Projects within Organisations:
A simplistic but essentially true observation:
“An organisation only does two things:
It runs its normal operations;
and
It runs projects when it wants to make changes to
its normal operations”
Projects within Organisations:
A large part of this course explores WHAT organisations do
to manage a project and HOW they do it – time, cost, scope,
risk etc ie Planning and Executing Projects
However, before we can start to look at WHAT & HOW, we
firstly need to consider WHY an organisation wants to run a
particular project in the first place ie
• what are the organisation’s strategic objectives
• how does the organisation turn those objectives into
project deliverables that a PM then works to fulfil
Projects within Organistions
We will consider various aspects of WHY an organisation
is undertaking a project:
• Organisational strategy;
• Project selection to deliver on that strategy
• Impact of Organisational culture on project delivery
• Impact of project team structure & staffing on project
delivery
Why Organisations undertake projects?
Strategic Management
1
What is Strategic Management ?
1
• Strategy is fundamental in determining HOW an
organization will compete with the resources in its
existing and perceived future environments
• Organisations use projects to convert strategy into
deliverables – ie products, processes and services –
they need for success
• Aligning projects with strategic goals is fundamental to
organizational success
• Strategic Management is the process of assessing
“what we are” and deciding and implementing “what
we intend to be and how we are going to get there”
PM’s spheres
of influence
within the
organisation
External
Influences
impacting on
organisation
Why does Strategic Management concern the PM?
Traditionally, Strategic Mngt was not a primary concern of PM.
However, it is now considered imperative that a PM has a good
understanding of their organisation’s strategy for the following reasons:
• It allows the PM to make necessary decisions and adjustments
within a project to achieve results for the strategic benefit of the
project’s organizational sponsors
• Allows the PM to become an effective project advocate to Senior
Management, team members etc – necessary to obtain support and
resources to effectively execute the project
Four Activities of the Strategic Management Process:
1
1. Review/Define
Organisational Mission
Statement
4. Implement Strategies
through Projects
3. Set Objectives to
Achieve Strategies
2. Analyse / Formulate
Strategies
Mission statement typically identifies
WHO organisation is; and WHAT it
wants to become
WHAT needs to be done to achieve
mission
Objectives in concrete terms.
SMART (Specific; Measurable,
Assignable, Realistic, Time-
related
More on Strategic Management
Peet C. “Managing Benefits” video in course Managing Project Benefits, released
13/11/18, LinkedIn Learning accessed through UNSW
Peet C. “How to link to Corporate Strategy” video in course Managing Project Benefits,
released 13/11/18, LinkedIn Learning accessed through UNSW
—
How Organisations select projects for
investment within limits of available resources
to best deliver on their strategic needs
Portfolio Management
1
Portfolio Management System
1
Components of Portfolio Management System
1
Typical Reasons WHY Organisations Initiate Projects:
1
Project Classification – based on reasons for initiation
1
Project Selection Criteria – WHICH Projects should an
Organisation Initiate to meet its strategic requirements?
1
Financial
Payback NPV ERR
Non-Financial
Multi-Criteria
Check List
Multi Weighted
Also known as building and comparing Business Cases
Financial Criteria – Cash Flow Diagram
1
The Concept of ‘Time Value of Money’
1
Example of Equivalence
1
More on Time Value of Money, Discounted Cash Flow
Patel Y. “Opportunity Cost” video in course Investment Evaluation, released 19/6/18,
LinkedIn Learning accessed through UNSW
Patel Y. “Present, future and terminal values” video in course Investment Evaluation,
released 19/6/18, LinkedIn Learning accessed through UNSW
—
Patel Y. “What is DCF” video in course Investment Evaluation, released 19/6/18,
LinkedIn Learning accessed through UNSW
Patel Y. “Solve for DCF” video in course Investment Evaluation, released 19/6/18,
LinkedIn Learning accessed through UNSW
1. Payback Period
1
• Measures the time taken to repay the initial investment
• Emphasises Cash Flows – a key business consideration
• Ignores the Time Value of Money; nor considers profitability
• Shorter paybacks are more desirable
More on Payback Period
Patel Y. “Payback Period” video in course Investment Evaluation, released 19/6/18,
LinkedIn Learning accessed through UNSW
Patel Y. “Payback Period in Microsoft Excel” video in course Investment Evaluation,
released 19/6/18, LinkedIn Learning accessed through UNSW
—
2. Net Present Value (NPV)
1NB The process of calculating NPV can be shortcut using NPV function in Excel
More on NPV
Patel Y. “The Net Present Value Equation” video in course Investment Evaluation,
released 19/6/18, LinkedIn Learning accessed through UNSW
Patel Y. “NPV using a Microsoft Excel formula” video in course Investment Evaluation,
released 19/6/18, LinkedIn Learning accessed through UNSW
—
Patel Y. “Pro’s & Con’s of NPV” video in course Investment Evaluation, released
19/6/18, LinkedIn Learning accessed through UNSW
Patel Y. “Real Talk: Net Present Value” video in course Investment Evaluation, released
19/6/18, LinkedIn Learning accessed through UNSW
3. Economic Rate of Return (ERR )
(also called Internal Rate of Return – IRR)
1
The ERR is the discount rate that makes the net present value
(NPV) of a project equal zero (0)
ie is the discount rate that makes the initial cash investment at the
beginning equal to the net present value of the future cash
flows from that investment.
NB The time consuming process of iteratively using assumed IRR rates until NPV = 0 can be
shortcut using IRR function in Excel
More on ERR (IRR)
Patel Y. “What is IRR” video in course Investment Evaluation, released 19/6/18,
LinkedIn Learning accessed through UNSW
Patel Y. “IRR Calculation the Long Way” video in course Investment Evaluation,
released 19/6/18, LinkedIn Learning accessed through UNSW
—
Patel Y. “IRR using the Microsoft Excel formula” video in course Investment
Evaluation, released 19/6/18, LinkedIn Learning accessed through UNSW
Patel Y. “Pro’s & Con’s of IRR” video in course Investment Evaluation, released
19/6/18, LinkedIn Learning accessed through UNSW
Comparing Payback vs NPV vs ERR
1
Payback NPV ERR
Quick and Easy More Effort to Calculate –
simplified by M/S Excel
Significantly more Effort to
Calculate iteratively- simplified
by M/S Excel
No Time value of Money – Less
accurate on longer projects
Time Value of Money; used
where Organisation has little
limit on investment pool;
Time Value of Money; used
where Organisation’s projects
compete for limited investment
pool
Exaggerates benefits of longer
life projects
Favours larger projects over
smaller projects regardless of
actual rates of return; uses
assumed discount rate
Compares Rates of Return
regardless of project size; not
absolute amount of investment
or return.
Used on smaller, shorter
projects or initial estimates
Usually used by large publicly
funded organisations
Usually used by commercial
organisations
More on Project Financial Evaluation
Patel Y. “Challenge 6: Choose a project based on NPV, IRR & payback period” video
in course Investment Evaluation, released 19/6/18, LinkedIn Learning accessed through
UNSW
Patel Y. “Solution 6: Choose a project based on NPV, IRR & payback period” video in
course Investment Evaluation, released 19/6/18, LinkedIn Learning accessed through
UNSW
—
Typical Non-Financial Strategic Criteria
1
Example – Check List:
1
TOPIC QUESTION
Strategic Alignment Which specific organisational strategy does this project align with?
Sponsorship Who is the project sponsor?
Risk What is the project risk of the project to the organisation?
Benefits, Value, ROR When will the project show results?
Organisational Culture Is the Organisation’s culture right for this project?
Schedule How long will project take?
Approach Will organisation build or buy?
Portfolio Is this a new initiative or part of an existing initiative?
Example – Weighted Multi-Criteria:
Good for project comparison
1
More on Non-Financial Project Selection
—
Chau R.. “Generate, Evaluate & Select Solutions” video in course Six Sigma
Foundations , released 18/7/16, LinkedIn Learning accessed through UNSW
Proposal Valuation Methods – ways of ranking projects
in relation to strategic organizational needs
1
More on Portfolio Management
Jordan A. “Introduction to Portfolio Management” video in course Project Portfolio
Management , released 23/8/18, LinkedIn Learning accessed through UNSW
Biafore B. “The relationship between portfolios, programs and projects” video in
course Learning Program Management, released 8/4/17, LinkedIn Learning accessed
through UNSW
—
How Organisations impact on their Projects?
– Project Team Structure
– Organisational Culture
– The Project Manager
1
Organisational Culture
1
Organisational Culture:
1
• Shared norms, beliefs, values, and assumptions
• Binds people together
• Creates shared meanings
• The “personality” of the organization that sets its personality
apart from other organizations:
Provides a sense of identify to its members.
Helps legitimize the management system of the organization.
Clarifies and reinforces standards of behaviour.
Often voiced as “this is the way we do things around here”
Types of Organisational Cultures
1
Examples of cited organizational cultures:
“engineering culture”; “a sales culture”; “a Wall St culture”,
a “results culture”; a “litigious culture” etc – many others
These types of cultural descriptions are shorthand for the
predominant mindset in the organisation, regardless of the
organisation’s industry.
NB Organisations in the same industry can have totally
different cultures
Ways of Identifying Cultural Characteristics
1
• Study the physical characteristics of an organization.
• Read about the organization.
• Observe how people interact within the organization.
• Interpret stories and folklore surrounding the organization
• Look at backgrounds of board and senior management –
diversity vs one background predominating
More on Organisational Culture
Biafore B.. “How Organisational Culture Affects Projects” video in course Project
Management Foundations, released 28/6/19, LinkedIn Learning accessed through
UNSW
—
How Organisational structure affects projects
1
No project structure is perfect– each has its
strengths and weaknesses.
Rather, it is a case of looking for the optimum
structure for a particular project with specific
deliverables within a particular organisation
Choosing project structure: Functional
1
Choosing project structure: Weak Matrix
1
Choosing project structure: Balanced Matrix
1
Choosing project structure: Strong Matrix
1
Choosing project structure: Dedicated Project Team
1
Typical project differences for various structures:
1
Functional Matrix Dedicated
Minimal
Total
PM Role
Type of Project
Scope
Project Team
Core Bus.
Technical
Perm.
Total
Logistical
Temporary
One Off
What factors should be considered to determine the
optimum choice of structure for a particular project?
1
• The Organisation – history, culture, size, strategic
requirements, recent similar project outcomes
• The Technology – complexity, novelty, risk, public
safety, logistical requirements.
• Resources available – technical capabilities,
project management competencies
More on Organisational Project Structure
Biafore B.. “How Organisational Structure Affects Projects” video in course Project
Management Foundations, released 28/6/19, LinkedIn Learning accessed through
UNSW
—
Importance of selecting the right PM to the Organisation
achieving its strategic deliverables from a project
1
• The PM leads the project team in delivering the project;
setting the team’s standards; monitoring team
performance, resolving problems and managing
outcomes.
• The PM carries the prime responsibility to the
organizational sponsor(s) for achieving the project
deliverables to meet the sponsor’s defined success
criteria
PMI’s Talent Triangle – Core Competencies required as a PM
1
More on PMI’s Talent Triangle
Stanton D. “The Talent Triangle” video in course Business Accumen for Project
Managers, released 19/4/17, LinkedIn Learning accessed through UNSW
—
Dionisio CS. “What is Project Leadership?” video in course Project Leadership,
released 3/9/20, LinkedIn Learning accessed through UNSW
Thoughts on Career Paths in Engineering / IT Organisations:
Some typical career paths in larger engineering / IT organisations are
shown in the next few slides.
A ‘pure’ Project Management career typically results in a very
responsible and well rewarded position,. However, it usually does not
lead to senior management – project management is more narrowly
focused on project delivery rather than wider organisational issues.
Commercial roles more often lead to senior general management,
although engineers usually face competition from other disciplines (eg
lawyers and accountants) for such roles.
Typical Technical Career Path:
Design Engineer, Construction Engineer
Operations Engineer, Contracts Engineer
Project Engineer
Project Manager
GM / Operations
Project DIrector
Senior
Management
GM / Sales
Tendering
Director
Business Devel.
Manager
Snr Design
Engineer
Chief Engineer
Principal
Engineer
GM Engineering
Eng Director
Typical Commercial Career Path:
Design Engineer, Construction Engineer
Operations Engineer, Contracts Engineer
Project Engineer
Project Manager
GM / Operations
Project DIrector
Senior
Management
GM / Sales
Tendering
Director
Business Devel.
Manager
Snr Design
Engineer
Chief Engineer
Principal
Engineer
GM Engineering
Eng Director
Typical Project Management Career Path:
Design Engineer, Construction Engineer
Operations Engineer, Contracts Engineer
Project Engineer
Project Manager
GM / Operations
Project DIrector
Senior
Management
GM / Sales
Tendering
Director
Business Devel.
Manager
Snr Design
Engineer
Chief Engineer
Principal
Engineer
GM Engineering
Eng Director
Career Paths in Engineering / IT Organisations (cont.)
Whilst the above trends tend to hold for larger / more
well established companies, smaller / more recently
established companies (eg startups) can show great
variety in career path trajectories offered.
As organisations mature, career path opportunities
evolve – something you should consider when selecting
your career options.
Looking at example of an IT Start-up
Programmer
Senior Programmer
Program
Manager
Senior
Management
Director of
Sales
Project
Manager
Development
Engineer
Director of
Engineering
Senior
Management
Initially, major challenge is product
development by technical side. Founders
often run the company
Stage 2: More Mature Expanding IT Company
Programmer
Senior Programmer
Program
Manager
BD
Manager
Director of
Sales
Project Manager
Development Engineer
Director of
Engineering
Senior
Management
Director of
Operations
Then, major challenge is ramping up
operations and delivery
Stage 3: Larger IT Company in mature industry facing
competition
Programmer
Senior Programmer
Program
Manager
Senior
Management
Director of
Operations
BD Manager
Director of
Sales
Senior
Management
Project
Manager
Development
Engineer
Director of
Engineering
Senior
Management
Once the market matures and competition
is faced, sales and commercial
performance become more important
A few Career Tips from my experience
Design Engineer, Construction Engineer
Operations Engineer, Contracts Engineer
Project Engineer
Project Manager
GM / Operations
Project DIrector
Senior
Management
GM / Sales
Tendering
Director
Business Devel.
Manager
Snr Design
Engineer
Chief Engineer
Principal
Engineer
GM Engineering
Eng Director
Look at backgrounds of
senior management in your
company / industry to get
an idea of what is valued
and where snr. Mngt is
selected from
Decisions about which career
path to take typically are
made 5-10 years after
starting first post-
graduation job
In your junior years, try as many positions as
possible, even outside your field eg an
engineer running an IT project. You will
get a chance to compare roles as well as
gain an appreciation of what most roles
do even if they are not for you. This will
be a great assistance in later higher
level management roles.
Thoughts on Career Paths in Engineering / IT Organisations:
Regardless of whether or not your career ultimately goes down
the Project Management route, most engineers / IT
professionals are likely to be involved in project management
early on in their career, either as:
– A project team member
– Running a small project
– Running an informal project
Case Study: Boeing 737 Max Crisis
Case Study: Boeing 737 Max Crisis (cont.)
HISTORY: Boeing and McDonnell-Douglas were the dominant players in
commercial aviation market up until the 1980s.
Boeing – larger market share; engineering culture; stronger engineering reputation;
strong functional organisation along engineering discipline lines; ran innovative new
aircraft development projects using a weak matrix structure with strong input from
the functions. PMs sourced internally from engineering functions.
McDonnell Douglas – more profitable; commercial culture; more risk adverse
strategy of evolving existing designs rather than start new ones; ran aircraft
development projects using a dedicated project team outside engineering functions.
PMs were sourced externally from outside aerospace industry with strong
commercial focus.
Case Study: Boeing 737 Max Crisis (cont.)
Merger: As time progressed, McD’s minimally evolved product portfolio
became increasingly uncompetitive against the newer technology of
both Boeing and new entrant Airbus, resulting in financial performance
deterioration.
Boeing eventually took over McDonnell-Douglas in 1990s.
Nevertheless, McDonald Douglas personnel took the majority of senior
management positions in new merged Boeing. Over time, they
converted Boeing’s culture over to that of the former McDonald Douglas.
Result of Merger: Culture changed to more like old McD – had the
desired short term effect of quickly improving financial results / boosting
share price. Expensive new technology adoption became more limited.
Case Study: Boeing 737 Max Crisis (cont.)
737 Max Project
The 737 has been the largest selling plane in history. It’s design has
evolved from 1960s origins; Boeing’s cash cow since 1980s.
Boeing had planned to profitably maintain 737 production without
further investment until late 2020s but competitive pressure from Airbus
forced an upgrade in 2012.
Boeing’s dedicated project team drove the 737 redesign within a very
short 3 year schedule without sufficient eng. function input.
Unfortunately, compromised engineering led to two 737-Max crashes of
2018-19
Case Study: Boeing 737 Max Crisis (cont.)
Results for Boeing: a trashing of its long held engineering reputation;
severe financial pain; regulatory scrutiny
Case Study: Boeing 737 Max Crisis (cont.)
Consequences of the 737-Max Crash Crisis within Boeing:
Boeing Board replaced its CEO.
The Boeing Board undertook a review of strategy, culture and
organisation of its aircraft development projects. The review firstly
determined that Boeing’s Mission Statement would become:
“People working together as a global enterprise for aerospace
industry leadership.”
Case Study: Boeing 737 Max Crisis (cont.)
From this, Boeing’s new CEO established the following strategies to return the
business to its position of aerospace leadership.
1. Future aircraft development programs to incorporate the latest technology to
maintain aerospace leadership
2. Boeing regain its safety and reliability reputation by utilising the company’s
full technical resources in future development programs;
3. Future Development Projects will require strict commercial discipline, given
the company now finds itself under severe financial distress.
4. Boeing improve its culture to harness its global presence and resources; and
support its push for aerospace technology leadership
You have been hired by the CEO as a consultant to recommend on a set of SMART
objectives from which a series of projects can be proposed to deliver the strategy
Case Study: Boeing – Answer
Strategy Item SMART Objective
1. Future aircraft development
programs to incorporate the
latest technology to maintain
aerospace leadership
Recall: SMART = Specific; Measurable, Assignable, Realistic, Time-related
1. Head Marketing Dept to review market and
produce a aircraft development project
pipeline for next twenty years – to be
completed within 6 months.
NOT SMART: 1. Boeing review market and its
aircraft development pipeline
2. Head R&D department to develop a new
technology development schedule to fit the
Objective 1 aircraft development projects
pipeline ……complete 6 months after
Objective 1 finishes
Case Study: Boeing – Answer
Strategy Item SMART Objective
2. Boeing regain its safety and
reliability reputation by utilising
company’s full technical
resources in future development
programs;
3. Boeing CEO to redesign optimum Project
Structures to manage future Aircraft
Development Projects to regain safety and
reliability reputation; whilst simultaneously
maintaining strict commercial discipline; and
implement within 9 months
3. Future Development Projects
will require strict commercial
discipline, given the company
now finds itself under severe
financial distress.
4. Boeing CEO to redesign new selection
criteria for choosing Project Managers for
Aircraft Development projects; to be
implemented within 3 months after
finalisation of Objective 3.
Case Study: Boeing – Answer
Strategy Item SMART Objective
4. Boeing improve its culture to
harness its global presence and
resources; and support its
aerospace technology leadership
5. Board to establish a new Safety Ombusman
Dept directly reporting to Board outside
Management structure; and to whom any
employee at any level can report any safety
concern for investigation anomalously …….
completed within 6 months
6. Head HR Dept to implement within 6 months
an ongoing program of internal conferences
and staff exchanges to foster better person-to-
person relationships and understandings
between employees in all global offices.
Projects would then be initiated to deliver on each of these objectives; and
prioritised as we have seen in this lecture within Boeing’s project portfolio.
Case Study: Boeing – Additional Consideration :
As an example, consider you became PM for a project to implement,
say, Objective #3 – A Project to Redesign Optimum Aircraft
Development Project Team Structure – with the CEO as sponsor.
You can now appreciate that knowing the history of the project, the
company culture, the reasons behind the strategy your project is
implementing; and the situation and motivations of the project’s
sponsor, the CEO, allows you, as PM, to be in a better position to:
• Make decisions during the project’s execution to better deliver
strategic benefit to Boeing
• Be in a better position to seek any further resources, additional
support or removal of organizational roadblocks needed to
complete the project from the CEO or other management
1
One final thought from my industry experience
on
Projects within Organisations:
1
A project can run on budget, on time and on scope
but ultimately be considered a failure if it doesn’t
deliver strategic benefit to the organization.
Equally, a project can run over budget, over time and
with excess scope but ultimately still be considered a
success if it does deliver net strategic benefit to the
organization.
Organisation should actually consider STOPPING such a Project
despite its flawless execution !
Organisation should consider PERSEVERING with such a Project
despite its poor execution !