Project Management Situation—Improvement of Project Management

An electric utility was organized in a very traditional way. Project engineering was carried out in the engineering organization. Any project management that was done was also planned and executed within engineering, a subdivision of the Engineering and Research Department. Although the professionals in the engineering department were excellent project engineering planners and executors, very few of these professionals had any real appreciation of project management—and its broader context in the management of the other functional input areas for a project. Consequently, the quality of project management and leadership was sadly lacking in the company.

Historically, as the company grew, many additional levels were added to the existing bureaucratic structure. Communication between functional “silos” became complex, cumbersome, and slow. Responsibilities were diluted for the overall management of projects for new power plant construction. The cultural ambience of the company could be described as a highly structured, hierarchical enterprise. People tended to focus on the specialization of their functional organizations. Boundaries between the functional organizations became more rigid. As the company grew, its bureaucratic organizational design continued. Fences between functions became higher, and coordination of any particular project became more difficult. Many of the problems in the development and construction of new power plants continued to be difficult.

Senior management, after some major cost and schedule overruns on new power plant construction, concluded that there was no cohesive force to bring together the diverse activities involved in the design, construction, and start-up of new plants. No one individual, other than the CEO, had the authority and responsibility for the building of new plants. Some of the major problems in the management of the acquisition of new power plants included:

· Planning was diffused throughout the organization and no individual had the responsibility for maintaining oversight of the planning for the new plant.

· Although project coordinators had been appointed, the authority of these coordinators was lacking. About all that coordinators could do was to persuade, cajole, or “threaten” the functional people into working in a cooperative fashion in designing, construction, and getting the plant up and running.

· One-way communication prevailed. When a functional element finished its work, the results were “thrown over the organizational wall” to the next function. Concurrent work by the functions on a particular project was limited.

· No person watched the overall project budget. This lack of budget control set the stage for subsequent project cost and schedule overruns.

The stress on the organization and the people was severe. Everyone knew that there must be a better way of dealing with new plant initiatives.

Finally, the senior management of the company established a new project management organizational unit. Some of the key actions undertaken by this new organizational unit included:

· An in-depth assessment of the problems and difficulties being encountered in designing, building, and bringing new plants on-line.

· The development of a strategy on how project management concepts and processes could be implemented in the organization.

· The identification of key individual and collective roles in the organization, particularly those who would be concerned with the management of forthcoming projects.

· The appointment of project teams to evaluate and come up with recommended strategies for the improvement of the management of projects in the enterprise.

· A training program for all key people on the concept and process of project management.

· A commitment on the part of the senior managers, to include corporate directors to provide support and resources to develop a project-driven culture in the enterprise.

· A project review strategy for all projects whereby the project’s cost, schedule, and technical performance would undergo careful scrutiny.

· A commitment by the senior managers of the enterprise that projects would be considered key building blocks in the design and execution of enterprise strategies.

· A plan to go through a formal assessment process of the efficacy of the emerging project management concept and processes within the enterprise.

Case Questions

1. Evaluate the strategy initiated by this company for the improvement of project management in the enterprise.

2. What could have been done differently in the improvement of the company’s remedial strategy for project management?

3. What would you have done if you had been appointed as the project manager for the remedial strategy for the improvement of project management within the enterprise?

4. What are some of the key issues and considerations to keep in mind when initiating a remedial strategy in a company undergoing a cultural change to emphasize the practice of project management?

5. What project management principles and process could be applied to a situation such as this where an entrenched traditional bureaucracy needs to become a project-driven enterprise, with all the support that a philosophy of project management can provide?

PROJECT MANAGEMENT: Strategic Design and Implementation

By: David L. Cleland; Lewis R. Ireland

Publisher: McGraw-Hill Osborne Media

Pub. Date: August 21, 2006