Table Special Cases

Type of Organization

Project-Driven Organizations

Early Life-Cycle Phases

Late-Life-

Cycle

Phases

Non-Project-Driven

Organizations

Banks

Nonprofit Organizations

Leader

Follower

Time Cost

Performance than the performance criteria. A specific case is the development of the automatic teller machine (ATM). After the initial introduction of the system by some banks (leaders), the remainder of the competitors (followers) chose to provide a more advanced ATM with little consideration for the time involved for procurement and installation. On the other hand, with the introduction of negotiable order of withdrawal (NOW) accounts, the January 1, 1981, change in federal regulations allowed banks and savings and loans to offer interest-bearing checking accounts. The ensuing scramble to offer the service by that date led to varying performance levels, especially on the part of savings and loans. In this instance the competitors sacrificed performance in order to provide a timely service.

In some banking projects, the time factor is extremely important. A number of projects depend on federal laws. The date that a specific law goes into effect sets the deadline for the project.

Generally, in a nonprofit organization, performance is the first resource that will be compromised. The United Way, free clinics, March of Dimes, American Cancer Society, and Goodwill are among the many nonprofit agencies that serve community needs. They derive their income from donations and/or federal grants, and this funding mechanism places a major constraint on their operations. Cost overruns are prohibited by the very nature of the organization. Inexperienced staff and time constraints result in poor customer service.

The non-project-driven organization is structured along the lines of the traditional vertical hierarchy. Functional managers in areas such as marketing, engineering, accounting, and sales are involved in planning, organizing, staffing, and controlling their functional areas. Many projects that materialize, specifically in a manufacturing concern, are a result of a need to improve a product or process and can be initiated by customer request, competitive climate, or internal operations. The first resource to be sacrificed in the non-project-driven organization is time, followed by performance and cost, respectively. In most manufacturing concerns, budgetary constraints outweigh performance criteria.

In a non-project-driven organization, new projects will take a back seat to the day-today operations of the functional departments. The organizational funds are allocated to individual departments rather than to the project itself. When functional managers are required to maintain a certain productivity level in addition to supporting projects, their main emphasis will be on operations at the expense of project development. When it becomes necessary for the firm to curtail costs, special projects will be deleted in order to maintain corporate profit margins.

Resource trade-offs in a project-driven organization depend on the life-cycle phase of a given project. During the conceptual, definition, and production phases and into the operational phase of the project, the trade-off priorities are cost first, then time, and finally performance. In these early planning phases the project is being designed to meet certain performance and time standards. At this point the cost estimates are based on the figures supplied to the project manager by the functional managers.

During the operational phase the cost factor increases in importance over time and performance, both of which begin to decrease. In this phase the organization attempts to recover its investment in the project and therefore emphasizes cost control. The performance standards may have been compromised, and the project may be behind schedule, but management will analyze the cost figures to judge the success of the project.

The project-driven organization is unique in that the resource trade-offs may vary in priority, depending on the specific project. Research and development projects may have a fixed performance level, whereas construction projects normally are constrained by a date of completion.

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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