PROJECT MANAGEMENT

Rudi ROZMAN, Ph.D.
Aljaž Stare, M.Sc.
PROJECT MANAGEMENT
Ljubljana, 2010

Contents
1 INTRODUCTION TO PROJECT MANAGEMENT ..................................................................... 4
1.1 PROJECTS ....................................................................................................................................... 4
1.1.1 Project definition .................................................................................................................. 4
1.1.2 Kinds of projects ................................................................................................................... 5
1.1.3 The development of projects .................................................................................................. 6
1.1.4 Project life cycle ................................................................................................................... 6
1.2 MANAGEMENT ............................................................................................................................... 7
1.2.1 Development of management ................................................................................................ 7
1.2.2 Managerial process .............................................................................................................. 8
1.3 GOVERNING-MANAGERIAL AND IMPLEMENTATION PROCESS ............................................................ 9
1.4 PROJECT MANAGEMENT .................................................................................................................. 9
1.5 CONTROL QUESTIONS ................................................................................................................... 10
2 STRATEGIES AND PROJECTS .................................................................................................. 10
2.1 INTRODUCTION............................................................................................................................. 10
2.2 GOALS AND THE PURPOSE OF THE PROJECT .................................................................................... 12
2.3 PROBLEM OF RELATIONSHIP BETWEEN STRATEGIES AND PROJECTS ................................................. 15
2.4 THE BUSINESS AND MANAGERIAL PROCESS .................................................................................... 16
2.5 THE DEVELOPED THEORY OF ORGANIZATION ................................................................................. 17
2.6 PURPOSE AND GOALS, STRATEGIES AND PROJECTS, BUSINESS AND ORGANIZATION .......................... 19
2.7 CONCLUSION ................................................................................................................................ 20
2.8 CONTROL QUESTIONS ................................................................................................................... 21
3 START-UP OR BEGINNING (OPENING) OF THE PROJECT ................................................. 21
3.1 PROPOSAL OF THE PROJECT ........................................................................................................... 21
3.2 THE CONTENT OF THE FORMAL (OFFICIAL) OPENING OF THE PROJECT .............................................. 22
3.3 CONTROL QUESTIONS ................................................................................................................... 23
4 PROJECT PLANNING ................................................................................................................. 23
4.1 NETWORK PROGRAMMING ............................................................................................................ 23
4.2 LIST OF ACTIVITIES ....................................................................................................................... 24
4.3 NETWORK DIAGRAM ..................................................................................................................... 25
4.4 TIME ANALYSIS AND PLAN OF THE PROJECT ................................................................................... 26
4.5 RESOURCES PLANNING ................................................................................................................. 27
4.6 PLANNING AND CONTROLLING COSTS ............................................................................................ 28
4.7 PERT APPROACH.......................................................................................................................... 30
4.8 CONTROL QUESTIONS ................................................................................................................... 30
5 RISK MANAGEMENT ................................................................................................................. 31
5.1 PROJECT RISKS ............................................................................................................................. 31
5.2 RISK MANAGEMENT PROCESS ........................................................................................................ 32
5.3 RISK IDENTIFICATION AND EVALUATION........................................................................................ 33
5.4 RISK REDUCING PLAN DEVELOPING ............................................................................................... 35
5.5 RISK CONTROL ............................................................................................................................. 36
5.6 CONTROL QUESTIONS ................................................................................................................... 37
6 PLANNING ORGANIZATION OR ORGANIZING THE PROJECT ........................................ 37
6.1 DEFINITION OF PLANNING PROJECT ORGANIZATION ........................................................................ 37
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6.2 WORK BREAK-DOWN STRUCTURE (WBS) ...................................................................................... 39
6.3 PROJECT STAKEHOLDERS .............................................................................................................. 39
6.4 POSITION OF THE PROJECT WITHIN THE ORGANIZATIONAL STRUCTURE ............................................ 40
6.4.1 Project within the existing organization .............................................................................. 41
6.4.2 Project organizational structure .......................................................................................... 41
6.4.3 Project matrix structure ...................................................................................................... 42
6.5 PROJECTS SUPPORTING ORGANIZATIONAL CULTURE ....................................................................... 42
6.5.1 Definition and characteristics of organizational culture ...................................................... 42
6.5.2 Project supporting values and changing the culture............................................................. 43
6.5.3 Creativity and innovation as important elements of project organizational culture ............... 43
6.5.4 Conclusion ......................................................................................................................... 51
6.6 PROJECT (MANAGEMENT) OFFICE (PMO) ....................................................................................... 52
6.6.1 Project office development .................................................................................................. 52
6.6.2 Project office functions ....................................................................................................... 52
6.7 CONTROL QUESTIONS ................................................................................................................... 53
7 ACTUATION OF PLANNED ORGANIZATION ........................................................................ 54
7.1 HRM ........................................................................................................................................... 54
7.2 PROJECT (TEAM) LEADERSHIP ....................................................................................................... 55
7.2.1 Participative leadership and characteristics of a good leader .............................................. 55
7.2.2 Characteristics of successful teams ..................................................................................... 57
7.3 COMMUNICATIONS ....................................................................................................................... 59
7.3.1 Project communications characteristics .............................................................................. 59
7.3.2 Team meetings .................................................................................................................... 60
7.4 MOTIVATION ................................................................................................................................ 63
7.5 CONTROL QUESTIONS ................................................................................................................... 64
8 PROJECT CONTROL................................................................................................................... 64
8.1 CONTROL DEFINITION ................................................................................................................... 64
8.2 SCHEDULE / TIME CONTROL .......................................................................................................... 65
8.3 COST CONTROL ............................................................................................................................ 67
8.4 QUALITY CONTROL ....................................................................................................................... 68
8.5 PROJECT TRACKING / PROGRESS INFORMATION PROVIDING ............................................................. 69
8.6 PROJECT (MANAGEMENT) INFORMATION SYSTEM (PMIS)............................................................... 70
8.7 CONTROL QUESTIONS ................................................................................................................... 71
9 PROJECT CLOSEOUT ................................................................................................................. 72
9.1 STEPS IN CLOSING A PROJECT ........................................................................................................ 72
9.2 PROJECT CLOSE-OUT ACTIVITIES ................................................................................................... 73
9.3 THE FINAL REPORT ...................................................................................................................... 74
9.4 CONTROL QUESTIONS ................................................................................................................... 75
BIBLIOGRAPHY ................................................................................................................................... 76
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1 INTRODUCTION TO PROJECT MANAGEMENT
1.1 Projects
1.1.1 Project definition
Project is a word, which is very often used and usually contains a positive meaning. The
word project derives from the Latin »proiectum«. It means a composed, rounded and
systematic plan, which has to be implemented in a given time by coordinating the activities
of people, and/or departments.
We would expect that word so often used and phenomenon behind it will be clearly and
uniformly defined in the theory. This is not quite the case. Definitions by different authors
differ to a certain extent. However, the differences are not very big. We can say that
authors differ in emphasizing differently the characteristics of projects. This probably
derives from differences in projects themselves.
Following different definitions by authors we will define project as a broad endeavour
(undertaking, work, activity) of people, conducting interwoven activities and using
different resources. The characteristics of this undertaking are the uniqueness of the
result: product or service, time constraint of the entire endeavour and the cooperation of
many different members and other resources.
The uniqueness or non-repetition of a project means that a project is not repeated in the
same manner with the same activities. This is the main difference compared to repetitive
production of standard products (e.g. cars, TV sets etc.). In the repetitive (mass or series)
production all products and services are produced in the same and a very efficient way.
The customer is usually not known in the time of production. In the case of a project the
activities differ and also the result of a project depends on the requirements of the
customers.
The time constraint means that each project has a starting and finishing event. Project is a
temporary effort. Also activities within the project have their time constraints. It is very
important that a project is implemented as soon as possible.
Within projects many activities can run at the same time in a parallel way whereas in a
mass production they run in a successive way. In a project activities are tightly interwoven
and the coordination of activities, people and other resources can be quite difficult.
Let us – for the sake of easier understanding – mention a few different projects. Building a
house, a factory, a road is quite easy to understand as a project. So is introducing a new
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product or service, or a new technology. Research, preparing a strategic plan or a
reorganization of the company, introducing TQM system are projects without any doubt.
A project consists of many activities and events. Events are the start or the finish of
activities and projects. Some similar activities join to parts of a project, to sub-projects.
Thus, a project can consist of more sub-projects. Similarly, some similar projects together
represent a program. All the projects or programs within an enterprise represent the
portfolio of projects. Thus, a portfolio consists of programs, programs consist of projects,
projects consist of sub-projects.
1.1.2 Kinds of projects
There are different criteria used to divide projects to different kinds of them. Each kind of
projects has its own characteristics. One of the divisions of projects is regarding the result
of projects: product (e.g. a bridge) or service (e.g. a strategic plan).
The next division is according to the person requiring a project: an individual or family
(house construction), company (building a factory), a user (road construction), and state
(tax reform).
Lock (2003, pp. 4-6) distinguishes four groups of projects: construction (construction
business), production (construction of machines, airplanes, ships), managerial (marketing
campaign, restructuring), and research (developing new technologies) projects.
Carroll (2006, pp. 13-14) distinguishes hard (road construction) and soft (reorganization)
projects.
Quite some authors (e.g. Turner, 1993, Thomsett (2002, pp. 45-46) discuss small, big, huge
and multi-projects. The criteria used are complexity, duration, risk, financial requirements,
stakeholders, etc. By complexity we understand not only the number of activities,
duration, and costs but above all the relationships between activities and people, their
interdependences, parallel implementation, diversity of people involved etc. Very complex
projects are e.g. construction of Channel tunnel, space program Shuttle, moon landing,
Endicott oil field etc.
The next division is to determined and stochastic projects. Within the determined projects
data on activities, their determination, duration etc. are quite known in advance. Within
stochastic projects the mentioned items are less known and more risc is involved
concerning the achievement of projects goals.
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1.1.3 The development of projects
Most of the production started as individual. Due to efficiency people tried to develop
series and mass production through which costs and prices decreased. However, it is not
possible to develop the production of all products as mass production.
On the other hand due to efficient production to many products are produced and services
offered compared to demand. Customers have the choice and they require products to be
more individualized. In a way production started to be more individual (JIT production).
Customers require adaptation from the producers. Producers have to develop new
products and services. To introduce novelties the research and development are required.
They are conducted in teams; innovation, research and similar are projects.
The time competition started to take place. It is not important only to produce new
products. It is important to introduce them as soon as possible. This can be achieved
through more parallel activities, which represents the basic idea of projects.
All these changes require changes in organizational or managerial structures and processes.
Development of information systems, strategic planning, TQM are just a few of responding
projects.
Strategies bring huge changes in the enterprises. They represent novelties, are complex; so
is their implementation. The preparation of strategic plans can be based on project
approach and the implementation of strategies represents a project.
Although we can talk about projects already in the ancient times (Egyptian pyramids,
China wall, temples, aquaducts etc.) projects seriously started to develop around the
middle of 20 th century due to mentioned factors. They spread to different areas, within all
the institutions, in all countries around the world. Computer programs dealing with
planning and control developed. There is neither an area nor the place where projects
cannot be found. Their appearance, implementation and development are universal.
1.1.4 Project life cycle
Each project (e.g. building a house) has its start and end. It runs as a process through
different phases. In the house construction example the necessary documentation is
prepared, land activities follow etc. In the case of strategic planning there are activities on
internal and external analysis, vision and goal setting, developing strategies etc., before
strategic plan is accepted. Quite often authors talk about starting or conceptual phase,
development of the project, execution and finish.
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It is interesting to observe human efforts and needs for financing within different stages of
the project life cycle. Within starting phases there is relatively less manpower and costs
required. The starting phases require quite some duration compared to work and costs. In
the middle of the project during the execution phase the work used and costs increase
tremendously. At the end of the project the starting situation is repeated. The use of
financial and human resources thus changes through the project development.
1.2 Management
1.2.1 Development of management
All living beings try to survive in a successful way. Guided by instinct they behave in a
rational way. Due to constraints of means for survival and/or satisfying their needs they
have to act in an efficient way. Human beings – differently to the animals – act also in a
conscious way. They introduce technical division of labour, they establish organizations
consciously to increase the efficiency and the probability and quality of survival.
Both, formally established and developed technical division of labour as well as
development of organizations represent the most important elements of development of
mankind. They are the cornerstones of industrial and post-industrial development.
Technical division of labour exists within organizations. Parts of technically divided labor
(duties) are not isolated; they represent connected parts of the whole. Duties are assigned
to members of organizations. Members are connected to each other. They are in
relationships. They are interacting. All the relationships among them ought to be assigned
in a way, which will yield a rational achievement of organization’s goals. Organizations
are more than a sum of individuals. The relationships, if properly established, result in
synergy. Dynamic relationships among members represent organization (of
organizations – social units).
Technical division of labour requires the coordination (by extent, by time, by content etc.)
of divided labour (duties or even broader of different kinds of relationships). Like the
division of labour the coordination started in an informal way. Through the development it
starts to become formal. Coordination becomes more complex and requires special
knowledge and abilities. The coordination starts to be performed by managers.
Coordination is the content of managerial job, of management. Within the social units
there are specialists and managers. Specialist performs small parts of the entire work of a
social unit whereas managers try to coordinate specialists in a way to achieve best results
of the social unit. Specialists do the business activities whereas managers assure that the
business will be conducted in a rational way.
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The approaches to management have changed through time. School of scientific
management (Taylor) saw employees in a technical way as parts of well-oiled machinery.
Process school made the research on the managerial process as a rationality assuring
process as different to the business process. Managerial process consists of planning,
organizing, leading and control. Other approaches look at employees not as machines but
living beings. Let us mention human relations approach, organizational behaviour
approach, systems’ approach and contingency approach.
1.2.2 Managerial process
Each consciously performed activity of an individual starts by thinking ahead about the
result (product, service) and the process of how to achieve it. This part of the entire process
is known as planning. Following the plan individual has to develop willingness to act
according to the plan. This endeavour to achieve planned results is known as control.
Following the plan and control the execution of the activity starts. The individual
working process thus exists of planning, controlling and executing. The real work is
done within the execution phase. Planning and control try to assure that the execution is
conducted in a rational, efficient way. These two phases can be called organizational or
rationality assuring phases.
How does the described process look like within the social unit. As we said already,
members of the social unit are not independent. They have to plan, control and act in a
mutual way or managers have to plan and control considering relationships among
members. Managerial process as described by all authors on management thus consists of
planning, organizing, leadership and control.
Firstly, managers think ahead about the goals and (business) processes of the entire social
unit. This represents the planning phase. Next, plans have to be made on the individual
level. Duties, responsibilities, authority and communication have to be assigned to
individuals. This phase is known as organizing. Managers have to communicate to
specialists, they motivate them and lead them in the direction of fulfilling their goals. This
managerial phase is called leadership and often includes HRM unless it is shown
separately. Following plan of the business, plan of individuals and leadership
business/execution starts. Execution has to be controlled at the individual and business
level. We talk about individual (organizational) and business control. The entire process is
shown in the next table.
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1.3 Governing-managerial and implementation process
Business planning Execution Business control
Plan of org. Actuation of org. Control of org.
Managerial process has been firstly determined as a coordination process and now as a
rationality assuring process. The managerial job as a process is a decision-making
process. This process consists of cognizing (through analysis: observation of symptoms
and diagnosis as finding reasons for deviations) the subject of the decision-making and its
goal; of looking for different solutions; and selecting the best solution according to the
goal.
Now, let us define management. Management is an organizational (not execution)
process or function, which:
• coordinates the technically divided labor (or broader all the relationships) to an
entity,
• assures the rational actions by planning (business and organization), by actuation
(HRM and leadership),
• makes important decisions on the subject of their responsibility.
Let us now connect management to projects.
1.4 Project management
The subject of project management are projects. In a pure tecnical meaning project
managers coordinate different activities (and employees at the same time). However, they
also coordinate project members: their activities, responsibility (interests, goals), authority,
communication. Compared to repetitive production the prevailing coordination within
projects is horizontal and less vertical. It relies on referent power and less on the power of
position.
According to the managerial process projects represent mainly the organizational part
whereas the business part is managed by general management. Business part is represented
mainly by strategies (e.g. investments), their plan, execution and control. As we will see
projects are the organizational part of business strategies. Projects are planned, actuated
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and controlled at the organizational level. Through project management managers try to
assure a rational achievement of project goals. Project goals are finishing date of the
project, costs and quality of the project.
Project management is also a decision making process. Decisions are made on dates,
activities, project quality, financial means etc.
Project management is defined as an organizational process on projects, which,
• coordinates activities, project members, financial means,
• plans, actuates and controls in order to assure timely, efficient and quality conduct
of project,
• makes decisions on activities, members, costs etc.
1.5 Control questions
1. Define project and discuss its characteristics. Show different projects and discuss
them.
2. Show different kinds of projects and show some examples.
3. Show some reasons for increased number of projects.
4. Discuss the project life cycle.
5. Discuss goals of the project.
6. Discuss general management and show it as a coordinative, rationality assuring and
decision-making activity.
7. Define and discuss project management. Show its relationship to strategy.
2 STRATEGIES AND PROJECTS
2.1 Introduction
At the annual conference on project management in 2001, organized by Slovenian Project
Management Association, one of the authors delivered a paper on the importance of
considering the profitability of projects as we plan and control them (or as we make
decisions on them). He argued – and being a very good speaker also persuaded the
audience – that in projects the profitability or similar more elaborated criteria like netpresent
value or internal rate of return should be considered. According to him that is not
the case with most projects in Slovenian companies and in return the results of projects -
measured in profit - are not satisfactory. Hence, he concluded, project management is not
adequately developed.
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At that time I conducted some research on some other issues of project management and
my conclusion was that profitability (or some other similar measures of effectiveness) is
not the goal of the project. As its main goals most authors name the performance
(quality), costs and time. There are also many projects where the profitability cannot be
measured. And finally, within enterprises the general management and not project
managers are responsible for profitability. However, many authors suggest that projects
should be selected on a profitability basis.
So I decided to devote some time to the study of the related issues of project goals and the
purpose of the projects. An additional reason for studying purpose and goals of the
projects is the finding that one of the most mentioned reasons for project failure is
inappropriate determination of project’s purpose and goals. I think also that more
theoretical research on project management would be appropriate at the today’s level of
project management development. Lack of theory could harm further development of
practice, which is very likely ahead of the theory.
To verify my standpoint that performance and not profitability is the goal of the project,
during the roundtable discussion on project management at the conference 2002 I asked the
participants one simple question:
Let us assume a project: construction of a new factory. Project manager A manages the
project and delivers it in required performance and quality, in short time and within
required costs. Factory starts to operate. Unfortunately, sales are low because the market
behaves quite different to the market analysis conducted within the feasibility study made
prior the project. Factory makes a loss. In a similar case the project manager B manages
the construction of another factory. The performance of the factory is lower than expected,
schedules are overdue and actual costs exceed the requirements. Factory starts to operate.
There is an increasing demand for products and the sales are over expectations. The factory
makes profit. The question arises: which project manager is better, A or B.
Although everybody would expect that at least project managers know who is a good
project manager participants felt uneasy in answering the question. Around half of them
thought that project managers were responsible also for the profit of the factory and
according to them project manager B would be superior to project manager A. I tried to
explain that project manager A was superior to project manager B. He achieved the goals
of the project. He was very efficient. Unfortunately, the decision on the new investment
was not so good. However, top management was responsible for the decision on the
investment. In case B this decision was quite good but the management of the project was
not.
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Let us briefly look at another problem. At many conferences on project management
authors quite often discuss practical cases of conducting project management. It happens
that they do not explain the project management but the process that is implemented by
project management. E. g. once, at an international conference on project management in
the new economy, one of the authors presented a paper on the project of privatization in
one of the transitional countries. But in reality he explained the privatization process and
not the specifics (if any) of managing such a process. In general, there was more discussion
on the new economy than on the project management. Some authors on information,
construction, and other projects often present more the information systems, construction
and other areas than the management of the projects. Many authors do not distinguish
between the managerial and execution (or business) process.
The third issue concerns the relationship between strategies and projects, which is
discussed by many authors in detail. They have all started with the fact that strategies are
rarely successfully implemented and that projects quite often do not meet their goals. Many
practicing managers come to the right explanation that strategies have to be implemented
by project organization. In this case strategies are distinguished from projects. Very rarely
the relationship is explained and founded within a theoretical framework.
The three issues and the questions that arose within them derive from the same root and are
connected. That is the reason for my joint discussion of them. I will discuss them
separately first and show the dilemmas. I will show the problems as a consequence of an
inappropriate understanding of business/organization relationship and explain them in the
light of a different understanding of the organization. Doing this I will also try to develop
some more theoretical approach to project management, believing that nothing is as
practical as a good theory.
2.2 Goals and the purpose of the project
Most very well and less known authors in project management agree upon three basic
goals of a project: performance, costs and time. Mantel et al. (2001, p. 5) clearly define
the three basic goals for any project. Kerzner (2001, p. 59) also defines project success as
the completion of an activity within the constraints of time, cost, and performance. He also
suggests that today some additional criteria are to be added. According to Rosenau (1998,
p. 15) a successful project management means accomplishing the performance
specifications before the time limit and within the budgeted costs. Rosenau discusses
different reasons why the goals of the project are rarely achieved.
Most authors will describe the three goals as a triangle of goals, whose weights will differ
from project to project. The three goals are often in conflict. Project specifics determine the
relative importance of each dimension of the Triple Constraint (Rosenau, 1998, p. 22).
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Some authors prefer to use the term quality instead of performance. They emphasize that
the quality of the product delivered by a project should be in accordance with the required
one. Some authors add quality and talk of quality and performance. E. g. Fuller (1997, p.
xii-xiii) requires that there should be a clear definition of the end product and of its quality.
Performance and quality of a project might include also the requirement to finish the
project on time and at low costs. People involved in quality management will agree with
this definition of quality. Time and costs represent resources that are used to produce a
product. We can conclude that projects should be conducted in an efficient way; the end
product should be produced efficiently. Efficiency is defined as a ratio between output and
input. In a concrete situation the end product and its quality should be achieved within little
time and with other resources used.
We can conclude that the mentioned goals of projects are “technical” goals independent of
the socio-economic system and can be summarized as efficiency. The project manager
has to manage a required project to assure its completion in the most efficient way.
From the above example we have seen that the performance of a project manager is
measured by the degree to which the three goals are achieved. It seems quite natural that
we will evaluate two or more projects or project managers on the basis of the planned or
actual achievement of the three goals. When planning the projects we select them within
the planning process on this basis and later evaluate them within the control.
But if we look at some known books on project management we find some other criteria
for selection of the projects. E. g. Mantel et al. (2001, pp. 8-16) or Meredith and Mantel
(2000, pp. 39-61) tell us that before a project begins it must have been selected by some
criteria, also and quite often on the basis of profitability. Authors discuss different criteria
and models of selection like payback period, average rate of return, internal rate of return,
net present value and others. Kerzner (2001a, p. 123), among different criteria for selecting
projects, names also their profitability.
We could be confused now. On which basis the projects should be selected: the
profitability or the stated goals? We can refer to our introductory question: who is a good
project manager: a project manager who delivers the project on time and at low costs or a
project manager who delivers a profitable project? Very often – but not always – both –
efficiency and profitability - move in the same direction.
Already the authors themselves emphasize that before the project begins its life cycle, it
has to be selected by parent organization (Mantel et al., 2001, p. 8). The selection is
usually complete before a project manager is appointed. Project manager has no influence
on the selection. Graham and Endlund (1997, p. 231) stated clearly that project selection is
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normally done by an upper-management team. The same authors are of the opinion that the
top management team has to be informed about the project so that they can make a
selection, basically on the net present value, return on investment, and the discount period
based upon the cost and benefit streams.
From the above it is quite clear that first the decision on projects selection is conducted on
the basis of effectiveness: whether they add to the goal of the company, to the profit.
Responsible for this decision are top managers. Project managers than decide about the
project following the three criteria: to manage the project in most efficient way. However,
the goal of the company has to guide their decision. We can also say that top managers
make the right decision whereas project managers try to manage the selected project right.
From the point of view of project manager the achievement of the profitability is not the
goal of the project; it is the goal of the enterprise, the criteria for decisions made by general
management. It is the purpose (mission) of the project. The purpose or mission is
explaining why the project exists. This is usually explained in a few sentences and in terms
of profitability and similar (socio-economic) goals of the company. By definition the
purpose is supposed to be outside the decisions made on the subject-project. The purpose is
very crucial for the project manager. He should exactly know why company has selected a
project (it would be much better and correctly to say an investment, or a strategy instead
the project) to plan and accomplish project goals in the best way.
Many authors claim that one of major problems in managing projects is the fact that
neither the purpose nor the goals of projects are clearly established (especially the
performance). I would emphasize that we clearly point out that it is the top management
that is responsible for profitability. Project managers are responsible for achieving the
goals of the project through the team. However, they can sometimes influence the selection
of investments, strategies etc. even if this is not their responsibility. In practice both
decisions (on strategy and on project) are connected.
I would also suggest to emphasize that top managers select the strategies, investments,
changes. For the selected strategy we have to find the best project. We have to make the
distinction between strategies on one side and projects on the other. As the mentioned
authors discuss the selection of projects by profitability and similar criteria of effectiveness
they use the word project in an inappropriate way. It would be correct not to talk about
selection of projects but about selection of investments, strategies, changes. The first ones
are selected by effectiveness criteria, the second ones by efficiency. Whereas the
effectiveness is the goal of the business of the enterprise, the efficiency is the goal of the
(technical) organization.
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Webster (1993, p. 7) emphasizes that project is not synonymous with the product or
outcome of the project. “The word project is often used ambigously, sometimes referring
to the project and sometimes referring to the product of the project”. The product is
decided through feasibility study using profitability criteria. The most efficient project that
will assure the achievement of the profitability in a rational way should be selected.
If we have to distinguish the goals of the project from its purpose (or goals of investments
or broader, of strategies), let us discuss what is the relationship between projects and
strategies. This relationship is much discussed but mainly only from the practical
perspective. It is not settled from the theoretical perspective.
2.3 Problem of relationship between strategies and projects
There are many reasons to believe that the success of a company heavily depends on
management. Within management two issues are regarded as having utmost importance for
the success of a company: strategies and projects. For that reason, it is astonishing that
many authors and practitioners find that strategies are rarely implemented and that projects
do not meet their objectives. Many authors discussing strategic planning and project
management deal with this problem. Taylor (1995, pp. 71-81) points out that “a key
problem with strategic planning was how to turn strategies into actions”. Worley, Hitchin
and Ross (1996, p.4) agree, saying,” the largest criticism of strategic management
(although being thought different from planning just by including implementation) is the
difficulty in getting good strategies implemented. Hay and Williamson (1991, p. 4),
quoting a survey conducted by Fortune, conclude that “implementation is believed to be
the simple, most important cause of that failure”. Randolph and Posner (1992, p. xii) say
that many books have been written on management, but few of them emphasize the
importance of getting the job done.
Several authors claim that the strategic plan overemphasizes what shall be done rather then
how to do it. Lord (1993, pp. 76-85) asserts that “by focusing more on what needs to be
done rather than how is it to be achieved, corporate planners may have failed to appreciate
that competing can in practice subvert certain key objectives”. Worley, Hitchin and Ross
(1996, pp.4-5) say that “traditional strategy formulation and implementation primarily
involve describing the content of change – the “what”, not the process of the “how”.
Organizational development principles are rarely used in strategy implementation.”
Greiner and Schein (1988, p. 80) agree that organizational development can make a
valuable contribution to the strategy formulation and implementation process”. Taylor
(1997, p. 80) suggests managing the implementation of strategic plans through company
structure, culture, business processes and HRM. Johnson (1992, pp. 28-36) suggests that
proper organizational culture, organizational structure and control systems increase the
likelihood of achieving fundamental strategic change. Wilson (1994, pp. 28-36) suggests
15

that the most provocative finding is the growing emphasis on organization and culture as
critical ingredients in the execution of strategy. Daft (1998, p. 556) points out that a “key
task for top leaders is to decide on goals and strategy and then to design the organizational
form appropriate for the strategy”.
From the above, it appears, based on these quotes, that the problem of not executing
strategies is the relationship between business strategy and organization. Can we
theoretically prove these practical findings?
2.4 The business and managerial process
The business (or execution) process within a company consists of personnel, purchasing,
production, marketing and financial function. The goal of the business process is to
produce and sell products and services to gain profit. Without a business process a
company cannot be operating. Within a project participants have to execute many activities
to create the end product. Even more is required. Participants have to cooperate in an
efficient and rational way. It is the duty and responsibility of the project manager to assure
such a rational achievement of project’s goals.
The managerial process or function does not result in products and services directly. Its
purpose is to assure the rationality of the business process to achieve the business goals.
Managerial process consists of many processes or functions. There is some disagreement
among authors on management about sub-processes. But most of them discuss the
following processes or functions: planning, organizing, leading, and controlling. They
include staffing or HRM either into leading or show it separately; into the leading they
include leadership, communication, and motivation, too. Few authors nowadays discuss
coordination as a managerial function. It is the essence or the basic principle of
management. For some authors also the decision making process is a managerial process.
Yet, it is more the method of management process. So, management process is defined
according to its purpose of assuring the rational achievement of company goal as planning,
organizing, leading and controlling. In its content management is coordination and in its
method it is decision-making.
Let us look at the managerial process. All the authors start the managerial functions with
planning. However, a closer look at their books and chapters on planning will reveal that
they discuss the planning of a company, of the over-all business. Individuals conduct the
execution of such a plan, not the company as a whole. For that reason managers determine
duties, responsibilities and authorities of the employees. They should be assigned to
individuals in a coordinated way. Managers organize, design or plan the organization in
such a way that the plan of the business will be rationally conducted and the goal of the
company achieved. But non-managers or specialists cannot start working yet. First, they
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have to be told what to do, they have to be motivated and they should trust their superiors.
This is leadership: to achieve the goals that managers plan through employees. Managers
influence them through their traits and behaviour, by communicating and motivating.
Employees execute the plan of business. Managers control the organization (whether
duties, responsibilities and authority have been executed and used in a planned way) and
then they control the business.
Although authors explain the above process as one, in reality there are two interwoven
processes: the first one being planning, executing and controlling business and the second
one planning, actuating (executing) and controlling the organization. However, also the
HRM is to be included within actuating.
To explain and clarify the three stated problems and to suggest solutions to them let us
look at the developed theory and definition of the organization.
2.5 The developed theory of organization
Most authors define organization in a similar way. For that reason I will mention only a
few of them. George and Jones (1996, p.4) defined the organization as “a collection of
people who work together to achieve a wide variety of goals”. Wilson and Rosenfeld
(1990, p. 2) defined organizations as “social collectivises…filled with people”. Donaldson
(1995, p. 135) describes organization as created and sustained in order to attain certain
objectives. Pfeffer and Salancik (Pfeffer, 1997, p. 7) state that “the goal oriented or
instrumental view of organizations implies that organizations are collections of individual
efforts that are coordinated to achieve things that could not be achieved through individual
action alone.” All the above and other similar definitions define organization(s) as social
unit(s) consisting of people and having specific goals. However, the social unit or its
parts or specific units like companies are studied by different sciences such as sociology,
economics, psychology, anthropology, and engineering. The question arises whether there
exists any specific and autonomous science on the “organization”.
An explanation for the behaviour of a social unit is only possible by explaining
relationships among members. Different authors give the central role of explaining the
behaviour of a social unit to relationships that comprise it. Koontz (1962, p. 11) stated that
a semantic confusion lies in the word organization. Many authors define it as an activityauthority
structure of the enterprise, and refer to it as a technical structure. Some use the
term organization meaning an enterprise, which matches our previous definition of
organization as a social unit. “Yet a large number of organization theorists conceive of
organization as being the sum total of human relationships in any group activity; thus they
seem to make it equivalent to social structure”, according to Koontz (1962, p. 11). Koontz
and O’Donnell (1968, p. 63) feel that relationships bind members of a social unit together.
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Robey and Sales (1994, p. 79) define organization as “a system of roles and stream of
activities to accomplish shared purposes. The phrase system of roles describes the structure
of an organization; stream of activities refers to organizational processes.”
Although regarded by many authors as very significant, the relationships among members
of a social unit remain subordinate in importance to the social unit (or to individuals). They
have not become a specific, direct subject of research of whatever science yet. On the
dynamic side of the social units the organizational processes are still seen as aiming to
accomplish the goal of the social unit (according to our discussion the authors do not
distinguish the business from organizational processes). They are not seen as processes,
which adequately ensure rationality of the goal achievement; organizational processes are
thus not clearly separated from business processes. Business processes or execution
processes accomplish the goal of the social unit. Organizational processes assure that
business goals will be achieved in a rational (efficient) way. Business looks for
effectiveness, organization looks for efficiency. The emphasis on relationships among
members of a social unit is a sign that at today’s level of development, relationships are the
most important factor contributing to the success of the social unit.
Now let us quote the definition of organization (of the social unit) as proposed by Lipovec:
“Organization is the composition or a system of relationships among people, who
through relationships become members of a formed social unit. Organization assures
the identity, existence, development and specific characteristics of the social unit and
a rational achievement of the goal of the social unit” (Lipovec, 1987, p. 35). The first
part of the definition shows the structure of relationships in a static way. The second part is
a dynamic, rationality assuring part. The dynamic, assuring relationship is the smallest part
of the organization. It is a subject, an object and a process at the same time. As the
organizational elements are separated from non-organizational (business) ones it is
possible to study organization in the defined sense independently, as a subject of
organizational science. Formal and informal structures and processes compose the
organization. For more details on the above theory that combines Taylor’s relationships
and Fayol’s processes see e.g. Lipovec (1987) and Rozman (2000, pp. 31-39).
Sociology studies social units and groups. To explain them it is necessary to study
relationships and individuals, too, but as subordinated to a social unit. Psychologists study
individuals. To explain their thoughts, feelings and behaviour, their relationships and the
social unit have to be considered. Researchers in the organization (of organizations) study
dynamic relationships. However, they are connected to individuals and groups within
social units. Organization structures and processes are of utmost importance to
management. Due to them the social unit is more than just a sum of individuals. Let us
now discuss the three issues from the point of view of a new understanding of
organization.
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2.6 Purpose and goals, strategies and projects, business and
organization
Strategies are the result of a strategic plan. They are the only part of strategic plan that is
supposed to be executed. They are part of the business world. It is obvious that they cannot
be directly implemented by a social unit but by individuals through planning and actuating
of organization. As the strategies represent a unique, important, one time effort and change
in which different people are involved, the most suitable organizational structure (formal)
and culture (informal) will be the project or project matrix organization. To increase the
level of strategy implementation projects’ or project-matrix’ organizational structure and
culture and leadership (and other managerial processes) have to be considered. Many
authors suggest this on the basis of their practical experience.
I tried to give a logical explanation following the distinction between the business and
organizational or managerial process. I see them as two connected but different processes:
planning strategy, planning project, actuating project, executing strategy (by non
managers), controlling project, controlling strategy. If we look at the strategies we can see
that the process consists of planning, executing and controlling strategies. If we look at
them from the project side the process consists of planning, actuating (the term actuating is
used to emphasize that the “execution” of planned organization is conducted by managers
themselves). The connecting phase between both processes is the actuation of the
organization (project). Through actuation (leadership) the actual organization is established
and the execution of business (strategy) starts.
In practice, the preparation of the strategic plan has to be followed by converting
strategies to projects. At least the purpose, goals, scope, appointment of project managers
and similar issues become part of the strategic plan. Let us assume that management has
prepared a strategic plan. Before the acceptance of the strategic plan, a discussion should
be held on how strategies will be implemented. This discussion might even change the
strategy. Following this discussion the strategies and their consequences are accepted and
projects “opened”. The project manager and some team members are nominated, duration,
costs and quality determined.
I suggest that a one page project opening document should be prepared for each project.
Management and execution of strategy as well as management of project are interwoven
and both can gain if their relationship is properly established.
Through the described process many advantages are achieved. Already in the preparation
of strategic plan the execution of strategies is discussed. At the same time it is possible to
assign people to projects taking into account their interest, knowledge, commitment, time
at disposal etc. The implementation of projects is controlled and its influence on business
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esults followed. This can be a basis for updating strategic plan once a year. Within the
company project managers gain on importance. General manager can conduct special
meetings with them and not only with functional managers.
Again, we make the distinction between business and organization: strategies are part of
the business whereas the projects are the connected part of the organization (Rozman,
2000(a), pp. 54-58). Strategies and projects are only a part of the business-organization (or
management) relationships. And finally, purpose of the project management is the
achievement of the goal of strategies; the goal of project management is to efficiently
achieve the goals of the project.
2.7 Conclusion
It has been indicated that through increased importance of relationships the greatest
improvement in practice and in science nowadays can be achieved in the area, defined as
organization. The managerial process of planning, organizing, leading, controlling does not
take into account or, at least does not emphasize enough the fact that it involves two
different yet connected subjects: business and organization. The existent description of the
managerial process is not entirely logical. Planning refers to business. Execution is
correctly left out as a non-managerial activity. Controlling often involves both: business
and organization. Organizing is really planning of organization and HRM and leadership
are the implementation of organization. Controlling of organization is carried out within
business control. It appears to be more correct to show the process as planning, execution
(actuating) and controlling either business or organization.
If we look at project management we can understand under planning sub-processes like
goals setting, WBS, scheduling, resources and costs planning; design of organizational
structure, developing projects’ supporting organizational culture, determining stakeholders
and their roles. Actuation consists of HRM, leadership, communication and motivation.
Controlling concerns the same issues as planning. Our explanation of the managerial
process based on a different definition of organization as a system of dynamic relationships
seems to us more consistent and systematic. To prove it I have shown three connected
cases to explain some areas where due to present approaches the doubts have been raised
and different explanations given.
We have to distinguish between the purpose and the goals of the project; between
strategies and projects; and between the business content of projects and managerial issues.
However, they are related. The distinction between organization as a social unit and its
business and organization as a structure of relationships is crucial for studying organization
and management and for the explanation of discussed relationships. It becomes clear that
the business process is different from the (project) managerial process; projects are the
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organizational counterpart of strategies and the goals and purpose of projects are distinct.
Following our understanding of organization many areas can be looked upon differently;
many problems can be explained logically and new research can be developed within both
the applied science of management and pure organizational science.
2.8 Control questions
1. Discuss the meaning of the purpose and of goals in a common understanding and
especially connected to projects.
2. Discuss the developed theory of organization and especially the governingmanagement
process.
3. Discuss the similarity in characteristics of strategies and projects.
4. Discuss the relationship between strategies and projects.
5. Discuss the process of strategic plan update.
3 START-UP OR BEGINNING (OPENING) OF THE PROJECT
3.1 Proposal of the project
As we mentioned already the most important changes within the company are known as
strategies. They are proposed as the result of strategic planning process. The result of such
a process - usually based on SWOT analysis - are the desired goals and proposed strategies
through which planned goals will be attained. In the planning process goals determine
strategies whereas in the execution process strategies are executed and lead to results
(attained goals). Strategies are the only part of the strategic plan to be executed. They can
be properly executed only through an organization, which will be based on projects.
Strategies are thus implemented through projects.
General manager (CEO) is responsible for selecting strategies on the basis of their
effectiveness.. Different strategies can lead to the same goal and likewise also different
projects can implement the same strategy. Again, the top manager is responsible for
selecting and proposing the appropriate project. However, he can get necessary
information and support from other employees especially the potential project manager.
We can say that most important projects within the company are selected and proposed by
top manager. Smaller projects, which are connected only to some business functions or
departments can be proposed and opened by functional or departmental managers.
What we argued so far is without any doubt true for “internal” projects. Quite often
companies execute “external” projects e.g. a construction company competes to get a roadbuilding
project. Again, the decision to prepare a bid to get the project is made by top
21

management. Let us mention that within the bid costs, duration and quality of the
deliverable (which are the goals of each project) have to be clearly proposed. The selection
of the best project is made by the institution (committee) placing the order – asking for
bids (tender). If company’s project is selected as best, again the general manager will
decide whether to carry on the project or to withdraw. In any case we can claim that it is
the duty, responsibility and authority of top management to select, propose and (officially)
open the (internal or external) project.
3.2 The content of the formal (official) opening of the project
Formal opening or authorization of the project includes the title of the project, a brief
description or concept, purpose, and goals of the project as well as the selection of the
project manager. Dependent on the top manager as authorizer of the project some other
decisions can be also made. The mentioned decisions represent the minimum proposed and
decided by top manager.
The concept includes a brief description of the project as understood by general manager.
He can emphasize some issues of great importance and also some content (not only
organizational) characteristics.
The purpose is the reason why the project has to be conducted. The purpose is to deliver a
product (new factory) or service (system of strategic planning) to the customer and hereby
achieve a sound economic result (profit). The purpose is usually understood as
implementation of a strategy.
The project has to be conducted in an efficient way. Therefore the goals of the project are:
duration of the project (which is a specific objective), costs of the project and
performance/quality of the project. Poorly determined purpose and goals are often the
reason for unsuccessful accomplishment of a project.
The selection of project manager is one of most important decisions. The criteria like the
availability of potential project managers and their time, their knowledge and abilities in
management and especially leadership, technical knowledge, and their references
(successfully managing similar projects) play important role in their selection. However,
there exists lack of experienced project managers in almost all companies.
General manager also often proposes directing-supervisory board of the project and some
other bodies or team members, suggests some milestones - important events and dates
within the project, points at some project constraints etc. The whole process of opening a
project can be regulated by a formal organizational regulation.
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Quite often many projects run at the same time. They compete for human and financial
resources. It is suggested to prepare a document showing all the projects in work and report
about their status as compared to the plan. This document enables the general manager to
follow the implementation of projects/strategies.
3.3 Control questions
1. Who can propose a new project? Show a few examples and discuss why the general
manager (or perhaps somebody else) usually makes the proposal.
2. Show the elements, which are proposed within the opening document and discuss
them.
4 PROJECT PLANNING
4.1 Network programming
Planning is thinking ahead about the process (activities) and result of human actions. By
thinking ahead we assure a rational conduct of activities and increase the probability of the
planned. achievement. Planning is also coordination and decision-making process.
In planning repetitive production the Gantt charts or bar charts have been used. They suit
the repetitive production. As projects started to develop there did not exist an appropriate
planning method to be used within projects. At the beginning the Gantt charts tried to be
used. However, Gantt charts do not show clearly the relationships among project activities
and do not show how critical the activities are. For that reason some managers started to
adapt Gantt charts. Around 1958 two methods of planning to be used within projects have
been developed: CPM (critical path method) and PERT (program evaluation and review
technique). CPM which is suited for more or less determined projects (construction,
maintenance, organization changes) is most used. PERT is suitable for stochastic projects
where it is little known about the activities of the project. Some specific methods (GERT,
MPM) have been developed on the basis of CPM and PERT. Also CPM and PERT
approaches have been developed in more detail and for specific use. We can speak about
families of network methods.
We will discuss the CPM approach first. It starts with preparing a list of activities.
Following CPM procedure the network diagram is drawn showing above all the
connections between activities. It is also – considering the duration of activities, too – the
basis for time calculation: starting and finishing dates of activities. Resources can be
leveled or planned (and controlled). Cost can also be planned and controlled and are the
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subject of minimization. Consideration of risk represents part of the PERT approach. We
will discuss the mentioned phases in the project plan.
4.2 List of activities
Each project consists of activities and events. Activity is a determined, logic part of the
project and requires time, human resources and other resources to be executed. An event
represents the beginning (start) or end (finish) of an activity or a project. Important events
are known as milestones. Besides the real or actual activities there exist also “dummy”
activities, which show only the connection between activities. They are introduced in the
case of two or more parallel activities requiring different duration and in the case of partial
connections.
The list of activities can be prepared by people who are experts in the content of the
project. Two basic questions usually arise: what criterion to follow by splitting a project to
activities and how detailed should be activities shown.
Usually the criterion for splitting the project to activities (WBS – work break-down
structure) is the process, which is followed. E. g. the preparation of a strategic plan
(project) starts by internal and external analysis, setting objectives, developing strategies
etc. By deciding about the activities we follow this process.
Especially big projects can be split on the basis of different parts. E.g. a corporate strategic
plan can be split on the basis of strategic business units and then within these units the
division by process can be used.
Sometimes the division of project to activities is based on the criterion of specialists
involved. E. g. activities conducted by maintenance crew, by carpenters, by engineers etc.
This division is very suitable in the case of planning and controlling costs (work packages)
on the basis of activities.
The second question is the level of detail. If we make the list of very detailed activities the
view on the entire project will deteriorate. If the activities are given very broad they might
not respond to real situation. Very often we can start a new activity after part (not the
whole) of the other activity is finished. This cannot be considered if we define activities
very broad.
Each activity has to be determined carefully: its content, the duration, number and
qualification of people involved, costs etc. The connection of the activity to other activities
is of utmost importance and represents the basis to draw the network diagram.
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An activity can preceded or follow (come after) another activity or they might happen at
the same time, parallel. The connections can be shown in two ways. Firstly, the connection
of one to each other activity can be shown. In this case we do not distinguish direct and
indirect connections. This approach is systematic and easier. However, the approach of all
connections is not suitable for drawing the network diagram. The network diagram is
easier drawn in the case of determining only direct connections between activities.
Usually we start by determining all connections. Then, following the logic process we
determine only the direct connections. We look at a connection, e. g. activity A before
activity M. We ask the question: is some other activity (except A) before the activity M. If
the answer is no, then activity A is directly before the activity M. If the answer is that there
is some other activity before the activity M (e. g. activity B is also before the activity M)
then we have to check the connection between the activities A and B. If these two activities
are not connected the activity A will be directly before the activity M. In the case of
connection – activity A before the activity B – activity A is not directly before the activity
M.
The result of this process (which can be seen - as well as drawing the network diagram -
from slides) are the direct connections between activities. On this basis it is easier to draw
a network diagram which is a graphical presentation of all the activities included.
4.3 Network diagram
In order to draw a network diagram it is necessary to agree to some symbols. In CPM
approach the activities are represented by arrows. The starting and finishing event are
presented by circles. These symbols as well as dummy activities (and later also the
network diagram) can be seen within slides.
We can start drawing the network diagram by drawing some activities, which do not have
any preceding activities. Then we look at the activity and draw the activities, which follow
directly the preceding activity. We continue the process until all the activities are drawn.
Last activities have no following activities.
However, in the drawing process we have to consider partial connection (dummies) and try
to draw a clear and transparent diagram. For that reason we often have to make
improvements. At the end we have to check whether the diagram corresponds to given
connection within the list.
The precedence or network diagram clearly shows all the activities and connections
between them. It is the picture of the entire project and as such offers a systematic view of
the entire project to the project manager.
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4.4 Time analysis and plan of the project
We mentioned already that the project’s main objective is its duration. To find out the
project duration and to determine the starting and finishing dates (terms) we have to
consider the duration of activities. To each activity its duration is assigned.
We assume that the project starts at zero time. All first activities (no preceding activities)
can start immediately. They are finished dependent on their duration. E. g. activity A is a
starting activity in duration of 20 days. It starts on the 1 st day (time zero) of the project and
will be finished on 20 th day. On 21 st day following activities can start. The finish of activity
A is thus the starting time for following activities.
The process of calculating the starts and ends of activities is thus the following. We look at
the earliest possible start of each activity and add its duration. Thus we find the earliest
possible finish of the activity, which is the earliest possible start for following activity.
This process changes if two or more activities are preceding the activity X. It is obvious
that activity X can start after all preceding activities are finished. We calculate the earliest
possible finishing dates for preceding activities. The highest (maximum) finishing date is
the earliest possible starting time of activity X. Following the described process we draw
all the activities and find the (minimum) duration of the whole process (e.g. 43 days –
slides).
The figures within the circles – events represent the first possible starts and ends of the
activities. But we can see that some activities can start or finish earlier. E. g. if activities A
(duration 20 days) and B (10 days) duration have to be finished before the activity C, then
activity C can start after 20 days. The activity B has some time reserve or slack time
whereas the activity A has none. Activity B can finish after 10 days (earliest) possible or
before 20 days (latest allowed finish time) or in between not jeopardizing the start of
activity C. Activity B has 10 days of time slack.
In order to obtain the latest possible starting and finishing times of activities we will follow
the next procedure. In our case the earliest possible end of the project is 43 days. Let us
assume that this is also the last allowed end of the project. Let us ask the question: when
the last activities have to start at latest not jeopardizing the duration of the entire project. It
is obvious that we have to deduct the duration of the activity. E. g. if the last activity is P
and its duration is 12 days we have to start it at the latest on the 31 st day (43-12=30).
Again, the problem starts if two or more activities derive from the same event. The
previous activity latest finishing time should be such to enable the following activity,
which should start first to be accomplished in due time (not to become critical and prolong
the duration of the project). E . g. if the latest starting time for activity P is 21th day and for
activity R the 24 th day then the previous activity has to be finished before 21th day. The
26

ule is the following: if more activities derive from the same event the minimum starting
time of them represents the latest possible finishing time of the previous activity.
For some activities the earliest and latest starting time and the earliest and latest finishing
time are equal. These activities are critical activities. Critical activities are always
connected in the critical line or critical path. The other activities are non-critical and
possess some time slack. We distinguish different kinds of time slack. The most important
is the total slack, which is the difference between the latest possible end of an activity and
the sum of earliest possible start and duration of the activity. On the basis of time slacks we
can make time analysis of the project. We can try to make critical activities less critical
and/or non-critical activities more critical. By doing so, we can shorten the duration of the
project as well as make all activities approximately similarly critical.
The end result of the described time analysis is time plan of the activity. For each activity
the first and latest possible start and the first possible and last possible finish times are
given. Total slack is also shown. The dates are converted to calendar dates considering the
way each activity is done (all days, all days except Saturday and Sundays and similar) as
well as weekends, holidays etc. The connection of activities are clearly shown and their
criticality, too. The main disadvantage is that the length of the arrows representing
activities is not proportional to the duration of activities.
For that reason we try to show the project activities in the time scale. One possibility is to
draw a network bar chart. We draw it from the time network diagram. First we draw the
critical activities and then non-critical. It is advisable to draw activities at the same places
as they are in the network diagram. A time bar chart is shown in the slides. The activities
can be drawn in their earliest or latest’s starts or ends. Time slacks are represented by
horizontal dotted lines and seen quite clearly.
4.5 Resources planning
Network time chart represents also the basis for planning different resources especially
people employed within the project. To make a manpower plan we have to get the
information on number of people working within each activity. To make a manpower plan
we add the employees on each activity on the same day (see slides). In this way we get the
plan of resources for each day through the project.
We usually see that the plan of employees is quite uneven in time. There are some days
where many employees are required and some days with little employees required. Such an
unlevelled plan is not suitable. In order to make it more levelled we can move some noncritical
activities from very crowded days to less crowded ones respecting time slacks. A
special heuristic approach can deal with this problem more systematically. The measure of
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levelling the resources can be sum of squares of numbers representing employees each
day. The measure of levelling can be also the sum of absolute values of differences of
employees each day and their mean value through the project.
The more realistic assumption is that the number of employees assigned to the project is
given. Now the problem is to conduct activities in such a way that all employees will be
employed through the project and the project duration is increased at the minimum. The
approach to this problem is straightforward. We always give priority to critical activities
and then less critical and so on. By doing so and postponing non-critical activities the noncritical
activities are becoming more critical and critical. They are given priority now. The
rule is: always give priority to critical (or more critical) activities.
Very often employees of different qualification are employed at different activities.
Additionally within the same activity employees of different qualifications are employed.
This makes the levelling problem more difficult. There is also the problem of assigning
employees to different projects as projects compete for scare resources. This problem is
already connected to multi-project situation or managing programs.
4.6 Planning and controlling costs
In the case of repetitive production costs are planned and controlled by cost centres usually
on the monthly basis. Total costs are divided by number of products passing cost centre. In
the case of product mix products can be weighted on the basis of time used to pass the cost
centre. Managers responsible for cost centres (departments) are responsible for costs and
try to keep them at minimum. Costs of (raw) materials are usually directly charged to
products.
The activities within the project also cause costs. It is necessary that project managers take
responsibility to keep costs (the goal of the project) as low as possible. In order to do so
project managers have to plan and control costs of the project.
Within most companies repetitive production and costs take part. The question arises
whether costs per cost centres can be used for planning and controlling project costs.
Again, costs of raw materials and some similar costs can be charged directly to activities
and/or project. What about other costs?
Let us assume a maintenance group as a cost centre. Salaries and wages, depreciation,
services etc are costs gathered at the cost centre. On the other hand we know the number of
employee and the time spent, e. g. hours worked at the cost centre. By dividing total costs
by number of hours (planned or actual) we find out costs per one hour per costs centre.
Indirect costs can be added proportionally. Maintenance crew is working within the
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project. We know the number of hours (or days) planned for each activity. If we multiply
the number of hours/days by costs per hour/day we will get the costs per activity.
It is the task of line manager (at cost centre) to keep costs per hour/day as low as possible
and the responsibility of project manager to use as little working hours/days as possible.
Costs of a project thus become matter of concern of project managers.
Let us first assume that so far we planned costs per each activity considering a number of
employees, time spent and costs. Let us ask the question what will happen to costs if we
shorten the activity. The activity is for instance normally planned for 20 days. Can the
activity be finished in less than 20 days? The answer is yes. But there should remain the
same number of working hours. We can increase number of workers or workers cab work
some time overtime. But overtime is more expensive and usually less productive. So, costs
per activity will increase if we shorten the activity. Opposite, costs per activity can
decrease if we prolong the activity (see the example in slides). Costs (coefficients) are
increasing and decreasing differently for each activity. Usually, we assume that the
increases and decreases are linear.
Two different situations concerning project costs can occur. First, we have planned project
and activities costs assuming normal durations of activities. However, if we prolong noncritical
activities the project duration will remain the same but costs of prolonged activities
will decrease. There is a limitation of prolonging activities. First, they are not allowed to
become critical and there are usually some technical constraints which prevent us of
prolonging activities. We can also prolong critical activities where the prolongation
decrease costs more, and shorten the critical activities, where there is little increase in
costs. If the sum of shortening and prolonging the activities results in decreasing costs we
can follow the approach. Let us repeat the rule. Given the project duration we can plan low
costs by prolonging non-critical activities within the constraints and thus decrease planned
costs and we prolong some critical activities, which decrease costs quite importantly and
shorten some others, which do not require much of additional costs.
Second question appears of how to shorten the project duration not increasing costs too
much. In order to shorten the project we have to shorten critical activities. We shorten
critical activities where shortening increases costs very little. If we like to decrease project
duration more, we have to prolong activities, which require higher increases in costs. Very
likely two or more critical lines will appear and we will have to shorten two or more
activities at the same time. By shortening the project duration costs are increasing
exponentially (see slides).
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4.7 PERT approach
In the CPM approach we considered activities and their durations as determined. In some
projects it is quite difficult to predict the activities and above all their durations. In such a
case PERT approach advises us to evaluate the duration of an activity by provide three
time estimates: the most likely duration, pessimistic and optimistic estimate (see the
example in slides). Assuming beta distribution the expected mean duration of the activity
is:
T expected = (t pes. + 4* t likely + topt.) / 6
Now all the calculations that we practiced in CPM can be practiced with expected time
durations now.
The duration of the activity is not determined but a probability distribution. According to
beta distribution the variance of activity duration equals:
Variance = ((t opt. – t pes) /6) square
The expected duration of the project is the sum of expected durations of critical activities.
The variance of the expected duration of the project is the sum of variances of critical
activities. Thus we can also find out the standard deviation of the project duration.
On the basis of expected duration and standard deviation we can calculate the probability
that a project will be finished in a given time period. Or, we can find out, given the
probability, the expected duration of the project.
We can see that the more uncertain the project the bigger will be the value of standard
deviation. The distribution depends on the risk that activities will not be finished in the
most likely time. If we decrease risk, the distribution of activities and consequently the
distribution of the project duration will become narrower.
In the practice the CPM approach is more used. PERT is more complex and his main
addition is in studying the risk and looking at the probabilities of project accomplishment.
4.8 Control questions
1. Show the steps in the process of project planning.
2. Define the breakdown structure and discuss criteria of splitting the project to
activities.
3. Discuss the information for each activity.
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4. Draw some simple network diagrams, time network diagrams and network time
charts.
5. Discuss levelling of resources.
6. Discus planning and controlling costs.
7. Discuss decreasing costs by given project duration and minimal increases of project
costs in case of shortening the project.
8. Discuss PERT approach.
5 RISK MANAGEMENT
5.1 Project risks
A risk that the project will not turn out as expected arises directly from the uniqueness of
projects. Successful completion requires this risk to be managed. Project risks are either
internal or external. An internal risk is peculiar to a project, such as the inability to get the
parts of a product to work. An external risk originates from outside the scope of the
project. External risks are:
• environmental (weather, natural disasters, storms, flooding, tempests, pollution
incidents, transport problems, including aircraft/vehicle collisions),
• legal and regulatory (changed legislation, loss of intellectual property rights,
unexpected regulatory controls or licensing requirements, changes in tax or tariff
structure),
• public (cultural differences, change of government policy (national or
international), adverse public opinion/media intervention),
• economic (exchange rate fluctuation, interest rate instability, inflation, shortage of
working capital, market developments will adversely affect plans),
• technical (unproven technology, quality of technology, performance failure,
complex technology),
• risks derived from means of production (damages, low capacity),
• risks derived from suppliers (supply delays, cost, quality or quantity of supplied
material),
• risks derived from contractors (inconsideration of demands, poor quality),
• risks derived from customer (demand changes, dissatisfaction, poor collaboration,
unclear expectations),
unrealistic objectives,
poorly defined requirements,
lack of qualified resources,
Table 1: Internal risks
31
vested interests creating conflict and compromising
the overall aims,
individual or group interests given unwarranted

lack of management support,
poor estimating,
resource planning,
inexperienced project manager,
poor staff selection procedures,
lack of clarity over roles and responsibilities,
5.2 Risk management process
32
priority,
personality clashes,
indecision or inappropriate decision making,
lack of operational support,
inadequate or inaccurate information,
health and safety constraints.
Authors presents different process steps (as it is showed in Table 2), but the most common
steps of the process are:
• risk identification and evaluation,
• risk reducing strategy developing,
• risk control.
The goal of the first two steps is to reduce risk of the project by reducing the probability
and impact of potential events with negative influence on project implementation already
during the project planning phase. Risk control is performed during the project
implementation phase. By the early risk triggers detection and promptly corrective action
lounging, team assures lower impact of project risks.
Chapman &
Ward
Define & focus
Table 2: Risk management process by different authors
Kerzner, PMBOK Prince2 Thomsett Turner Young
Risk management
planning
Identify Identification Identification
Structure
Ownership
Estimate &
evaluate
Plan
Quality and quantity
analyses
Developing a
strategy for
managing the risk
Manage Monitoring in control
Evaluate the risks
Identify suitable
responses to risk
Monitoring and
reporting
Analyse risk
Reduce risk
Tracking and
reporting
Identify the potential
sources of risk on the
project
Determine their
individual impact
Assess the overall
impact of the
significant risks
Determine how the
likelihood or impact
of the risk can be
reduced
Develop and
implement a plan for
controlling the risks
and achieving the
reductions
Identification
Ranking risks
Derivation of
mitigation plans
Monitoring
Chapman & Ward (1997, p. 50; Cooper et al (2005, p. 15), Kerzner (2001, p. 904), PMBOK (2004, p. 237), Prince2
(2002, p. 242), Thomsett (2002, p. 158), Turner (1993, p. 237), Young (2000, p. 83)

5.3 Risk identification and evaluation
The inputs to the risk identification process are objectives specifications, WBS (the list and
specifications of project tasks), enterprise environmental factors, project scope statement
and risks data base. For every task, listed in WBS, team should find risk most likely to
occur by asking themselves followed questions:
• what would be the reason for delays or increased cost;
• what would be the reason that project results won’t satisfy customer requirements;
• what obstacles could cause lower results quality;
• Are there any risk related to project resources (unavailability, poor knowledge,
motivation).
There are five techniques for identifying risk. They are listed separately, but are in practice
used interactively:
• expert judgement uses personal intuition and awareness. The use of checklists
against the categories identified above can help.
• plan decomposition shows risks inherent in the interdependency of work. Any
event that lies at the start or completion of many activities is a potential risk. These
occur at bottlenecks in the network. When analysing the plan, you should also look
at all external interfaces, such as external supply, for potential failure of third
parties.
• assumption analysis is win/lose analysis, and focuses on events that might be
detrimental, considering both events we want to occur but may not, and events we
do not want to occur but may. Expert judgement is needed to foresee these events
and check for completeness.
• decision drivers are influences that might determine whether or not certain events
may occur (inside and outside the project). Win/lose analysis can be used to derive
the list of decision drivers. It can be particularly damaging if decisions are made
for the wrong reason: political versus technical; marketing versus technical;
solution versus problem; short term versus long term; new technology versus
experience.
• brainstorming uses social interaction to enhance the above techniques.
Risks evaluation (“sizing”) involves assessing the range of possible impacts and associated
probabilities. For every identified risk team has to estimate the probability of risk event
will occur and expected consequences. The risk size (factor) is the product of probability
and impact.
Risk = likelihood * impact Kerzner
Risk size = probability * impact Chapman & Ward
Risk priority = probability * consequence / impact Burke
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Risk can be entered in matrix which demonstrates the size of risks. Authors presents
different ranges of probability and consequence factors:
• both factors from 1 to 3 (Burke)
• consequence from 1 to 3, probability from 1 to 9 (Young)
Probability
By Young risks can be ranked as:
Table 3: Risk matrix
High 9 Extreme
3 3 6 9 6 High
2 2 4 6 3, 4 Middle
1 1 2 3 2, 1 Low
Low 1 2 3 High Risk
Consequences / Impact
Burke, 2003, p. 261
• unacceptable – the project cannot be proceed without some immediate actions to
reduce the probability of the risk;
• high – has major impact on schedule and costs and must be monitored regularly
and carefully; mitigation actions can reduce or minimise the impact;
• medium - has significant impact on project and must be monitored regularly to
ensure it does not turned into a high risk;
• low– not expected to have any serious impact in the project, but should be
monitored regularly.
PROBABILITY OF
OCCURRENCE
Figure 1: Risk ranking matrix
34
IMPACT ON PROJECT
Low Medium High
High (7 – 9) medium high unacceptable
Medium (4 – 6) low high unacceptable
Low (1 – 3) low medium high
Young, 2000, p. 87
Risk can have impact on schedule (delay), cost (growth) and technical impact (missed
requirements with workaround), hence estimates of the probability and impact may be also
given in different formats as follows:
• Probability – 0 - 100%,

• Impact - from 1 to 10 (or even 100), timescales (weeks / months / years)m cost
(currency units or man days / man months), or quality /( performance (reduced
specification).
Costs are preferred as a more definitive measure of impact as it can be compared with the
costs of mitigation respond.
5.4 Risk reducing plan developing
Having identified, assessed (quantified) and prioritized risks, team is in a position to
consider ways of reducing it and to developed risk response plan which defines ways to
address adverse risk and enhance opportunities before they occur. In literature you can find
five basic approaches / types of response:
• acceptance & contingency (active acceptance),
• prevention / avoidance,
• reduction / mitigation,
• transfer / deflection.
Acceptance means the risk toleration − perhaps because nothing can be done at a
reasonable cost to mitigate it or the probability and impact of the risk occurring are at an
acceptable level. Sometimes contingency plans can be determined in advance - these are
actions planned and organised to come into force as and when the risk occurs; you take no
action in advance of the deviations occurring, other than to draw up contingency plans
should they occur.
Prevention / avoidance is elimination of the risk ��
by removing the cause or by doing things
differently where it is feasible to do so (changing the project plan). Measures are put in
place that either stop the threat or problem from occurring or prevent it having any impact
on the project.
Reduction / mitigation means reducing the risk probability and impact. It could be
achieved by using proven technology, developing prototypes, simulating, early actions,
adopting less complex process, conducting more tests, choosing more stable supplier. The
frequently control actions either reduce the likelihood of the risk developing or limit the
impact on the project to acceptable levels.
Transfer / deflection is a special form of risk reduction where the management of the risk is
passed to a third party via, for instance, an insurance policy or penalty clause, such that the
impact of the risk is no longer an issue for the health of the project. Shifting the negative
impact of threat to a third party does not eliminate the risk! There are three ways of
def1ecting risk - through insurance, by which it is passed on to a third party; through
35

onding, by which a security is held against the risk; or through the contract, by which it is
passed between owner, contractor, and subcontractors.
Project manager can also insert some time contingency:
• insert small amount of contingency (5-10%) on each activity in the network;
• add an unplanned activity near the end of the project;
• using PERT (Program Evaluation and Review Technique).
Each risk has to be assign to a team member (risk owner) who has the knowledge and
experience and responsibility for the tasks of the project most likely to be affected by the
risk. Owners responsibility in project implementation phase is to control the risk and to
detect the risk trigger immediately after it appears. Risk triggers should also be defined and
entered in risk register (Table 4).
Risk ID
No.
001
002
003
Issued by:
Contact:
Risk
description
5.5 Risk control
Activity at risk
Description WBS
Table 4: Typical risk register
Project:
Risk
owner
36
Risk factor
Carter et al, 1994, p. 127
Risk mitigation
Strategy
description Trigger
Issue number:
Issue date:
Remarks
Once risks have been identified and plans derived risks have to be monitored to make sure
prompt action is taken when appropriate. The risk control implements the risk management
plan. Continuous risk monitoring is the responsibility of risk owners. Their duty is to detect
the emerged trigger of the risk as soon as possible, and to lounge the planned corrective
action promptly. Sooner the risk is detected, lower are the consequences. Risk should be
controlled weekly, the highest risks even more frequently.
Project team members and other project stakeholders must regularly report project
manager on the following:
• The effectiveness of the implemented risk reduction strategies;
• The emergence of any new risk factors;
• The elimination of existing risk factors; and
• Any change of status of existing risk factors, for example, a medium risk factor
becomes high risk.

This monitoring would typically occur during the normal project tracking and review
meetings and reviews undertaken throughout the project. At each review, the risk tracking
forms are sorted into their order of current importance. A list of the most significant risks,
usually the 'top-ten', is produced, giving rank this period, rank last period, and periods on
the list. However, it is important that team constantly adopt a risk perspective and keep
collective "risk antenna" tuned for any early warning signs of new risks or changes in the
level of existing risks.
5.6 Control questions
1. Define risks and list some typical external risks. What is the difference between
internal in external risks?
2. Define risk management process. When risk management steps occurs in project
life cycle?
3. Show the inputs to the risk identification process and define techniques for
identifying risk.
4. Show tools and techniques for risk evaluation. Make a case!
5. What is the purpose of risk management plan. Make a risk register with five risks.
6. Who is risk owner and what is one’s role?
7. Show basic approaches / types for risk reducing.
8. Make a case of risk acceptance & contingency and discuss a difference.
9. Define risk control process.
6 PLANNING ORGANIZATION OR ORGANIZING THE PROJECT
6.1 Definition of planning project organization
Organization consists of a set of relationships between members of a social unit, which
assures the existence and development of thus formed unit and assures the rational
achievement of social unit's goal. The first part is static and structural. The second part, the
assurance of rationality is dynamic consisting of organization processes: planning,
actuating (HRM and leadership) and control. In this chapter we will discuss organizational
structures whereas in the next chapter the process of actuation will be discussed.
There exist 4 groups of uniform relationships or structures: technical, communication,
authority and motivational. Structures are sets of relationships between more than two
members of the social unit. All activities necessary to be conducted to produce a product or
service represent the entire activity of a company. Through technical division of labor the
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whole process is split to smaller units, tasks, which are performed by individuals.
Technical division of labor appears within social units and can be understood as division of
labor between different specialists. It increases efficiency and quality and decreases costs.
The tasks are connected in different ways and they are not autonomous. The relationships
between tasks, activities, groups of activities are technical. More tasks are the duty of an
individual. The technical structure of a project is the structure of activities (WBS)
Each activity has to be conducted in a successful way. People get reward for properly
conducting their tasks. For the success of a task or an activity people are held responsible.
Managers are supposed to be responsible also for the work of their subordinates. This part
of responsibility always remains centralized. As responsibility is connected to rewards and
motivation we talk about motivational structure (relationships between rewards, salaries,
goals, interests) or responsibility structure.
In order to conduct their job or activities employees ought to have power to execute them.
The formal power of their positions is known as authority. To each member of project team
appropriate authority is given. The referent and expert power are also quite important
within projects. The authority structure represents the relationships regarding authority
between project members and stakeholders.
The last uniform structure is communication structure. Through the communication
structure all other uniform structures are expressed. If communication structure is not
appropriate the other structures do not assure rational behaviour and achievement of
project goals.
All mentioned structures are supposed to be coordinated within themselves. E. g. no task,
communication link, etc. should be missing or doubled. The mentioned structures always
develop to processes. They also have to adapt to each other. E.g. duty of each individual
has to be coordinated to responsibility, authority and communication. A complex duty
requires more responsibility and authority. A simple duty gets little responsibility and
authority. The managerial structure is a composed one: it consists of the 4 mentioned
(coordinated, adapted) uniform structures. The managerial structure determines the
position of each individual member of the social unit. Thus the organizational position is
determined by duty, responsibility, authority and communication.
The responsibility for the achievement of project goals rests with project manager. He
delegates duties, direct responsibility and authority to project members through the process
of delegation. Let us only mention that there are many problems to delegate in an
appropriate way.
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6.2 Work break-down structure (WBS)
The whole working process of a project is divided to activities. By division to activities
some criteria should be followed. Usually the project breakdown follows the criterion of
the process, of the flow of activities. The other possibility, especially in bigger project is
the division according to parts (subjects) of the project. Division can be also based on
employees, different professions or different departments.
The next problem is the question how detailed should be the division. Should the project
be split to very small activities? If the division is to detailed many activities will appear
and the overview of the project will deteriorate. If the activities are to big the connections
among activities cannot be shown properly.
The next problem is that within the same activity more different people can be involved. If
we determine activities according to each individual or homogenous group the number of
activities will increase tremendously. For that reason the linear responsibility charts can
be introduced. Activities are not divided to each individual but remain reasonably
determined. However, within the activity the role of each individual is shown. Some
individuals execute the activity, some have to agree, control, be informed etc. An example
of LRC is shown in slides.
6.3 Project stakeholders
Within each project many individuals and groups take place and have some special
position and interest in the project. We already mentioned some.
The person placing the order to start the project is usually the general manager –
CEO. They determine the concept (scope), the purpose and goals of the project and select
the project manager. They can also make other decisions. Through project they implement
their strategies.
Project sponsors represent the financial sources of the project and expect some benefits
from the project. They also take part in decision-making following their interest. They can
also be senior influential officers within the company, who support the project and project
manager.
Control or direction (steering) committee is often established in complex projects.
General manager as authorizing the project assigns some of his duties to the control group.
The committee confirms the plan of the project and controls the execution in shorter period
of time. Committee also decides in some uncertain situations. Members of this committee
are functional managers of (team) members, the users of the project and others. The
general manager can be member or the chairman of such a committee.
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Project manager is the most important person within the project. He plans, actuates and
controls the project. He coordinates activities and resources. He makes or proposes most
important decisions. He is selected on basis of some criteria, e. g. his availability, his
references regarding project management, knowledge and experience in project
management, especially leadership, knowing about the content of the project, ability to
work under pressure, his personality and getting along with project team members and
similar.
Manager of projects is not always established. His duty is to coordinate different projects
themselves as well as projects and business functions. He can be an assistant to the general
manager.
Functional managers are important stakeholders. Their employees are assigned to the
project. Whereas the project manager decides about the activity, the appropriate
participants and time, functional managers assign their people to the activities. Middle
managers are often members of the direction or control committee. They decide who
should take part in the project and take care of knowledge and abilities of the assigned
people. The relationship between functional and project manager is crucial for the project.
Manager of a group of activities or individual activity is usually a departmental manager.
Employees of one department often conduct more activities within a project. These
activities are also coordinated. Within one activity more people participate and one of them
is a lower level manager.
Within the project also consultants and expert may participate. Experts provide written
opinion on some business or organization problems. Consultants can also give advise
either on business or project management.
Very important stakeholder is the project team. Members of the team execute the
activities. They are specialists but act connected as a team, as a collective. They also have
to establish strong social relationships, not only relationships connected to their
specialization. Members of the team participate also in planning and controlling the
project.
6.4 Position of the project within the organizational structure
The project is usually placed within the organizational structure of the company. There
exist three basic possibilities:
• project within the existing functional organization
• project organization
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• project matrix organization (for graphical presentations look at the slides)
6.4.1 Project within the existing organization
The functional organization is the classical organization of small and medium size
companies producing one group of products. The organization (see slide) consists of
purchasing, personnel, production, sales, financial (and R&D) department. It is suitable for
repetitive operations. If the company starts a project this structure is not suitable without
introducing some changes. Employees from different departments get additional activities
to be conducted. Management of the project is assigned to a person within the hierarchical
functional organization, too. All project activities as well as management of the project
represent additional tasks, which can be conducted overtime and/or some existent or new
employees take over some of the project team members repetitive tasks. The advantage of
this solution is that nothing has changed within the existent organizational structure by
introducing projects. The main disadvantage is that team members always give priority to
their repetitive or functional duties. We can argue that this solution is appropriate in the
case of starting a few projects.
6.4.2 Project organizational structure
To omit the problems of the previous solution the project organization (see the slide) can
be established. The project is assigned to a group of employees, who are supposed to act on
the project. It is like establishing a new department or inn case of more projects more new
departments. Members of project team work mainly on the project, at least some of them.
So there is no excuse of being occupied with other repetitive activities.
The advantages of this approach are:
• the project management bears the responsibility only for the project,
• members of the team report only to the project management,
• there is no need for cooperation with functional managers,
• identification of team members with projects is strong,
• the managerial structure is simple,
• in the case of more similar projects the team became permanent, which could
represent the basis for team structure.
The main disadvantages are:
• team members are not always fully occupied,
• the connection of team members to the business functions is decreasing,
• team members are not aware of company problems,
• there is a problem of employment after the project is finished.
We can argue that this structure is reasonable in the case of a few bigger projects
41

6.4.3 Project matrix structure
Project matrix structure (see the slide) is a combination of the previously mentioned
structures. Each employee can work (repetitive job) within the business function and at the
same time be assigned to the project to conduct some unique activities. The member is thus
subordinated to the functional manager (for repetitive work) and to the project manager
(for involvement within the project). If both managers posses the same level of authority
we talk about the balanced structure.
The advantages of this most known and used »project« organization are:
• the responsibility for project lies with project manager, who is like the other
members usually part of the time managing the project,
• members of the team are connected to the business function,
• the adaptation to project customer is easy by putting more or less emphasis on the
project,
• for team members pert time job on more creative activities and part time
employment on repetitive activities is quite suitable.
The main disadvantages are:
• lack of cooperation between project (responsible for the activities, dates and
content of work) and functional managers (responsible to decide on employees
assigned to projects and their qualification),
• the matrix structure requires some new approaches in cost accounting systems,
• the coordination can become difficult if the number of projects is increasing
(manager of projects should be introduced).
6.5 Projects supporting organizational culture
6.5.1 Definition and characteristics of organizational culture
Organizational culture is often mentioned as one of important factors influencing the
achievement of project goals. The problem is that in most cases within companies the
repetitive production supporting culture has developed, which does not support projects
management and implementation. It hinders the proper conduct of projects.
The organizational culture represents basic values which are developed, considered, shared
and followed by most employees (strong and weak culture). It is personality of the
company. To work together employees have to adapt: They repeat actions which have been
proved as successful. They thus develop similar values.
42

The organizational culture can be represented at three levels. The visible level consists of
symbols, legends, artifacts and is shown through the behaviour of employees. The middle
level consists of values shared by employees. The invisible level explains the reasons
(assumptions) for developing a certain type of culture.
The organizational culture depends on contingency variables and above all on the values
and behaviour of managers and owners as well as on national culture. Within a company
different subcultures emerge. We could easily imagine that the repetitive operations
supporting culture will differ from the project supporting values.
6.5.2 Project supporting values and changing the culture
The main values supporting the projects are: the importance of achieving project results,
customer orientation, team work, importance of knowledge and learning, acceptance of
conflicts, flexibility, importance of referent power, importance of creativity and innovation
and similar. The projects supporting culture often represents a subculture.
It is very difficult to change the existent organizational culture and the process takes quite
some efforts and time. General managers as well as project and functional managers have
an important role in changing the organization culture in order to become more projects
supporting. The process consists of the analysis of the present culture, the plan of the new
culture and of the process of changing the culture. As most important actions of culture
change we can discuss: motivation and rewarding (for project goals achievement), the
communication expressing the importance of projects, the support of general management,
the examples given by project managers, symbolic management (by changing symbols,
behaviour influence the organizational culture).
We will discuss the values of creativity and innovation more in detail.
6.5.3 Creativity and innovation as important elements of project organizational
culture
Authors in project management as well as practicing project managers will agree on basic
goals of the project. A project should be conducted according to the required quality, with
smallest costs possible and in due time. All the three goals (their level of importance could
be different for a particular project) are typical efficiency goals. The efficiency within the
enterprises in the past was achieved mainly through repetition of routine tasks and mass
production. It does not mean that no changes occurred within the process. It only means
that the repetition occurred many times and changes were rare and mainly of adaptive or
evolutionary nature.
43

This explanation of how the efficiency could be achieved cannot be applied to projects as
they, by definition, cannot be repeated. Of course, some activities can be repeated and
some projects are similar. Within the project very often no right way of how to execute the
activities has been established yet. Repetition and routine are not important for achieving
the project’s goals. Verzuh (1999, pp. 10-12) emphasizes two characteristics of projects:
their uniqueness and temporality. He emphasizes that the ongoing operations have
characteristics opposite to projects in that they have no end and they produce similar, often
identical products.
As already mentioned, some projects are similar and some activities are even the same in
more projects. To a certain degree improvements in the efficiency of projects are due to
repetition and gained experience. But mainly, as a consequence of characteristics of
projects, their efficiency should be achieved in a different way than through repetition of
activities. Most of projects and their activities are conducted for the first time. We have to
plan and to implement novel solutions. The degree of novelty can be quite different. There
are different degrees of novelty, running from minor, incremental changes right through to
radical changes which transform the way we think about and use them (Teed, Bessant,
Pavitt, 2001, p. 6).
Projects introduce change and they are an organizational change process themselves. But it
is not sufficient to introduce a change or an innovation, or make a project. This has to be
done in an efficient way. We can say that in the case of projects the efficiency goals are
achieved through innovation. Without creativity and innovation the basic goals of
projects cannot be achieved. Yet, in managing projects, we still often focus on the
techniques applied to repetitive tasks and not on techniques that are necessary to manage
work that is temporary and unique. Due to this fact many projects fail to achieve their
goals. For that reason it is important to look at the innovation process within projects to
increase their efficiency.
Amabile (2001, p. 4) argues that creativity (as the starting process of innovation) gets
killed much more often than it gets support. Her opinion is that this is not due to aversion
of managers against creativity. The reason is that managers follow productivity and similar
goals as apparently different to creativity. Amabile believes that both, efficiency goals and
creativity are connected and it is possible to develop both of them. To build a project
organization that will achieve project goals through creativity and innovation requires a
good understanding of what kind of management fosters the creativity and which kills it.
The purpose of this paper is therefore to increase the success of a project defined in terms
of time, costs and quality. The goal of the paper is to discuss the innovation process, its
connection to creativity and the barriers to both of them. There are suggestions made for
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project managers and top management about how to overcome the barriers and support
creativity and innovation.
1. Definitions of creativity and innovation process
We talk often about creativity and innovation. Both are desired by practitioners and studied
by researchers. Yet both are poorly understood. Some authors discuss creativity at a greater
length and some innovation. Others again focus their attention only on one of them, as
creativity and innovation are understood as the same process.
Creativity can be defined as a decision making process that produces novel and useful
ideas (Amabile, 1988, pp. 123-167). Innovation is a successful implementation of creative
ideas. Similarly other authors (like Daft and Noe, 2001, p.116; Hellriegel et al., 1998, p.
458) define creativity as a generation or production of new ideas that may meet perceived
needs or respond to opportunities for the organization. Accordingly, organizational
innovation is the implementation of creative and useful ideas through planned or
unplanned organizational change (Woodman and al., 1993, pp. 293-321). Creativity is the
essential first step in innovation, which is vital for long-term organizational success
(Muller, 1995, pp.16-19). Innovation always represents change. That explains why
definition of change and innovation are almost always the same. However, not each change
is innovation.
There is often the opinion that creating an idea or an innovation is a happy occurrence of a
blinding flash of insight. Drucker (1985, pp. 67-72) tells us that innovation is a systematic
management process based on some principles like starting by analyzing the sources of
new opportunities, studying users’ expectations, focusing on relevant issues, looking for
knowledge, etc.
The steps in the creative process are recognition of a problem or opportunity,
information gathering, production of ideas, and selection of ideas (George, Jones,
1999, pp. 513-521). Creative people can see the problem or the opportunity where the
others cannot. Their personality traits are specific. They are not conforming to others and
they do not adopt the majority opinion. They are a dissenting voice. They know what
problem to focus on (Chickszentmihayi, 1990, p.193). They put no restraints on the
problem or opportunity. In the second phase they gather different information and make
additional investigation. This provides them with a variety of perspectives on the problem.
Creative people are good at generating a high degree of different ideas in a short period
of time. Challenging problems motivate them. They are able to withhold the decision on a
problem until sufficient facts have been collected. They are more concerned with the
meanings of a problem than with small details. Solomon and Winslow (1988, pp. 162-171)
mentioned also more other characteristics of creative people. Innovative ideas often occur
while the person is doing something else. They can appear unexpected, but in most cases
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the answer comes usually incrementally (Kuratko, Hodgetts, 1995, p. 69). In the last phase
of creating ideas, different ideas are evaluated and developed into more detail.
Sometimes they are reworked.
The creation and selection of ideas continues in the implementation of ideas or innovation
process. According to Roberts (1988, pp. 1-19), who presents the case of innovating a
product, the innovation process starts with idea creation and continues through initial
experimentation, feasibility determination and final application. Schermerhorn (1999,
p. 380) maintains that the process of innovation within the companies occurs in two forms:
product and/or process innovation. Both processes include invention, the act of discovery
as the result of the creativity phase and application, the act of use. I would add that not
only products and processes but also the organization: structure, culture and processes can
be innovated. Authors in production, marketing and other business functions as well as
authors in management and organization discuss the steps of innovation process in more
details.
We could also look at the innovation process from a broader perspective. The innovation
process consists of more stages: invention as the creation of a new idea (inventor),
development of the idea to practical use (producer), diffusion of the idea to be used by
users (user), integration to make complete change (manager) and the decline as the
innovation stops being used. Often innovations are susceptible to the environmental threats
because of lack of resources and experience. To resolve this problem is to show the
benefits to the user, to show him the importance of resolving his problem.
Within the project the ideas are developed into how to execute an activity, shorten the
duration of the project, how to decrease costs and resources, and/or how to improve
quality. The innovation part of the process includes the implementation of the ideas.
Competitiveness of the project can be achieved only through the innovation. The
innovation includes risk. It is important to manage properly the creativity and innovation
process within the project as well as to manage risk. It is important to emphasize that the
creativity and innovation process can be managed. The creativity of people is not only
inherited; it can be taught and learned. Most people possess more creativity than they can
use.
2. Creativity and innovation within project management
By definition activities within projects are often unique. So are the projects. To conduct
them efficiently the creativity and innovation are more a rule than exception. Project
members are specialists responsible to find new solutions within their activities by using
their knowledge, skills and creativity. Project managers have to provide support to them.
At the same time they have to look for new ways of managing the project: to plan, control,
organize the project, motivate members, etc.
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As Cleland (1990, pp.326-329) points out “the important enemies of effective project
management are the failure to use the potential creativity and innovation skills of the
project team, and accepting what is being done on the project as good enough and failing
to evaluate the quality of the project and the quality of the project management. Improved
quality usually comes about through creativity and innovation in the project work.” He also
claims that an effective project manager sees changes as normal, always searching along
with the project team for creative ideas and their exploitation. He has to foster creativity
within the team and on individual level.
Although the importance of creativity and innovation is much emphasized we still lack
them within the projects. Probably one of important reasons lays in the fact that routine and
repetitive tasks and their management were developed first. Quite often managers of
repetitive tasks started to manage projects. As the projects developed still the managerial
approaches suitable for routine tasks were used. Approaches of yesterday were used to
resolve today’s problems. Authors, especially in the organizational behaviour area, discuss
different barriers to innovation. I am focusing on these barriers by adapting them to
projects and trying to arrange them in a systematic way.
Projects are the organizational side of strategies and changes (Rozman, 2000, pp. 54-59).
Through project organization strategies and changes are implemented. The organization
consists of organizational structure and organizational processes. They both can be formal
and informal. If the (formal) organizational structure, (informal) organizational culture,
formal organizational processes (of planning, actuating: HRM, leadership, communication,
motivation and controlling) and informal processes (of influencing and adapting) do not
support projects considering their characteristics, the goals of the projects will be rarely
met. However, some of the mentioned areas are more important in terms of creativity and
innovation within projects.
Robbins (2001, pp. 557-559) names similar areas to be important for development and use
of creativity and innovation and discusses findings on the relationship between innovation
and organization. He emphasizes three sources of change: organizational structure,
organizational culture and human resources. His review of the structure-innovation
findings leads to the following conclusions:
• organic organization positively influences innovation
• long tenure in management is associated with innovation
• slack resources nurture the innovation
• inter-unit communication leads to innovation.
Research and development, historically a separate and isolated function, is being integrated
into a team setting. Peter Drucker (1988, p.11) pointed out that successful innovations are
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turned out by cross-functional teams with people from marketing, manufacturing, and
finance participating in research work from the very beginning. Innovative organizations
are also reorganizing themselves into smaller divisions and encouraging entrepreneurship
to remain innovative.
The innovation supporting cultures encourage experimentation, risk taking, promotion
of success and not punishment of failure etc. Without the project supporting organizational
culture the goals of the project are rarely achieved. One of the main reasons people are not
more creative and innovative is the cultural ambience of the project. Cultural blocks
include the conformity to established norms. The organizational culture is often not
supporting projects. The influence of culture is often hidden.
Innovative organizations promote training and development of their members and
encourage them to become champions of change. Once a new idea is developed, idea
champions promote the idea, build support, overcome resistance, and ensure that the
innovation is implemented (Howell, Higgins, 1990, pp. 31-32). Champions are selfconfident,
persistent, risk-taking and energetic. They are like transformational leaders.
According to Roberts the other critical organizational roles are: idea generators (especially
in the creativity phase), information gatekeepers (who serve as links between individuals
and groups within the organization and with external sources), innovation leaders
(transformational managers) and project managers who keep an innovative project on track
with all the necessary resource support.
If the organizational structure and culture as well as organizational processes are in line
with projects we can expect appropriate creativity and innovation processes within the
companies. What kind of organization would we suggest?
Recommendations to support creativity and foster innovation
3.1 What can top managers do to increase innovation within companies?
Senior managers have to establish a proper organizational structure, culture and processes
that will support projects. They are responsible for coordinating projects and business
functions. Changes of organizational structure are implemented from the top downwards.
Much has been written about organization of projects and selection of an appropriate
organization that will formally enable innovation processes within projects. Formal
position and status of projects and project managers within organizational structure is of
high importance for project management.
Organizational culture must support the performance improvement or the project will be
extremely difficult to manage and to implement (Fuller, 1997, p.57). Managers have to
establish a culture supporting the project. They have to emphasize the importance of
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projects. Values within project structure shared by employees are the following:
performance rewards, team work, identification with project team, conflict tolerance, risk
tolerance, support by managers for projects, importance of knowledge and learning
process, low differences of power, emphasis on referent and expert power, autonomous
work, flexible working time, less formality, long-term results, supporting change and
innovation, users orientation (Rozman, 2000, pp. 327-335). According to typologies of
some authors the project management supporting culture is task culture (Handy, 1986),
vitalized culture (Kono, 1990, pp. 9-19), etc.
Changing the present culture to a project-supporting one consists of analyzing the
present culture, designing the desired one and implementing change. This is very difficult
due to characteristics of culture. Schein (1985, pp. 223-243) emphasizes the following
culture reinforces: what do managers pay attention to; what do they measure and control;
the ways the managers react to critical incidents; how they model managerial and team
roles; how they teach, coach; how they allocate rewards and status; what ceremonies, rites
and stories they support. Daft (1994, pp. 132-134) also emphasizes the importance of
symbolic management. Dumaine (1990, p.128) emphasizes the importance that managers
live and behave according to the values of the culture.
The organizational processes of planning, actuating (human resources management,
leadership, motivation, communication) and controlling should support innovation within
the projects.
There arises the question of how to develop (project) managers to be creative and to
support creativity of others. We are tracing growing interest in developing managers.
Unfortunately, many development programs are not adequate. The main reasons seem to
be twofold. First, programs tend to develop managers within the present experience: to
produce transactional managers. Second, the needs of individual managers are specific. In
order to overcome this second problem, some organizations have moved from off-the-job
training to more individually tailored and job related programs (Newstrom, 1995) at the
level of companies and for individuals.
3.2 What can project managers do to increase creativity and innovation?
Project managers are held responsible that those involved in a project think about
innovative ways. They should participate in building appropriate organizational structure
and culture. However, managers themselves can be innovative in their way of managing a
project: in planning, organizing, staffing, communicating, motivating and controlling.
It is not possible to argue that some people are creative and the others are not. It is a
continuum. Kirton (1989) contends that not only do people exhibit different degrees of
creativity, but they also express their creativity in different ways, along a spectrum which
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uns from adaptors to innovators. Adaptors prefer to work within the existent system and
suggest evolutionary changes and improvements. They are efficient and conform to
existing norms and come up with only a few ideas at one time. The transactional
managers or leaders correspond to them. Innovators ignore the present system and come
up with radical, revolutionary changes. Transformational leaders correspond to them
(Burnes, p. 501). Majority of people are between both extremes and can even adopt
different styles at the same time. Talbot (1997) indicates that there are approaches to
increase the creativity and change the adaptors to innovators and transactional leaders to
transformational ones. Talbot (1993) also points out that changes in people’s creativity
alone are not enough. Individuals cannot be considered in isolation. The organization,
especially the culture influences their creativity.
Transactional leaders guide their followers in the direction of established goals by
clarifying role and task requirements. Transformational leaders inspire followers to
transcend their self-interest for the good of the organization; they pay attention to
developmental needs of individuals and help them to look at problems in the new way.
Transactional and transformational leadership shouldn’t be viewed as opposing approaches
to getting things done (Bass, 1990, pp. 693-703). Transformational leadership is built on
top of transactional leadership. Project managers are required to be both.
Project managers should support creativity and innovation. They have to remove
blocks to creativity and stimulate it. According to Randolph and Posner the major blocks to
creativity are: fear from expressing talents, stress of criticism for failures, instability,
formalization little support and time allowed for innovation (1992, pp. 116-117). They
have to be aware that creativity is within individuals not within a team. Still more, teams
influence individuals to act in line with team opinion. Individual members should be freed
of such influences of teams. The manager has to give the instructions to refrain following
the opinion of others. This is the basis of most techniques supporting creative thinking like
brainstorming, Delphi method, Nominal group techniques and similar ones. Project
managers should lead people (e. g. manage team meetings) considering the philosophy of
mentioned techniques. But to implement the ideas the team support is very important. We
can connect the creativity with individuals and teams with innovation.
Project managers should take care of members already in the recruitment phase. It is the
task of a project manager to provide an appropriate mix of skills and personal traits of
members within team. Members have to possess different skills. At least some of them
have to be creative.
Project managers have to encourage different opinion. There should be no need to hurry
with a solution. The first and most obvious decision should not be accepted without doubt.
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In this connection the role of devil’s advocate is often recommended. It is a process by
which an individual or a team develops a systematic critique of suggested alternative.
Creativity is partly inherited. But it can be also taught. Project managers should take care
that members are taught to unleash the creativity. They have to motivate, to reinforce
and not stifle creativity. Creative people respond more to intrinsic rewards, like recognition
and praise. Project manager is more a supporter providing possibilities and broadly
directing the activities.
The innovation process is supposed to be conducted by planning and controlling.
Members should participate in the planning process. After an agreement is obtained the
execution should follow efficiently. Project managers should not over-control the
personnel.
Channels of communication should be open to all members. There should be all-channels
communication structure. Project managers should take care that members have no fear of
negative consequences for making a mistake. Rewarding and promotion should be on the
basis of results and merits. Project managers focus less on how work is going to be done;
they should focus on the achievement of goals.
3.3 What should members of project teams do?
To become innovative members, they have to follow some principles. Innovators must be
action-oriented, always searching and developing new ideas. They should try, test and
revise. They should learn from the failure. Failures give rise to new innovation (Mitsch,
1990, pp.18-21). During the process they should keep the user in mind and deliver him
simple solutions. According to Taylor (1990, pp. 97-106) work is of utmost importance. It
takes work and not genius to innovate successfully.
6.5.4 Conclusion
The creativity and innovation processes are very important for efficient and effective
project management. Due to different reasons the creativity and innovation are rarely
properly managed. This is quite often the reason for less successful projects that do not
meet their goals. We have to find barriers to innovation processes and make suggestion
how the creativity and innovation processes should be supported by managers, project
managers, project team and other stakeholders connected to projects. Top management has
to take care that an appropriate organizational structure is introduced. A project supporting
culture is their responsibility. They should take care of developing creative and creativity
supportive project managers. Project managers should unleash the creativity of project
members and their own. This can be achieved in different ways. They have to become
transformational managers. However, team members and other stakeholders have also to
think and behave in an innovative way.
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6.6 Project (management) office (PMO)
6.6.1 Project office development
The idea of project offices appeared in the 50's and 60's of the past century in the
construction industry, aerospace and defence industry. The main purpose was higher
cooperation of project team and contractors on large projects. Project Office was a team for
contractors management and a focal point for communication with the users. Staff were
fully employed, often with incompletely load. The focus of their work was constantly
updating the framework of plans and preparation of all documentation for users.
In the 70's serious computer programs for the project management were developed. The
project office was included experts who mastered these programs and supported all
projects. Project Office amended to project managers support in a range of fields and
combined the skills associated with project management. From the user-oriented office
became an information centre and started to tender full technical support (as corporate
knowledge-based centre).
Latter the project office was responsible for standardization of management phases
(planning, control), the roles determination in the management of projects, defining of
project managers job descriptions, and the implementation and updating of an archive of
experience from previous projects. This was mainly PMO’s role in the 80's.
6.6.2 Project office functions
In the 80's and 90's the importance of the projects was increasing. Literature, conferences,
symposia, experiences, computers and related SW were drawn to each other new project
office:
• project management methodology development,
• setting standards,
• determining the best practices,
• coordination and implementation of training,
• transfer of knowledge and experience,
• oversight of staff in the projects
• risk assessment of projects
• planning in case of emergencies, crises.
At the time the name was changing to the Centre of excellence.
The company should constantly update the processes of project management, provide
appropriate organisational rules, uniform project approach and appropriate computing
solutions. This role is increasingly taking over the PMO.
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Now days usual activities of project offices are (Verzuh, 1999, p. 285-292):
• maintenance of project standards (documentation, updating and promotion of best
practice);
• training organising;
• mentoring and advising the project managers, since office employees are experts in
individual fields;
• network scheduling and cost planning;
• integration project information into the enterprise information system;
• participate in decisions along with project managers;
• monitoring of project managers;
• concern for the quality, timing and cost of projects;
• project managers career planning;
• new project managers recruiting.
Kerzner (2001, p. 99-100) declares the following responsibilities of PMO:
• a strategic planning focal point of project management
• benchmarks project management
• concerns for the continuous improvement
• provides mentorship for inexperienced project managers
• a centralized data bank on lessons learned
• shares project management ideas and experiences
• a “hot line” for problem-solving that does not automatically inform senior
management
• creates project management standards
• a focal point for centralized planning and scheduling activities
• a focal point for centralized cost control and reporting
• assists Human Resources in the creation of a project management career path
• an assists Human Resources in developing a project management curriculum
6.7 Control questions
1. What do you understand by organization? Discuss the organizational structures and
organizational processes.
2. Discuss the reasons for use of linear responsibility chart. Show some examples of its
use.
3. Discuss the work-breakdown organizational structure.
4. Enumerate different stakeholders and discuss some of them
5. Discuss the roles of project manager, direction committee and project team.
6. Discuss project management within the functionally organized company.
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7. Discuss the organization of a project within the project type organization: its
characteristics, advantages and disadvantages.
8. Discus the characteristics of project-matrix organization. Show its advantages and
disadvantages.
9. Define the organizational culture, discuss different values and levels of
organizational culture.
10. Discuss the values, which are important for achieving project results.
11. Discuss the change of organizational culture.
12. Discuss creativity and innovation within projects.
13. Indicate PMO functions and describe it’s role in improvement of the efficient
execution of projects within the organization.
7 ACTUATION OF PLANNED ORGANIZATION
In the previous chapters we discussed the planning of project: planning time, resources and
costs as well as planning duties, responsibilities, authority and communications. However,
all this planning is in vain if it is not followed by its actuation or activating or
implementation. To actuate the plan we have to recruit and develop people, and lead them.
The leadership in a broader sense depends on motivation, communication and leadership.
In this chapter we will talk about HRM, leadership, motivation and communication.
7.1 HRM
HRM (earlier known also as staffing) consists of recruiting and selecting employees (team
members), placing them, making their evaluation, rewarding, promoting and demoting
them as well as developing their resources. Let us emphasize that the HRM is really
managing of the roles or required role characteristics.
Based on the proposed project and its activities and other characteristics project manager
has to propose the project team. He looks for potential candidates, which is known as
recruitment.
He tries to select most suitable members considering their knowledge on the activities
which they are supposed to be conducting. However not only their knowledge and abilities
are important. Within the team also the social cooperation and complementary of members
is important. The selection of project members thus includes the professional and social
mix of selected members. Especially important is the selection of the project manager. His
managerial and above all leadership skills, technical knowledge of the project, references
and availability are important for the selection.
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Project manager explains to the project team the requirement to be fulfilled and explains to
the team and individual members what he expects from them. This is called placement.
Team members start to execute the activities and project. Project manager has to motivate
them. He evaluates their individual and team performance. On this basis he suggests
further development (education and training) of their resources, proposes their rewards
and also proposes their promotion.
7.2 Project (team) leadership
7.2.1 Participative leadership and characteristics of a good leader
Different experts are joined in project team. Because of high specialism and project
specificity project managers are not familiar with activities’' details, in any case not as
team members. For that reason they have no possibility to command team members what
and how to perform the activities. Better way is to enrapture them for independent work
and goals attaining. Managers efforts are directed to personal relations, they rely on their
personal strengths. This style of leadership is known as participative or democratic.
Typical characteristics of participative leadership:
• leadership is built on personal characteristics, not on position - project manager
could be subordinate of team member in company organisational structure;
• team planning and control, team members decides upon the way of task execution
• team work and discussion encouragement, the proper organization culture has to be
implemented
• team decision-making - discussion should take place until the team find the
consensus; no one is final arbiter; exceptionally, under the time pressure, manager
make a decision;
• for the sake of better mutual understanding, it makes sense to change the work
among members and encourage mutual assistance. Eg. members who have
completed their work, helping other members.
• team searches for facts in information when decides,
• empowers and promotes creativeness;
• conflict discussion, either jointly or separately with individual members;
• “theory Y” leadership
• team leader is available for different discussion with team members - the open
door.
• team is open for criticism and praise, every individual in his opinion are important.
Criticism must be constructive and duly delivered.
• communication is predominantly verbal and follows the principle of all channels
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(all communicate with each other). Active listening skills are important.
• management is geared to the satisfaction of both (theory of interpersonal relations)
For successful project the following team leader characteristics are particularly important:
• by leader’s persuasion in the project importance, complexity and the objectives
achievement, one leads and motivates team members.
• leader can demonstrate, communicate the importance of the project to members
and others. Communication is open, in order to reach a return communication from
participants. Openness is the basis of the views exchange.
• Team members may rely on a leader. This does not mean that they always agree
with him, but know that it is committed to the project and considered in its
operation. They follow leader on the basis of confidence, because they know that
leader works for the benefit of all. Reliability is greatly appreciated feature by the
participants.
• Leader must be self-managed – one has to know oneself, ones abilities and
weaknesses, acknowledges mistakes and learn from them. Self-management is a
systematic, disciplined and persistent mode of action of the leader. This is
especially necessary in crisis situations.
Hierarchic leadership in companies are older than project management. Many times line
managers are also project managers or team members, consequently their leadership type is
hierarchic, autocratic which is harmful for project goals attaining. Argyris indicates follow
leadership faults:
• to autocratic leadership instead of democratic;
• forcing of solutions;
• it is important to motivate the whole team, not individual members;
• unsuitable methods application;
• unsuitable conflict resolving; conflicts, which are associated with the dual
responsibility - members of the team are often in a difficult situation, because they
must decide between two managers. It is also dangerous to abuse;
• poor project goals and objectives - team should require a clear definition of the
goals of the project and the relevant objectives;
• poor meetings management and directing.
In connection with the work of the project teams we have to mention two more frequent
problem. In improperly assembled teams individual members can contribute less than they
are capable of - problem is called Soccer effect. Their individual contribution is not visible.
They think, why should I work as all the rest, if this is not observed.
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Often, the team also makes inappropriate decisions, although we expect that their decisions
will be more deliberate. Interestingly, the majority of the members often do not agree with
the decision, but they fear that their opposition will threatened conflict. At the same time
they rely on the opinion of others, even if it is different from their (Groupthink).
Good leadership can be seen in team members’ behaviour. Members of a well-leaded
teams shared the following characteristics:
• are confident and feel important;
• knowledge and expertise mean them a lot, as well as the personal characteristics of
staff;
• they feel like part of a team and are willing work and are dedicated to the
company, they always present and defended the project and company;
• they are more and more interested in work.
7.2.2 Characteristics of successful teams
Key role in the project implementation has the project team. The team is the organization
of two or more persons who cooperate and coordinate their work to achieve the objectives.
The team definition includes three essential elements: team has two or more members,
work requires mutual cooperation and has collective goal. Many authors distinguish the
team and the group, so we explained the differences in following table.
Group Team
- powerful leader is selected,
- individual responsibility
- goal of group is identical to company goal
- meetings' goal is agreement
- success is measured by company success
- work is assign to individuals.
Table 1: Differences between group and team
- members take an active part in management,
- everyone feels responsible for themselves and for the team
- vision and goal of team are specific
- meetings stimulate discussion and problems solving
- success of team
- work is divided among members.
Daft and Noe (2001, p. 273) indicate the following advantages of team work:
• effort in the team is greater, because the presence of other members will contribute
to greater motivation and effect;
• the satisfaction of the members is greater because of the need to belong a team and
because of socializing;
• accelerating the acquisition of knowledge and skills due to members join work;
• greater flexibility of work, as members execute several different works;
• lower monotony of work.
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Disadvantages of working in teams are in particular:
• loss of informal competences and power of line managers, who fear loss of status
or even a job (that is present mainly in the self-management teams);
• exploitation of the team, when individuals gain the benefits of membership in the
team, but are not ready to offer all of their skills, knowledge and effort;
• costs for teams are often greater than in hierarchical coordination.
Project teams are placed outside of the permanent hierarchal organization to implement
significant and creative projects. Although team members are company employees, they
feel team as a special unit. Team often involves employees from different business
functions and / or units.
Authors separate technical and human / personal characteristics of the teams. Technical
characteristics include:
• dedication to the project in a professional context,
• focus on the result, to attain the project objectives,
• the willingness of members for changes accepting as a result of creativity and
innovation,
• the importance of the quality of the project,
• the ability of linking together different skills,
• expectation of next project phases,
• the speed of problem solving,
• synergies between members as a result of the different skills and abilities.
Human or personal characteristics of the teams are:
• involvement of members and dedication to the project,
• the ability of the coordination of the various views, the recognition of diversity and
conflict resolution,
• ability to communicate between all, equal members, not to degenerate even in the
hierarchical communication even in the chat,
• a desire for a collective achievement,
• the appropriate atmosphere in the team,
• mutual trust
• willingness to learn and to develop innovations.
The performance of teams can be affected by various factors. Authors often mentioning
culture, rewards, diversity of members, the knowledge and skills of members, the size of
teams, the merits of installing a team, etc.
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7.3 Communications
7.3.1 Project communications characteristics
Communication is the transmission of messages between the sender and the receiver. Four
elements of each message are the message, transmitter, receiver and channel by which the
message travels. Classic ways to convey the message are verbal, written and by body
language. Modern ways are electronic medias, such as telephone, e-mail, Internet.
Communications have different characteristics - duration, direction, extent, volume,
acceptability, directness. Regard to direction we distinguish one-way and two-way
communication. One-way communication takes place predominantly in one direction, from
transmitter to receiver or vice versa. In the two-way messages are constantly exchanged,
the receiver simultaneously clarifies confusions, while transmitter explains the message.
Both sides are equal. However; the communication in one direction can be better prepared
and faster, but the receiver is in unequal position. More relevant is the communication,
which is consistent with the situational variables and other organizational structures.
An understanding of communication is difficult due to several reasons, problems and
communication barriers. These are mainly consequence of the diversity of transmitter and
receiver, the comprehensiveness of the message and the difficulties in the communication
channel. Also, there are a number of recommendations on how to avoid problems, how to
eliminate or overcome, if they occur. Mention few: the repetition of messages, messages
organising, active listening, readiness to transmit and receive.
Characteristics of the project management affects the proper communication. So first we
expect to communicate horizontally and not hierarchical. While in the hierarchical
organization the messages travel mainly in the vertical direction (commands and reports on
the work done), the positions of team members is equal. Communication is therefore
among the members of the same level, and it’s content can not be the commands, but the
interpretations, suggestions, explaining, agreement. Frequently relations between members
outside of the team influence on communication in the team, which makes a team work
more difficult.
Communication in the project team is two-way. Two members constantly exchange the
roles of transmitter and receiver. It is important that the transmitter is open, while the
receiver feedbacks. All team members participate in the communication, therefore
communication across all channels is typical for the team.
Figure 2: Interpersonal communications
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Of course it is not necessary that all team members communicate to the same extent. Team
leader has more frequent communications, which are sometimes hierarchical. Leader can
change, what also affects the communication.
A third characteristic are informal communication, which are not predetermined, and
therefore interfere in areas which are not directly related to the handling of specific
problems or into adoption of concrete decisions.
The next characteristic is mostly oral communication, in the meetings, which does not
mean that other communication doesn’t exist. Eg. minutes of meetings are written. Also,
certain techniques for creativity promotion (eg. ideas recording) require written
communication. Finally, the number of dislocated meetings (via electronic mail, the
Internet or teleconferencing) increases. In such cases, we talk about virtual teams
The most common problems in communication within the team are:
• The reluctance of members to exchange information. Individual members,
especially those who feel that they know more than the others, and who fear that
their results will not be sufficiently visible, do not give all of himself, but only hat
much, as in comparison with other seems necessary.
• team leader communicates too much with team members individually or with the
close part of his team.
• At meetings team leader puts into force one’s (hierarchic) position, so the meeting
is not running democratically.
• often Team members do not want to tell bad news, therefore the problems increase
and require intervention in the hierarchy.
• Due to the efforts that the team would work homogeneous, members often do not
express their doubts about the problems or solutions. They rely on each other, so
other members think that the solution is appropriate. This is a phenomenon of
group thinking – team takes bad solutions, because the members wish to maintain
the team, so they do not express their concerns.
7.3.2 Team meetings
Team members communications mainly take place on meeting, therefore the proper
meeting moderating in quite important, as improper cooperation on meetings unnecessarily
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causes time loss and doesn’t bring right results. Meetings have to be founded, carefully
prepared and moderated, by proper participants’ collaboration and with precise
conclusions.
First of all meeting purpose has to be known and defined. Why the meeting is necessary?
Usually team leader or members apprise that particular problems or solutions have to be
discussed in team. The following activities follows:
• the agenda for the meeting has to be set. Typically, team discusses several
problems and solutions, or may be a wider problem. Careful consideration should
be given on the order of the topics.
• short explanation for each topic of the problem has to be prepared and determined
the purpose of discussion, for example - the solutions, the definition of the
problem, etc.. Preferred solution should not be proposed in advance, as this would
restrict the discussion only to the confirmation or the opposition.
• next step is meeting participants selection. These could be all members of the team
or just part of a them, often are invited other participants as well. The answer to the
question of who should be present at the meeting, is not easy. It happens that those
who could possibly oppose the proposer, are not invited. The problem of who to
invite is particularly severe if the purpose of the meeting is not clear. Too many
participants paralyse the meeting.
• meeting moderator is not always a team leader. Sometimes it may be a member of
the team, especially if the meeting’s directing changes, or an external actor, eg.
client or user.
• for each item on the agenda a reporter should be establish, who will explain the
problem and clearly show the objectives of debate. For this purpose it is necessary
to prepare the appropriate audio-visual aids.
• depending on the nature of the meeting is necessary to prepare the appropriate
invitations. This must be sent early enough so that participants can adequately
prepare.
• meeting location and time should be defined. Beside the start of the meeting is
desirable to define an approximate duration of the meeting so that participants can
plan the schedule of their activities. The meeting room must allow a proper and
smooth running of the meeting and the tables layout has to allow for equal
discussion.
• In advance has to be determined whether the meeting will have a detailed written
record or only decisions will be recorded. This depends on the nature and purpose
of the meeting.
Meeting directing is pretentious work. Poor meeting directing causes dispensable time
and effort loss. Meeting moderators have to take into consideration the following
recommendations for discussion directing:
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• meeting moderator should be prepared for the meeting and has to check whether
everything is prepared for the meeting, were invitations and material timely sent,
was there any excuse for non-participation, is the location free, etc.
• at the beginning explains the purpose and importance of the meeting. Possible, but
not particularly desirable, are the suggestions regarding changes to the agenda.
• explains the way of running the meeting: whether written record will be prepared,
how detailed will be and who will write it, how long should be presentations, will
replies be allowed, will he permit discussion of items that are not directly related
with an agenda;
• leader (or a reporter) clearly shows the problem and the need for solution at any
point. Leader shouldn’t indicate his own solution, since this would obstruct the
discussion. Some members would agreed with him because of tactical reasons, and
some will be against. Already imposed opinion is difficult to change, even if it is
latter concluded that the objections are justified. It is better to encourage others to
propose solutions, and at the end of the debate leader can also present his opinion.
• during discussion leader encourages more shy participants, addresses them directly
and engage them in the discussion. Those, who like to discuss, he limits at the
duration so as the frequency of their discussions.
• moderator tries to keep the participants present, it keeps the discussion interesting.
He allows the sense debate, which is only indirectly related to the item on the
agenda. For large deviations from the topics he suggests that the matter will be
discussed next time. He always returns the discussion to a main topic.
• He clearly summarises the course and content of the debate and propose relevant
conclusions. Always tries to reach unanimous decisions, but he also allows a
different opinion, especially if they do not hinder the course of further actions. In
such cases, the view of majority predominates, while the course of latter events can
show, whose opinion was more relevant.
• Each item on the agenda should be clearly closed, latter returns to the already
closed topics is not desirable.
• Moderator has to pay attention that the debate would not be repeated. It may also
emphasizes that those who do not agree with the previous discussion, do not repeat
the proposals already given.
• moderator arranges proper written minutes of the meeting with the relevant
decisions. He should not persist in the decisions which he has for the most
appropriate, if the debate showed otherwise. Conclusions must clearly show what
have to be done, by whom and when to do it, so next time it will be possible to
determine whether the decisions were implemented.
Summary of discussions, in particular, decisions on future work are the result of the
meeting. Conclusions are formed already at the debate closeout, and recorded in the
meeting minutes. Their implementation must be monitored. It is pointless to draw up a
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whole series of decisions, which are already known in advance that they will not be
implemented.
Despite the recommendations and the rules of proper meeting directing we mentioned,
team meetings should be informal and with ease. This depends mainly on team relations in
general.
7.4 Motivation
People work to satisfy their needs. That activity is mostly reasonably managed, that is to
say that people activity is directed to goals attaining (means, that will satisfy their needs).
The needs and goals are not only associated with physical survival. They are also (and
increasingly) the need for safety, socializing, recognition by others and not least the need
to use own abilities for self development.
Employees are rewarded for day by day activities they perform in their departments. The
reward depends on work pretentiousness in the first place. It is defined by education and
experiences, responsibilities, work efforts and work environment. Salaries can also be
remodelled in way that individuals work successes is also taken into account. The
evaluation of individuals’ success is usually made by superiors at least ones a year. They
consider the extent and the quality of performed work, independence of employee,
initiatives, readiness for collaboration, etc. Part of reward can also be linked to results of
the group, department or company.
However, some individuals work on project as well. By the proper team selection, the
project work pretentiousness is nearly equal to the one of day by day activities, but the
nature the work is changing, more stress is laid on different style of cooperation among
team members.
When people work on project they relates to project managers. Line managers can not
evaluate employees efforts on project activities, while project manager can do it easily. It
means that employees effectiveness can be evaluated by both managers, what can be done
in two ways: they can make the evaluation together, or each one evaluates efforts on their's
activities. In that case the time spent on project (or in line department work) has to be
considered as ponder. In that case team members can have equal position as employees
that don't work on projects.
Small problem in mentioned ways is the fact that team should be rewarded as entirety,
while we previously discussed on rewarding manners that leys on differences between
individuals, mitigated by collaboration evaluation. We also mentioned the group or
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department reward. Similarly the project success can be considered in defining the part of
reward, related to project work.
Project success is defined by expected attaining of goals (deadline, costs, quality). Those
goals are defined by the customer already at the beginning of the project, or else goals do
not motivate team. At the end of the project the customer evaluates goals attaining and
defines collective reward. This reward can be divided among team members
proportionally, regard on pretentiousness and project work hours. Additional factors can be
defined by project manager: collaboration, independence, initiatives, etc.
7.5 Control Questions
1. Show the recruitment and selection as well as other phases in the HRM process.
2. Indicate the advantages of teamwork and the characteristics of successful teams.
What is your opinion about self-management teams?
3. Explain the difference between management and leadership? Describe
characteristics of good leaders.
4. Describe team communications characteristics. What types of communications
should prevalent?
5. Indicate goals, organization and directing of project meeting. How meeting
participants prepare themselves for the meeting. Indicate some typical meetings.
6. What monetary and non-monetary motivation of project team do you know?
Indicate few cases!
8 PROJECT CONTROL
8.1 Control definition
Control is the process of monitoring, evaluating, and comparing actual results with project
plan to determine the progress toward the project cost, schedule, and technical performance
objectives. It is a three-step process:
• measuring progress toward an objective - determining through formal and informal
reports the degree to which progress toward objectives is being made;
• evaluating what remains to be done - determining cause of and possible ways to act
on significant deviations from planned performance;
• taking the necessary corrective action to achieve or exceed the objectives, to
correct an unfavourable trend or to take advantage of an unusually favourable
trend.
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The major purpose of control is to equip the project with an early warning signals which
force team to take actions to resolve the issues causing the current schedule variance and
mitigate risks to future schedule. Control's primary purpose is not to determine what has
happened (although this is important information) but rather to predict what may happen in
the future if present conditions continue and if there are no changes in the management of
the project. This enables the project manager to manage the project in compliance with the
plan.
8.2 Schedule / time control
Progress tracking is fundamental to performance evaluation, variance analysis, and
productivity measurement. The calculations used to compute performance, variance, and
productivity measures are usually based on the percent complete for each project task or
work package.
It is critical that progress data (for percent complete calculations) accurately reflect the
physical progress on the work package and not some ''subjective guess" the work package
manager makes. It is the responsibility of project management to ensure that each work
package is accurately statused (progress data accurately determined) each period.
The most convenient and most used method for time control is Gantt chart. The chart is
formatted as a two-dimensional representation of the project schedule with activities
shown in the rows and time shown across the horizontal axis. It can be used during
planning, for resource scheduling, and for status reporting. Information inputs are the
baseline schedule, performance reports, change requests, resource and cost information.
Heerkens, 2002, p. 170
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In case of delays corrective actions have to be taken. To find proper corrective action right
causes have to be known, so as the following information:
• planned duration and percentage of performed work,
• time reserve (uncritical task),
• planed work (working hours) and percentage of used hours,
• planned task deadline,
• needed time and working hours for task completion.
Typical causes for poor performance and project delays are:
• poor estimation of planned work and task duration, or too optimistic estimates,
• ineffective or incapable task performer,
• insufficient resources when needed,
• technical and quality problems,
• changes of client specifications,
• inter-functional complications,
• technological breakthroughs,
• conflicts in project team (technical solutions, personal conflicts),
• changes in entrepreneurship environment (market, legislation),
• delays caused by predecessors.
Corrective action can take the form of replanning, reprogramming, or reallocating
resources, or changing the way the project is managed and organized. The corrective
actions that are available to the project manager focuses on the cost, schedule, and
technical performance parameters of the project. Two approaches are handy for schedule
change:
• fast-tracking is focused on dependencies of future activities. Any sequential
activities with dependencies has to be turn into overlapping activities as much as
possible;
• schedule crashing – to compress the duration, the project usually deploys more
resources in performing activities, without changing the project logic; usually the
total cost grows.
Both approaches can increase the number of critical activities and time pressure.
Correcting a problem with one of the mentioned parameters (schedule, cost, technical
performance) may have reverberations on one or both of the other parameters. Such
potential reverberations should be considered by the project team before the decision on
corrective action is made.
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8.3 Cost control
Most authors as the most effective cost control method indicates EVA – (Earned Value
Analysis), also known as EVT – (Earned Value Technique). EVA offers the following
benefits:
• assesses true schedule and cost position,
• monitors trend performance and generates an early-warning signal,
• integrates scope, cost and schedule,
• focuses on exceptions,
• provides a single control system for all management levels and projects.
Cost control bases on cost plan (baseline costs), corrected by eventual changes of
objectives, requirements and plans. For the assessment of the current deviations we need
four important data – planned work, the actual work, the cost of planned work and the cost
of the actual work. EVA diagram shows information on spent funds for entire project.
More clear picture of cost variances shows part diagrams for every type of costs – work
hours, material, contract payments, etc. For efficient correcting actions is crucial to know
precise causes for deviations. In some organizations, project managers are held
accountable not for costs but only for the hours actually worked on the project and for the
work actually accomplished. (Lewis, 2002, p. 111).
Figure 3: EVA – earned value analysis
www.projectsmart.co.uk/docs/earned-value.pdf
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Cost control problems come about for many reasons, including incorrect estimating
techniques (work, cost, etc.), predetermined or fixed budget with no flexibility, schedule
overruns, inadequate WBS development, customer-generated change orders, unavailable
material, personnel, or equipment when needed, frauds, prices of materials increases.
Despite proper cost estimation, cost changes may also be consequences of delays and
additional activities, material irregularities, wrong recording of spending hours,
contractors’ invoices for the work they have not done yet, and pre-implemented orders that
have been planned for later time.
The cost variance for a summary-level control package is the sum of all the cost variances
of the all current tasks. Consequently, it is possible to have cost variances from different
tasks that effectively cancel each other out at a summary-level. In other words, it is
possible that the overall cost performance goals of a project are being met even though
they are not being met at the task or work package level. That is why some recommend to
track cost for each activity separately.
Successful managers of large projects tend to rely on the Law of Compensating Error to
help them meet their performance goals, because on large projects, there is not enough
time to analyse every deviation from the plan. Managers of large projects normally adopt a
management-by-exception philosophy. They look at performance measures (such as cost
and schedule variances) at summary levels, and, if they are acceptable at the summary
level, they often do not attempt to analyze the problem further.
It is only in the case where performance at the summary level is not acceptable that further
analysis is necessary, and this is one of the advantages of the cost variance: it can be
examined at any level of the WBS hierarchy. Normally, the cost variance at the top level is
observed by comparing the earned man-hours and actual man-hour expenditure on an
earned value plot. Project management relies heavily on these plots because they show a
good deal more about per
8.4 Quality control
Typical causes for quality deviations are technical problems, unsuitable resources, bad
material and equipment quality, demands changing, new technology, poor activities
linkages, and quality unsuitable culture
Because of large differences in quality demands of different types of projects (civil
engineering, research and development, events) experts have not developed unified and
wide used method for quality control, such as Gantt chart for time control or EVA for cost
control. The quality management plan is defined during the planning phase. In
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Responsibility and Competence matrix project team usually defines responsible for the
quality control and responsible for the (task, phases, project) results approvals.
The quality management plan also contains quality demands, metrics and checklists, and
terms of quality control, while control inputs in the project implementation phase are work
performance information, approved changes requests, and deliverables.
For typical company’s projects the quality standards and other internal quality assurance
rules can be developed, so as test procedures. Test procedures development can be one of
project activities.
8.5 Project tracking / progress information providing
Excellent project managers work preventive and are all the time focused into the future!
Proactive cycle of project control can be performed by answering to the following
questions (Milosevic, 2003, p. 384):
• What is the variance between the baseline and the actual project schedule?
• What are the issues causing the variance?
• What is the current trend – the preliminary predicted completion date if we
continue with our current performance?
• What new risks may pop up in the future and how could they change the
preliminary predicted completion date?
• What actions should we take to prevent the predicted completion dates from
happening and deliver on the baseline?
The basis of effective project monitoring, evaluation, and control is an explicit statement of
the project objectives, goals, and strategies which provide performance standards against
which project progress s can be evaluated (Cleland, 1999, p. 326). Project tracking has one
major objective: to determine whether the project is in control (i.e., meeting the agreed
business case) or out of control (Thomsett, 2002, p. 239). Monitoring means to make sure
sufficient intelligence is gained on the status of the project that an accurate and timely
evaluation can be conducted of the project (Cleland, 1999, p. 328). Information may be
obtained from various sources, formal and informal. Official sources are reports,
checklists, inspection meetings, letters, notes and bookmarks, and notes and minutes of the
audits. Regular inspection project meetings also provide continuous information to all
participants in the project. Informal sources are informal interviews, observation and
monitoring of contractors and rumours tracking.
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You need to establish a reporting system that keeps you informed of the many variables
that describe how the project is proceeding as compared to the plan (Wysocki & McGary,
2003, p. 211). A reporting system has the following characteristics:
• Provides timely, complete, and accurate status information
• Doesn’t add so much overhead time as to be counterproductive
• Is readily acceptable to the project team and senior management
• Warns of pending problems in time to take action
• Is easily understood by those who have a need to know
The method of providing information of project progress is already defined in the project
planning phase. To provide information for the purpose of control is necessary to establish
the following:
• decision terms definition;
• what data will be collected an how will they be evaluated?
• who and where collects data (and evaluate performance)?
• what tools will be used for collecting data;
• types and levels of progress reports;
• regular and periodical project tracking;
• PMIS usage for project tracking.
Project progress meetings should be conducted regularly throughout the whole life of the
project:
• weekly once or twice (Kliem & Ludin, 1998, p. 132),
• weekly or monthly (Howes, 2001, p. 112; Hughes & Cotterell, 1999, p. 172);
• interval of about 4% of total project duration (Heerkens, 2002, p. 169).
8.6 Project (management) information system (PMIS)
Project management information system is a set of (usually computerised) tools, that
support scheduling and resources planning, project tracking and control. It is also a system
of tools and techniques to ensure the collection, recording, screening and dissemination of
information between the project team, and the information management, which includes
modelling, collection, selecting, storing and re-access to information.
Project information system may be composed of several subsystems, which support a
variety of areas. None of the subsystems can operate independently, and the border
between them are theoretical. Some can also be merged, the structure, however, also
depends on whether or not we have a computerized information system, because different
software packages are in place. Project information system should have the following subsystems:
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• a list of activities (WBS), the use of calendar and time units, the estimated duration
of activities and the creation of graphs and diagrams, milestones;
• management of resources - the types and number of the necessary resources for
project implementation, their allocation, the load problems solving, HR analysis
and estimation of the costs in multi-project environment;
• project reports, a detailed assessment of the information, a schedule of activities,
details of the tasks and the current time diagrams; plans that relate to the final
outcome of the project,
• drawings, technological processes, procedures, flowcharts;
• economics, costs calculations, financing plan, performance optimisation, statement
of actual costs and earned value;
• work orders, contracts, annexes, material orders;
• project tracking - the state information collection, plan changing, collection and
calculation of spent hours of work, critical path analysis,
• system for early detection of difficulties and problems, a comparison of planned
and actual implementation of activities, adjustment of resources’ load;
• memos, project manual, project library, newsletters, history files.
In addition to the above subsystems Palmer states the following database of operational
information system companies, which are used to support work on the project (Lock, 1994,
p.. 472-492):
• details of materials - details of requirements for materials, details of contracts,
status of supplies according to the contract;
• a list of suppliers - the details of individual suppliers (address, phone, fax, contact
person), past services are important to select the best suppliers;
• tariffs and rates - base contains a standard costs, overtime costs and the details of
the additives for each type of resources.
8.7 Control Questions
7. Define the purpose and the process of project control. What team controls and why?
What team members report orally and in what written? How often?
8. Describe the control of time and deadlines achievement and give reasons for the
deviations. Show few typical questions the project manager use to verify the status
of implementation.
9. Describe the control of costs and give reasons for the deviation. If we are at half the
planned duration of the project, and the current spending is less than planned, does
this mean that we will ultimately spend less?
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10. Describe the quality control and give reasons for the deviations. How the team
prepares for the quality control? Is there a uniform method for different types of
projects (according to the professional field)? Describe with examples.
11. Show ways of collecting information about the project progress. Can project
manager control project only from its office?
12. Describe the contents of the meeting recordings and project progress reports.
13. Indicate the contents of the project information system and the importance of its use.
How PMIS supports the project control?
9 PROJECT CLOSEOUT
9.1 Steps in closing a project
Closing the project is routine once we have the customer’s approval of the deliverables
(Wysocki & McGary, 2003, p. 230). There are six steps to closing the project:
• Getting client acceptance of deliverables
• Ensuring that all deliverables are installed
• Ensuring that the documentation is in place
• Getting client sign-off on final report
• Conducting the post-implementation audit
• Celebrating the success
The client decides when the project is done. It is the job of the project manager to
demonstrate that the deliverables (whether product or service) meet client specifications.
This acceptance can be very informal and ceremonial, or it can be very formal, involving
extensive acceptance testing against the client’s performance specifications.
The second step of closing a project is to go live with the deliverables. This commonly
occurs in computer systems work. The installation can involve phases, cutovers, or some
other rollout strategy. In other cases, it involves nothing more than flipping a switch. In
either case, some event or activity turns things over to the customer. This installation
triggers the beginning of a number of close-out activities that mostly relate to
documentation and report preparation.
Documentation always seems to be the most difficult part of the project to complete. There
are at least five reasons why we need to do documentation:
• Reference for future changes in deliverables.
• Historical record for estimating duration and cost on future projects, activities, and
tasks.
• Training resource for new project managers.
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• Input for further training and development of the project team.
• Input for performance evaluation by the functional managers of the project team
members.
The post-implementation audit is an evaluation of the project’s goals and activity
achievement as measured against the project plan, budget, time deadlines, quality of
deliverables, specifications, and client satisfaction. The log of the project activities serves
as baseline data for this audit. There are six important questions to be answered:
• Was the project goal achieved?
• Does it do what the project team said it would do?
• Does it do what the client said it would do?
• Was the project work done on time, within budget, and according to specification?
• Was the client satisfied with the project results?
• Was business value realized? (Check success criteria.)
• What lessons were learned about your project management methodology?
• What worked? What didn’t?
9.2 Project close-out activities
The following is a list of activities of the project closing process. we have summarized it
by various authors. According to the type of project, they may not all be required.
Customer Issues
• ensure timely completion of the “odds-and-ends” (the punch list activities);
• ensure that the project will deliver what was promised; that the objectives or aims
set out in the Project initiation document have been met; complete, install and test
deliverables;
• prepare operating and maintenance manual, train customer’s personnel
• identify any recommendations for follow-on actions, agree on level of follow-up
support;
• ensure that all expected products have been handed over and accepted by the
customer or relevant subsequent project; conduct formal acceptance review with
customer;
• obtain customer acceptance and verify customer satisfaction.
Organizational Issues
• ensure that the project records reflect accurate “as-built” data;
• capture and document lessons resulting from the project; communicate to the
organization;
• prepare final technical reports;
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• evaluate project performance;
• conduct final review with management;
• prepare project historical files and place in archive, project files (most notably the
project plan) should be updated to reflect final “actuals” in terms of cost, schedule,
functionality, and quality.
Personnel Issues
• recognize/reward team performance;
• write performance evaluations for project team;
• assist in reassignment of project personnel.
Administrative/Other Issues
• dispose of leftover project material;
• close down temporary site operations;
• submit final invoices and forward all final payments;
• close out project charge codes and work orders;
• bring the project to efficient administrative closure; if the project has been closed
prematurely, document what has been achieved and recommend the way forward;
• prepare an end project report and request formal acceptance from top management.
9.3 The Final Report
The final project report acts as the memory or history of the project. It is the file that others
can check to study the progress and impediments of the project. Many formats can be used
for a final report, but the content should include comments relative to the following points:
• Overall success of the project. Taking into account all of the measures of success
that we considered, can we consider this project to have been a success?
• Organization of the project. Hindsight is always perfect, but now that we are
finished with the project, did we organize it in the best way possible? If not, what
might that organization have looked like?
• Techniques used to get results. By way of a summary list, what specific things
did you do that helped to get the results?
• Project strengths and weaknesses. Again by way of a summary list, what
features, practices, and processes did we use that proved to be strengths or
weaknesses? Do you have any advice to pass on to future project teams regarding
these strengths/weaknesses?
• Project team recommendations. Throughout the life of the project, there will
have been a number of insights and suggestions. This is the place to record them
for posterity.
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9.4 Control Questions
14. Include factors that ensure the success of the project, and some of the reasons for the
failure to achieve the objectives of the project.
15. Describe the process of finalizing the project.
16. Indicate ten project close-out activities.
17. Explain the purpose and show the content of the final report.
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