Master of Project Management MPM Degree Programme Fundamentals

Master of Project Management (MPM) Degree Programme Fundamentals of Project Management PART II: ADVANCED TOPICS IN PROJECT MANAGEMENT Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 1

Outline of Presentation Part II Brief Overview of Part II Introduction to Project Organization Impact of Organizational Culture on Projects Organization Examples The Project Management Office (PMO) The Functional Organization Form Functions, Advantages and Disadvantages of the PMO Advantages and Disadvantages of the Functional Organization Form The Project Matrix Organization Form The Functional Project Matrix The Balanced Project Matrix Introduction to Project Portfolio Management The Project Portfolio Management Process Portfolio Selection: Qualitative Models The Strong Project Matrix Portfolio Selection: Quantitiative Models Advantages and Disadvantages of the Strong Project Matrix Form Project Portfolio Management Software Issues in Project Portfolio Management Project Teams The Project Management Methodology Advantages and Disadvantages of Project Teams Review of Selected Project Management Methodologies: Which Project Organization Form is Best? The Project-Based Organization PMBOK APMBOK IPMA Baseline PRINCE 2 Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 2

Projects in the Functional Organization Form Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 3

The Functional Form of Organization In the functional form of organization, work activities are structurally segmented according to their “function’ – i. e. their similarity of purpose. For example: - Accounting & Finance Production Research & Development Marketing IT Support Procurement General Administration These are the typical functions one would expect to find in most commercial organizations. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 4

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 5

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 6

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 7

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 8

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 9

University of Texas at Austin, USA Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 10

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 11

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 12

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 13

Projects in the Functional Organization Form Functional Area of the Organization (E. g. : IT or HR) Staff HRIS Project Staff The functional form of organizing projects is best suited for those projects whose scope of work is basically confined to one functional area of the organization only and for which there is no (or only minimal) necessity for interaction with separate functional areas. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 14

Projects in the Functional Organization Form If more than one functional area is involved in a project, the coordination of project activities takes place through the hierarchy Project Coordination Functional Area A Functional Area B Functional Area C Staff Staff Staff Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 15

Project Coordination in Functional Organizations Corporation X Project Coordination Human Resources Marketing Electronics Engineering Customer Service Finance & Administration Engineering Software Engineering Domestic Sales Manufacturing Mechanical Engineering International Sales Design Fabrication Assembly Procurement Purchasing Receiving & Inspection Testing Production Scheduling Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 16

The Functional Form- Advantages No alteration in the existing structure and operations of the organization is necessary as functional units are already well established. The project simply avails the existing structure and diverse resources which are available in its functional areas in order to undertake the projects which it wants. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 17

The Functional Form - Advantages The functional form of project organization offers high flexibility in assigning personell employed in the different functional units to work on projects. Functional employees can divide their time working on different projects and can be immediately reassigned to other projects once their work has been completed. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 18

The Functional Form - Advantages The functional form of organization offers the possibility of (very) focussed utilisation of knowledge, expertise and experience on a project by employees in any given functional area. Also, as these employees are familiar with each other, communication between them would normally be good, reaction time to issues quick, and authority and responsibility clear defined. The project work may be simpler to estimate because of past experience with similar projects. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 19

The Functional Form - Advantages Functional employees working on projects can maintain their normal career paths in their respective functional areas or „home bases“. This is important because it allows functional employees to keep abreast of developments concerning them in their respective areas, which they may not be able to do in a (dedicated) project team, and it does not jeopardize their promotional chances. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 20

The Functional Form - Disadvantages If a project has a comparatively broad scope, and crosses several functional lines, the different functional areas may have different perceptions as to the priority level which should be accorded to the project. Hence, reluctance by one functional area to support the project and provide the resources needed for it may result in delays to the project. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 21

The Functional Form - Disadvantages Inadequate integration across different functional areas is a common criticism of managing projects in the project functional form. Functional specialists tend to be concerned primarily with their specific part of the project work and not the whole project. Thus, a holistic perspective is often lacking and this is not a good way for managing projects, particularly of a complex kind. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 22

The Functional Form - Disadvantages Functional staff working on a project may display a lack of identification with, and committment to the project. This is because project work is often seen as additional work which distracts them from their routine functional work (which for them usually has priority) and for which there may be no incentive or reward system. A sense of „project ownership“ is frequently lacking and the high level of motivation usually found among (dedicated) project teams is absent. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 23

The Functional Form - Disadvantages In cross-functional projects, project response and overall completion times tend to be higher due to the requirement of channeling (potentially large amounts of) project information, as well as decision-making and problem-solving through the „normal“ management channels. Lack of horizontal communication across functional areas may require rework of work performed. Conflict and rivalry between functional areas may also impede communication. Response times to clients and changing environmental conditions are slow. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 24

The Functional Form - Disadvantages A strong criticism of the functional form of organi-zing projects is that there is no individual who has full authority and responsibility for the project. Instead, authority and responsibility is shared between different individuals from different parts of the organization in which case no proper accountability fo the project can be expected. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 25

The Project Matrix Organization Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 26

What is the Project Matrix Organization? The Matrix organization is a form of project organization within the framework of which temporary horizontal (project) levels are applied over the permanent vertical (functional) levels of the organization. Project Management defines three basic project matrix forms: the Functional Matrix, Balanced Matrix, and Project Matrix. In practice, the matrix structure can assume many different manifestations and these may change over the course of the project life-cycle. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 27

The Project Matrix Organization Form GENERAL MANAGER Project Level Functional Level A Functional Level B Functional Level C Functional Level D Project 1 FI FI Project 2 FI FI Project 4 FI FI Project N FI FI Functional Interfaces Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 28

The Functional Project Matrix In the Functional or „Weak“ Project Matrix, an individual is selected who will oversee and coordinate the project activities across the various involved functional levels of the organization. Functional managers are responsible for managing their respective segments of the project, decide who does what and when the project is to be completed, and evaluate the participants. Their influence is greater than that of the project manager, who has indirect authority to expedite and monitor the project. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 29

The Functional (“Weak”) Project Matrix Functional Manager Staff Staff Staff Project Coordination Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 30

The Balanced Project Matrix In the Balalanced Project Matrix an individual is selected who will manage the project across the various functional levels of the organization and who will interact with the functional managers on an equal basis and jointly approve technical and operational decisions. The project manager defines what needs to be accomplished and the functional managers decide how and by whom it will be accomplished within the plan, various designated functional inputs, standards and schedules established by the project manager. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 31

The Balanced Project Matrix Functional Manager Staff Staff PM Staff Staff Project Coordination Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 32

The Strong Project Matrix In the Project – or „strong“ - Matrix a project manager is selected to oversee the completion of the project across the various involved functional levels of the organization. The project manager is ultimately is responsible for the project‘s completion, has final say on major project decisions and controls most aspects of the project, including the assignment of functional personell, what they do and when. The functional managers maintain title over their respective personell and have consultation rights. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 33

The (Strong) Project Matrix Functional Manager of Project Mgrs. Staff Staff Staff Project Manager Project Coordination Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 34

Example of a Strong Project Matrix System Senior Management Lead Project Manager ENGINEERING PA E 1 E 2 PM X 1 2 1 PM Y 1 3 1 PM Z 0, 5 1 3 MANUFACTURING E 3 MA 1 MA 2 M 1 M 2 2 3 4 7 MA 3 MARKETING M 3 1 0, 5 1 2 Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 0, 5 35

The Strong Project Matrix - Advantages Resources are scarce in any organization! A big advantage of the matrix is that it allows for the sharing of diverse resources across multiple projects within the respective functional areas, enabling the functional personell to flexibly divide their attention, effort and time among these projects and thereby reducing the costly duplication of resources which is inherent in setting up (dedicated) project teams. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 36

The Strong Project Matrix - Advantages The matrix ensures a strong project focus by having a project manager who performs a coordinating and integrating role across functional areas, enabling a more holistic approach towards undertaking the project than is possible in the purely functional form of project organization where the different functional areas are usually only concerned with their portion of the project work. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 37

The Strong Project Matrix - Advantages By using a project matrix, the entire spectrum of the functional areas‘ technology, expertise and experience which can be brought to bear on the project can easily be and flexibly be accessed since all project work is performed within the area. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 38

The Strong Project Matrix - Advantages Functional personell can maintain close ties with their respective areas. They are not required to leave their home bases in the organization which they may have to do if they are assigned to work on a project full-time as in a (dedicated) project team and hence they will feel more confident as they can keep abreast of developments directly concerning them and their future in the organization. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 39

The Strong Project Matrix - Disadvantages A major criticism of the project matrix is that it explicitly violates the established hierarchical principle „Unity of Command“ (Fayol, 1916) which demands that an employee report to only one superior and not two as is the case in the matrix. Dual Reporting (i. e. to both a project and functional manager) may cause stress for the employee, especially when both managers do not get along and issue diverging or conflicting orders. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 40

The Strong Project Matrix - Disadvantages In the matrix environment, there is a potential for conflict between project managers and functional managers due to diverging agendas, possibly unclear patterns of authority and accountability and so forth, and this may occasionally engender a personal animosity which will be detrimental for the project. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 41

The Strong Project Matrix - Disadvantages Unhealthy competition over the sharing of project inputs, equipment, human resources and facilities etc. may arise in the matrix environment between project managers who each are endeavouring to acquire the best available inputs for their respective projects from the functional areas. Consequently, there is the possibility that underhand „deals“ may be made between project and functional managers. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 42

Problems With Matrix Organizations • Failure to understand the key principles and roles in the matrix organizational environment • Distrust in organizational forms which are not based on Fayol‘s „unity of command“ • Apprehensions of functional managers over the apparent superority of the project goals over those of the functional entity • Senior management shortcomings in terms of clearly delineating in writing the formal and reciprocal roles of all the key managers involved in the project Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 43

Problems With Matrix Organizations • Lacking understanding by the project team to understand the role and responsibilities of the functional professionals and their managers • Incompetent project and functional managers / project managers who manage less and coordinate more / decision referall by project managers to senior management • Inadequate stakeholder management • Lack of trust, integrity, loyalty and committment by project team members Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 44

Issues of Concern in the Project Matrix • • • Visible and Sustained Commitment by Top Management Supportive Organizational Culture Tackling Resistance to Change Effective Project Prioritization System Commitment by Functional Managers and Employees Delineation of Roles and Responsibilities Decision-Making Conflicts between Project and Functional Areas Empowerment Communication, Cooperation and Coordination Professional Project Managers System of Rewards and Incentives Meeting Training Needs (e. g. in Teamwork, Interpersonal Skills, Conflict Resolution) • Learning from Experience • Institutional and Infrastructural Framework (e. g. PMO) Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 45

Case Study of a Project Matrix Organization Adtranz, Sweden Students are required to read the Case Study working paper Exploring the Multi-Project Matrix: Process Dynamics of a Projectified Organization by Mats Engwall & Anna Sjoegren Kaellqvist (2001) Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 46

The (Pure) Project-Based Organization Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 47

About the Project-Based Organization In a project-based organization, most of the work performed is project work and this is reflected in the organization‘s structure which is not based on the functional paradigm but changes acccording to the projects which the organization has in its portfolio. Project-based organizations are often found in the defence and construction industries, in the movie industry, in some NGOs and in some outsourced industries. Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 48

The Project-Based Organization Project Manager Staff Staff Staff Project Coordination Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 49

Structure of a Project-Based Organization Corporation X Marketing Other Projects Finance and Administration Manufacturing Other Projects Legal Project Manager (Project B) Project Manager (Project A) Engineering Human Resources Procurement Engineering Subcontractors (X, Y, Z) Manufacturing Procurement Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 50