Project Organization

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A firm, if successful, usually tends to grow, adding resources and people, developing an organizational structure. Commonly, the focus of the structure is specialization of the human elements of the group. As long as its organizational structure is sufficient to the tasks imposed on it, the structure tends to persist. When the structure begins to inhibit the work of the firm, pressures arise to reorganize along some other line. The underlying principle will still be specialization, but the specific nature of the specialization will be changed |see 24).

Any elementary management textbook covers the common bases of specialization (see 60, for example]. In addition to the ever-popular functional division, firms organize by product line, by geographic location, by production process, by type of customer, by subsidiary organization, by time, and by the elements of vertical or horizontal integration. Indeed, large firms frequently organize by several of these methods at different levels. For example, a firm may organize by major subsidiaries at the top level; the subsidiaries organize by product groups; and the product groups organize into customer divisions. These, in turn, may be split into functional departments that are further broken down into production process sections, which are set up as three-shift operating units.

When projects are initiated, two issues immediately arise. First, a decision must be made about how to tie the project to the parent firm. Second, a decision must be made about how to organize the project itself.

In the previous chapter we discussed the selection of the project manager (PM) and described the difficulties and responsibilities inherent in the PM's role. This chapter focuses on the interface between the project and its parent organization (i.e.. how the project is organized as a part of its host). In the latter part of this chapter, we begin a discussion of how the project itself is organized, a discussion that will be continued in the next chapter.

First we look at the three major organizational forms commonly used to house projects and see just how each of them fits into the parent organization. We examine the advantages and disadvantages of each form, and discuss some of the critical factors that might lead us to choose one form over the others. We then consider some combinations of the fundamental forms and briefly examine the implications of using combination structures. Finally, we discuss some of the details of organizing the project team, describing the various roles of the project staff. We also describe some of the behavioral problems that face any project team.

To our knowledge, it is rare for a PM to have much influence over the interface between the organization and the project, choice of interface usually being made by senior management. The PM's work, however, is strongly affected by the project's structure, and the PM should understand its workings. Experienced PMs do seem to mold the project's organization to fit their notions of what is best. One project team member of our acquaintance remarked at length about how different life was on two projects (both matrix organized) run by different PMs. A study of the subtle impacts of the PM on project structure are beyond the scope of this book and deserve more attention from researchers in the behavioral sciences. (For an excellent review of relevant research, see j52j.)

In 1988, as a result of the deregulation of the phone industry, AT&T announced that it was going to split itself into 19 separate Strategic Business Units. One of these, Business Communications Systems (BCS), is primarily focused on the customer PBX market. Following divestiture, the executives at BCS realized that the old ways of doing business would not be competitive in the new, open market they now faced and decided to reengineer their whole process of Providing PBXs to the market. They decided that organizing by project management would give them better control over their business and bring a competitive advantage to BCS. Thus, they set the goal of becoming the leader in project management in the industry.

AT&T had previously used project managers in many of its activities but in a significantly different way. For instance, it was more a project coordination responsibility that could be successfully completed

Source: D. Ono, "Implementing Project Management in AT&T's Business Communications System," PM Neiworfc, October 1990.

through achieving the activities on a task list. However, the position was of low status and seen as only a temporary activity serving to carry someone on to a better functional position. Thus, the reward for doing a good job was to move into a functional position and get out of project management.

BCS realized it would have to change the whole nature of the project management role, and the entire structure of the organization as well, if it were to be successful in this strategy. They needed to develop professional project managers, plus a support system to maintain their abilities and careers in project management. The managerial mentality of two or three years on a project and then moving on to a functional job had to be changed to an attitude of professional pride in project management and staying in the field for the remainder of their careers. Equally important, the organizational mentality of admiring heroic rescues of projects in trouble had to be replaced with admiration for doing a competent job from the beginning and time after time. The challenge was to survive during the years it would take to evolve into a professional project management organization.

The reorganization for project management was a major project in itself, including the areas of candidate selection, education and training, compensation, career development, organizational restructuring, and methods development. In terms of organizational structure, a National Project Management (NPM) organization was created at the corporate level reporting to the service operating vice-president. Reporting to the director of NPM were three project directors spread across the United States, a systems support organization, and a methods and support staff. Program managers, project managers, and their subordinates reported to the project directors. This structure provided an integrated, self-contained project management group.

The project management career path now consists of:

• Trainee: a six-month position to learn about project management.

• Cost Analysis/Schedule Engineer: a 6-18 month team position reporting to a project manager.

• Site Manager-, a 6-12 month position responsible for a large site and reporting to a program manager.

• Small Project Manager: sole responsibility for a $1M to $3M revenue project.

• Project Manager: responsible for $3M to $25M projects.

• Program Manager, responsible for mul-tiyear projects and programs over $25M.

Candidates for the project manager career track are selected from BCS's Leadership Continuity Plan, a program to identify the people with the most potential to progress to middle and senior management levels of responsibility, as well as from career people within the organization. Particular skills sought are interpersonal leadership skills; oral and written communication skills-, a presidential, big-picture perspective; political sensitivity; delegating, problem-solver orientation; optimistic, can-do attitude; planner mentality; kaizen (continuous improvement) spirit; and administrative, in-charge credibility.

BCS's Project Management organization now includes a staff in Denver and groups of project managers in Los Angeles, San Francisco, Atlanta, Chicago, Washington D.C., and New York City. These groups now manage over $500 million in projects, ranging in size from $1M to $92M. The project management approach is deemed the most capable in the field, setting the pace for AT&T's competitors.

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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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  • Stefano
    What was the problem with the mentality of admiring heroic rescues of projects in trouble?
    3 years ago

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