Chapter 2
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1.
2.
3.
4.
Understand how effective project management
contributes to achieving strategic objectives.
Recognize three components of the corporate
strategy model: formulation, implementation,
and evaluation.
See the importance of identifying critical
project stakeholders and managing them within
the context of project development.
Recognize the strengths and weaknesses of
three basic forms of organizational structure
and their implications for managing projects.
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5.
6.
7.
8.
Understand how companies can change their
structure into a “heavyweight project
organization” structure to facilitate effective
project management practices.
Identify the characteristics of three forms of
project management office (PMO).
Understand key concepts of corporate culture
and how cultures are formed.
Recognize the positive effects of a supportive
organizational culture on project management
practices versus those of a culture that works
against project management.
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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 business
opportunities
◦ Making cross functional decisions
◦ Achieving objectives
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Projects are stepping stones of corporate strategy.
The firm’s strategic vision 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.
change strategic direction or product
portfolio configuration
to create new product lines.
improve cross-organizational
communication & efficiency
to install an enterprise IT system.
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Review Figure 2.2 page
36 for an example
Mission
Objectives
Strategy
Goals
Programs
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Stakeholders are 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
Accounting
Other functional managers
Project team members
Clients
Competitors
Suppliers
Environmental, political,
consumer, and other
intervenor groups
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
Used to record stakeholders of the project
Useful to build communication plans
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Will inform you of the interests and influence
of those involved in a project change.
Should show each person or group’s interest
in the change, where interests converge, the
level of influence, and who will have a voice in
new developments.
Can be beneficial at the beginning of new
projects and when projects change direction.
Displayed in a stakeholder analysis grid
See World Wildlife Foundation example at:
http://assets.panda.org/downloads/1_1_stakeholder_analysis_11_01_05.pdf
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1.
2.
3.
4.
5.
6.
Begin by making a list of anyone who has interest and influence over your
project. i.e. investors, customers, general public, etc.
Use this list to weigh the interest and influence of each person.
Create the Matrix: (example - four levels per category)
Draw a box divided into four equal quadrants.
Divide each quadrant into fourths again. You should now have sixteen
boxes.
Label down the left side starting at the top with “Significant Importance,”
“Some Importance,” “Little Importance,” “No Importance.”
Label across the top starting at the left with “Significant influence,” “Some
influence,” “Little influence,” “No influence.”
Organize your stakeholders according to importance and influence.
When you are done, your matrix will be a graphic display of who holds the
most importance and influence (the group in the upper left-hand corner)
and who holds the least amount of influence and importance (the group in
the lower right-hand corner).
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Parent
Organization
External
Environment
Other
Functional
Managers
Project
Clients
Top
Management
Manager
Accountant
Project
Team
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1.
2.
3.
4.
5.
6.
Assess the environment - Is this low key or significant?
Identify the goals of the principal actors - What true
goals do the stakeholders have?
Assess your own capabilities - What are your strengths
and weaknesses?
Define the problem
Develop solutions - Try to cover as many stakeholder’s
concerns as possible (80%).
Test and refine the solutions – it is an iterative process.
The goal is to formulate strategies to
identify and manage for positive results.
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Identify
Stakeholders
Implement
Stakeholder
Management
Strategy
Predict
Stakeholder
Behavior
Identify
Stakeholder
Strategy
Gather Information
on Stakeholders
Project
Management
Team
Identify
Stakeholder’s
Mission
Determine
Stakeholder
Strengths &
Weaknesses
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Consists of three key elements:
1.
2.
Designates formal reporting relationships
◦ including the number of levels in the hierarchy
◦ span of control of management
Groupings of:
◦ individuals into departments
◦ departments into the total organization

3.
Functional? Geographic? Product type? Project based?
Design of systems to
◦ ensure effective communication
◦ coordination
◦ integration of efforts across departments
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
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Functional organizations – groups people
performing similar activities into departments
Project organizations – groups people into
project teams on temporary assignments
Matrix organizations – creates a dual
hierarchy in which functions and projects
have equal prominence
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Board of Directors
Silos of work
Chief Executive
Vice President of
Marketing
Vice President of
Production
Market Research
Logistics
Vice President of
Finance
Accounting
Services
Sales
New Product
Development
Testing
Outsourcing
After Market
Support
Vice President of
Research
Contracting
Research Labs
Distribution
Investments
Quality
Advertising
Warehousing
Employee
Benefits
Manufacturing
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Strengths
Weaknesses
1.
Fosters development of in-depth
knowledge
1.
Functional siloing – no
collaboration
2.
Projects are developed within the
basic functional structure – no
change to firms functional design
2.
Lack of customer focus
-self-focusing
3.
Project team members remain
connected with their functional
group
3.
Projects may take longer as
tasked are routed from one
department to another
4.
Standard career paths
4.
Projects may be sub-optimized
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Board of Directors
Chief Executive
Vice President of
Projects
Vice President of
Marketing
Vice President of
Production
Vice President of
Finance
Vice President of
Research
Project
Alpha
Project
Beta
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Strengths
Weaknesses
1. Project manager sole authority 1. Expensive to set up and
maintain teams
2. Improved communication
across the organization
2. Chance of loyalty to the
project rather than the firm
3. Rapid decision-making
3. No pool of specific knowledge
4. Promotes the creation of
project management experts
4. Workers unassigned at project
end
5. Flexible and rapid response
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
Seeks a balance
between the
functional and project
organizations
Vice President of
Projects
Vice President of
Marketing
Board of Directors
Chief Executive
Vice President of
Production
Vice President of
Finance
Vice President of
Research
Project
Alpha
2 resources
1.5 resources
1 resource
3 resources
Project
Beta
1 resource
2 resources
2 resources
2.5 resources
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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
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-PMBok 2004
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Organizations can sometimes gain tremendous
benefit from creating a fully-dedicated project
organization
Lockheed Corporation’s “Skunkworks”
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Project manager authority expanded
Functional alignment abandoned in favor of market
opportunism
Focus on external customer
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

Centralized units that oversee or improve the
management of projects
Resource centers for:
◦
◦
◦
◦
Support with technical details
Expertise
Central repository for lessons learned
Center for excellence
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
Weather station
◦ used only to monitor and track projects

Resource pool
◦ maintain and provide a group of skilled project
professionals

Control tower
◦ project management is a skill to be protected and
supported
◦ focuses on establishing standards, consulting/enforcing,
and improving project management skills
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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 level
Business environment
Geographical location
Reward systems
Rules and procedures
Key organizational members
Critical incidents
Have you heard of
“The Toyota Way?”
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Technology
Critical
incidents
Environment
Key
organizational
members
Geographical
location
Rules and
procedures
Reward
systems

Departmental interaction

Employee commitment to goals

Project planning

Performance evaluation

Attitudes
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
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Start with a cage containing five apes.
In the cage, hang a banana on a string and put stairs under it. Before long, an ape will
go to the stairs and start to climb towards the banana. As soon as he touches the stairs,
spray all of the apes with cold water. After a while, another ape makes an attempt with
the same result - all the apes are sprayed with cold water. This continues through
several more attempts.
Pretty soon, when another ape tries to climb the stairs, the other apes all try to prevent
it. Now, turn off the cold water. Remove one ape from the cage and replace it with a
new one. The new ape sees the banana and wants to climb the stairs. To his horror, all
of the other apes attack him. After another attempt and attack, he knows that if he tries
to climb the stairs, he will be assaulted.
Next, remove another of the original five apes and replace it with a new one. The
newcomer goes to the stairs and is attacked. The previous newcomer takes part in the
punishment with enthusiasm. Again, replace a third original ape with a new one. The
new one makes it to the stairs and is attacked as well. Two of the four apes that beat
him have no idea why they were not permitted to climb the stairs, or why they are
participating in the beating of the newest ape.
After replacing the fourth and fifth original apes, all the apes, which have been sprayed
with cold water, have been replaced. Nevertheless, no ape ever again approaches the
stairs. Why not? Because that's the way they've always done it and that's the way it's
always been around here.
And that's how company policy begins....
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1.
a.
b.
c.
d.
2.
3.
4.
The chapter suggests that a definition of strategic management includes four
components:
Developing a strategic vision and sense of mission
Formulating, implementing, and evaluating
Cross-functional decisions
Achieving its objectives
Discuss how each of these four elements are important to understanding the
challenge of strategic project management. How do projects serve to allow an
organization to realize each of these three components of strategic management?
Discuss the difference between organizational objectives and strategies.
Your company is planning to construct a nuclear power plant in Oregon. Why is
stakeholder analysis important as a precondition of the decision whether or not to
follow through with such a plan?
Consider a medium-sized company that has decided to begin using project
management in a wide variety of its operations. As part of their operational shift,
they are going to adopt a project management office (PMO) somewhere within their
organization. Make an argument for the type of PMO they should be adopting
(weather station, control tower, or resource pool). What are some of the key decision
criteria that will help them determine which model makes the most sense?
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5.
What are some of the key organizational elements that can affect the
development and maintenance of a supportive organizational culture? As
a consultant, what advice would you give to a functional organization that
was seeking to move from an old, adversarial culture, where the various
departments actively resisted helping each other, to one that encourages
“project thinking” and cross-functional cooperation?
6.
You are a member of the senior management staff at XYZ Corporation.
You have historically been using a functional structure set up with five
departments: finance, human resources, marketing, production, and
engineering.
a. Create a drawing of your simplified functional structure, identifying the
five departments.
b. Assume you have decided to move to a project structure. What might
be some of the environmental pressures that would contribute to your
belief that it is necessary to alter the structure?
c. With the project structure, you have four projects currently ongoing:
stereo equipment, instrumentation and testing equipment, optical
scanners, and defense communications. Draw the new structure that
creates these four projects as part of the organizational chart.
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
1.
2.
Your task:
In your groups, prepare a two-minute briefing
for the class to identify the project and what
you see as the key elements your project will
have to address. Include a discussion of aspects
of Good Answers’ operations that would not be
part of the project but rather are part of Good
Answers’ general procedures.
Specifically, address the following questions:
◦ What is the project in this scenario?
◦ Who are the stakeholders? Create a stakeholder matrix.
◦ What are some of the main issues that you will need to
address in this project?
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