Hong Kong Zhuhai Macao Bridge Research Proposal

Hong Kong Zhuhai Macao Bridge Research Proposal

Organization Strategy and Project Selection Why Project Managers Need to Understand the Strategic Management Process • Changes in the organization’s mission and strategy –Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. –Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission. The Strategic Management Process: An Overview • Strategic Management –Provides the theme and focus of the future direction for the firm. • Responding to changes in the external environment— environmental scanning • Allocating scarce resources of the firm to improve its competitive position—internal responses to new action programs –Requires strong links among mission, goals, objectives, strategy, and implementation. Strategic Management Process (cont’d) • Four of Activities of the Strategic Management Process 1. Review and define the organizational mission. 2. Set long-range goals and objectives. 3. Analyze and formulate strategies to reach objectives. 4. Implement strategies through projects Strategic Management Process FIGURE 2.1 Characteristics of Objectives S Specific Be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources T Time related EXHIBIT 2.1 Project Portfolio Management Problems • The Implementation Gap –The lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy. • Organization Politics –Project selection is based on the persuasiveness and power of people advocating the projects. • Resource Conflicts and Multitasking –The multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects. Benefits of Project Portfolio Management • Builds discipline into project selection process. • Links project selection to strategic metrics. • Prioritizes project proposals across a common set of criteria, rather than on politics or emotion. • Allocates resources to projects that align with strategic direction. • Balances risk across all projects. • Justifies killing projects that do not support organization strategy. • Improves communication and supports agreement on project goals. EXHIBIT 2.2 Portfolio of Projects by Type FIGURE 2.2 A Portfolio Management System • Selection Criteria –Financial: payback, net present value (NPV) –Non-financial: projects of strategic importance to the firm. • Multi-Weighted Scoring Models –Use several weighted selection criteria to evaluate project proposals. Financial Models • The Payback Model –Measures the time it will take to recover the project investment. –Shorter paybacks are more desirable. –Emphasizes cash flows, a key factor in business. –Limitations of payback: • Ignores the time value of money. • Assumes cash inflows for the investment period (and not beyond). • Does not consider profitability. Financial Models (cont’d) • The Net Present Value (NPV) model –Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows. • Positive NPV: the project meets the minimum desired rate of return and is eligible for further consideration. • Negative NPV: project is rejected. Net Present Value (NPV) and Internal Rate of Return (IRR): Example Comparing Two Projects EXHIBIT 2.3 Project Screening Matrix FIGURE 2.3 Applying a Selection Model • Project Classification –Deciding how well a strategic or operations project fits the organization’s strategy. • Selecting a Model –Applying a weighted scoring model to bring projects to closer with the organization’s strategic goals. • Reduces the number of wasteful projects • Helps identify proper goals for projects • Helps everyone involved understand how and why a project is selected Project Proposals • Sources and Solicitation of Project Proposals –Within the organization –Request for proposal (RFP) from external sources (contractors and vendors) • Ranking Proposals and Selection of Projects –Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power. • Managing the Portfolio –Senior management input –The priority team (project office) responsibilities Major Project Proposal FIGURE 2.4A Risk Analysis FIGURE 2.4B Managing the Portfolio • Senior Management Input –Provide guidance in selecting criteria that are aligned with the organization’s goals –Decide how to balance available resources among current projects • The Priority Team Responsibilities –Publish the priority of every project –Ensure that the project selection process is open and free of power politics. –Reassess the organization’s goals and priorities –Evaluate the progress of current projects Project Screening Process FIGURE 2.5 Priority Analysis FIGURE 2.6 Project Portfolio Matrix FIGURE 2.7 Project Portfolio Matrix Dimensions • Bread-and-butter projects – Involve evolutionary improvements to current products and services. • Pearls – Represent revolutionary commercial advances using proven technical advances. • Oysters – Involve technological breakthroughs with high commercial payoffs. • White elephants – Projects that at one time showed promise but are no longer viable. Key Terms Balanced scorecard Implementation gap Net present value Payback Organizational politics Priority system Priority team Project portfolio Project screening matrix Sacred cow Strategic management process Chapter 3: Organization Structure 1–1 Project Management Structures • Challenges to Organizing Projects – The uniqueness and short duration of projects relative to ongoing longer-term organizational activities – The multidisciplinary and cross-functional nature of projects creates authority and responsibility dilemmas. • Choosing an Appropriate Project Management Structure – A project management system provides a framework for launching and implementing project activities within a parent organization. – The best system balances the needs of the project with the needs of the organization by defining the interface between the project and parent organization in terms of authority, allocation of resources, and eventual integration of project outcomes into mainstream operations. 3–2 Project Management Structures • Organizing Projects: Functional organization –Different segments of the project are delegated to respective functional units. –Coordination is maintained through normal management channels. –Used when the interest of one functional area dominates the project or one functional area has a dominant interest in the project’s success. 3–3 Functional Organizations FIGURE 3.1 3–4 Functional Organization Functional Organization of Projects • Advantages 1. No Structural Change 2. Flexibility 3. In-Depth Expertise • Disadvantages 1. Lack of Focus 2. Poor Integration 3. Slow 4. Lack of Ownership 4. Easy Post-Project Transition 3–6 Functional Organization of Projects (advantages) 1. No Structural Change • Projects are completed within the basic functional structure of the parent organization. There is no radical alteration in the design and operation of the parent organization 2. Flexibility • There is maximum flexibility in the use of staff. Switching of appropriate specialists between projects 3. In-Depth Expertise • With narrow scope, in-depth expertise can be brought to bear on the most crucial aspects of the project. 4. Easy Post-Project Transition • Normal career paths within a functional division are maintained. 3–7 Functional Organization of Projects (disadvantages) 1. Lack of Focus • Each functional unit has its own core routine work to do; responsibilities get pushed aside to meet primary obligations. • Different priorities for different units. 2. Poor Integration • Functional specialists tend to be concerned only with their segment of the project 3. Slow • Slow response time—project information and decisions have to be circulated through normal management channels. 4. Lack of Ownership • Week motivation; additional burden; no identification; Lack of ownership discourages strong commitment. 3–8 Project Management Structures (cont’d) • Organizing Projects: Dedicated Teams –Teams operate as separate units under the leadership of a full-time project manager. –The interface between the parent organization and the project teams will vary between tight rein through financial controls or maximum freedom to get the project done. –Projects are the dominant form of business (construction firm or a consulting firm). –In a projectized organization where projects are the dominant form of business, functional departments are responsible for providing support for its teams. 3–9 Dedicated Project Team FIGURE 3.2 3–10 Project Organization: Dedicated Team • Advantages • Disadvantages 1. Simple 1. Expensive 2. Fast 2. Internal Strife 3. Cohesive 3. Limited Technological Expertise 4. Cross-Functional Integration 4. Difficult Post-Project Transition 3–11 Project Organization: Dedicated Team (advantages) 1. Simple • the functional organization remains intact with the project team operating independently 2. Fast • Participants devote their full attention to the project and are not distracted by other obligations and duties. Response time tends to be quicker because most decisions are made within the team and are not deferred up the hierarchy. 3. Cohesive • Participants share a common goal and personal responsibility toward the project and the team. 4. Cross-Functional Integration • Specialists from different areas work closely together and become committed to optimizing the project. 3–12 Project Organization: Dedicated Team (disadvantages) 1.Expensive •Project manager and resources are assigned on a full-time basis (duplication of efforts across projects and a loss of economies of scale). 2.Internal Strife •A disease known as projectitis develops; A strong we–they divisiveness emerges between the project team and the parent organization. Miss-integration of outcomes into mainstream 3.Limited Technological Expertise •Technical expertise is limited somewhat to the talents and experience of the specialists assigned to the project. 4.Difficult Post-Project Transition •Transition back of employees to their original functional departments may be difficult (prolonged absence) 3–13 Projectized Organizational Structure FIGURE 3.3 3–14 Projectized Organization Project Management Structures (cont’d) • Organizing Projects: Matrix Structure –Hybrid organizational structure (matrix) is overlaid on the normal functional structure. • Two chains of command (functional and project) • Project participants report simultaneously to both functional and project managers. –Matrix structure optimizes the use of resources. • Allows for participation on multiple projects while performing normal functional duties. • Achieves a greater integration of expertise and project requirements. • Designed to optimally utilize resources by having individuals work on multiple projects as well as being capable of performing normal functional duties. 3–16 Matrix Organization Structure FIGURE 3.4 3–17 Division of Project Manager and Functional Manager Responsibilities in a Matrix Structure Project Manager Negotiated Issues Functional Manager What has to be done? Who will do the task? How will it be done? When should the task be done? Where will the task be done? How much money is available to do the task? Why will the task be done? How will the project involvement impact normal functional activities? How well has the total project been done? Is the task satisfactorily completed? How well has the functional input been integrated? TABLE 3.1 3–18 Different Matrix Forms • Weak Form –The authority of the functional manager predominates and the project manager has indirect authority. • Balanced Form –The project manager sets the overall plan and the functional manager determines how work to be done. • Strong Form –The project manager has broader control and functional departments act as subcontractors to the project. 3–19 Different Matrix Forms (weak form) –The authority of the functional manager predominates and the project manager has indirect authority. –This form is very similar to a functional approach with the exception that there is a formally designated project manager responsible for coordinating project activities. –Functional managers are responsible for managing their segment of the project and decide who does what and when the work is completed. –The project manager basically acts as a staff assistant who monitor the project indirectly and draws the schedules and checklists, collects information on status of work, and facilitates project completion. 3–20 Weak Matrix Organization Different Matrix Forms (balanced form) –The project manager is responsible for defining what needs to be accomplished while the functional managers are concerned with how it will be accomplished. –The project manager establishes the overall plan for completing the project, integrates the contribution of the different disciplines, sets schedules, and monitors progress. –The functional managers are responsible for assigning personnel and executing their segment of the project according to the standards and schedules set by the project manager. 3–22 Balanced Matrix Organization Different Matrix Forms (strong form) –Attempts to create the “feel” of a project team within a matrix environment. –The project manager controls most aspects of the project, including scope trade-offs and assignment of functional personnel as well as controls when and what specialists do and has final say on major project decisions. –The functional manager has title over her people and is consulted on a need basis. 3–24 Composite Organization PMO Project Organization: Matrix Form • Advantages • Disadvantages 1. Efficient 1. Dysfunctional Conflict 2. Strong Project Focus 2. Infighting 3. Easier Post-Project Transition 3. Stressful 4. Slow 4. Flexible 3–26 Project Organization: Matrix Form (advantages) 1. Efficient • reduces duplication required in a projectized structure through sharing resources & dividing personnel energy on as-needed basis. 2. Strong Project Focus • provided by having a formally designated project manager who is responsible for coordinating and integrating contributions of different units. 3. Easier Post-Project Transition • specialists maintain ties with their functional group, so they have a homeport to return to once the project is completed. 4. Flexible • provide for flexible utilization of resources and expertise within the firm. 3–27 Project Organization: Matrix Form (disadvantages) 1. Dysfunctional Conflict • tension between functional managers and project managers who bring critical expertise and perspectives to the project. 2. Infighting • Any situation in which equipment, resources, and people are being shared across projects and functional activities lends itself to conflict and competition for scarce resources. 3. Stressful • Violates the management principle of unity of command. Project participants have at least two bosses—their functional head and one or more project managers. 4. Slow • Decision making can get slow down as agreements have to be forged across multiple functional groups. (balanced matrix). 3–28 3–29 Organizational Influences on Projects Choosing the Appropriate Project Management Structure • Organization (Form) Considerations • Project Considerations 3–31 Choosing the Appropriate Project Management Structure • Organization (Form) Considerations –How important is the project to the firm’s success? –What percentage of core work involves projects? • If over 75 percent of work involves projects, then an organization should consider a fully projectized organization. • If an organization has both standard products and projects, then a matrix arrangement would appear to be appropriate. • If an organization has very few projects, then a less formal arrangement is probably all that is required. –What level of resources (human and physical) are available? 3–32 Choosing the Appropriate Project Management Structure (cont’d) • Project Considerations –Size of project –Strategic importance –Novelty and need for innovation –Need for integration (number of departments involved) –Environmental complexity (number of external interfaces) –Budget and time constraints –Stability of resource requirements 3–33 Organizational Culture (importance) • There is a strong connection between project management structure, organizational culture, and project success. • Organizations successfully manage projects within the traditional functional organization because the culture encouraged cross-functional integration. • Conversely we have seen matrix structures break down because the culture of the organization did not support the division of authority between project managers and functional managers. • Companies relying on independent project teams because the dominant culture would not support the innovation and speed necessary for success. 3–34 CBFS Bachelor’s Degree Program Project Management Course Code : UG104 Chapter 1 Introduction to Project Management. What is a Project? • Project Defined –A complex, nonroutine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs. • Major Characteristics of a Project –Has an established objective. –Has a defined life span with a beginning and an end. –Requires across-the-organizational participation. –Involves doing something never been done before. –Has specific time, cost, and performance requirements. 1–2 Program versus Project • Program Defined –A series of coordinated, related, multiple projects that continue over an extended time and are intended to achieve a goal. –A higher level group of projects targeted at a common goal. –Examples: • Projects: – adding a warehouse; setting up a production line, building a bridge, construct a house • Program: – The Manhattan , the Apollo , the Operation Desert Storm. & a public housing program 1–3 Comparison of Routine Work with Projects Routine, Repetitive Work Projects Taking class notes Writing a term paper Daily entering sales receipts into the accounting ledger Setting up a sales kiosk for a professional accounting meeting Responding to a supply-chain request Developing a supply-chain information system Practicing scales on the piano Writing a new piano piece Routine manufacture of an Apple iPod Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and stores 10,000 songs Attaching tags on a manufactured product Wire-tag projects for GE and Wal-Mart TABLE 1.1 1–4 Project Life Cycle FIGURE 1.1 1–5 Project Management ➢ The discipline of carefully projecting or planning, organizing, motivating and controlling resources to achieve specific goals and meet specific success criteria ➢The application of knowledge, skills, tools, and techniques to project activities …