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The organiz&^onal subsystem that is used to manage the project includes an organisational design withappropriate authority, responsibility, and accountability relationships. It provides the basis for the use of resources in a systematic fashion by providing afunctional focal point for starting and completing the project.

Jhe type of project organization used depends on the nature of the project. Whatever type b used, there are two basic strategies that must be followed:

1. The relative Authority, responsibility, and accountability of the project and supporting organizational elements must be clearly delineated and followed by key managers and professionals. |

2. The organizational form used by the owners or client should permit the senior executives to maintain strategic surveillance of the project.

All too often, managers grossly oversimplify an organization as consisting primarily of structure. W* K project organizational design, which includes the organizational s; ?re are individual and collective roles to be performed. These roles are the result of the development of a work breákdown structure, with its associated work packages, to which individuals can be assigned authority, responsibility, and accountability. Thus, rather than talking simply of an organizational structure, which tends to be static we must consider not only the organizational structure, but also the roles within that structure. Selection of an organizational design requires analysis of such key concepts as authority, responsibility, and accountability to arrive at an orderly arrangement of the interdependences and interactive parts of an organization.

TAPS owners established an owners' construction committee to ádrtiin-ister the contract with Alyeska, the owners' agent, and the designated project manager. ,

Committees such as the owners' construction committee on TAPS are often called a plural executive. The plural executive is found in the field of policymaking in corporations at the office of the chief executive level. Such committees have been used and studied for niore than thirty years. They are given the power to make decisions and to undertake one or all of tíié overall organizational managerial functions of planning, organizing, leading, and controlling. Typically, these plural executive groups do not become involved in short-range or tactical operations. Théy are more concerned with formulation and approval of broad strategy to include selection of overall organizational mission, objectives, and goals and then provide a strategic monitorship to determine if the organization is making progress toward accomplishment of its mission, objectives, and goals. Since it is a top decision-making and surveillance group, the plural executive also formulates the basic organization of the company.

But it is difficult for a committee, made up of multiple owners, to function as a plural executive. Successful operation of a plural executive requires a clear and unambiguous definition of roles and responsibilities and delegation of responsibility and authority for particular tasks within the context of an overall strategic plan. John Q. Anderson, a notable member of the project management profession, has studied the use of committees or plural executives in the organizational hierarchy in the management of large projects. He makes the following observations about the multicommittee approach (8):

The multiple committee approach is used wheri owners cannot or will not agree to delegate authority to a strong managing partner. The PMC (project management contractor) is left to deal with various committees directly, or through a weak managing partner (in terms of decision-making authority), indirectly. This relationship has two potential problems for the PMC:

1. The decision-making process will be slowed considerably by the committee approach; obtaining timely decisions, even in emergencies, can be next to impossible.

2. The PMC may receive mixed signals from the different committees, or even from different members on a single committee.

In addition, a more subtle problem can be that the committees will not delegate sufficient authority to the PMC to allow optimum use of expertise and resources. The likelihood gation of authority by a committee to a managing partner was not accomplished in the first place (9).

gation of authority by a committee to a managing partner was not accomplished in the first place (9).

the TAPS Owners' Construction Comirtittée foiled to defirié its strategic role in a charter that could have established its basic authority and responsibility. The problems Anderson delineates surfaced, and a review of the committee's actions óri TÁPS indicates that it did not focus on and resolve substantive strategic issues such as: ? u

• the development of a master strategic plan

• early integrated life-cycle project planning ?

• the development of organizátional strategy2 for Alyeska, the owners, and the construction management contractors > ,

• the design and implementation of a comprehensive project management information system to iacilitate organizing, planning, and controlling the attainment of technical pe|formance objectives on time and within budget

• the development of an effective control system for TAPS -

• úft confusion of responsibilities between Alyeska and Bechtel resulting in ^verlap and duplication of people and functions

• the continued existence of Alyeska as a costly, redundant, time and re-source-consuming la^rinthe TAPS project.^,- . ^

Key steps in defininEthe organizational &ign of TAPS were not taken during the early stages of the project life-cycle? The Owners Construction Committee never developedj^strategic or master plan that could guide its organizational design (10). Without that strategy, it could not (or at least did

in the project: the owners, Alyeska,. the construction management contractor, and the execution contractors. Without that strategy, it could not assign authority, responsibility, and accountability in a prudent manner. The result was a constantly evolving but always ineffective organizational design that ^ lacked cohe&iveness. While this lack of cohesiveness on TAPS is not endem-^ ic to all pfojects, it is characteristic of those projects that lack a strategic plan t which an organizational design can be developed. -'Tie, owners and contractors of large projects sonietfines have parallel atcSpaft organizations.* When Bechtel was hired ai the construction lent contractor for the TAPS, it and Alyeska became counterpart organizations. : \-vvi- ^

Unless authority ana responsibility are Well defined between the counterpart organizations, there is serious danger of costly duplication and inefficient decision-making. The authorities and responsibilities of Alyeska and Bechtel counterparts were not sufficiently defined to avoid these adverse consequences.

^Although Alyeska's organization manual seemed to be the basic document that defined the roles along with the associated authority and responsibility of these parties, it had three fundamental flaws that lead to the conclusion that there was an absence of clearly ¡defined roles and responsibilities on the TAPS project. '

First, the organization manual's issuance by Alyeska on January 1, 1975, came far too late. Bechtel had already been on the job for fifteen months and had notified Alyeska repeatedly of its inability to obtain a clear definition of its role and responsibilities. The existing organization on TAPS was characterized by

Figure 2 TAPS Organization (1974)

"overlapping control, lack of defined responsibilities, a strong horizontal functional group superimposed on a weak vertical project organization, and a one-on-one relationship of Alyeska to Bechtel" (11). These ate issues that should have been addressed and resolved at the very earliest stage of the Alyeska/con-struction management contractor relationship, not fifteen months after the counterpart organization had been in existence.

Second, the organization manual did little to clarify authority and responsibility. Although the manual did contain some "division of responsibility charts" (linear responsibility charts or LRCs), these charts were too vague and general to serve their intended purpose.

The organization manual failed to provide the type of definition of authority and responsibility that is a prerequisite of prudent use of a counterpart organization.

Third, the organization manual reinforced the preexisting excessive layering of managers in the hierarchy of the TAPS organization. Figure 2 depicts this hierarchy.

Alyeska constituted an intervening layer of managers and professionals in the hierarchy of the TAPS organization. This layering increased the distance between the top-level members of the Owners7 Construction Committee and the "front-line" supervisors directly concerned with accomplishing project work package objectives.

These effects were compounded by the detailed day-to-day involvement of Alyeska staff in project affairs. In the absence of a clear specification of roles, responsibilities, and performance standards, Alyeska did not know the boundaries of its authority and consequently established its counterpart personnel who became actively involved in day-to-day management.

As a result of this layering and vague role definition, the TAPS project was plagued with violations of that most basic principle of management, unity of command, which assures that an individual receives orders from only one person. The contractors on TAPS unfortunately—and all too often—received orders from both Alyeska and Bechtel (12). This effect was highlighted in a report submitted to the Alaska Pipeline Commission:

tMWSMéá M'tJlífSItíí^iiíiilf^^^MMá É^ 1 dfüpl. _

four-tierfed management fetrúeture eltalblished by the owner companies (Owñers' Committee, Alyeska, construction mañager-Bechtel for the pipeline; and the Execution Contractors). Lines of management authority were confused; a "pass the buck" attitude prevailed, andjil concerned—from Bechtel to the labor unions—were left distrustful and frustrated (13). >

The lack of kn adequate organizational design for TAPS can be attributed to an ineffective planning activity.

Planning Subsystem

The planning subsystem deals with the seíectidfí bf project objectives and goals as well ás the strategies for the use of resources to accomplish project ends. These strategies include plans of action, policies, procedures, resource allocation^schemes, aijp the productive use of organizational resources.

Planning for all key aspects of the project must begin at the earliest stage of the lifé-cycle to define objectives, goals, and strategy. This conclusion is ctijlfirmed by a study conducted by Fluor Utah, Inc. During the early 1960s, after hundreds of projects had been completed, Fluor Utah reviewed the his-4 tory of these projects to identify conditions and events common to successful projects vis-a-vis those londitions and events that occurred frequently on less successful projects. A senior Fluor vice-president concluded:

A common identifiabl^lement on most successful projects wastthe quality and deffch of early planning by the project man-agément group. Execution of the plan, bolstered by strong pro-v ject management control of identifiable phases of the project, Was another major reason why the project was successful (14).

Project planning on TAPS was not adequate. Archibald testified:

> The owners and Alyeska failed to require preparation of ad-^ equate, comprehensive plans at the owners' level, interrelat-ImL ^ engineerinS/ right-of-way, materials and equipment pro-curement, and construction activities ... the owners further ' ... failed to require the use of PERT/CPM network planning ahd scheduling method was widely known and used (15).

If planning is inadequate, then control will be impossible to accomplish. Control Subsystem

The project control subsystem provides performance standards for the project schedule, budget, and technical objectives and uses information feedback to compare actual progress with planned progress. The project control subsystem alsó provides the means for comparing actual with planned progress and the required initiation of corrective action for better resource utilization.

Alyeska and the owners began construction before adequate, comprehensive planning had been performed. Consequently, adequate project control systems were not in place. This was contrary to practice in the construction industry.

More specific aspects of project planning, scheduling, and control which should have been properly used on the TAPS project included: • identification of an appropriate work breakdown structure

• development of an overall project fnaáter sbhédülé With supporting schedules at each level of the work breakdown structure

• resoúrce (labor, materials, machines, facilities, and funds) estimating and budgeting

• work authorization and control

• cost accounting and expenditure control

• materials and logistics management

• ongoing project evaluation and control (16).

The lack of adequate controls on TAPS was also noted in a report to the Alaska Pipeline System in the summer of 1977, viz.,

... the TAPS owners and Alyeská failed tb establish sound internal controls priot to full-scale construction. This situation developed despite the fact that the owner companies' and Alyeska's auditors repeatedly emphasized the need for project controls. In sum, a combination of inadequate owner support and Alyeska's own ineptitude led the company into the most expensive privately financed project in United States history without sound internal controls in place (17).

Inadequate planning and organizing Will be affected by the adequacy of the information system. The effect was apparent on TAPS.

The Management Information Subsystem

The project management information subsystem contains the intelligence essential to the effective planning and controlling of the project. Such information enables the principal managers of the project to plan for and track the use of supporting resources.

Inadequate information systems on the TAP project contributed to the lack of adequate controls. Crandall testified,

... there is little question that the control of TAPS required an adequate and well designed formal control environment to provide control information for senior managers. The volume of data to be processed indicated the need for computers in at least parts of this control environment (18).

The impact that the absence of cost controls had on the project are further noted:

Thus, had cost controls been in place in early 1974, at the very start of the project, they would have allowed management to minimize costs while still attaining realistic schedule goals Thus, it is my opinion that if prudent cost controls, as part of a comprehensive control environment, had been installed at the start of construction, they would have helped assure completion of the project on or even before the scheduled date (19).

Cultural Subsystem

The cultural ambiance of a project is the synergistic set of managerial and professional shared ideas and beliefs associated with the way of life practiced in the project organization. The culture associated with the organization has composite leader and follower étylé^wfcich ^ts thé tdnfe for individual ánd , group áttitude and bei&trfofc ^iMf^Pt^^v ^ i^,

» VAn organizations culture consists of ex^liákék kit*

plicit, among organizational members as to what is important in behaviot and/ttitude in terms of values, beliefs/ standards, and social and management practices. The culture that is developed aridbecomes characteristic of an organization affects strategic planning and implementation, project management, and all else. ^ 3

Insights into the cuIütó ÍMt éáéíM üfí tftl' TAP project áte found hi project documentation fsuch áá the follóWíiíg; ; ^ ¡*- * . 1 ~

1.. I believe there is * mire fundamental proDlem wiiich > í must be addressed and resolved, before it severely limits >or t even destroys the teamwork, coordination and communica-? f " tion needed by Alyeska oigáníiation iti carrying out its assigned task, i.e., building the Alyeska Pipeline at the lowest f 1 possible cost. This fundamental problem is the aura of dis-' trust áñd qúéstiórtáble ctMibilit^JbéfÓfeáítributed to key v people in Alyeska and the íñjájoir fcoiiferSctbrs (20).

¡mámiá Alye&ká Pipeline Service Company noted ih a letter: % ^ f ' ^

„.an attitude of "gall! plátihg" has evolved. This áttitude exists within botllitíie Alydska and the Bechtel organiza-\j3ris and comes afedUt because of the uñusual degree of public involvement, because of environmental and quality , conirol demands, and because of the weather, terrain, and locatioiH This áttitude manifested itself in "slugging" the pmject with people, facilities, equipment, etc The results of me above arc easy to see: y , ' 4 multiple and overlapping control f J t "vLj, lack of delined responsibilities ^ it

* a strong horizontal staff organization superimposed on a vertical project organization

• eteryone (almost) requires a counterpart

• stáff assistants, coordinators, liaison men, etc. (21).

The foregoing examples provide ifisight intb the culture On the TAPS project, i.e., those values and attitudes that really existed in the life of that project and affected its outcome. .

An organization's culture is the social expression manifested by the people dfi the project. Prudent and reasonable management requires that close attention be paid ft) the project's "human subsystem."

The Human Subsystem f

An evaluation of the efficacy of any project includes an evaluation of people. The outcome of a project is ultimately dependent on people—those professionals and managers who have a responsibility to make the project happen. Thus, project evaluation is people evaluation—an assessment of the quality of managerial and professio rmanee.

Becâusé the final test of effective project inanagement is the degree to which the project objective has been accomplished on time and within budget, project management means working with people tri obtain results. Success or failure of a project depends on the artful and scientific management of a project's human resources, lb determine this, management must be ?ble to evaluate the performance and use of people.

Imprudent management of human resources for TAPS was claimed. For example:

Management of the project resulted in pipeline productivity that was only 57 percent of what Alyeska itself estimated it should have been. Moreover, productivity declined significantly as the project progressed. The result was excess expenditures of nearly $1.3 billion on the pipeline portion of the project alone.

Alyeska's poor labor management was a major contributor to the excesses (22).

When inadequate support is provided to people, mismanagement of a project's human resources can also occur. On TAPS:

... as a result of belated planning, the TAPS construction began without adequate housing, catering control, or communications facilities in place. The result was that not only did expenditures for these vital support functions far exceed expectations, but the housing and communications problems delayed construction progress. They also caused numerous adverse "ripple" impacts (23).

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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