Business Project Management!

Session 2!
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Organization Strategy and !
Organizational Structure and Culture"
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San Diego, CA!
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AGENDA!

The Strategic Management Process!

Payback versus Net Present Value approaches!
Project Prioritization!
Organizational Structures!
Dimensions of Organizational Culture!

The Strategic Management process entails phases for defining

a mission, formulating strategies, and implementing projects!
Strategic Management Process

Review and
Develop Mission
& Vision

Environment
Analysis

Strategy
Objectives
and Portfolio

Strategy
Implementation

Project
Selection and
Implementation

Vision
Criteria

External

Set Strategy
&Objectives

Strategy
Execution

Project
Selection

Mission
Embedding

Internal

Portfolio of
Choices

Tactical
Execution

Project
Execution

-Vision Criteria
Development
-Weighing of
Criteria

-SWOT and
-SPECIFIC
Capability Analysis -MEASURABLE
-PESTEL
-ASSIGNABLE
-REALISTIC
-TIME-RELATED

-Resource allocation -Project Selection

-Prioritization
-Motivation
-Tracking of Success

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

Portfolio of Projects!
Project Portfolio

Compliance (and
emergency) projects are
regulatory demanded

Compliance
Project

Strategic
Projects

Operational
Projects

Strategic Projects
support revenue and
market share generation
along the vision and
mission
Operational Projects
support current
operations (TQM,
efficiency, synergistic,
cost oriented)

Project Portfolio

Sources: Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

AGENDA!

The Strategic Management Process!

Payback versus Net Present Value approaches!
Project Prioritization!
Organizational Structures!
Dimensions of Organizational Culture!

Payback approaches to evaluating projects are very simplistic!

Application
Simplistic

Does not account for time

value of money

No uncertainty evaluation
Does not assume cash
flow beyond investment
period

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

Net Present Value Approach!

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

AGENDA!

The Strategic Management Process!

Payback versus Net Present Value approaches!
Project Prioritization!
Organizational Structures!
Dimensions of Organizational Culture!

Project Screening Matrix!

Selection models need to

mirror the objectives of
the entire organization

Multi-Weigthed models
are usually weighted by
multiple people

Qualitative and
quantitative criteria

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

Project Priority Evaluation Form!

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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AGENDA!

The Strategic Management Process!

Payback versus Net Present Value approaches!
Project Prioritization!
Organizational Structures!
Dimensions of Organizational Culture!

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One approach for project structures includes embedding into

functional organizations!
Functional Project Coordination
President
HR, Finance, Administration

Functional Project Coordination and Alignment

Marketing

Engineering

Procurement and
Logistics

Manufacturing

Sales

Electronics

Logistics

Fabrication

Marketing

Software

Supply Chain

Assembly

International

Mechanical

Purchasing

Scheduling

Adv.
Clear roles/responsibilities
Synergies and flexibility across
Functions
Expertise

Disadv.

Integration
Customer Focus
Ownership challenges
Speed

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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A second approach includes dedicated project teams!

Dedicated Project Teams
President
HR, Finance, Administration

Marketing

Engineering

Procurement and
Logistics

Manufacturing

Project Manager

Sales

Electronics

Logistics

Fabrication

Member 1

Marketing

Software

Supply Chain

Assembly

Member 2

International

Mechanical

Purchasing

Scheduling

Member 3

Adv.

Disadv.

Speed of Project
Simple to Set-up
Cross-Functional
High level of motivation and
Cohesiveness

Expensive
Limited Technological embedding
Post project transitions are difficult

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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A third approach includes a projectized organization

structure!
Projectized Organization Structure
President

HR

Marketing

Legal

Finance

Project Manager A

Project Manager B

Project Manager C

Engineering

Engineering

Innovation

Manufacturing

Manufacturing

Supply Chain

Procurement

Subcontractors

Subcontractors

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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A further approach for project structures includes matrix

organizations!
Matrix Organization

President
HR, Finance, Administration

Matrix
Director of Projects

Engineering

Procurement and
Logistics

Manufacturing

Project Administration

Electronics

Logistics

Fabrication

Software

Supply Chain

Assembly

Mechanical

Purchasing

Scheduling

Project Manager A

Project Manager B

Adv.

Disadv.

Efficient
Project Focus
Flexible

Conflict
Speed
Complex hierarchy structure

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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AGENDA!

The Strategic Management Process!

Payback versus Net Present Value approaches!
Project Prioritization!
Organizational Structures!
Dimensions of Organizational Culture!

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Cultural Dimensions!
Identity
Job

Organization
Team

Individual

Group
Management Focus

Task

People
Unit Integration

Independent

Interdependent
Control

Loose

Tight
Risk Tolerance

Low

High
Rewards

Performance

Other
Conflict Tolerance

Low

High
Orientation

Means

Ends
Open System

Internal

External

Sources: adapted from Larson, E.W. and Gray, C.F. (2015). Project Management: The Managerial Process. McGraw Hill. 6th Edition.

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