Project Management

1. Project Management Project Organization Jiwei Ma

2. Content • Introduction • Organization theory • Basic organization types • Project organization and project • Project team building

3. Introduction • Project organization is the foundation of project management • Project objective is decisive to project organization • Project organization is designed mainly to carry out project controlling

4. Objective Production methods and tools Production personnel Management methods and tools Management personnel Project Objective and Project Organization Methods & Tools People Organization

5. Organization Model Environment Social structure Physical Structure ORG Culture Technology

6. Organization Theory • Organization theory studies, • The structural components of a system • Organization structure • Task breakdown and responsibility definition • Management functionalities arrangement • The mechanism and procedure of a system • The mechanism of material flow • The mechanism of information flow

7. Development of Organization Theory • Adam Smith • efficiency on division of labor  social structure of organization • Karl Marx • Relationships between the organization and individuals, fundamental antagonism between labor and the interests of capital • Emile Durkheim • increasing specialization, hierarchy, interdependence of work tasks • formal and informal aspects of organization  tension between economic and human aspects

8. Development of Organization Theory • Max Weber • bureaucracy is objective and impersonal  benefits of rationality (formal authority) • types of social action: formal rationality, substantive rationality, affectional, traditional • three types of legitimate ’Herrschaft’: rational, traditional, charismatic • Fredrick Winslow Taylor • Scientific Management: method to discover the most efficient working techniques for manual forms of labor • close supervision of highly specified physical work • managerial control

9. Development of Organization Theory • Henry Fayol • universal principles for the rational administration of organizational activities • principles: span-of-control, exceptions, departmentation, unity-of-command, hierarchy • esprit de corps: unity of sentiment and harmony contribute to the functioning of an organization • functions of manager: planning, organizing, command, coordination, control

10. Classical Organization Theory • The classical organization theory is focused on the mechanism of power, authority, and control • Three types of organizations • Charismatic authority • Based on the sacred or outstanding characteristic of the individual • Traditional authority • Essentially a respect for custom • Rational legal authority • Based on code or set of rules • The last one was regarded as the predominant form of organization

11. Classical Organization Theory • Bureaucracy is the most efficient form of organization • A legal code shall be established for all members to obey • The code form a system of abstract rules, and administration looks after the interest of the organization within the limit of this system • The person exercising authority also obeys this impersonal order • Only through being a member does the member obey the law • Obedience is due not to the person who holds the authority but to the impersonal order which has granted him this position

12. Classical Organization Theory • The theory is based on the assumption of formal and total rationality • Isolated from the environment • The primary concern of the theory is • the behaving mechanism to avoid corruption, unfairness, and nepotism within the organization • instead of the slow, rigid and inefficient bureaucracy

13. Organization Theory - Modified • The modified organization theory has less idealistic assumption and established organization control principles with more practical realism • Principles • Division of work - Repetition of the same function brings speed and accuracy. Thus work should be divided according to skill and technical expertise • Authority and responsibility - Authority is linked to responsibility, and together require increasing judgment and morality at senior levels

14. Organization Theory - Modified • Principles • Discipline – essential for the smooth running of an organization • Unity of command – an employee should receive orders from one superior only • Unity of direction – One and one plan for a group having the same objective • Remuneration of personnel • Assure fairness • Encourage keenness by rewarding well-directed effort • Avoid over-payment beyond reasonable limits

15. Organization Theory - Modified • Principles • Equity – employees must be treated equally and fairly • Stability of tenure of personnel – a period of stability will help employees to delivery their best • Esprit de corps – dividing one’s own team is a grave sin against the business • Provide a key to modern organization and possible approach to current organizational solutions • Unable to explain many modern practices contradictory to the principles due to the limits

16. Hierarchical organization Functional organization Project organization Matrix organization …… Organization Structure

17. B1 B2 B3 . . . . . . C21 C22 C23 . . . . . . Hierarchical Organization A

18. Brigade Brigade Brigade …… …… Regiment Regiment Regiment Regiment Regiment …… …… Battalion Battalion Battalion Battalion Battalion Battalion Battalion Battalion Battalion Company Company Company Example: Army Division

19. B1 B2 B3 . . . C5 C6 . . . Functional Organization A

20. General Manager R&D Production Sales/Marketing Accounting Human Resource Example:Typical Functional Organization in Manufacturing Industry

21. Example: Modified Functional Organization HR VP Accounting VP Marketing VP EngineeringVP Production VP SupplyVP Purchasing Mng Inspection Mng System Eng. Mng ElectronicEng. Mng Software Eng. Mng Mechanical Eng. Mng Technical Booking Mng Customer Service Mng Domestic SalesMng I/E Mng Manufacturing Mng Assembly Mng Testing/Inspct. Mng ProductionPlanning Mng TransportationMng President

22. Functional Organization • Advantages • Emphasis of specialization and opportunities for employees to obtain professional training and advances • Promotion opportunity for professionals • Professionals can work for different project at same time • Functional department can be the basis of technical continuity and sustainability • Stability of tenure of professionals

23. Functional Organization • Disadvantages • Instead of customers, functional activities become the focus of departments • It’s difficult to find a fully responsible person for a problem or fault • Slow and hindered reaction to customer’s requirement due to multi-layer and multi-branch management structure • Negligence of the needs of project and individuals working on project • Difficult for cross-department coordination due to communication and information exchange barriers, which is critical to the complex project

24. Project Manager R&D Production Marketing Accounting Human Resource AProject Manager BProject Manager R&D Production Sales Accounting HR R&D Production Sales Accounting HR Example: Project Organization General Manager

25. Example: Project Organization Marketing VP Human Resource VP Accounting VP Legal Department VP A Project Manager B Project Manager Engineering Manager Manufacturing Manager Supply Manager Consultant Engineering Manager Manufacturing Manager Supply Manager Subcontractor AjaxExpress Company President

26. Project Organization • Advantages • Project manager is fully responsible for the project and directly report to senior management level • Members of project team report to project manager • Separation of project from functional department makes communication simple and easy • Unity of direction enables project teams to concentrate on project objective • Centralization of management expedites the decision making process and enable an fast reaction • Unity of command

27. Project Organization • Disadvantages • Duplication of resource input when there are more than one project • Waste of critical resources due to project manager’s preparatory inventory • Inconsistency in company’s regulatory management • Difficulty for communication and information exchange • Lack of stability of tenure and continuity of professional career for employees

28. X1 X2 X3 Y1 Y2 Y3 Matrix Organization A

29. R&D Project Mng. AProj. Mng BProj. Mng CProj. Mng Example: Matrix Organization General Manager Production Marketing Accounting HR

30. Example: Matrix Organization Marketing VP HR VP Accounting VP Legal Dept. VP Project VP Engineering VP Manufacturing VP Logistics VP Assembly Inspection & Testing Production Installation Training PM System Electronic Software Mechanical Technical Booking A Project Manager Jack Jim Julie Cathy Rose Dennis Chris Sharon Tyler B Project Manager Beth Jeff Maggie Jen Paul Steve Jessi Chris Katie Gerri Wendy C Project Manager Jack Joe Cattry Rose Katie Hanna AjaxExpress Company President

31. A X Y X1 X2 X3 YX YY Y1 Y1X1 Y1X2 Y!Y1 Y!Y2 Y2 Y2X1 Y2X2 Y2Y1 Y2Y2 Y3 Multi-level Matrix Organization A

32. Matrix Organization • Advantages • Most of works center around project • Different projects can share the expertise of various functional departments • Project team member has a strong connection to project, while still maintains a sense of belonging • Fast reaction to both internal and external requirement • Part of project team members are from administrative department, it helps to maintain the consistency in regulatory management • Easy to maintain the balance of resource input among different project

33. Matrix Organization • Disadvantages • Lack of the unity of command • Project manager will concentrate on project objective, instead of company’s objective • It’s difficult to allocate resources and easy to invoke dispute between project managers • High demand on the coordination between project manager and functional department manager

34. Comparison of Various Organization Structures

35. Project Organization Case • An office building is fully invested by public fund and will be used by a governmental institute. • This institute does not have construction specialist or a team to manage the project, so it’s decided to hire a consulting company to manage the project under an owner’s representative. • The owner’s representative, reporting to the director of this governmental institute, will be fully responsible for all of the project issues. • Any decision regarding major functionality and project implementation of this office building will be made by top management level of this institute, and than carried out by the owner’s representative. • It is also required by law to hire a certified consulting company to deal with project procurement, and a site supervising company to monitor the construction procedure.

36. Project Organization Case • A state owned company decided to expand its production capacity by building a new facility. • This company has a maintenance team with mechanical, electrical, and production equipment engineers. • The top management level assigned an owner’s representative to be responsible for all the project issues, who will directly report to the president of the company. • A decision-making committee has been established to monitor the project and support the president regarding critical decision making procedure. • The company decided to hire a consulting company to provide project management consulting service to the owner’s representative and owner’s project engineers. • It is also required by law to hire a certified consulting company to deal with project procurement, and a site supervising company to monitor the construction procedure.

37. Project Organization Case • A foreign invested joint-venture is going to build an industrial facility in China. • This company has a maintenance team with mechanical, electrical, and production equipment engineers. • The company has set up a project engineering department to deal with project engineering issues. • The director of the project engineering department will be reporting to the chief operating officer of the company. • Other functional departments of the company such as purchasing, accounting, etc. will also be involved in certain project issues. • A consulting team has been hired as a part of the project engineering department to deal with project management issues as well as certain technical issues during design and construction procedure. • A site supervising company has also been hired to monitor the construction procedure.

38. Team Building • Basic Concept • Types of Team • Rules of a Team • Steps to Build a Team • Team Effectiveness

39. Team Building • Basic Concept • A team is a group of people working towards a common goal • Every team member has his/her own goals in a hierarchy system that conform to the common goal • A team may be a formal organization or an informal workgroup • Team building is the process of enabling that group of people to reach their goal

40. Types of Team – in Size

41. Types of Team – in Size

42. Team Building • Rules of a Team • Purpose: Members share the vision and the sense of the mission • Priorities: Members know what needs to done next, by whom, and by when • Roles: Every member know his own role • Decisions: Authority and decision making lines are clearly understood • Conflict: Conflict is dealt openly and is considered important issues • Personal traits: members feel their unique personalities are appreciated and well utilized.

43. Team Building • Rules of a Team • Norms: Group norms for working together are well established and observed. • Effectiveness: Members find team meetings efficient and productive. • Success: Members share the clear view of the team’s success and the sense of accomplishment. • Training: Opportunities for updating skills are provided and taken advantage of by team members.

44. Team Building • Steps to Build a Team • Forming • Storming • Norming • Performing • Adjourning

45. Steps to Build a Team • Forming • Personal relations are characterized by dependence • Members have a desire for acceptance by the group • Members behave to keep things simple and to avoid controversy • Serious topics and feelings are avoided • Discussion centers around orientation to tasks and one another • To advance to next step, members have to risk discussions beyond non-threatening topics with possible conflict

46. Steps to Build a Team • Storming • Characterized by competition, conflict in personal relations and organization of tasks/functions • Conflicts arise when members are organized for tasks and structured for function • Individuals have to bend to suit the group organization • There will be questions over leadership, structure, power, and authority • To advance to the next step, members have to move from a “testing and proving” mentality to a problem-solving mentality

47. Steps to Build a Team • Norming • Characterized by cohesion and recognition • Members are willing to change and mold their feelings, ideas, attitudes, and beliefs • Leadership is shared and cliques dissolve with more and more sense of group belonging • Data flow between group members increases and creativity is high • Interactions between members are characterized by openness and sharing of information

48. Steps to Build a Team • Performing • Not reached by all groups • Characterized by interdependence in personal relations and efficiency of problem solving • Members can work independently, in subgroups, or as a total unit with equal performance • Roles and authorities can dynamically adjust to the changing needs of the group and individuals • Members are both highly task and people oriented • Group morale is high and group loyalty is intense

49. Steps to Build a Team • Adjourning • Characterized by termination of task behavior and disengagement from relationships • There will be a recognition for participation and achievement • There might be a sense of fear due to the feeling of giving up control and inclusion in the group

50. Team Building • Team Effectiveness • Team goals are development through team interaction and by members’ willingness • Participation of team members is high • Feedback is asked openly and given freely with a desire to help • Decision making is participated actively by all members • Leadership is distributed and shared among team members