Chapter 2

Strategy and Project Management

 Overview

• Project is a mean to achieve various organizational

objectives.

• Project as vehicle.

• To execute organizational strategy.

 Project Life Cycle
• CONCEPTUALIZATION:

• PLANNING:

• EXECUTION:

• TERMINATION:
 Project framework
Initiate Prepare Execute & Close
Control

Track
Track
&&Control
Control

• Scope Management
Definition Planning • Workplan
Definition/ / Planning Completion
Scope and Management Completion&&
Startup
Startup Scope/ / and
• Resources
Reporting
Reporting Assessment
Requirements Resource
Resource Assessment
Requirements
Allocation
Allocation Management (Time,
Cost, People)
• Deliverables Mgmt
• Quality Management

Review
Review

Risk & Issue Management

Donor/Sponsor Management
Communication Management
continued…..

These are the steps in the Project life cycle as you learn it. How do we do it in the real world?
Each of these parts are important to the success of a project (interlinked chain of events) therefore good management
in each part very important.
e.g. does the executing / implementation follow the plan, what do you do when something changes?
Is the outcome as we imagined in the beginning?

Initiation (Defining ) stage

Goals, feasibility study, specifications, tasks, responsibilities
Planning stage
Schedules, budgets, resources, risks, staffing
Executing stage
Status reports, changes, quality, forecasts
Delivering stage
Train customers, transfer documents, release resources, release staff, reasons learned

Here we might want to talk about the stage gate review (because we deleted that part from this version)--

Between each phases of the project framework, we should stop and think about what the next steps should be.
Did we manage to achieve our milestones / deliverables, do we need more resources than is affordable?,
Do we need to cancel the project?
Etc.
 Project and Organizational strategy
• Within organization project success is contextual.
• Organization itself matters(culture, structure and strategy), flourish
environment.
• Issues of project can vary widely company
• Care, goals strategy set for team may be critical as compared to policies,
structure, operating system(supportive)
• Issues are important to understand how to manage project.
• Prior to project; project manager and team must be aware of structure,
reporting relationship must be specified, rules and regulation must be
established, staffing issues must be identified,
• In many organizations projects management practices are not operating norm
• Project exist outside of formal and process oriented activities. Many
companies are simply not structured for successful completion of project.
 Projects Reflect Strategy
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving force
behind project development
Some examples include:

strategy project
redevelop products or processes, to reengineer products or processes.
change strategic direction or product to create new product lines.
portfolio configuration,
improve cross-organizational to install an enterprise IT system.
communication & efficiency

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 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

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-8

 Developing Vision and Mission Statements

• Vision and mission statement establish a sense of what organization hope to

achieve

• Corporate vision serves as a focal point for members of the organization

• Which help to pulled them into different direction

• Tie breaker (beneficial in establishing priorities)

• Vision is Important source of motivation and purpose.

• “Where there is no vision people are perish” prov.

• Firms also use their vision and mission statement in evaluating new project
opportunities. Because its screening device
 Formulating, Implementing and Evaluating

• Project is key element in strategy implementation.

• Firm spends significant time and resources to evaluating business

opportunities through corporate vision or mission, assessing internal
strength and weaknesses, external opportunities and threats,
establishing long term objectives, and generating and selecting various
strategic alternatives .

• All above mentioned component are related to strategy formulation and

implementing over all objectives.

• Example of new product development is response to business opportunity.

 Making Cross Functional Decisions

• Business strategy is corporate venture

• To meet overall objectives It requires commitment and shared

resources of all functional areas

• CFD is critical feature of PM, experts from various groups.

 Achieving Objectives
• Projects are mean and most effective tool to allow objectives to met.

• It is effectively used in both environment internal or external

• Seeking market with low cost

• Innovative products

• Superior quality
 Relationship of Strategic Elements

Mission

Objectives

Strategy Goals Programs

Fig 2.1

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 FIGURE 2.3 Illustrating Alignment Between Strategic Elements
and Projects
Mission
“ the business of
supplying system
components to a world-
wide nonresidential
air conditioner market.”

Objectives
a. 14.5% ROI
b. Non-decreasing dividends
c. Socially-conscious image

Strategies Goals Programs

a. Existing products in existing Year 1: 8% ROI, $1 dividend, 1. Product Cost Improvement
markets with image maintain image, unit cost Program (PCIP)
maintenance down 5% 2. Image Assessment Program
b. Existing products in new Year 2: 9% ROI, $1 dividend, (IAP)
markets (foreign, restricted) improve image 3. Product Redesign Program
c. New products in existing Year 3: 12% ROI, $1 dividend, (PRP)
markets (significantly improve improve image 4. Product Development Program
image) Year 4: 14% ROI, $1.10 dividend (PDP)

02-
 Role of strategy in PM
• Levels of influence (strategic/ tactical and operational)
• Ignore its role at strategy development
• PM Influence more on tactical and operational levels
• Little or no role in strategic process.
• Lack of definable objectives of project
• Inevitable conflicts with line manager on resources
• PM understand the strategic process
• PM can make input in achieving success
Continued…….
• Strategy defined
• Set of principles that guide and inform actions and
decision of managers.
• It is about setting objectives for organizations and
providing a path for its progress Towards those objectives.
• Good strategy is central to success in any organization
• Definition of strategy can not be universally agreed.
• Strategy (in context of PM) is outcome of strategic process
Continued………..
• The strategic process ensures the outcome.
• Includes two elements: Assessment of the process and anticipation of
future
• Conducted at two levels: The organizational level (the aspects of
interest are external to project but those policies will effect
objectives)and
• Project levels ( interest is at internal level and generated by PM and
refer to project specifics). Project strategy must be align with
organizational strategy.
 Stakeholder Management
Stakeholders are all individuals or groups who have
an active stake in the project and can potentially impact,
either positively or negatively, its development.

Sets of project stakeholders include:

Internal Stakeholders External Stakeholders

• Top management • Clients
• Accountant • Competitors
• Other functional managers • Suppliers
• Project team members • Environmental, political, consumer,
and other intervenor groups

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 Project Stakeholder Relationships
Parent
Organization
Other External
Functional Environment
Managers

Project Top
Clients Management
Manager

Project
Fig 2.3 Accountant Team

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 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

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 Project Stakeholder Management Cycle
Identify
Stakeholders

Implement Gather Information

Stakeholder on Stakeholders
Management
Strategy
Project
Management Team
Predict
Identify
Stakeholder
Stakeholders’
Behavior
Mission

Identify
Stakeholder Determine
Strategy Stakeholder
Strengths &
Weaknesses
Fig 2.4

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-21

 The strategy Process
Organizational Competitive Analysis
Strategy
(Senior Management ) Organizational Requirements

Aggregate Project Existing Projects

Plan
(Management Steering Organizational Capabilities and Capacities
Board)

Project Strategy
Prioritized Customer Requirements
(Project Manager )

Supplier Capabilities

Project Activities
(Project Team)
 The strategy process

Organizational Strategy
• High level decisions at senior management level
• Within organizations
• Are reflected through project activities
• Organizational strategy take organizational requirement (projected sale/cost)
• Competitive analysis (SWOT)
• Changes in technology
• New entrants
• Other forces (currency and legal)
• Effect organizations
Continued…………
• The outcome of strategy is the statement of policy
• Provides focus for all activities including organization and project
• Defines aspects of product and services offerings
• Invest cost, time and efforts
• To achieve performance objectives
 The Aggregate Project Plan
• Assesses the contribution of each project to the
organizational strategy
• Determines using objective criteria what projects are to be
undertaken
• Rank the relative importance of projects being carried out
• Set timings for those projects
• Assesses the capability, resources and logic requirements of
each project
Continued………………
• Without above mentioned steps the firms can result in:
• Take too many projects resulting in over starches resources
• Fail to limit scope of project (allowing non benefit generated
activities)
• ‘Invest in Managerial Ego’ Tend to expand resources (produce little
benefit and emotional attachment for manager)
• Have project goals out of line of organizational objectives
• Ignore key issues concerning projects until it is too late
• Lack of balance between short-term and long-term goals
 Project Strategy
• Traditionally PM considers three important elements in strategy
• Time
• Cost
• Quality
• These objectively can be defined
• These provides goals for project
• Then Flexibility
• Three elements considers two other elements :
• Performance expressed as (shortest project duration, low cost and highest level of quality)
• Conformance expressed as (project guaranteed to deliver on time, finish within budget, meet
defined quality)
Continued…….
• Developing strategy is easy if customers know what
they really want
• The ability of project system to respond change is
known as flexibility
• QFD
 Trade-Off Decision in Strategy
Time Performance Quality
Cost Performance Quality
Performance Quality
Prioritization
Planning
Execution
Resources starched
Removed by Modern Management
Recent PM does face
 Measuring Project Success
• Results meets stated needs
• Result within given constraints
• Results within minimum cost
• Result with benefit to Project team
• Result with benefit to all stakeholders
 Measuring Project Failure
• Project ran over time
• Project ran over budget
• Project out put does not meet project needs
 Developing Strategy
• The relationship of interim objective with overall objective
• High level of complexities with project
• Provides a mean to achieve project objective
Objective 1 Reduce product lead-time (Establish managed portfolio, Re-
engineer project process, implement new design Technology )
Objective 2 Achieve balanced work allocation (determine workload
due to current projects)
Objective 3 Understand current process (Map current process)
 Organizational Structure
Consists of three key elements:

1. Designates formal reporting relationships

– number of levels in the hierarchy
– span of control

2. Groupings of:
– individuals into departments
– departments into the total organization

3. Design of systems for

– effective communication
– coordination
– integration across departments

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 Forms of Organizational 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

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 Functional Structures for Project
Management
Strengths Weaknesses
1. Firm’s design maintained 1. Functional siloing

2. Fosters development of in- 2. Lack of customer focus

depth knowledge

3. Standard career paths 3. Projects may take longer

4. Project team members remain 4. Projects may be sub-

connected with their functional optimized
group

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 Project Structures for Project Management

Strengths Weaknesses
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. No pool of specific knowledge

management experts
4. Workers unassigned at project
5. Rapid response end

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 Matrix Structures for Project Management

Strengths Weaknesses
1. Suited to dynamic 1. Dual hierarchies mean two
environments bosses

2. Equal emphasis on project 2. Negotiation required in order

management and functional to share resources
efficiency

3. Promotes coordination across 3. Workers caught between

functional units competing project & functional
demands
4. Maximizes scarce resources

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-37

 Heavyweight Project Organizations
Organizations can sometimes gain tremendous benefit from creating a fully-
dedicated project organization

Lockheed Corporation’s “Skunkworks”

• Project manager authority expanded

• Functional alignment abandoned in favor of market opportunism
• Focus on external customer

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 Project Management Offices
Centralized units that oversee or improve the management of
projects

Resource centers for:

– Technical details offloaded from manager
– Expertise in project management skills
– Repository of lessons learned, documentation
– Center for project management excellence

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 Forms of PMOs
• Weather station – monitoring and tracking

• Control tower – project management is a skill to be protected and

supported

• Resource pool – maintain and provide a cadre of skilled project

professionals

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 Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and guide behavior, is
shared by some subset of organization members and is taught to all new members of
the company.

Key factors that affect culture development

– Technology
– Environment
– Geographical location
– Reward systems
– Rules and procedures
– Key organizational members
– Critical incidents

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 Cultural Influences
• Technology
• Environment
• Geographical location
• Reward systems
• Rules and procedures
• Key organizational members
• Critical incidents

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 Culture Affects Project Management

• Departmental interaction

• Employee commitment to goals

• Project planning

• Performance evaluation

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• Introduction
• Project life cycle
• Project and organizational strategy
• The role of strategy in PM
• The strategy process
• Resolving trade-off decision in strategy
• Deploying strategy
• Stakeholder Management