Chapter 3

Project Organization Structure,

Team Work Issues and Conflicts
Project Structure
• The organizational strategies have to be aligned
with those project strategies
 Projects and Organizational Strategy
Strategic management – the science of
formulating, implementing and evaluating
cross-functional decisions that enable an
organization to achieve its objectives.
Consists of:
– Developing vision and mission statements
– Formulating, implementing, and evaluating
– Making cross-functional decisions
– Achieving objectives
SWOT matrix
 Stakeholder management
Stakeholder Analysis is a useful tool for
demonstrating some of the seemingly
irresolvable conflicts that occur through the
planned creation and introduction of new
projects.

Project Stakeholders are defined as all individuals

or groups who have an active stake in the project
and can potentially impact, either positively or
negatively, its development.
 Identifying project stakeholders

Internal Stakeholders External Stakeholders

• Top management • Clients
• Accountant • Competitors
• Other functional • Suppliers
• Environmental,
managers
political, consumer,
• Project team and other intervener
members groups
Project stakeholder relationships
 Managing stakeholders

1. Assess the environment.

2. Identify the goals of the principal actors.
3. Assess your own capabilities.
4. Define the problem.
5. Develop solutions.
6. Test and refine the solutions.
 Organizational Structure
Consists of three key elements:
1. Designates formal reporting relationships
– number of levels in the hierarchy
– span of control
2. Identifies groupings of:
– individuals into departments
– departments into the total organization
3. Design of systems to ensure
– effective communication
– coordination
– integration across departments
 Forms of Organization Structure
• Functional organizations – group people
performing similar activities into departments

• Project organizations – group people into

project teams on temporary assignments

• Matrix organizations – create a dual hierarchy

in which functions and projects have equal
prominence
Functional Organizational Structure
 Functional Structures
Strengths for
Project Management
1. Projects developed within
basic functional structure
require no disruption or change
to firm’s design.
2. Enables development of in-
depth knowledge and
intellectual capital.
3. Allows for standard career
paths.
Weaknesses for
Project Management
1. Functional siloing makes it
difficult to achieve cross-
functional cooperation.
2. Lack of customer focus.
3. Longer time to complete
projects.
4. Varying interest or
commitment.
Project Organizational Structure
 Project Structures
Strengths for Weaknesses for
Project Management Project Management
1. Project manager sole authority 1. Expensive to set up and
maintain teams
2. Improved communication
2. Chance of loyalty to the
3. Effective decision-making project rather than the firm

4. Creation of project 3. Difficult to maintain a pooled

management experts supply of intellectual capital

5. Rapid response to market 4. Team member concern about

opportunities future once project ends
Matrix Organizational Structure
 Matrix Structures
Strengths for Weaknesses for
Project Management Project Management
1. Suited to dynamic 1. Dual hierarchies mean
environments two bosses
2. Equal emphasis on project
management and functional 2. Negotiation required in
efficiency order to share resources

3. Promotes coordination across

functional units
3. Workers caught between
competing project &
functional demands
4. Maximizes scarce resources
 Heavyweight Project Organizations
Organizations can sometimes gain tremendous
benefit from creating a fully-dedicated project
organization.

Lockheed Corporation’s “Skunk works”

• Project manager authority expanded

• Functional alignment abandoned in favor of
market opportunism
• Focus on external customer
Manager’s Perceptions of Effectiveness of Various
Structures on Project Success
 Project Management Offices
Centralized units that oversee or improve
the management of projects

Resource centers for:

–Technical details
–Expertise
–Repository
–Center for excellence
• Many organizations are moving in the direction of
establishing PMOs or have already done so.
• There is strong evidence that PM standards and
methods are most highly correlated with project
performance.
• The use of project historical archives also showed
a significant correlation with project performance.
• Pioneers in establishing PMOs are providing
information and advice on essential policies and
documents that should accompany the
establishment and use of a PMO.
 Organizational Culture

• Unwritten

• Rules of behavior

• Held by some subset of the organization

• Taught to all new members

 Organizational culture Influences

• Departmental interaction

• Employee commitment to goals

• Project planning

• Performance evaluation
Project Team Environment

• Projects, in general, do not fail

because the planning hardware or
software broke down.

• People make projects succeed or fail.

• They make the decisions, predict, plan

for and control the progress.
 Proposed in Specified in Project Scope
Project Charter Designed

Installed at user site What the user wanted!

Programmed
• Every project is unique, and the people
involved contribute to that uniqueness more
than any other aspect.
• The people, and how they relate to the project
environment, are a major factor in the success
of any project.
• Most project management practice has to be
team-based.
• Project managers have to operate both as
team members and as project team leaders.
• The person who is likely to have the greatest
influence over whether the project has a
successful outcome is the project manager.
 The Project Manager
• One of the most important decisions in
project management is the choice of
project manager.
• Many project failures can be traced to bad
choices in this area.
• Conversely, there are projects where so
many unforeseen obstacles and problems
arose that failure could be expected but
the project succeeds because of the
leadership and other qualities of the
project manager.
 Famous Project Failures
Name Year Probable cause of failure
Mars Polar Lander 2000 Failure of middle management
Hershey ERP implementation 1999 Lack of training; mismanagement
Misjudged competition and wrong
Motorola, Iridium 1999 technology
Denver baggage handling Poor project management; complex
system 1993 technology
Hubble Space Telescope 1990 Lack of system testing
Chernobyl Nuclear Power Bad design, Bad risk management, Cost
Plant 1986 cutting
IBM PC 1983 Failure to discover customer needs
War in Vietnam 1967-72 Scope problem, Micromanagement
Edsel automobile 1958 Failure to discover customer needs
Titanic 1912 Poor quality control
 Famous Project Successes
Name Year Probable cause of success
Several successful products, 1980-Present Good project management practices
buildings, systems
The Shuttle Project (NASA), 1981 Value; technology innovation,
Projects Apollo and Mercury planning and execution

Mt. Rushmore 1941 Project leadership, unique value

Hoover Dam 1935 Engineering; Organizational and
political skills of project champion
TVA (Tennessee Valley 1933 Value; planning and execution
Authority)
Empire State Building 1931 Competitive nature; Great planning
Model T Ford 1908 Quality, manufacturing process

Waldorf Astoria Hotel 1897 Understanding of customers and

market
 Selecting the Project Manager
• Project managers are:
– Sometimes qualified and experienced
project management specialists who are
employed on a permanent basis by an
organization.
– Some-times they are external consultants
who are contracted to manage the project
for its duration only.
• In the case of internal projects they are mostly
selected from within the existing workforce.
• In all cases they are charged with organizing
and managing a project team.
The Role of Project Manager
 The project manager’s roles can be summarized
as:
◦ Planning the project activities, schedules and
budgets;
◦ Organizing and selecting the project team;
◦ Interfacing with the client, the organization and
all other interested parties;
◦ Negotiating with suppliers and clients;
◦ Managing the project resources;
◦ Monitoring and controlling the project status;
◦ Identifying issues and problem areas;
◦ Finding the solutions to problems;
◦ Resolving conflicts.
These roles are intrinsically linked and cannot
be regarded in isolation.
Personal, Managerial and Leadership Skills
Generally, in terms of ‘soft’ management
skills and attributes, the project manager
should:
– Be flexible and adaptable;
– Be able to concentrate on more than one
thing at a time;
– Demonstrate initiative;
– Be persuasive;
– Be a good communicator;
– Be able to keep multiple objectives in sight
and be able to balance them;
Technical and Business Skills
Understanding how to set up a team and run it;
The ability to develop complex time and cost
plans and achieve them;
Understanding of contracts, procurement,
purchasing and personnel;
Active interest in training and development;
Understanding of the technology that is central
to project success;
Ability to translate business strategy into
project objectives.
 Effective Project Teams
Clear Sense of Mission
Productive Interdependency
Cohesiveness
Trust
Enthusiasm
Results Orientation
 Project Team Staffing Profile and Operation
The effectiveness of the team will depend
on the characteristics of the individual
specialists who comprise the team.
Staffing a project team with competent
people is the first stage in a team-building
process.
In selecting team members, a balance of
various skills and experience is sought in
terms of:
◦ technical skills;
◦ management skills;
◦ administrative skills;
◦ interpersonal skills.
Project teams are staffed and operated in
a less formal manner than functional
teams.
◦ Project managers lead by example.
◦ Project teams are flexible and responsive.
◦ Project teams interface.
◦ Project teams innovate and evolve.
Functional managers who provide
resources for project teams receive
recognition or credit when the project team
performs well.
There is some research evidence to
suggest that conflict should be promoted
during the staffing process.
Project Team Operation
Most team handbooks identify similar
objectives and contain common elements.
Some typical common areas include
those set out next:
◦ Establishing measurable objectives-
Identify and acknowledge the stakeholders who
will determine, on completion of the project,
whether or not it has been successful.
Work with the stakeholders to determine and state
explicitly what their dimensions of success are.
• Stakeholders management
Stakeholders are sometimes
referred to as the ‘invisible team’.
These include all stakeholders
who are members of the extended
project team outside the
immediate project management
team.
If managed properly, they will
provide a great source of support.
• Establishing and planning measurable
targets
Set realistic and achievable milestones
that will act as celebration points
throughout the project.
These have an important effect on
motivation as the project progresses.
• Planning and establishing processes
Establish firm ground rules so that
participants understand both their own
roles and as many aspects of the project
as possible.
• Leadership 
Strong, credible leadership is required to
provide clear direction and stimulate high
performance from its members.
Rewarding good performance will motivate
members.
• Membership and identity
Team members need to support the project
manager for the team to be successful.
 The project manager requires their respect
and must have credibility to carry out the job.
The members need to believe in the project
manager’s ability to get the job done.
• Communication systems
 In order to develop a good working team
spirit, formal or informal meetings are
important.
 Accept and address conflict.
 Efficient communication with external bodies
is particularly important.
• Team separation 
 Team members are expected to deliver on
time what they agreed to.
 Being apart from the other team members
does not mean they have reduced their
expectations.
 Reasons Why Teams Fail
• Poorly developed or unclear goals
• Poorly defined project team roles &
interdependencies
• Lack of project team motivation
• Poor communication
• Poor leadership
• Turnover among project team members
• Dysfunctional behavior
 Stages in Group Development

1. Forming – members become acquainted

2. Storming – conflict begins
3. Norming – members reach agreement
4. Performing – members work together
5. Adjourning – group disbands
 Building High-Performing Teams
Make the project team tangible.
– Publicity
– Terminology & language
Reward good behavior.
– Flexibility
– Creativity
– Pragmatism
Develop a personal touch.
– Lead by example
– Positive feedback for good performance
– Accessibility & consistency
 Virtual Project Teams
Use electronic media to link members of a
geographically dispersed project team.
How Can Virtual Teams Be Improved?
 Use face-to-face communication when
possible.
 Don’t let team members disappear.
 Establish a code of conduct.
 Keep everyone in the communication loop.
 Create a process for addressing conflict.
 Conflicts
Conflicts:
• a way of life in a project structure
• generally occur at any level in the
organization,
• usually occurs as a result of conflicting
objectives.
• The project manager has often been
described as a conflict manager.
• The ability to handle conflicts requires an
understanding of why they occur.
• Asking and answering these four
questions may help handle and prevent
conflicts.
1. What are the project objectives and are
they in conflict with other projects?
2. Why do conflicts occur?
3. How do we resolve conflicts?
4. Is there any type of analysis that could
identify possible conflicts before they
occur?
 Conflict Management
Conflict is a process that begins
when you perceive that someone has
frustrated or is about to frustrate a
major concern of yours.
Categories Views
• Goal-oriented • Traditional
• Administrative • Behavioral
• Interpersonal • Interactionist
 Sources of Conflict

Organizational Interpersonal
Reward systems  Faulty attributions
Scarce resources  Faulty communication
Uncertainty  Personal grudges &
Differentiation prejudices
• Sometimes conflict is “meaningful” and
produces beneficial results.
• A project manager should report high
enough so that he can get timely assistance
in resolving conflicts.
• Project managers must plan for conflict
resolution.
• The best way of resolving conflicts is by
establishing priorities.
• The ultimate responsibility for establishing
priorities rests with top-level management.
Conflict Resolution Modes
• Based upon the situation, the type of
conflict, and whom the conflict is with,
any of these modes could be justified.
1. Confronting / Problem Solving
2. Compromising
3. Forcing
4. Smoothing / Accommodating
5. Withdrawing / Avoiding
Confronting / Problem Solving
• Sometimes referred to as “collaborating” -Generally
viewed as the best method for conflict resolution
• Appropriate when:
• Conflicting parties can both get at least what they
want and maybe more to reduce cost, create a
common power base and attack a common
enemy
• Skills are complimentary
• There is enough time
• There is trust
• You have confidence in the other’s ability
 Compromising
• To negotiate or bargain for a solution to give both parties
some degree of satisfaction
• Give and take” or “win-win” as Neither party gets
everything they want or need (“lose-lose”)
• Appropriate when:
• Others are as strong as you are
• You haven’t time to win
• You want to maintain the relationship
• You are not sure you are right
• You get nothing if you don’t
• Stakes are moderate
• You need to avoid giving the impression of “fighting”
 Forcing
• Competing, Being Uncooperative, Being Assertive
• When one party imposes the solution on the other party
• “Win-Lose” situation, One wins at the expense of the loser
• Does not always address the underlying source of conflict and often
reduces team morale
• Appropriate when:
• You are right
• Stakes are high
• You are stronger
• A do-or-die situation exists
• Important principles are at stake
• In short term (one time) deals
• When the relationship is unimportant
• When a quick decision must be made
 Withdrawing / Avoiding
• Temporary solution at best as conflict and source of
conflict will continue through project life
• Some view as cowardice and unwillingness to address
the conflict situation
• Appropriate when:
• You can’t win
• Stakes are low
• Stakes are high, but you are not ready
• You need to gain time
• To preserve neutrality or reputation
• When you think the problem will “go away”
• When you win by delay
 Smoothing / Accommodating
• Emphasizes areas of agreement and tends to downplay
conflict instead of solving conflict
• May make sacrifices to satisfy the needs of the other party
• To reach an overarching or higher goal
• To create obligation for a trade-off at a later date
• When the stakes are low
• When liability is limited
• To maintain harmony
• When any solution will be adequate
• To create goodwill
• When you will lose anyway
• To gain time
 Negotiation
Negotiation is a process that is
predicated on a manager’s ability to
use influence productively.
Questions to Ask Prior to Entering a Negotiation
1. How much power do I have?
2. What sort of time pressures are there?
3. Do I trust my opponent?
 Principled Negotiation

1. Separate the people from the problem.

2. Focus on interests, not positions.

3. Invent options for mutual gain.

4. Insist on using objective criteria.

The End