The Organizational Context:

Strategy, Structure, and Culture

Chapter 2

OUTLINES
Understand how effective project management
contributes to achieving strategic objectives
Recognize three components of the corporate
strategy model: formulation, implementation,
and evaluation.
See the importance of identifying critical project
stakeholders and managing them within the
context of project development

OUTLINES (Cont.)
Recognize the strengths and weaknesses of
three basic forms of organizational structure and
their implications for managing projects
Understand how companies can change their
structure into heavyweight project organization
structure to facilitate effective project
management practices
Identify the characteristics of three forms of
project management office (PMO)

OUTLINES (Cont.)
Understand key concepts of corporate culture
and how cultures are formed
Recognize the positive effects of a supportive
organizational culture on project management
practices versus those of a culture that works
against project management.

2-4

Introduction
Organizations strategy, structure and culture are integral
parts that create environment in which a project is to be
operated.

These parts provide the backdrop around which project

activities must operate, so understanding what is beneath
these issues is paramount.
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Projects and Organizational

Strategy

2-6

Projects and Organizational Strategy

Strategic management the science of
formulating, implementing and evaluating
cross-functional decisions that enable an
organization to achieve its objectives.
Consists of:

Developing vision and mission statements

Formulating, implementing and evaluating
Cross functional decisions
Achieving objectives

2-8

Projects Reflect Strategy

Projects are stepping stones of corporate strategy
The firms strategic development is a driving force
behind project development
Some examples include:
A firm wishing to

may have a project

redevelop products or processes

to reengineer products or
processes.

changes strategic direction or

product portfolio configuration

to create new product lines.

improve cross-organizational
communication & efficiency

to install an enterprise IT system.

Relationship of Strategic
Elements

Mission

Objectives

Fig 2.1

Strategy

Goals

Programs

2-11

Stakeholder Management

2-12

Stakeholder Management
Stakeholders are all individuals or groups who have
an active stake in the project and can potentially impact,
either positively or negatively, its development.
Sets of project stakeholders include:
Internal Stakeholders

External Stakeholders

Top management
Accountant
Other functional managers
Project team members

Clients
Competitors
Suppliers
Environmental, political,
consumer, and other
intervenor groups

Project Stakeholder Relationships

Other
Functional
Managers

External
Environ
ment

Project

Clients

Fig 2.3

Parent
Organiz
ation

Top
Manage
ment

Manager

Account
ant

Project
Team

External Stakeholders
Client
Concerned with the duration of receiving the project
Seek the right to make suggestions and request
alternations in project features
Result-oriented without overly involvement in project
running
Difficult to raise additional expenditure to client
May consist of a number of interest conflict clients
Communication must be done in business languages to
suit various clients.
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Competitors
Similar projects launched alter the project course of direction
Derive plausible lessons from competitor failures

Suppliers
Raw material or resources provider
Ensure supplier receives the input information
Ensure supplier delivers items accordingly

Intervenor groups
Environmental, political, social, community-activist, or consumer
groups.
Effects asserted either positive or negative
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Internal Stakeholders
Top management
Control over project managers
Giving the initial go decision, sanctions additional resource
transfers, supports and protects project managers.

Accounting
Support and actively monitor project budgets.

Functional managers
Project members individuals on loan from departments
Divided loyalties among team members
Performance evaluations are conducted by functional managers

Project team members

Motivation, commitment and productivity

2-17

Project Stakeholder
Management Cycle
Identify
Stakeholders
Implement
Stakeholder
Management
Strategy
Predict
Stakeholder
Behavior

Fig 2.4

Gather Information
on Stakeholders

Project
Management Team

Identify
Stakeholder
Strategy

Identify
Stakeholders
Mission
Determine
Stakeholder
Strengths &
Weaknesses

Organizational Structure

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Organizational Structure
Consists of three key elements:
1. Designates formal reporting relationships
number of levels in the hierarchy
span of control
2. Groupings of:
individuals into departments
departments into the total organization
3. Design of systems for
effective communication
coordination
integration across departments

Forms of Organization Structure

Functional organizations group people
performing similar activities into departments
Project organizations group people into
project teams on temporary assignments
Matrix organizations create a dual hierarchy in
which functions and projects have equal
prominence

Functional organizations group

people performing similar activities into
departments

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Functional Structures for Project

Management
Strengths

Weaknesses

1. Firms design maintained

1. Functional siloing

2. Fosters development of indepth knowledge

2. Lack of customer focus

3. Standard career paths

3. Projects may take longer

4. Project team members remain 4. Projects may be sub-optimized

connected with their functional
group

Functional Siloing Effect

Siloing occurs when similar people in a work
group are unwilling or unable to consider
alternative viewpoints, collaborate with other
groups or work in cross-functional ways.
Leads to interdepartmental arguments for
crashing of interests and priority.

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Project organizations group

people into project teams on
temporary assignments

2-25

Project Structures for Project

Management
Strengths

Weaknesses

1. Project manager sole authority 1. Expensive to set up and

maintain teams
2. Improved communication
3. Effective decision-making
4. Creation of project
management experts
5. Rapid response

2. Chance of loyalty to the

project rather than the firm
3. No pool of specific knowledge
4. Workers unassigned at project
end

Matrix organizations create a dual

hierarchy in which functions and

projects have equal prominence

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Matrix Structures for Project

Management
Strengths

Weaknesses

1. Suited to dynamic
environments

1. Dual hierarchies mean two

bosses

2. Equal emphasis on project

management and functional
efficiency

2. Negotiation required in order

to share resources

3. Promotes coordination across

functional units

3. Workers caught between

competing project & functional
demands

4. Maximizes scarce resources

Weak Matrix vs Strong Matrix

Weak matrix (functional matrix)
Functional departments maintain control over their
resources and are responsible for managing their
components of the project.
Project manager coordinator
Prepare schedules, update project status
Strong matrix (project matrix)
Control of project activities and functions
Assignment and control of project resources.
Functional manager consultative position.
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Heavyweight Project Organizations

Organizations can sometimes gain tremendous benefit
from creating a fully-dedicated project organization

Project manager authority expanded

Functional alignment abandoned in favor of market
opportunism
Focus on external customer

Project Management Offices

Centralized units that oversee or improve the
management of projects
Resource centers for:
Technical details
Expertise
Repository
Center for excellence

Forms of PMOs
Weather station monitoring and tracking
Control tower project management is a skill to
be protected and supported
Resource pool maintain and provide a cadre of
skilled project professionals

Organizational Culture

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Organizational Culture
The unwritten rules of behavior, or norms that are used to shape
and guide behavior, is shared by some subset of organization
members and is taught to all new members of the company.

Key factors that affect culture development

Technology
Environment
Geographical location
Reward systems
Rules and procedures
Key organizational members
Critical incidents

Culture Affects Project Management

Departmental interaction
Employee commitment to goals
Project planning
Performance evaluation