to function as your project sponsor. Unfortunately, your sponsor refuses to make any critical decisions, always “passing the buck” back to you. What should you do? What are your alternatives and the pros and cons of each? Why might an executive sponsor act in this manner? 368 WORKING WITH EXECUTIVES CASE STUDY CORWIN CORPORATION By June 1983, Corwin Corporation had grown into a $150 million per year corporation with an international reputation for manufacturing low-cost, high-quality rubber components. Corwin maintained more than a dozen different product lines, all of which were sold as off-the-shelf items in department stores, hardware stores, and automotive parts distributors. The name “Corwin” was now synonymous with “quality.” This provided management with the luxury of having products that maintained extremely long life cycles. Organizationally, Corwin had maintained the same structure for more than fifteen years (see Exhibit 10–1). The top management of Corwin Corporation was highly conservative and believed in a marketing approach to find new markets for existing product lines rather than to explore for new products. Under this philosophy, Corwin maintained a small R&D group whose mission was simply to evaluate state-of-the-art technology and its application to existing product lines. Corwin’s reputation was so good that they continually received inquiries about the manufacturing of specialty products. Unfortunately, the conservative nature of Corwin’s management created a “do not rock the boat” atmosphere opposed to taking any type of risks. A management policy was established to evaluate all specialty-product requests. The policy required answering the following questions: ● Will the specialty product provide the same profit margin (20 percent) as existing prod- uct lines? ● What is the total projected profitability to the company in terms of follow-on con- tracts? ● Can the specialty product be developed into a product line? ● Can the specialty product be produced with minimum disruption to existing product lines and manufacturing operations? Exhibit 10–1. Organizational chart for Corwin Corporation President V.P. Marketing Gene Frimel Market Support Contracts Dick Potts V.P. Engineering Dr. Royce Project Management R&D Dr. Reddy Dan West V.P. Manufacturing Engineering Support 369 Case Study These stringent requirements forced Corwin to no-bid more than 90 percent of all specialty-product inquiries. Corwin Corporation was a marketing-driven organization, although manufacturing often had different ideas. Almost all decisions were made by marketing with the exception of product pricing and estimating, which was a joint undertaking between manufacturing and marketing. Engineering was considered as merely a support group to marketing and manufacturing. For specialty products, the project managers would always come out of marketing even during the R&D phase of development. The company’s approach was that if the specialty product should mature into a full product line, then there should be a product line manager assigned right at the onset. The Peters Company Project In 1980, Corwin accepted a specialty-product assignment from Peters Company because of the potential for follow-on work. In 1981 and 1982, and again in 1983, profitable follow-on contracts were received, and a good working relationship developed, despite Peter’s reputation for being a difficult customer to work with. On December 7, 1982, Gene Frimel, the vice president of marketing at Corwin, received a rather unusual phone call from Dr. Frank Delia, the marketing vice president at Peters Company. Delia: “Gene, I have a rather strange problem on my hands. Our R&D group has $250,000 committed for research toward development of a new rubber product material, and we simply do not have the available personnel or talent to undertake the project. We have to go outside. We’d like your company to do the work. Our testing and R&D facilities are already overburdened.” Frimel: “Well, as you know, Frank, we are not a research group even though we’ve done this once before for you. And furthermore, I would never be able to sell our management on such an undertaking. Let some other company do the R&D work and then we’ll take over on the production end.” Delia: “Let me explain our position on this. We’ve been burned several times in the past. Projects like this generate several patents, and the R&D company almost always requires that our contracts give them royalties or first refusal for manufacturing rights.” Frimel: “I understand your problem, but it’s not within our capabilities. This project, if undertaken, could disrupt parts of our organization. We’re already operating lean in engineering.” Delia: “Look, Gene! The bottom line is this: We have complete confidence in your manufacturing ability to such a point that we’re willing to commit to a five-year production contract if the product can be developed. That makes it extremely profitable for you.” Frimel: “You’ve just gotten me interested. What additional details can you give me?” Delia: “All I can give you is a rough set of performance specifications that we’d like to meet. Obviously, some trade-offs are possible.” Frimel: “When can you get the specification sheet to me?” Delia: “You’ll have it tomorrow morning. I’ll ship it overnight express.” Frimel: “Good! I’ll have my people look at it, but we won’t be able to get you an answer until after the first of the year. As you know, our plant is closed down for the last two weeks in December, and most of our people have already left for extended vacations.” 370 WORKING WITH EXECUTIVES Delia: “That’s not acceptable! My management wants a signed, sealed, and delivered contract by the end of this month. If this is not done, corporate will reduce our budget for 1983 by $250,000, thinking that we’ve bitten off more than we can chew. Actually, I need your answer within forty-eight hours so that I’ll have some time to find another source.” Frimel: “You know, Frank, today is December 7, Pearl Harbor Day. Why do I feel as though the sky is about to fall in?” Delia: “Don’t worry, Gene! I’m not going to drop any bombs on you. Just remember, all that we have available is $250,000, and the contract must be a firm-fixed-price effort. We anticipate a sixmonth project with $125,000 paid on contract signing and the balance at project termination.” Frimel: “I still have that ominous feeling, but I’ll talk to my people. You’ll hear from us with a go or no-go decision within forty-eight hours. I’m scheduled to go on a cruise in the Caribbean, and my wife and I are leaving this evening. One of my people will get back to you on this matter.” Gene Frimel had a problem. All bid and no-bid decisions were made by a four-man committee composed of the president and the three vice presidents. The president and the vice president for manufacturing were on vacation. Frimel met with Dr. Royce, the vice president of engineering, and explained the situation. Royce: “You know, Gene, I totally support projects like this because it would help our technical people grow intellectually. Unfortunately, my vote never appears to carry any weight.” Frimel: “The profitability potential as well as the development of good customer relations makes this attractive, but I’m not sure we want to accept such a risk. A failure could easily destroy our good working relationship with Peters Company.” Royce: “I’d have to look at the specification sheets before assessing the risks, but I would like to give it a shot.” Frimel: “I’ll try to reach our president by phone.” By late afternoon, Frimel was fortunate enough to be able to contact the president and received a reluctant authorization to proceed. The problem now was how to prepare a proposal within the next two or three days and be prepared to make an oral presentation to Peters Company. Frimel: “The Boss gave his blessing, Royce, and the ball is in your hands. I’m leaving for vacation, and you’ll have total responsibility for the proposal and presentation. Delia wants the presentation this weekend. You should have his specification sheets tomorrow morning.” Royce: “Our R&D director, Dr. Reddy, left for vacation this morning. I wish he were here to help me price out the work and select the project manager. I assume that, in this case, the project manager will come out of engineering rather than marketing.” Frimel: “Yes, I agree. Marketing should not have any role in this effort. It’s your baby all the way. And as for the pricing effort, you know our bid will be for $250,000. Just work backwards to justify the numbers. I’ll assign one of our contracting people to assist you in the pricing. I hope I can find someone who has experience in this type of effort. I’ll call Delia and tell him we’ll bid it with an unsolicited proposal.” Royce selected Dan West, one of the R&D scientists, to act as the project leader. Royce had severe reservations about doing this without the R&D director, Dr. Reddy, being actively involved. With Reddy on vacation, Royce had to make an immediate decision. 371 Case Study On the following morning, the specification sheets arrived and Royce, West, and Dick Potts, a contracts man, began preparing the proposal. West prepared the direct labor manhours, and Royce provided the costing data and pricing rates. Potts, being completely unfamiliar with this type of effort, simply acted as an observer and provided legal advice when necessary. Potts allowed Royce to make all decisions even though the contracts man was considered the official representative of the president. Finally completed two days later, the proposal was actually a ten-page letter that simply contained the cost summaries (see Exhibit 10–2) and the engineering intent. West estimated that thirty tests would be required. The test matrix described only the test conditions for the first five tests. The remaining twenty-five test conditions would be determined at a later date, jointly by Peters and Corwin personnel. On Sunday morning, a meeting was held at Peters Company, and the proposal was accepted. Delia gave Royce a letter of intent authorizing Corwin Corporation to begin working on the project immediately. The final contract would not be available for signing until late January, and the letter of intent simply stated that Peters Company would assume all costs until such time that the contract was signed or the effort terminated. West was truly excited about being selected as the project manager and being able to interface with the customer, a luxury that was usually given only to the marketing personnel. Although Corwin Corporation was closed for two weeks over Christmas, West still went into the office to prepare the project schedules and to identify the support he would need in the other areas, thinking that if he presented this information to management on the first day back to work, they would be convinced that he had everything under control. The Work Begins . . . On the first working day in January 1983, a meeting was held with the three vice presidents and Dr. Reddy to discuss the support needed for the project. (West was not in attendance at this meeting, although all participants had a copy of his memo.) Reddy: “I think we’re heading for trouble in accepting this project. I’ve worked with Peters Company previously on R&D efforts, and they’re tough to get along with. West is a good man, but I would never have assigned him as the project leader. His expertise is in managing internal rather than external projects. But, no matter what happens, I’ll support West the best I can.” Royce: “You’re too pessimistic. You have good people in your group and I’m sure you’ll be able to give him the support he needs. I’ll try to look in on the project every so often. West will still Exhibit 10–2. Proposal cost summaries Direct labor and support Testing (30 tests at $2,000 each) Overhead at 100% Materials G&A (general and administrative, 10%) $ 30,000 60,000 90,000 30,000 21,000 Total Profit $231,000 19,000 Total $250,000 372 WORKING WITH EXECUTIVES be reporting to you for this project. Try not to burden him too much with other work. This project is important to the company.” West spent the first few days after vacation soliciting the support that he needed from the other line groups. Many of the other groups were upset that they had not been informed earlier and were unsure as to what support they could provide. West met with Reddy to discuss the final schedules. Reddy: “Your schedules look pretty good, Dan. I think you have a good grasp on the problem. You won’t need very much help from me. I have a lot of work to do on other activities, so I’m just going to be in the background on this project. Just drop me a note every once in a while telling me what’s going on. I don’t need anything formal. Just a paragraph or two will suffice.” By the end of the third week, all of the raw materials had been purchased, and initial formulations and testing were ready to begin. In addition, the contract was ready for signature. The contract contained a clause specifying that Peters Company had the right to send an in-house representative into Corwin Corporation for the duration of the project. Peters Company informed Corwin that Patrick Ray would be the in-house representative, reporting to Delia, and would assume his responsibilities on or about February 15. By the time Pat Ray appeared at Corwin Corporation, West had completed the first three tests. The results were not what was expected, but gave promise that Corwin was heading in the right direction. Pat Ray’s interpretation of the tests was completely opposite to that of West. Ray thought that Corwin was “way off base,” and redirection was needed. Ray: “Look, Dan! We have only six months to do this effort and we shouldn’t waste our time on marginally acceptable data. These are the next five tests I’d like to see performed.” West: “Let me look over your request and review it with my people. That will take a couple of days, and, in the meanwhile, I’m going to run the other two tests as planned.” Ray’s arrogant attitude bothered West. However, West decided that the project was too important to “knock heads” with Ray and simply decided to cater to Ray the best he could. This was not exactly the working relationship that West expected to have with the in-house representative. West reviewed the test data and the new test matrix with engineering personnel, who felt that the test data were inconclusive as yet and preferred to withhold their opinion until the results of the fourth and fifth tests were made available. Although this displeased Ray, he agreed to wait a few more days if it meant getting Corwin Corporation on the right track. The fourth and fifth tests appeared to be marginally acceptable just as the first three were. Corwin’s engineering people analyzed the data and made their recommendations. West: “Pat, my people feel that we’re going in the right direction and that our path has greater promise than your test matrix.” Ray: “As long as we’re paying the bills, we’re going to have a say in what tests are conducted. Your proposal stated that we would work together in developing the other test conditions. Let’s go with my test matrix. I’ve already reported back to my boss that the first five tests were failures and that we’re changing the direction of the project.” West: “I’ve already purchased $30,000 worth of raw materials. Your matrix uses other materials and will require additional expenditures of $12,000.” Case Study 373 Ray: “That’s your problem. Perhaps you shouldn’t have purchased all of the raw materials until we agreed on the complete test matrix.” During the month of February, West conducted fifteen tests, all under Ray’s direction. The tests were scattered over such a wide range that no valid conclusions could be drawn. Ray continued sending reports back to Delia confirming that Corwin was not producing beneficial results and there was no indication that the situation would reverse itself. Delia ordered Ray to take any steps necessary to ensure a successful completion of the project. Ray and West met again as they had done for each of the past forty-five days to discuss the status and direction of the project. Ray: “Dan, my boss is putting tremendous pressure on me for results, and thus far I’ve given him nothing. I’m up for promotion in a couple of months and I can’t let this project stand in my way. It’s time to completely redirect the project.” West: “Your redirection of the activities is playing havoc with my scheduling. I have people in other departments who just cannot commit to this continual rescheduling. They blame me for not communicating with them when, in fact, I’m embarrassed to.” Ray: “Everybody has their problems. We’ll get this problem solved. I spent this morning working with some of your lab people in designing the next fifteen tests. Here are the test conditions.” West: “I certainly would have liked to be involved with this. After all, I thought I was the project manager. Shouldn’t I have been at the meeting?” Ray: “Look, Dan! I really like you, but I’m not sure that you can handle this project. We need some good results immediately, or my neck will be stuck out for the next four months. I don’t want that. Just have your lab personnel start on these tests, and we’ll get along fine. Also, I’m planning on spending a great deal of time in your lab area. I want to observe the testing personally and talk to your lab personnel.” West: “We’ve already conducted twenty tests, and you’re scheduling another fifteen tests. I priced out only thirty tests in the proposal. We’re heading for a cost-overrun condition.” Ray: “Our contract is a firm-fixed-price effort. Therefore, the cost overrun is your problem.” West met with Dr. Reddy to discuss the new direction of the project and potential cost overruns. West brought along a memo projecting the costs through the end of the third month of the project (see Exhibit 10–3). Dr. Reddy: “I’m already overburdened on other projects and won’t be able to help you out. Royce picked you to be the project manager because he felt that you could do the job. Now, don’t let him down. Send me a brief memo next month explaining the situation, and I’ll see what I can do. Perhaps the situation will correct itself.” During the month of March, the third month of the project, West received almost daily phone calls from the people in the lab stating that Pat Ray was interfering with their job. In fact, one phone call stated that Ray had changed the test conditions from what was agreed on in the latest test matrix. When West confronted Ray on his meddling, Ray asserted that Corwin personnel were very unprofessional in their attitude and that he thought this was being carried 374 WORKING WITH EXECUTIVES Exhibit 10–3. Projected cost summary at the end of the third month Direct labor/support Testing Overhead Materials G&A Totals Original Proposal Cost Summary for SixMonth Project Total Project Costs Projected at End of Third Month $ 30,000 60,000 (30 tests) 90,000 (100%) 30,000 21,000 (10%) $ 15,000 70,000 (35 tests) 92,000 (120%)* 50,000 22,700 (10%) $231,000 $249,700 *Total engineering overhead was estimated at 100%, whereas the R&D overhead was 120%. down to the testing as well. Furthermore, Ray demanded that one of the functional employees be removed immediately from the project because of incompetence. West stated that he would talk to the employee’s department manager. Ray, however, felt that this would be useless and said, “Remove him or else!” The functional employee was removed from the project. By the end of the third month, most Corwin employees were becoming disenchanted with the project and were looking for other assignments. West attributed this to Ray’s harassment of the employees. To aggravate the situation even further, Ray met with Royce and Reddy, and demanded that West be removed and a new project manager be assigned. Royce refused to remove West as project manager, and ordered Reddy to take charge and help West get the project back on track. Reddy: “You’ve kept me in the dark concerning this project, West. If you want me to help you, as Royce requested, I’ll need all the information tomorrow, especially the cost data. I’ll expect you in my office tomorrow morning at 8:00 A.M. I’ll bail you out of this mess.” West prepared the projected cost data for the remainder of the work and presented the results to Dr. Reddy (see Exhibit 10–4). Both West and Reddy agreed that the project was now out of control, and severe measures would be required to correct the situation, in addition to more than $250,000 in corporate funding. Reddy: “Dan, I’ve called a meeting for 10:00 A.M. with several of our R&D people to completely construct a new test matrix. This is what we should have done right from the start.” West: “Shouldn’t we invite Ray to attend this meeting? I’m sure he’d want to be involved in designing the new test matrix.” Reddy: “I’m running this show now, not Ray!! Tell Ray that I’m instituting new policies and procedures for in-house representatives. He’s no longer authorized to visit the labs at his own discretion. He must be accompanied by either you or me. If he doesn’t like these rules, he can get out. I’m not going to allow that guy to disrupt our organization. We’re spending our money now, not his.” West met with Ray and informed him of the new test matrix as well as the new policies and procedures for in-house representatives. Ray was furious over the new turn of events and stated that he was returning to Peters Company for a meeting with Delia. 375 Case Study Exhibit 10–4. Estimate of total project completion costs Direct labor/support Testing (60 tests) Overhead (120%) Materials G&A $ 47,000* 120,000* 200,000* 103,000* 47,000* Peters contract $517,000* 250,000* Overrun $267,000* *Includes Dr. Reddy. On the following Monday, Frimel received a letter from Delia stating that Peters Company was officially canceling the contract. The reasons given by Delia were as follows: 1. Corwin had produced absolutely no data that looked promising. 2. Corwin continually changed the direction of the project and did not appear to have a systematic plan of attack. 3. Corwin did not provide a project manager capable of handling such a project. 4. Corwin did not provide sufficient support for the in-house representative. 5. Corwin’s top management did not appear to be sincerely interested in the project and did not provide sufficient executive-level support. Royce and Frimel met to decide on a course of action in order to sustain good working relations with Peters Company. Frimel wrote a strong letter refuting all of the accusations in the Peters letter, but to no avail. Even the fact that Corwin was willing to spend $250,000 of their own funds had no bearing on Delia’s decision. The damage was done. Frimel was now thoroughly convinced that a contract should not be accepted on “Pearl Harbor Day.” 11 Planning Related Case Studies (from Kerzner/Project Management Case Studies) • Quantum Telecom • Concrete Masonry • Corporation* • Margo Company • Project Overrun • The Two-Boss Problem • Denver International • Airport (DIA) Related Workbook Exercises and Case Studies (from Kerzner/Project Management Workbook to Accompany Project Management, 8th Edition) • The Statement of Work • Technology Forecasting • The Noncompliance Project • Payroll Services, Inc. (PSI) • Kirk Corporation • Multiple Choice Exam • Crossword Puzzle on Scope • Management PMBOK® Reference Section for the PMP® Certification Exam • Scope • Management 11.0 INTRODUCTION The most important responsibilities of a project manager are planning, integrating, and executing plans. Almost all projects, because of their relatively short duration and often prioritized control of resources, require formal, detailed planning. The integration of the planning activities is necessary because each functional unit may develop its own planning documentation with little regard for other functional units. *Case Study also appears in Workbook. 377 378 PLANNING Planning, in general, can best be described as the function of selecting the enterprise objectives and establishing the policies, procedures, and programs necessary for achieving them. Planning in a project environment may be described as establishing a predetermined course of action within a forecasted environment. The project’s requirements set the major milestones. If line managers cannot commit because the milestones are perceived as unrealistic, the project manager may have to develop alternatives, one of which may be to move the milestones. Upper-level management must become involved in the selection of alternatives. The project manager is the key to successful project planning. It is desirable that the project manager be involved from project conception through execution. Project planning must be systematic, flexible enough to handle unique activities, disciplined through reviews and controls, and capable of accepting multifunctional inputs. Successful project managers realize that project planning is an iterative process and must be performed throughout the life of the project. One of the objectives of project planning is to completely define all work required (possibly through the development of a documented project plan) so that it will be readily identifiable to each project participant. This is a necessity in a project environment because: ● ● ● If the task is well understood prior to being performed, much of the work can be preplanned. If the task is not understood, then during the actual task execution more knowledge is gained that, in turn, leads to changes in resource allocations, schedules, and priorities. The more uncertain the task, the greater the amount of information that must be processed in order to ensure effective performance. These considerations are important in a project environment because each project can be different from the others, requiring a variety of different resources, but having to be performed under time, cost, and performance constraints with little margin for error. Figure 11–1 identifies the type of project planning required to establish an effective monitoring and control system. The boxes at the top represent the planning activities, and the lower boxes identify the “tracking” or monitoring of the planned activities. Without proper planning, programs and projects can start off “behind the eight ball.” Consequences of poor planning include: ● ● ● ● ● ● ● Project initiation without defined requirements Wild enthusiasm Disillusionment Chaos Search for the guilty Punishment of the innocent Promotion of the nonparticipants There are four basic reasons for project planning: ● ● ● ● To eliminate or reduce uncertainty To improve efficiency of the operation To obtain a better understanding of the objectives To provide a basis for monitoring and controlling work FIGURE 11–1. SOW WBS • TIME • COST • PERFORMANCE • RELIABILITY • MAINTAINABILITY • EFFECTIVENESS SYSTEM REPORTS SPECS The project planning and control system. FEEDBACK PAYOFF TABLES STATES OF NATURE MANAGEMENT DECISION-MAKING • COMPANY LEVEL • SYSTEM LEVEL GOALS/OBJECTIVES STRATEGIES WORK DESCRIPTION AND INSTRUCTIONS TIME/COST/PERFORMANCE TRACKING PERT/CPM NETWORK SCHEDULING TIME BUDGETS MASTER/DETAILED SCHEDULES $ 379 380 PLANNING Planning is a continuous process of making entrepreneurial decisions with an eye to the future, and methodically organizing the effort needed to carry out these decisions. Furthermore, systematic planning allows an organization of set goals. The alternative to systematic planning is decision-making based on history. This generally results in reactive management leading to crisis management, conflict management, and fire fighting. 11.1 GENERAL PLANNING Planning is determining what needs to be done, by whom, and by when, in order to fulfill one’s assigned responsibility. There are nine major components of the planning phase: ● ● ● ● ● ● ● ● ● Objective: a goal, target, or quota to be achieved by a certain time Program: the strategy to be followed and major actions to be taken in order to achieve or exceed objectives Schedule: a plan showing when individual or group activities or accomplishments will be started and/or completed Budget: planned expenditures required to achieve or exceed objectives Forecast: a projection of what will happen by a certain time Organization: design of the number and kinds of positions, along with corresponding duties and responsibilities, required to achieve or exceed objectives Policy: a general guide for decision-making and individual actions Procedure: a detailed method for carrying out a policy Standard: a level of individual or group performance defined as adequate or acceptable Several of these factors require additional comment. Forecasting what will happen may not be easy, especially if predictions of environmental reactions are required. For example, planning is customarily defined as either strategic, tactical, or operational. Strategic planning is generally for five years or more, tactical can be for one to five years, and operational is the here and now of six months to one year. Although most projects are operational, they can be considered as strategic, especially if spin-offs or follow-up work is promising. Forecasting also requires an understanding of strengths and weaknesses as found in: ● ● ● ● ● ● ● The competitive situation Marketing Research and development Production Financing Personnel The management structure If project planning is strictly operational, then these factors may be clearly definable. However, if strategic or long-range planning is necessary, then the future economic outlook 381 General Planning can vary, say, from year to year, and replanning must be done at regular intervals because the goals and objectives can change. (The procedure for this can be seen in Figure 11–1.) The last three factors, policies, procedures, and standards, can vary from project to project because of their uniqueness. Each project manager can establish project policies, provided that they fall within the broad limits set forth by top management. Project policies must often conform closely to company policies, and are usually similar in nature from project to project. Procedures, on the other hand, can be drastically different from project to project, even if the same activity is performed. For example, the signing off of manufacturing plans may require different signatures on two selected projects even though the same end-item is being produced. Planning varies at each level of the organization. At the individual level, planning is required so that cognitive simulation can be established before irrevocable actions are taken. At the working group or functional level, planning must include: ● ● ● ● ● Agreement on purpose Assignment and acceptance of individual responsibilities Coordination of work activities Increased commitment to group goals Lateral communications At the organizational or project level, planning must include: ● ● ● ● ● Recognition and resolution of group conflict on goals Assignment and acceptance of group responsibilities Increased motivation and commitment to organizational goals Vertical and lateral communications Coordination of activities between groups The logic of planning requires answers to several questions in order for the alternatives and constraints to be fully understood. A list of questions would include: ● Prepare environmental analysis Where are we? ● How and why did we get here? Set objectives ● Is this where we want to be? ● Where would we like to be? In a year? In five years? List alternative strategies ● Where will we go if we continue as before? ● Is that where we want to go? ● How could we get to where we want to go? List threats and opportunities ● What might prevent us from getting there? ● What might help us to get there? ● ● ● ● 382 PLANNING ● Prepare forecasts Where are we capable of going? What do we need to take us where we want to go? Select strategy portfolio ● What is the best course for us to take? ● What are the potential benefits? ● What are the risks? Prepare action programs ● What do we need to do? ● When do we need to do it? ● How will we do it? ● Who will do it? Monitor and control ● Are we on course? If not, why? ● What do we need to do to be on course? ● Can we do it? ● ● ● ● ● One of the most difficult activities in the project environment is to keep the planning on target. These procedures can assist project managers during planning activities: ● ● ● ● ● ● ● ● ● ● Let functional managers do their own planning. Too often operators are operators, planners are planners, and never the twain shall meet. Establish goals before you plan. Otherwise short-term thinking takes over. Set goals for the planners. This will guard against the nonessentials and places your effort where there is payoff. Stay flexible. Use people-to-people contact, and stress fast response. Keep a balanced outlook. Don’t overreact, and position yourself for an upturn. Welcome top-management participation. Top management has the capability to make or break a plan, and may well be the single most important variable. Beware of future spending plans. This may eliminate the tendency to underestimate. Test the assumptions behind the forecasts. This is necessary because professionals are generally too optimistic. Do not depend solely on one set of data. Don’t focus on today’s problems. Try to get away from crisis management and fire fighting. Reward those who dispel illusions. Avoid the Persian messenger syndrome (i.e., beheading the bearer of bad tidings). Reward the first to come forth with bad news. 11.2 LIFE-CYCLE PHASES Project planning takes place at two levels. The first level is the corporate cultural approach; the second method is the individual’s approach. The corporate cultural approach breaks the project down into life-cycle phases, such as those shown in Table 2–6. The life-cycle phase approach is not an attempt to put handcuffs on the project manager but to provide a method- 383 Life-Cycle Phases ology for uniformity in project planning. Many companies, including government agencies, prepare checklists of activities that should be considered in each phase. These checklists are for consistency in planning. The project manager can still exercise his own planning initiatives within each phase. A second benefit of life-cycle phases is control. At the end of each phase there is a meeting of the project manager, sponsor, senior management, and even the customer, to assess the accomplishments of this life-cycle phase and to get approval for the next phase. These meetings are often called critical design reviews, “on-off ramps,” and “gates.” In some companies, these meetings are used to firm up budgets and schedules for the followon phases. In addition to monetary considerations, life-cycle phases can be used for manpower deployment and equipment/facility utilization. Some companies go so far as to prepare project management policy and procedure manuals where all information is subdivided according to life-cycle phasing. Life-cycle phase decision points eliminate the problem where project managers do not ask for phase funding, but rather ask for funds for the whole project before the true scope of the project is known. Several companies have even gone so far as to identify the types of decisions that can be made at each end-of-phase review meeting. They include: ● ● ● ● Proceed with the next phase based on an approved funding level Proceed to the next phase but with a new or modified set of objectives Postpone approval to proceed based on a need for additional information Terminate project Consider a company that utilizes the following life-cycle phases: ● ● ● ● ● ● Conceptualization Feasibility Preliminary planning Detail planning Execution Testing and commissioning The conceptualization phase includes brainstorming and common sense and involves two critical factors: (1) identify and define the problem, and (2) identify and define potential solutions. In a brainstorming session, all ideas are recorded and none are discarded. The brainstorming session works best if there is no formal authority present and if it lasts thirty to sixty minutes. Sessions over sixty minutes will produce ideas that may resemble science fiction. The feasibility study phase considers the technical aspects of the conceptual alternatives and provides a firmer basis on which to decide whether to undertake the project. The purpose of the feasibility phase is to: ● ● ● Plan the project development and implementation activities. Estimate the probable elapsed time, staffing, and equipment requirements. Identify the probable costs and consequences of investing in the new project. 384 PLANNING If practical, the feasibility study results should evaluate the alternative conceptual solutions along with associated benefits and costs. The objective of this step is to provide management with the predictable results of implementing a specific project and to provide generalized project requirements. This, in the form of a feasibility study report, is used as the basis on which to decide whether to proceed with the costly requirements, development, and implementation phases. User involvement during the feasibility study is critical. The user must supply much of the required effort and information, and, in addition, must be able to judge the impact of alternative approaches. Solutions must be operationally, technically, and economically feasible. Much of the economic evaluation must be substantiated by the user. Therefore, the primary user must be highly qualified and intimately familiar with the workings of the organization and should come from the line operation. The feasibility study also deals with the technical aspects of the proposed project and requires the development of conceptual solutions. Considerable experience and technical expertise are required to gather the proper information, analyze it, and reach practical conclusions. Improper technical or operating decisions made during this step may go undetected or unchallenged throughout the remainder of the process. In the worst case, such an error could result in the termination of a valid project—or the continuation of a project that is not economically or technically feasible. In the feasibility study phase, it is necessary to define the project’s basic approaches and its boundaries or scope. A typical feasibility study checklist might include: ● Summary level Evaluate alternatives Evaluate market potential Evaluate cost effectiveness Evaluate producibility Evaluate technical base Detail level ● A more specific determination of the problem ● Analysis of the state-of-the-art technology ● Assessment of in-house technical capabilities ● Test validity of alternatives ● Quantify weaknesses and unknowns ● Conduct trade-off analysis on time, cost, and performance Prepare initial project goals and objectives Prepare preliminary cost estimates and development plan ● ● ● ● ● ● ● ● The end result of the feasibility study is a management decision on whether to terminate the project or to approve its next phase. Although management can stop the project at several later phases, the decision is especially critical at this point, because later phases require a major commitment of resources. All too often, management review committees approve the continuation of projects merely because termination at this point might cast doubt on the group’s judgment in giving earlier approval. 385 Life-Cycle Phases The decision made at the end of the feasibility study should identify those projects that are to be terminated. Once a project is deemed feasible and is approved for development, it must be prioritized with previously approved projects waiting for development (given a limited availability of capital or other resources). As development gets under way, management is given a series of checkpoints to monitor the project’s actual progress as compared to the plan. The third life-cycle phase is either preliminary planning or “defining the requirements.” This is the phase where the effort is officially defined as a project. In this phase, we should consider the following: ● ● ● ● ● ● ● ● ● ● ● General scope of the work Objectives and related background Contractor’s tasks Contractor end-item performance requirements Reference to related studies, documentation, and specifications Data items (documentation) Support equipment for contract end-item Customer-furnished property, facilities, equipment, and services Customer-furnished documentation Schedule of performance Exhibits, attachments, and appendices These elements can be condensed into four core documents, as will be shown in Section 11.5. Also, it should be noted that the word “customer” can be an internal customer, such as the user group or your own executives. The table below shows the percentage of direct labor hours/dollars that are spent in each phase: Phase Percent of Direct Labor Dollars Conceptualization Feasibility study Preliminary planning Detail planning Execution Commissioning 5 10 15 20 40 10 The interesting fact from this table is that as much as 50 percent of the direct labor hours and dollars can be spent before execution begins. The reason for this is simple: Quality must be planned for and designed in. Quality cannot be inspected into the project. Companies that spend less than these percentages usually find quality problems in execution. 386 PLANNING 11.3 PROPOSAL PREPARATION There is always a question of what to do with a project manager between assignments. For companies that survive on competitive bidding, the assignment is clear: The project manager writes proposals for future work. This takes place during the feasibility study, when the company must decide whether to bid on the job. There are four ways in which proposal preparation can occur: ● ● ● ● Project manager prepares entire proposal. This occurs frequently in small companies. In large organizations, the project manager may not have access to all available data, some of which may be company proprietary, and it may not be in the best interest of the company to have the project manager spend all of his time doing this. Proposal manager prepares entire proposal. This can work as long as the project manager is allowed to review the proposal before delivery to the customer and feels committed to its direction. Project manager prepares proposal but is assisted by a proposal manager. This is common, but again places tremendous pressure on the project manager. Proposal manager prepares proposal but is assisted by a project manager. This is the preferred method. The proposal manager maintains maximum authority and control until such time as the proposal is sent to the customer, at which point the project manager takes charge. The project manager is on board right from the start, although his only effort may be preparing the technical volume of the proposal and perhaps part of the management volume. 11.4 UNDERSTANDING PARTICIPANTS’ ROLES Companies that have histories of successful plans also have employees who fully understand their roles in the planning process. Good up-front planning may not eliminate the need for changes, but may reduce the number of changes required. The responsibilities of the major players are as follows: ● Project manager will define: Goals and objectives Major milestones Requirements Ground rules and assumptions Time, cost, and performance constraints Operating procedures Administrative policy Reporting requirements Line manager will define: ● Detailed task descriptions to implement objectives, requirements, and milestones ● ● ● ● ● ● ● ● ● 387 Project Planning ● ● Detailed schedules and manpower allocations to support budget and schedule Identification of areas of risk, uncertainty, and conflict ● Senior management (project sponsor) will: ● Act as the negotiator for disagreements between project and line management ● Provide clarification of critical issues ● Provide communication link with customer’s senior management Successful planning requires that project, line, and senior management are in agreement with the plan. 11.5 PROJECT PLANNING Successful project management, whether in response to an in-house project or a customer request, must utilize effective planning techniques. The first step is understanding the project objectives. These goals may be to develop expertise in a given area, to become competitive, to modify an existing facility for later use, or simply to keep key personnel employed. The objectives are generally not independent; they are all interrelated, both implicitly and explicitly. Many times it is not possible to satisfy all objectives. At this point, management must prioritize the objectives as to which are strategic and which are not. Typical problems with developing objectives include: ● ● ● ● ● ● ● Project objectives/goals are not agreeable to all parties. Project objectives are too rigid to accommodate changing priorities. Insufficient time exists to define objectives well. Objectives are not adequately quantified. Objectives are not documented well enough. Efforts of client and project personnel are not coordinated. Personnel turnover is high. Once the objectives are clearly defined, four questions must be considered: ● ● ● ● What are the major elements of the work required to satisfy the objectives, and how are these elements interrelated? Which functional divisions will assume responsibility for accomplishment of these objectives and the major-element work requirements? Are the required corporate and organizational resources available? What are the information flow requirements for the project? If the project is large and complex, then careful planning and analysis must be accomplished by both the direct- and indirect-labor-charging organizational units. The project organizational structure must be designed to fit the project; work plans and schedules must be established so that maximum allocation of resources can be made; resource costing and accounting systems must be developed; and a management information and reporting system must be established. 388 PLANNING Effective total program planning cannot be accomplished unless all of the necessary information becomes available at project initiation. These information requirements are: ● ● ● ● The statement of work (SOW) The project specifications The milestone schedule The work breakdown structure (WBS) The statement of work (SOW) is a narrative description of the work to be accomplished. It includes the objectives of the project, a brief description of the work, the funding constraint if one exists, and the specifications and schedule. The schedule is a “gross” schedule and includes such things as the: ● ● ● ● Start date End date Major milestones Written reports (data items) Written reports should always be identified so that if functional input is required, the functional manager will assign an individual who has writing skills. The last major item is the work breakdown structure. The WBS is the breaking down of the statement of work into smaller elements for better visibility and control. Each of these planning items is described in the following sections. 11.6 THE STATEMENT OF WORK The statement of work (SOW) is a narrative description of the work required for the project. The complexity of the SOW is determined by the desires of top management, the customer, and/or the user groups. For projects internal to the company, the SOW is prepared by the project office with input from the user groups because the project office is usually composed of personnel with writing skills. For projects external to the organization, as in competitive bidding, the contractor may have to prepare the SOW for the customer because the customer may not have people trained in SOW preparation. In this case, as before, the contractor would submit the SOW to the customer for approval. It is also quite common for the project manager to rewrite a customer’s SOW so that the contractor’s line managers can price out the effort. In a competitive bidding environment, there are two SOWs—the SOW used in the proposal and a contract statement of work (CSOW). There might also be a proposal WBS and a contract work breakdown structure (CWBS). Special care must be taken by contract and negotiation teams to discover all discrepancies between the SOW/WBS and CSOW/CWBS, or additional costs may be incurred. A good (or winning) proposal is no guarantee that the customer or contractor understands the SOW. For large projects, factfinding is usually required before final negotiations because it is essential that both the 389 The Statement of Work customer and the contractor understand and agree on the SOW, what work is required, what work is proposed, the factual basis for the costs, and other related elements. In addition, it is imperative that there be agreement between the final CSOW and CWBS. SOW preparation is not as easy as it sounds. Consider the following: ● ● ● The SOW says that you are to conduct a minimum of fifteen tests to determine the material properties of a new substance. You price out twenty tests just to “play it safe.” At the end of the fifteenth test, the customer says that the results are inconclusive and that you must run another fifteen tests. The cost overrun is $40,000. The Navy gives you a contract in which the SOW states that the prototype must be tested in “water.” You drop the prototype into a swimming pool to test it. Unfortunately, the Navy’s definition of “water” is the Atlantic Ocean, and it costs you $1 million to transport all of your test engineers and test equipment to the Atlantic Ocean. You receive a contract in which the SOW says that you must transport goods across the country using “aerated” boxcars. You select boxcars that have open tops so that air can flow in. During the trip, the train goes through an area of torrential rains, and the goods are ruined. These three examples show that misinterpretations of the SOW can result in losses of hundreds of millions of dollars. Common causes of misinterpretation are: ● ● ● ● ● ● Mixing tasks, specifications, approvals, and special instructions Using imprecise language (“nearly,” “optimum,” “approximately,” etc.) No pattern, structure, or chronological order Wide variation in size of tasks Wide variation in how to describe details of the work Failing to get third-party review Misinterpretations of the statement of work can and will occur no matter how careful everyone has been. The result is creeping scope, or, as one telecommunications company calls it, “creeping elegance.” The best way to control creeping scope is with a good definition of the requirements up front, if possible. Today, both private industry and government agencies are developing manuals on SOW preparation. The following is adapted from a NASA publication on SOW preparation1: ● The project manager or his designees should review the documents that authorize the project and define its objectives, and also review contracts and studies leading to the present level of development. As a convenience, a bibliography of related studies should be prepared together with samples of any similar SOWs, and compliance specifications. 1. Adapted from Statement of Work Handbook NHB5600.2, National Aeronautics and Space Administration, February 1975. 390 PLANNING ● ● ● ● ● ● ● ● A copy of the WBS should be obtained. At this point coordination between the CWBS elements and the SOW should commence. Each task element of the preliminary CWBS should be explained in the SOW, and related coding should be used. The project manager should establish a SOW preparation team consisting of personnel he deems appropriate from the program or project office who are experts in the technical areas involved, and representatives from procurement, financial management, fabrication, test, logistics, configuration management, operations, safety, reliability, and quality assurance, plus any other area that may be involved in the contemplated procurement. Before the team actually starts preparation of the SOW, the project manager should brief program management as to the structure of the preliminary CWBS and the nature of the contemplated SOW. This briefing is used as a baseline from which to proceed further. The project manager may assign identified tasks to team members and identify compliance specifications, design criteria, and other requirements documentation that must be included in the SOW and assign them to responsible personnel for preparation. Assigned team members will identify and obtain copies of specifications and technical requirements documents, engineering drawings, and results of preliminary and/or related studies that may apply to various elements of the proposed procurement. The project manager should prepare a detailed checklist showing the mandatory items and the selected optional items as they apply to the main body or the appendixes of the SOW. The project manager should emphasize the use of preferred parts lists; standard subsystem designs, both existing and under development; available hardware in inventory; off-the-shelf equipment; component qualification data; design criteria handbooks; and other technical information available to design engineers to prevent deviations from the best design practices. Cost estimates (manning requirements, material costs, software requirements, etc.) developed by the cost-estimating specialists should be reviewed by SOW contributors. Such reviews will permit early trade-off consideration on the desirability of requirements that are not directly related to essential technical objectives. The project manager should establish schedules for submission of coordinated SOW fragments from each task team member. He must assure that these schedules are compatible with the schedule for the request for proposal (RFP) issuance. The statement of work should be prepared sufficiently early to permit full project coordination and to ensure that all project requirements are included. It should be completed in advance of RFP preparation. SOW preparation manuals also contain guides for editors and writers2: ● Every SOW that exceeds two pages in length should have a table of contents conforming to the CWBS coding structure. There should rarely be items in the SOW 2. See note 1. The Statement of Work ● ● ● ● ● ● ● ● ● 391 that are not shown on the CWBS; however, it is not absolutely necessary to restrict items to those cited in the CWBS. Clear and precise task descriptions are essential. The SOW writer should realize that his or her efforts will have to be read and interpreted by persons of varied background (such as lawyers, buyers, engineers, cost estimators, accountants, and specialists in production, transportation, security, audit, quality, finance, and contract management). A good SOW states precisely the product or service desired. The clarity of the SOW will affect administration of the contract, since it defines the scope of work to be performed. Any work that falls outside that scope will involve new procurement with probable increased costs. The most important thing to keep in mind when writing a SOW is the most likely effect the written work will have upon the reader. Therefore, every effort must be made to avoid ambiguity. All obligations of the government should be carefully spelled out. If approval actions are to be provided by the government, set a time limit. If government-furnished equipment (GFE) and/or services, etc., are to be provided, state the nature, condition, and time of delivery, if feasible. Remember that any provision that takes control of the work away from the contractor, even temporarily, may result in relieving the contractor of responsibility. In specifying requirements, use active rather than passive terminology. Say that the contractor shall conduct a test rather than that a test should be conducted. In other words, when a firm requirement is intended, use the mandatory term “shall” rather than the permissive term “should.” Limit abbreviations to those in common usage. Provide a list of all pertinent abbreviations and acronyms at the beginning of the SOW. When using a term for the first time, spell it out and show the abbreviation or acronym in parentheses following the word or words. When it is important to define a division of responsibilities between the contractor, other agencies, etc., a separate section of the SOW (in an appropriate location) should be included and delineate such responsibilities. Include procedures. When immediate decisions cannot be made, it may be possible to include a procedure for making them (e.g., “as approved by the contracting officer,” or “the contractor shall submit a report each time a failure occurs”). Do not overspecify. Depending upon the nature of the work and the type of contract, the ideal situation may be to specify results required or end-items to be delivered and let the contractor propose his best method. Describe requirements in sufficient detail to assure clarity, not only for legal reasons, but for practical application. It is easy to overlook many details. It is equally easy to be repetitious. Beware of doing either. For every piece of deliverable hardware, for every report, for every immediate action, do not specify that something be done “as necessary.” Rather, specify whether the judgment is to be made by the contractor or by the government. Be aware that these types of contingent actions may have an impact on price as well as schedule. Where expensive services, such as technical liaison, are to be furnished, do not say “as required.” Provide a ceiling on the extent of such services, or work out a procedure (e.g., a level of effort, pool of man-hours) that will ensure adequate control. 392 PLANNING ● ● Avoid incorporating extraneous material and requirements. They may add unnecessary cost. Data requirements are common examples of problems in this area. Screen out unnecessary data requirements, and specify only what is essential and when. It is recommended that data requirements be specified separately in a data requirements appendix or equivalent. Do not repeat detailed requirements or specifications that are already spelled out in applicable documents. Instead, incorporate them by reference. If amplification, modification, or exceptions are required, make specific reference to the applicable portions and describe the change. Some preparation documents also contain checklists for SOW preparation.3 A checklist is furnished below to provide considerations that SOW writers should keep in mind in preparing statements of work: ● ● ● ● ● ● ● ● ● ● ● ● ● Is the SOW (when used in conjunction with the preliminary CWBS) specific enough to permit a contractor to make a tabulation and summary of manpower and resources needed to accomplish each SOW task element? Are specific duties of the contractor stated so he will know what is required, and can the contracting officer’s representative, who signs the acceptance report, tell whether the contractor has complied? Are all parts of the SOW so written that there is no question as to what the contractor is obligated to do, and when? When it is necessary to reference other documents, is the proper reference document described? Is it properly cited? Is all of it really pertinent to the task, or should only portions be referenced? Is it cross-referenced to the applicable SOW task element? Are any specifications or exhibits applicable in whole or in part? If so, are they properly cited and referenced to the appropriate SOW element? Are directions clearly distinguishable from general information? Is there a time-phased data requirement for each deliverable item? If elapsed time is used, does it specify calendar or work days? Are proper quantities shown? Have headings been checked for format and grammar? Are subheadings comparable? Is the text compatible with the title? Is a multidecimal or alphanumeric numbering system used in the SOW? Can it be cross-referenced with the CWBS? Have appropriate portions of procurement regulations been followed? Has extraneous material been eliminated? Can SOW task/contract line items and configuration item breakouts at lower levels be identified and defined in sufficient detail so they can be summarized to discrete third-level CWBS elements? Have all requirements for data been specified separately in a data requirements appendix or its equivalent? Have all extraneous data requirements been eliminated? 3. See note 1. 393 Project Specifications ● ● Are security requirements adequately covered if required? Has its availability to contractors been specified? Finally, there should be a management review of the SOW preparation interpretation4: During development of the Statement of Work, the project manager should ensure adequacy of content by holding frequent reviews with project and functional specialists to determine that technical and data requirements specified do conform to the guidelines herein and adequately support the common system objective. The CWBS/SOW matrix should be used to analyze the SOW for completeness. After all comments and inputs have been incorporated, a final team review should be held to produce a draft SOW for review by functional and project managers. Specific problems should be resolved and changes made as appropriate. A final draft should then be prepared and reviewed with the program manager, contracting officer, or with higher management if the procurement is a major acquisition. The final review should include a briefing on the total RFP package. If other program offices or other Government agencies will be involved in the procurement, obtain their concurrence also. 11.7 PROJECT SPECIFICATIONS A specification list as shown in Table 11–1 is separately identified or called out as part of the statement of work. Specifications are used for man-hour, equipment, and material estimates. Small changes in a specification can cause large cost overruns. Another reason for identifying the specifications is to make sure that there are no surprises for the customer downstream. The specifications should be the most current revision. It is not uncommon for a customer to hire outside agencies to evaluate the technical proposal and to make sure that the proper specifications are being used. Specifications are, in fact, standards for pricing out a proposal. If specifications do not exist or are not necessary, then work standards should be included in the proposal. The work standards can also appear in the cost volume of the proposal. Labor justification backup sheets may or may not be included in the proposal, depending on RFP/RFQ (request for quotation) requirements. Several years ago, a government agency queried contractors as to why some government programs were costing so much money. The main culprit turned out to be the specifications. Typical specifications contain twice as many pages as necessary, do not stress quality enough, are loaded with unnecessary designs and schematics, are difficult to read and update, and are obsolete before they are published. Streamlining existing specifications is a costly and time-consuming effort. The better alternative is to educate those people involved in specification preparation so that future specifications will be reasonably correct. 4. Statement of Work Handbook NHB5600.2, National Aeronautics and Space Administration, February 1975. 394 PLANNING TABLE 11–1. SPECIFICATION FOR STATEMENT OF WORK Description Specification No. Civil 100 (Index) 101 102 121 122 123 124 200 (Index) 201 201 209 225 226 227 300 (Index) 301 302 318 319 400 (Index) 401 402 403 414 415 416 500 (Index) 501 502 503 536 537 538 600 (Index) 601 602 603 640 641 642 700 (Index) 701 702 703 749 750 751 800 (Index) 801 802 803 841 842 843 • • • • • • Concrete Field equipment Piling Roofing and siding Soil testing Structural design Electrical • Electrical testing • Heat tracing • Motors • Power systems • Switchgear • Synchronous generators HVAC • Hazardous environment • Insulation • Refrigeration piping • Sheetmetal ductwork Installation • Conveyors and chutes • Fired heaters and boilers • Heat exchangers • Reactors • Towers • Vessels Instruments • Alarm systems • Control valves • Flow instruments • Level gages • Pressure instruments • Temperature instruments Mechanical equipment • Centrifugal pumps • Compressors • High-speed gears • Material handling equipment • Mechanical agitators • Steam turbines Piping • Expansion joints • Field pressure testing • Installation of piping • Pipe fabrication specs • Pipe supports • Steam tracing Project administration • Design drawings • Drafting standards • General requirements • Project coordination • Reporting procedure • Vendor data (continues) 395 Milestone Schedules TABLE 11–1. SPECIFICATION FOR STATEMENT OF WORK (Continued) Description Specification No. Vessels • Fireproofing • Painting • Reinforced tanks • Shell and tube heat exchangers • Steam boilers • Vessel linings 900 (Index) 901 902 948 949 950 951 11.8 MILESTONE SCHEDULES Project milestone schedules contain such information as: ● ● ● ● Project start date Project end date Other major milestones Data items (deliverables or reports) Project start and end dates, if known, must be included. Other major milestones, such as review meetings, prototype available, procurement, testing, and so on, should also be identified. The last topic, data items, is often overlooked. There are two good reasons for preparing a separate schedule for data items. First, the separate schedule will indicate to line managers that personnel with writing skills may have to be assigned. Second, data items require direct-labor man-hours for writing, typing, editing, proofing, retyping, graphic arts, and reproduction. Many companies identify on the data item schedules the approximate number of pages per data item, and each data item is priced out at a cost per page, say $500/page. Pricing out data items separately often induces customers to require fewer reports. The steps required to prepare a report, after the initial discovery work or collection of information, include: ● ● ● ● ● ● ● ● ● Organizing the report Writing Typing Proofing Editing Retyping Graphic arts Submittal for approvals Reproduction and distribution 396 PLANNING Typically, 6–8 hours of work are required per page. At a burdened hourly rate of $80/hour, it is easy for the cost of documentation to become exorbitant. 11.9 WORK BREAKDOWN STRUCTURE The successful accomplishment of both contract and corporate objectives requires a plan that defines all effort to be expended, assigns responsibility to a specially identified organizational element, and establishes schedules and budgets for the accomplishment of the work. The preparation of this plan is the responsibility of the program manager, who is assisted by the program team assigned in accordance with program management system directives. The detailed planning is also established in accordance with company budgeting policy before contractural efforts are initiated. In planning a project, the project manager must structure the work into small elements that are: ● ● ● ● Manageable, in that specific authority and responsibility can be assigned Independent, or with minimum interfacing with and dependence on other ongoing elements Integratable so that the total package can be seen Measurable in terms of progress The first major step in the planning process after project requirements definition is the development of the work breakdown structure (WBS). A WBS is a product-oriented family tree subdivision of the hardware, services, and data required to produce the end product. The WBS is structured in accordance with the way the work will be performed and reflects the way in which project costs and data will be summarized and eventually reported. Preparation of the WBS also considers other areas that require structured data, such as scheduling, configuration management, contract funding, and technical performance parameters. The WBS is the single most important element because it provides a common framework from which: ● ● ● ● ● ● ● ● The total program can be described as a summation of subdivided elements. Planning can be performed. Costs and budgets can be established. Time, cost, and performance can be tracked. Objectives can be linked to company resources in a logical manner. Schedules and status-reporting procedures can be established. Network construction and control planning can be initiated. The responsibility assignments for each element can be established. The work breakdown structure acts as a vehicle for breaking the work down into smaller elements, thus providing a greater probability that every major and minor activity will be accounted for. Although a variety of work breakdown structures exist, the most common is the six-level indented structure shown below: 397 Work Breakdown Structure Managerial levels Technical levels Level 1 2 3 冦 冦 4 5 6 Description Total program Project Task Subtask Work package Level of effort Level 1 is the total program and is composed of a set of projects. The summation of the activities and costs associated with each project must equal the total program. Each project, however, can be broken down into tasks, where the summation of all tasks equals the summation of all projects, which, in turn, comprises the total program. The reason for this subdivision of effort is simply ease of control. Program management therefore becomes synonymous with the integration of activities, and the project manager acts as the integrator, using the work breakdown structure as the common framework. Careful consideration must be given to the design and development of the WBS. From Figure 11–2, the work breakdown structure can be used to provide the basis for: ● ● ● ● ● ● ● The responsibility matrix Network scheduling Costing Risk analysis Organizational structure Coordination of objectives Control (including contract administration) The upper three levels of the WBS are normally specified by the customer (if part of an RFP/RFQ) as the summary levels for reporting purposes. The lower levels are generated by the contractor for in-house control. Each level serves a vital purpose: Level 1 is generally used for the authorization and release of all work, budgets are prepared at level 2, and schedules are prepared at level 3. Certain characteristics can now be generalized for these levels: ● ● ● ● The top three levels of the WBS reflect integrated efforts and should not be related to one specific department. Effort required by departments or sections should be defined in subtasks and work packages. The summation of all elements in one level must be the sum of all work in the next lower level. Each element of work should be assigned to one and only one level of effort. For example, the construction of the foundation of a house should be included in one project (or task), not extended over two or three. (At level 5, the work packages should be identifiable and homogeneous.) The level at which the project is managed is generally called the work package level. Actually, the work package can exist at any level below level one. 398 PLANNING Validates total risk and impact of decision-making Validates time and schedule PERT network Decision tree Validates organization charts Validates management coordination Work packages Interlocked objective networks Major objective Objective Subobjective Feeder objective Work breakdown structure Feeder objectives Corporate Divisional Departmental Sectional Level 1 Matrix of work packages Validates work methods and accountability Level 2 Level 3 Level 4 Cost flow objective network Validates total costs Work breakdown structure for objective control and evaluation. Source: Paul Mali, Managing by Objectives (New York: Wiley, 1972), p. 163. Copyright © 1972 by John Wiley & Sons. Reprinted by permission of the publisher. FIGURE 11–2. ● ● The WBS must be accompanied by a description of the scope of effort required, or else only those individuals who issue the WBS will have a complete understanding of what work has to be accomplished. It is common practice to reproduce the customer’s statement of work as the description for the WBS. It is often the best policy for the project manager, regardless of his technical expertise, to allow all of the line managers to assess the risks in the SOW. After all, the line managers are usually the recognized experts in the organization. Project managers normally manage at the top three levels of the WBS and prefer to provide status reports to management at these levels also. Some companies are trying to standardize reporting to management by requiring the top three levels of the WBS to be the same for every project, the only differences being in levels 4–6. For companies with a great deal of similarity among projects, this approach has merit. For most companies, however, the differences between projects make it almost impossible to standardize the top levels of the WBS. Work Breakdown Structure 399 The work package is the critical level for managing a work breakdown structure, as shown in Figure 11–3. However, it is possible that the actual management of the work packages is supervised and performed by the line managers with status reporting provided to the project manager at higher levels of the WBS. Work packages are natural subdivisions of cost accounts and constitute the basic building blocks used by the contractor in planning, controlling, and measuring contract performance. A work package is simply a low-level task or job assignment. It describes the work to be accomplished by a specific performing organization or a group of cost centers and serves as a vehicle for monitoring and reporting progress of work. Documents that authorize and assign work to a performing organization are designated by various names throughout industry. “Work package” is the generic term used in the criteria to identify discrete tasks that have definable end results. Ideal work packages are 80 hours and 2–4 weeks. However, this may not be possible on large projects. It is not necessary that work package documentation contain complete, stand-alone descriptions. Supplemental documentation may augment the work package descriptions. However, the work package descriptions must permit cost account managers and work package supervisors to understand and clearly distinguish one work package effort from another. In the review of work package documentation, it may be necessary to obtain explanations from personnel routinely involved in the work, rather than requiring the work package descriptions to be completely self-explanatory. Short-term work packages may help evaluate accomplishments. Work packages should be natural subdivisions of effort planned according to the way the work will be done. However, when work packages are relatively short, little or no assessment of workin-process is required and the evaluation of status is possible mainly on the basis of work package completions. The longer the work packages, the more difficult and subjective the work-in-process assessment becomes unless the packages are subdivided by objective indicators such as discrete milestones with preassigned budget values or completion percentages. In setting up the work breakdown structure, tasks should: ● ● ● ● Have clearly defined start and end dates Be usable as a communications tool in which results can be compared with expectations Be estimated on a “total” time duration, not when the task must start or end Be structured so that a minimum of project office control and documentation (i.e., forms) is necessary For large projects, planning will be time phased at the work package level of the WBS. The work package has the following characteristics: ● ● ● Represents units of work at the level where the work is performed Clearly distinguishes one work package from all others assigned to a single functional group Contains clearly defined start and end dates that are representative of physical accomplishment COMPANY FIGURE 11–3. MFG ENGINEERING TEST The cost account intersection. VERIFICATION VALIDATION MECHANICAL DESIGN COST ACCOUNT COST ACCOUNT COST ACCOUNT COST ACCOUNT COST ACCOUNT MODULE B MODULE A LEVEL 4 COST ACCOUNT MANUFACTURING SUBSYSTEM HARDWARE ENGINEERING SUBSYSTEM TRAINING PROGRAM LEVEL 3 LEVEL 2 LEVEL 1 ELECTRICAL DESIGN FUNCTIONAL ORGANIZATION DESIGN 400 MODULE D WORK PACKAGES MODULE C COMPONENT TESTING 401 Work Breakdown Structure ● ● Specifies a budget in terms of dollars, man-hours, or other measurable units Limits the work to be performed to relatively short periods of time to minimize the work-in-process effort Table 11–2 shows a simple work breakdown structure with the associated numbering system following the work breakdown. The first number represents the total program (in this case, it is represented by 01), the second number represents the project, and the third number identifies the task. Therefore, number 01-03-00 represents project 3 of program 01, whereas 01-03-02 represents task 2 of project 3. This type of numbering system is not standard; each company may have its own system, depending on how costs are to be controlled. The preparation of the work breakdown structure is not easy. The WBS is a communications tool, providing detailed information to different levels of management. If it does not contain enough levels, then the integration of activities may prove difficult. If too many levels exist, then unproductive time will be made to have the same number of levels for all projects, tasks, and so on. Each major work element should be considered by itself. Remember, the WBS establishes the number of required networks for cost control. For many programs, the work breakdown structure is established by the customer. If the contractor is required to develop a WBS, then certain guidelines must be considered including: ● ● ● ● ● ● The complexity and technical requirements of the program (i.e., the statement of work) The program cost The time span of the program The contractor’s resource requirements The contractor’s and customer’s internal structure for management control and reporting The number of subcontracts TABLE 11–2. WORK BREAKDOWN STRUCTURE FOR NEW PLANT CONSTRUCTION AND START-UP Program: New Plant Construction and Start-up Project 1: Analytical Study Task 1: Marketing/Production Study Task 2: Cost Effectiveness Analysis Project 2: Design and Layout Task 1: Product Processing Sketches Task 2: Product Processing Blueprints Project 3: Installation Task 1: Fabrication Task 2: Setup Task 3: Testing and Run Project 4: Program Support Task 1: Management Task 2: Purchasing Raw Materials 01-00-00 01-01-00 01-01-01 01-01-02 01-02-00 01-02-01 01-02-02 01-03-00 01-03-01 01-03-02 01-03-03 01-04-00 01-04-01 01-04-02 402 PLANNING Applying these guidelines serves only to identify the complexity of the program. These data must then be subdivided and released, together with detailed information, to the different levels of the organization. The WBS should follow specified criteria because, although preparation of the WBS is performed by the program office, the actual work is performed by the doers, not the planners. Both the doers and the planners must be in agreement as to what is expected. A sample listing of criteria for developing a work breakdown structure is shown below: ● ● ● ● ● ● ● ● The WBS and work description should be easy to understand. All schedules should follow the WBS. No attempt should be made to subdivide work arbitrarily to the lowest possible level. The lowest level of work should not end up having a ridiculous cost in comparison to other efforts. Since scope of effort can change during a program, every effort should be made to maintain flexibility in the WBS. The WBS can act as a list of discrete and tangible milestones so that everyone will know when the milestones were achieved. The level of the WBS can reflect the “trust” you have in certain line groups. The WBS can be used to segregate recurring from nonrecurring costs. Most WBS elements (at the lowest control level) range from 0.5 to 2.5 percent of the total project budget. 11.10 WBS DECOMPOSITION PROBLEMS There is a common misconception that WBS decomposition is an easy task to perform. In the development of the WBS, the top three levels or management levels are usually roll-up levels. Preparing templates at these levels is becoming common practice. However, at levels 4–6 of the WBS, templates may not be appropriate. There are reasons for this. ● ● ● Breaking the work down to extremely small and detailed work packages may require the creation of hundreds or even thousands of cost accounts and charge numbers. This could increase the management, control, and reporting costs of these small packages to a point where the costs exceed the benefits. Although a typical work package may be 200–300 hours and approximately two weeks in duration, consider the impact on a large project, which may have more than one million direct labor hours. Breaking the work down to small work packages can provide accurate cost control if, and only if, the line managers can determine the costs at this level of detail. Line managers must be given the right to tell project managers that costs cannot be determined at the requested level of detail. The work breakdown structure is the basis for scheduling techniques such as the Arrow Diagramming Method and the Precedence Diagramming Method. At low levels of the WBS, the interdependencies between activities can become so complex that meaningful networks cannot be constructed. WBS Decomposition Problems 403 One solution to the above problems is to create “hammock” activities, which encompass several activities where exact cost identification cannot or may not be accurately determined. Some projects identify a “hammock” activity called management support (or project office), which includes overall project management, data items, management reserve, and possibly procurement. The advantage of this type of hammock activity is that the charge numbers are under the direct control of the project manager. There is a common misconception that the typical dimensions of a work package are approximately 80 hours and less than two weeks to a month. Although this may be true on small projects, this would necessitate millions of work packages on large jobs and this may be impractical, even if line managers could control work packages of this size. From a cost control point of view, cost analysis down to the fifth level is advantageous. However, it should be noted that the cost required to prepare cost analysis data to each lower level may increase exponentially, especially if the customer requires data to be presented in a specified format that is not part of the company’s standard operating procedures. The level-5 work packages are normally for in-house control only. Some companies bill customers separately for each level of cost reporting below level 3. The WBS can be subdivided into subobjectives with finer divisions of effort as we go lower into the WBS. By defining subobjectives, we add greater understanding and, it is hoped, clarity of action for those individuals who will be required to complete the objectives. Whenever work is structured, understood, easily identifiable, and within the capabilities of the individuals, there will almost always exist a high degree of confidence that the objective can be reached. Work breakdown structures can be used to structure work for reaching such objectives as lowering cost, reducing absenteeism, improving morale, and lowering scrap factors. The lowest subdivision now becomes an end-item or subobjective, not necessarily a work package as described here. However, since we are describing project management, for the remainder of the text we will consider the lowest level as the work package. Once the WBS is established and the program is “kicked off,” it becomes a very costly procedure to either add or delete activities, or change levels of reporting because of cost control. Many companies do not give careful forethought to the importance of a properly developed WBS, and ultimately they risk cost control problems downstream. One important use of the WBS is that it serves as a cost control standard for any future activities that may follow on or may just be similar. One common mistake made by management is the combining of direct support activities with administrative activities. For example, the department manager for manufacturing engineering may be required to provide administrative support (possibly by attending team meetings) throughout the duration of the program. If the administrative support is spread out over each of the projects, a false picture is obtained as to the actual hours needed to accomplish each project in the program. If one of the projects should be canceled, then the support man-hours for the total program would be reduced when, in fact, the administrative and support functions may be constant, regardless of the number of projects and tasks. Quite often work breakdown structures accompanying customer RFPs contain much more scope of effort, as specified by the statement of work, than the existing funding will support. This is done intentionally by the customer in hopes that a contractor may be willing to “buy in.” If the contractor’s price exceeds the customer’s funding limitations, then 404 PLANNING the scope of effort must be reduced by eliminating activities from the WBS. By developing a separate project for administrative and indirect support activities, the customer can easily modify his costs by eliminating the direct support activities of the canceled effort. Before we go on, there should be a brief discussion of the usefulness and applicability of the WBS system. Many companies and industries have been successful in managing programs without the use of work breakdown structures, especially on repetitive-type programs. As was the case with the SOW, there are also preparation guides for the WBS5: ● ● ● ● ● ● Develop the WBS structure by subdividing the total effort into discrete and logical subelements. Usually a program subdivides into projects, major systems, major subsystems, and various lower levels until a manageable-size element level is reached. Wide variations may occur, depending upon the type of effort (e.g., major systems development, support services, etc.). Include more than one cost center and more than one contractor if this reflects the actual situation. Check the proposed WBS and the contemplated efforts for completeness, compatibility, and continuity. Determine that the WBS satisfies both functional (engineering/manufacturing/test) and program/project (hardware, services, etc.) requirements, including recurring and nonrecurring costs. Check to determine if the WBS provides for logical subdivision of all project work. Establish assignment of responsibilities for all identified effort to specific organizations. Check the proposed WBS against the reporting requirements of the organizations involved. There are also checklists that can be used in the preparation of the WBS6: ● ● ● ● ● Develop a preliminary WBS to not lower than the top three levels for solicitation purposes (or lower if deemed necessary for some special reason). Assure that the contractor is required to extend the preliminary WBS in response to the solicitation, to identify and structure all contractor work to be compatible with his organization and management system. Following negotiations, the CWBS included in the contract should not normally extend lower than the third level. Assure that the negotiated CWBS structure is compatible with reporting requirements. Assure that the negotiated CWBS is compatible with the contractor’s organization and management system. 5. Source: Handbook for Preparation of Work Breakdown Structures, NHB5610.1, National Aeronautics and Space Administration, February 1975. 6. See note 5. 405 WBS Decomposition Problems ● Review the CWBS elements to ensure correlation with: The specification tree Contract line items End-items of the contract Data items required Work statement tasks Configuration management requirements Define CWBS elements down to the level where such definitions are meaningful and necessary for management purposes (WBS dictionary). Specify reporting requirements for selected CWBS elements if variations from standard reporting requirements are desired. Assure that the CWBS covers measurable effort, level of effort, apportioned effort, and subcontracts, if applicable. Assure that the total costs at a particular level will equal the sum of the costs of the constituent elements at the next lower level. ● ● ● ● ● ● ● ● ● ● On simple projects, the WBS can be constructed as a “tree diagram” (see Figure 11–4) or according to the logic flow. In Figure 11–4, the tree diagram can follow the work or even the organizational structure of the company (i.e., division, department, section, unit). The second method is to create a logic flow (see Figure 12–21) and cluster certain elements to represent tasks and projects. In the tree method, lower-level functional units may be assigned to one, and only one, work element, whereas in the logic flow method the lowerlevel functional units may serve several WBS elements. LEVELS NEW CAR DESIGN BRAKES PROGRAM STRUCTURE ENGINE INTERIOR PROJECT CHEMICAL MECHANICAL ELECTRICAL FIGURE 11–4. WBS tree diagram. TASK 406 PLANNING A tendency exists to develop guidelines, policies, and procedures for project management, but not for the development of the WBS. Some companies have been marginally successful in developing a “generic” methodology for levels 1, 2, and 3 of the WBS to use on all projects. The differences appear in levels 4, 5, and 6. The table below shows the three most common methods for structuring the WBS: Method Level Flow Life Cycle Organization Program Project Task Subtask Work package Level of effort Program System Subsystem People People People Program Life cycle System Subsystem People People Program Division Department Section People People The flow method breaks the work down into systems and major subsystems. This method is well suited for projects less than two years in length. For longer projects, we use the life-cycle method, which is similar to the flow method. The organization method is used for projects that may be repetitive or require very little integration between functional units. 11.11 ROLE OF THE EXECUTIVE IN PROJECT SELECTION A prime responsibility of senior management (and possibly project sponsors) is the selection of projects. Most organizations have an established selection criteria, which can be subjective, objective, quantitative, qualitative, or simply a seat-of-the-pants guess. In any event, there should be a valid reason for selecting the project. From a financial perspective, project selection is basically a two-part process. First, the organization will conduct a feasibility study to determine whether the project can be done. The second part is to perform a benefit-to-cost analysis to see whether the company should do it. The purpose of the feasibility study is to validate that the project meets feasibility of cost, technological, safety, marketability, and ease of execution requirements. The company may use outside consultants or subject matter experts (SMEs) to assist in both feasibility studies and benefit-to-cost analyses. A project manager may not be assigned until after the feasibility study is completed. As part of the feasibility process during project selection, senior management often solicits input from SMEs and lower-level managers through rating models. The rating models normally identify the business and/or technical criteria against which the ratings will be made. Figure 11–5 shows a scaling model for a single project. Figure 11–6 shows SCALE TOP MANAGEMENT CRITERIA –2 –1 0 +1 +2 5 3 2 7 7 CAPITAL REQUIREMENTS COMPETITIVE REACTION RETURN ON INVESTMENT PAYOUT TIME WALL STREET IMPACTS ENGINEERING REQUIRED EQUIPMENT AVAILABILITY OF PERSONNEL KNOW-HOW DESIGN DIFFICULTY EQUIPMENT AVAILABILITY PIPING LAYOUTS RESEARCH PATENTABILITY LIKELIHOOD OF SUCCESS KNOW-HOW PROJECT COSTS AVAILABILITY OF PERSONNEL AVAILABILITY OF LABORATORY MARKETING LENGTH OF PRODUCT LIFE PRODUCT ADVANTAGE SUITABILITY TO SALESFORCE SIZE OF MARKET PRODUCTION NUMBER OF COMPETITORS PROCESSABILITY KNOW-HOW EQUIPMENT AVAILABILITY NUMBER OF XS KEY: +2 = EXCELLENT +1 = GOOD 0 = FAIR –1 = BAD –2 = UNACCEPTABLE = NOT APPLICABLE = SCORE FOR PROJECT A Illustration of a scaling model for one project, Project A. Source: William E. Souder, Project Selection and Economic Appraisal, p. 66. FIGURE 11–5. 407 408 PLANNING MARKETABILITY PROFITABILITY PROJECTS 3 2 SUCCESS LIKELIHOOD CRITERIA 1 3 2 1 3 2 1 TOTAL SCORE PROJECT A 7 PROJECT B 6 PROJECT C 3 FIGURE 11–6. Illustration of a checklist for three projects. Source: William Souder, Project Selection and Economic Appraisal, p. 68. a checklist rating system to evaluate three projects at once. Figure 11–7 shows a scoring model for multiple projects using weighted averages. If the project is deemed feasible and a good fit with the strategic plan, then the project is prioritized for development along with other projects. Once feasibility is determined, a benefit-to-cost analysis is performed to validate that the project will, if executed correctly, provide the required financial and nonfinancial benefits. Benefit-to-cost analyses require significantly more information to be scrutinized than is usually available during a feasibility study. This can be an expensive proposition. Estimating benefits and costs in a timely manner is very difficult. Benefits are often defined as: ● ● Tangible benefits for which dollars may be reasonably quantified and measured. Intangible benefits that may be quantified in units other than dollars or may be identified and described subjectively. Costs are significantly more difficult to quantify. The minimum costs that must be determined are those that specifically are used for comparison to the benefits. These include: 409 PROFITABILITY PATENTABILITY MARKETABILITY PRODUCEABILITY Role of the Executive in Project Selection 4 3 2 1 CRITERIA CRITERION WEIGHTS PROJECTS TOTAL WEIGHTED SCORE CRITERION SCORES* PROJECT D 10 6 4 3 69 PROJECT E 5 10 10 5 75 PROJECT F 3 7 10 10 63 TOTAL WEIGHTED SCORE = ⌺ (CRITERION SCORE X CRITERION WEIGHT) *SCALE: 10 = EXCELLENT; 1 = UNACCEPTABLE FIGURE 11–7. Illustration of a scoring model. Source: William Souder, Project Selection and Economic Appraisal, p. 69. ● ● ● The current operating costs or the cost of operating in today’s circumstances. Future period costs that are expected and can be planned for. Intangible costs that may be difficult to quantify. These costs are often omitted if quantification would contribute little to the decision-making process. There must be careful documentation of all known constraints and assumptions that were made in developing the costs and the benefits. Unrealistic or unrecognized assumptions 410 PLANNING TABLE 11–3. FEASIBILITY STUDY AND BENEFIT-COST ANALYSIS Basic Question Life-Cycle Phase PM Selected Analysis Critical Factors for Go/No-Go Executive Decision Criteria Feasibility Study Benefit-Cost Analysis Can We Do It? Preconceptual Usually not yet Qualitative • Technical • Cost • Quality • Safety • Ease of performance • Economical • Legal Strategic fit Should We Do It? Conceptual Usually identified but partial involvement Quantitative • Net present value • Discounted cash flow • Internal rate of return • Return on investment • Probability of success • Reality of assumptions and constraints • Benefits exceed costs by required margin are often the cause of unrealistic benefits. The go or no-go decision to continue with a project could very well rest upon the validity of the assumptions. Table 11–3 shows the major differences between feasibility studies and benefit-to-cost analyses. 11.12 ROLE OF THE EXECUTIVE IN PLANNING Executives are responsible for selecting the project manager, and the person chosen should have planning expertise. Not all technical specialists are good planners. As Rogers points out7: The technical planners, whether they are engineers or systems analysts, must be experts at designing the system, but seldom do they recognize the need to “put on another hat” when system design specifications are completed and design the project control or implementation plan. If this is not done, setting a project completion target date of a set of management checkpoint milestones is done by guesswork at best. Management will set the checkpoint milestones, and the technical planners will hope they can meet the schedule. Executives must not arbitrarily set unrealistic milestones and then “force” line managers to fulfill them. Both project and line managers should try to adhere to unrealistic milestones, but if a line manager says he cannot, executives should comply because the line manager is supposedly the expert. 7. Lloyd A. Rogers, “Guidelines for Project Management Teams,” Industrial Engineering, December 12, 1974. Published and copyright 1974 by the Institute of Industrial Engineers, 25 Technology Park, Norcross, GA 30092. 411 The Planning Cycle Executives should interface with project and line personnel during the planning stage in order to define the requirements and establish reasonable deadlines. Executives must realize that creating an unreasonable deadline may require the reestablishment of priorities, and, of course, changing priorities can push milestones backward. 11.13 THE PLANNING CYCLE Previously, we stated that perhaps the most important reason for structuring projects into life-cycle phases is to provide management with control of the critical decision points in order to: ● ● ● ● Avoid commitment of major resources too early Preserve future options Maximize benefits of each project in relation to all other projects Assess risks On long-term projects, phasing can be overdone, resulting in extra costs and delays. To prevent this, many project-driven companies resort to other types of systems, such as a management cost and control system (MCCS). No program or project can be efficiently organized and managed without some form of management cost and control system. Figure 11–8 shows the five phases of a management cost and control system. The first phase constitutes the planning cycle, and the next four phases identify the operating cycle. Figure 11–9 shows the activities included in the planning cycle. The work breakdown structure serves as the initial control from which all planning emanates. The WBS acts as a vital artery for communications and operations in all phases. A comprehensive analysis of management cost and control systems is presented in Chapter 15. PLANNING WORK AUTHORIZATION AND RELEASE PHASE I PHASE II PLANNING CYCLE FIGURE 11–8. COST DATA COLLATION AND REPORTING PHASE III COST ACCOUNTING PHASE IV OPERATING CYCLE Phases of a management cost and control system. CUSTOMER AND REPORTING PHASE V 412 PLANNING MCCS PHASES WORK BREAKDOWN STRUCTURE I II III IV V WORK PLANNING AUTHORIZATION MASTER PRODUCTION SCHEDULE DETAILED SCHEDULE PROGRAM PLAN MCCS BUDGET FIGURE 11–9. The planning cycle of a management cost and control system. 11.14 WORK PLANNING AUTHORIZATION After receipt of a contract, some form of authorization is needed before work can begin, even in the planning stage. Both work authorization and work planning authorization are used to release funds, but for different purposes. Work planning authorization releases funds (primarily for functional management) so that scheduling, costs, budgets, and all other types of plans can be prepared prior to the release of operational cycle funds, which hereafter shall be referred to simply as work authorization. Both forms of authorization require the same paperwork. In many companies this work authorization is identified as a subdivided work description (SWD), which is a narrative description of the effort to be performed by the cost center (division-level minimum). This package establishes the work to be performed, the period of performance, and possibly the maximum number of hours available. The SWD is multipurpose in that it can be used to release contract funds, authorize planning, describe activities as identified in the WBS, and, last but not least, release work. The SWD is one of the key elements in the planning of a program as shown in Figure 11–9. Contract control and administration releases the contract funds by issuing a SWD, which sets forth general contractual requirements and authorizes program management to proceed. Program management issues the SWD to set forth the contractual guidelines and requirements for the functional units. The SWD specifies how the work will be performed, which functional organizations will be involved, and who has what specific responsibilities, and authorizes the utilization of resources within a given time period. 413 Why Do Plans Fail? The SWD authorizes both the program team and functional management to begin work. As shown in Figure 11–9, the SWD provides direct input to Phase II of the MCCS. Phase I and Phase II can and do operate simultaneously because it is generally impossible for program office personnel to establish plans, procedures, and schedules without input from the functional units. The subdivided work description package is used by the operating organizations to further subdivide the effort defined by the WBS into small segments or work packages. Many people contend that if the data in the work authorization document are different from what was originally defined in the proposal, the project is in trouble right at the start. This may not be the case, because most projects are priced out assuming “unlimited” resources, whereas the hours and dollars in the work authorization document are based upon “limited” resources. This situation is common for companies that thrive on competitive bidding. 11.15 WHY DO PLANS FAIL? No matter how hard we try, planning is not perfect, and sometimes plans fail. Typical reasons include: ● ● ● ● ● ● ● ● ● ● ● ● ● ● Corporate goals are not understood at the lower organizational levels. Plans encompass too much in too little time. Financial estimates are poor. Plans are based on insufficient data. No attempt is being made to systematize the planning process. Planning is performed by a planning group. No one knows the ultimate objective. No one knows the staffing requirements. No one knows the major milestone dates, including written reports. Project estimates are best guesses, and are not based on standards or history. Not enough time has been given for proper estimating. No one has bothered to see if there will be personnel available with the necessary skills. People are not working toward the same specifications. People are consistently shuffled in and out of the project with little regard for schedule. Why do these situations occur? If corporate goals are not understood, it is because corporate executives have been negligent in providing the necessary strategic information and feedback. If a plan fails because of extreme optimism, then the responsibility lies with both the project and line managers for not assessing risk. Project managers should ask the line managers if the estimates are optimistic or pessimistic, and expect an honest answer. Erroneous financial estimates are the responsibility of the line manager. If the project fails 414 PLANNING because of a poor definition of the requirements, then the project manager is totally at fault. Sometimes project plans fail because simple details are forgotten or overlooked. Examples of this might be: ● ● Neglecting to tell a line manager early enough that the prototype is not ready and that rescheduling is necessary. Neglecting to see if the line manager can still provide additional employees for the next two weeks because it was possible to do so six months ago. Sometimes plans fail because the project manager “bites off more than he can chew,” and then something happens, such as his becoming ill. Many projects have failed because the project manager was the only one who knew what was going on and then got sick. 11.16 STOPPING PROJECTS There are always situations in which projects have to be stopped. Nine reasons for stopping are: ● ● ● ● ● ● ● ● ● Final achievement of the objectives Poor initial planning and market prognosis A better alternative is found A change in the company interest and strategy Allocated time is exceeded Budgeted costs are exceeded Key people leave the organization Personal whims of management Problem too complex for the resources available Today most of the reasons why projects are not completed on time and within cost are behavioral rather than quantitative. They include: ● ● ● ● Poor morale Poor human relations Poor labor productivity No commitment by those involved in the project The last item appears to be the cause of the first three items in many situations. Once the reasons for cancellation are defined, the next problem concerns how to stop the project. Some of the ways are: ● ● ● Orderly planned termination The “hatchet” (withdrawal of funds and removal of personnel) Reassignment of people to higher priority tasks Handling Project Phaseouts and Transfers ● ● 415 Redirection of efforts toward different objectives Burying it or letting it die on the vine (i.e., not taking any official action) There are three major problem areas to be considered in stopping projects: ● ● ● Worker morale Reassignment of personnel Adequate documentation and wrap-up 11.17 HANDLING PROJECT PHASEOUTS AND TRANSFERS By definition, projects have an end point. Closing out is a very important phase in the project life cycle, which should follow particular disciplines and procedures with the objective of: ● ● ● ● ● Effectively bringing the project to closure according to agreed-on contractual requirements Preparing for the transition of the project into the next operational phase, such as from production to field installation, field operation, or training Analyzing overall project performance with regard to financial data, schedules, and technical efforts Closing the project office, and transferring or selling off all resources originally assigned to the project, including personnel Identifying and pursuing follow-on business Although most project managers are completely cognizant of the necessity for proper planning for project start-up, many project managers neglect planning for project termination. Planning for project termination includes: ● ● ● ● ● ● ● ● Transferring responsibility Completion of project records ● Historic reports ● Postproject analysis Documenting results to reflect “as built” product or installation Acceptance by sponsor/user Satisfying contractual requirements Releasing resources ● Reassignment of project office team members ● Disposition of functional personnel ● Disposition of materials Closing out work orders (financial closeout) Preparing for financial payments 416 PLANNING Project success or failure often depends on management’s ability to handle personnel issues properly during this final phase. If job assignments beyond the current project look undesirable or uncertain to project team members, a great deal of anxiety and conflict may develop that diverts needed energy to job hunting, foot dragging, or even sabotage. Project personnel may engage in job searches on their own and may leave the project prematurely. This creates a glaring void that is often difficult to patch. Given business realities, it is difficult to transfer project personnel under ideal conditions. The following suggestions may increase organizational effectiveness and minimize personal stress when closing out a project: ● ● ● ● ● ● ● ● ● ● Carefully plan the project closeout on the part of both project and functional managers. Use a checklist to prepare the plan. Establish a simple project closeout procedure that identifies the major steps and responsibilities. Treat the closeout phase like any other project, with clearly delineated tasks, agreed-on responsibilities, schedules, budgets, and deliverable items or results. Understand the interaction of behavioral and organizational elements in order to build an environment conducive to teamwork during this final project phase. Emphasize the overall goals, applications, and utilities of the project as well as its business impact. Secure top-management involvement and support. Be aware of conflict, fatigue, shifting priorities, and technical or logistic problems. Try to identify and deal with these problems when they start to develop. Communicating progress through regularly scheduled status meetings is the key to managing these problems. Keep project personnel informed of upcoming job opportunities. Resource managers should discuss and negotiate new assignments with personnel and involve people already in the next project. Be aware of rumors. If a reorganization or layoff is inevitable, the situation should be described in a professional manner or people will assume the worst. Assign a contract administrator dedicated to company-oriented projects. He will protect your financial position and business interests by following through on customer sign-offs and final payment. 11.18 DETAILED SCHEDULES AND CHARTS The scheduling of activities is the first major requirement of the program office after program go-ahead. The program office normally assumes full responsibility for activity scheduling if the activity is not too complex. For large programs, functional management input is required before scheduling can be completed. Depending on program size and contractual requirements, the program office may have a staff member whose sole responsibility is to continuously develop and update activity schedules to track program work. The resulting information is supplied to program office personnel, functional management, team members, and the customer. Detailed Schedules and Charts 417 Activity scheduling is probably the single most important tool for determining how company resources should be integrated. Activity schedules are invaluable for projecting time-phased resource utilization requirements, providing a basis for visually tracking performance and estimating costs. The schedules serve as master plans from which both the customer and management have an up-to-date picture of operations. Certain guidelines should be followed in the preparation of schedules, regardless of the projected use or complexity: ● ● ● ● All major events and dates must be clearly identified. If a statement of work is supplied by the customer, those dates shown on the accompanying schedules must be included. If for any reason the customer’s milestone dates cannot be met, the customer should be notified immediately. The exact sequence of work should be defined through a network in which interrelationships between events can be identified. Schedules should be directly relatable to the work breakdown structure. If the WBS is developed according to a specific sequence of work, then it becomes an easy task to identify work sequences in schedules using the same numbering system as in the WBS. The minimum requirement should be to show where and when all tasks start and finish. All schedules must identify the time constraints and, if possible, should identify those resources required for each event. Although these four guidelines relate to schedule preparation, they do not define how complex the schedules should be. Before preparing schedules, three questions should be considered: ● ● ● How many events or activities should each network have? How much of a detailed technical breakdown should be included? Who is the intended audience for this schedule? Most organizations develop multiple schedules: summary schedules for management and planners and detailed schedules for the doers and lower-level control. The detailed schedules may be strictly for interdepartmental activities. Program management must approve all schedules down through the first three levels of the work breakdown structure. For lower-level schedules (i.e., detailed interdepartmental), program management may or may not request a sign of approval. One of the most difficult problems to identify in schedules is a hedge position. A hedge position is a situation in which the contractor may not be able to meet a customer’s milestone date without incurring a risk, or may not be able to meet activity requirements following a milestone date because of contractual requirements. To illustrate a common hedge position, consider Example 11–1 below. Example 11–1. Condor Corporation is currently working on a project that has three phases: design, development, and qualification of a certain component. Contractual requirements with the customer specify that no components will be fabricated for the development phase until the design review meeting is held following the design phase. Condor 418 PLANNING has determined that if it does not begin component fabrication prior to the design review meeting, then the second and third phases will slip. Condor is willing to accept the risk that should specifications be unacceptable during the design review meeting, the costs associated with preauthorization of fabrication will be incurred. How should this be shown on a schedule? (The problems associated with performing unauthorized work are not being considered here.) The solution is not easy. Condor must show on the master production schedule that component fabrication will begin early, at the contractor’s risk. This should be followed up by a contractual letter in which both the customer and contractor understand the risks and implications. Detailed schedules are prepared for almost every activity. It is the responsibility of the program office to marry all of the detailed schedules into one master schedule to verify that all activities can be completed as planned. The preparation sequence for schedules (and also for program plans) is shown in Figure 11–10. The program office submits a request for detailed schedules to the functional managers and the functional managers prepare summary schedules, detailed schedules, and, if time permits, interdepartmental schedules. Each functional manager then reviews his schedules with the program office. The program office, together with the functional program team members, integrates all of the plans and schedules and verifies that all contractual dates can be met. Before the schedules are submitted to publications, rough drafts of each schedule and plan should be reviewed with the customer. This procedure accomplishes the following: ● ● ● Verifies that nothing has fallen through the cracks Prevents immediate revisions to a published document and can prevent embarrassing moments Minimizes production costs by reducing the number of early revisions CONTRACTOR PROGRAM OFFICE 4 INDIVIDUAL REVIEWS 1 REQUEST FOR DETAILED SCHEDULES AND PLANS (LEVEL 3) 6 VERIFICATION PROGRAM TEAM REVIEW FUNCTIONAL MANAGEMENT SUPERVISE PREPARATION 2 5 PROGRAM TEAM MEMBERS VERIFY THAT ALL FUNCTIONAL PLANS ARE INTEGRATED 7 ROUGH DRAFTS 8 FINALIZE PLANS/ SCHEDULES CUSTOMER PROGRAM OFFICE 9 CUSTOMER REVIEW 3 FUNCTIONAL MANAGEMENT REVIEW PUBLICATIONS DEPARTMENT/SECTION LEVEL PREPARE PLANS FIGURE 11–10. 10 DISTRIBUTION Preparation sequence for schedules and program plans. Master Production Scheduling ● 419 Shows customers early in the program that you welcome their help and input into the planning phase After the document is published, it should be distributed to all program office personnel, functional team members, functional management, and the customer. Examples of detailed schedules are shown in Chapter 13. In addition to the detailed schedules, the program office, with input provided by functional management, must develop organization charts. The charts show who has responsibility for each activity and display the formal (and often the informal) lines of communication. Examples were shown in Section 4.11. The program office may also establish linear responsibility charts (LRCs). In spite of the best attempts by management, many functions in an organization may overlap between functional units. Also, management might wish to have the responsibility for a certain activity given to a functional unit that normally would not have that responsibility. This is a common occurrence on short-duration programs where management desires to cut costs and red tape. Project personnel should keep in mind why the schedule was developed. The primary objective is usually to coordinate activities to complete the project with the: ● ● ● Best time Least cost Least risk There are also secondary objectives of scheduling: ● ● ● ● ● ● ● Studying alternatives Developing an optimal schedule Using resources effectively Communicating Refining the estimating criteria Obtaining good project control Providing for easy revisions 11.19 MASTER PRODUCTION SCHEDULING The release of the planning SWD, as shown in Figure 11–9, authorizes the manufacturing units to prepare a master production schedule from which detailed analysis of the utilization of company resources can be seen and tracked. Master production scheduling is not a new concept. Earliest material control systems used a “quarterly ordering system” to produce a master production schedule (MPS) for plant production. This system uses customer order backlogs to develop a production plan over a three-month period. The production plan is then exploded manually to determine what parts must be purchased or manufactured at the proper time. However, rapidly changing customer 420 PLANNING MARKETING MARKETING AND CUSTOMER WORK TOGETHER TO IDENTIFY THE MAJOR MILESTONES FIGURE 11–11. MASTER PROJECT SCHEDULE MASTER PRODUCTION SCHEDULE MATERIAL REQUIREMENTS PLANNING SCHEDULE FUNCTIONAL GROUP (AND PROJECT OFFICE) PREPARE THE DETAIL SCHEDULES. MANUFACTURING PREPARES MASTER PRODUCTION SCHEDULE BASED UPON FACILITY, EQUIPMENT, MANPOWER AND MATERIAL AVAILABILITY MATERIAL REQUIREMENTS FOR PROJECT WILL UPDATE THE MAP SYSTEM Material requirements planning interrelationships. requirements and fluctuating lead times, combined with a slow response to these changes, can result in the disruption of master production scheduling.8 Master Production Schedule Definition A master production schedule is a statement of what will be made, how many units will be made, and when they will be made. It is a production plan, not a sales plan. The MPS considers the total demand on a plant’s resources, including finished product sales, spare (repair) part needs, and interplant needs. The MPS must also consider the capacity of the plant and the requirements imposed on vendors. Provisions are made in the overall plan for each manufacturing facility’s operation. All planning for materials, manpower, plant, equipment, and financing for the facility is driven by the master production schedule. Objectives of the MPS ● ● ● ● ● Objectives of master production scheduling are: To provide top management with a means to authorize and control manpower levels, inventory investment, and cash flow To coordinate marketing, manufacturing, engineering, and finance activities by a common performance objective To reconcile marketing and manufacturing needs To provide an overall measure of performance To provide data for material and capacity planning The development of a master production schedule is a very important step in a planning cycle. Master production schedules directly tie together personnel, materials, equipment, and facilities, as shown in Figure 11–11. Master production schedules also identify key dates to the customer, should he wish to visit the contractor during specific operational periods. 8. The master production schedule is being discussed here because of its importance in the planning cycle. The MPS cannot be fully utilized without effective inventory control procedures. 421 Program Plan 11.20 PROGRAM PLAN A program plan is fundamental to the success of any project. For large and often complex programs, customers may require a program plan that documents all activities within the program. The program plan then serves as a guideline for the lifetime of the program and may be revised as often as once a month, depending on the circumstances and the type of program (i.e., research and development programs require more revisions to the program plan than manufacturing or construction programs). The program plan provides the following framework: ● ● ● ● ● ● ● Eliminates conflicts between functional managers Eliminates conflicts between functional management and program management Provides a standard communications tool throughout the lifetime of the program (It should be geared to the work breakdown structure) Provides verification that the contractor understands the customer’s objectives and requirements Provides a means for identifying inconsistencies in the planning phase Provides a means for early identification of problem areas and risks so that no surprises occur downstream Contains all of the schedules defined in Section 11.18 as a basis for progress analysis and reporting Development of a program plan can be time-consuming and costly. All levels of the organization participate. The upper levels provide summary information, and the lower levels provide the details. The program plan, like activity schedules, does not preclude departments from developing their own plans. The program plan must identify how the company resources will be integrated. The process is similar to the sequence of events for schedule preparation, shown in Figure 11–10. Since the program plan must explain the events in Figure 11–10, additional iterations are required, which can cause changes in a program. This can be seen in Figure 11–12. The program plan is a standard from which performance can be measured by the customer and the program and functional managers. The plan serves as a cookbook by answering these questions for all personnel identified with the program: ● ● ● ● ● What will be accomplished? How will it be accomplished? Where will it be accomplished? When will it be accomplished? Why will it be accomplished? The answers to these questions force both the contractor and the customer to take a hard look at: ● ● Program requirements Program management 422 PLANNING OR K ST BR RU EA CT KD UR O E WN SO CI AL L GA LE CA L FORMULATE PLAN YES NO ARE RISKS TOO GREAT? YES ITERATIONS NO ARE SUFFICIENT RESOURCES AVAILABLE? NO YES ARE OBJECTIVES SATISFIED? NO YES FINALIZE PLANS FIGURE 11–12. ● ● ● ● ● Iterations for the planning process. Program schedules Facility requirements Logistic support Financial support Manpower and organization L OG I TI OL LI ECONOMIC SCHEDULES HAVE ASSUMPTIONS CHANGED? CA BU DG ET S ENVIRONMENTAL INPUT PO NS IO AT IC IF EC SP CUSTOMER INPUT TE CH N W T EN EM RK AT WO T S F O 423 Program Plan The program plan is more than just a set of instructions. It is an attempt to eliminate crisis by preventing anything from “falling through the cracks.” The plan is documented and approved by both the customer and the contractor to determine what data, if any, are missing and the probable resulting effect. As the program matures, the program plan is revised to account for new or missing data. The most common reasons for revising a plan are: ● ● ● “Crashing” activities to meet end dates Trade-off decisions involving manpower, scheduling, and performance Adjusting and leveling manpower requests The makeup of the program plan may vary from contractor to contractor.9 Most program plans can be subdivided into four main sections: introduction, summary and conclusions, management, and technical. The complexity of the information is usually up to the discretion of the contractor, provided that customer requirements, as may be specified in the statement of work, are satisfied. The introductory section contains the definition of the program and the major parts involved. If the program follows another, or is an outgrowth of similar activities, this is indicated, together with a brief summary of the background and history behind the project. The summary and conclusion section identifies the targets and objectives of the program and includes the necessary “lip service” on how successful the program will be and how all problems can be overcome. This section must also include the program master schedule showing how all projects and activities are related. The total program master schedule should include the following: ● ● ● ● An appropriate scheduling system (bar charts, milestone charts, network, etc.) A listing of activities at the project level or lower The possible interrelationships between activities (can be accomplished by logic networks, critical path networks, or PERT networks) Activity time estimates (a natural result of the item above) The summary and conclusion chapter is usually the second section in the program plan so that upper-level customer management can have a complete overview of the program without having to search through the technical information. The management section of the program plan contains procedures, charts, and schedules as follows: ● The assignment of key personnel to the program is indicated. This usually refers only to the program office personnel and team members, since under normal operations these will be the only individuals interfacing with customers. 9. Cleland and King define fourteen subsections for a program plan. This detail appears more applicable to the technical and management volumes of a proposal. They do, however, provide a more detailed picture than presented here. See David I. Cleland and William R. King, Systems Analysis and Project Management (New York: McGraw-Hill, 1975), pp. 371–380. 424 PLANNING ● ● Manpower, planning, and training are discussed to assure customers that qualified people will be available from the functional units. A linear responsibility chart might also be included to identify to customers the authority relationships that will exist in the program. Situations exist in which the management section may be omitted from the proposal. For a follow-up program, the customer may not require this section if management’s positions are unchanged. Management sections are also not required if the management information was previously provided in the proposal or if the customer and contractor have continuous business dealings. The technical section may include as much as 75 to 90 percent of the program plan, especially if the effort includes research and development, and may require constant updating as the program matures. The following items can be included as part of the technical section: ● ● ● ● ● A detailed breakdown of the charts and schedules used in the program master schedule, possibly including schedule/cost estimates. A listing of the testing to be accomplished for each activity. (It is best to include the exact testing matrices.) Procedures for accomplishment of the testing. This might also include a description of the key elements in the operations or manufacturing plans, as well as a listing of the facility and logistic requirements. Identification of materials and material specifications. (This might also include system specifications.) An attempt to identify the risks associated with