PROJECT
MANAGEMENT
A SYSTEMS APPROACH
TO PL ANNING, SCHEDULING,
AND CONTROLLING
HAROLD KERZNER, PH.D.
T E N T H E D I T I O N
PROJECT
MANAGEMENT
Dr. Kerzner’s 16 Points to Project
Management Maturity
1. Adopt a project management methodology and use it consistently.
2. Implement a philosophy that drives the company toward project
management maturity and communicate it to everyone.
3. Commit to developing effective plans at the beginning of each project.
4. Minimize scope changes by committing to realistic objectives.
5. Recognize that cost and schedule management are inseparable.
6. Select the right person as the project manager.
7. Provide executives with project sponsor information, not project
management information.
8. Strengthen involvement and support of line management.
9. Focus on deliverables rather than resources.
10. Cultivate effective communication, cooperation, and trust to achieve
rapid project management maturity.
11. Share recognition for project success with the entire project team and
line management.
12. Eliminate nonproductive meetings.
13. Focus on identifying and solving problems early, quickly, and cost
effectively.
14. Measure progress periodically.
15. Use project management software as a tool—not as a substitute for
effective planning or interpersonal skills.
16. Institute an all-employee training program with periodic updates based
upon documented lessons learned.

PROJECT
MANAGEMENT
A Systems Approach to
Planning, Scheduling,
and Controlling
T E N T H E D I T I O N
H A R O L D K E R Z N E R , P h . D .
Senior Executive Director for Project Managenment
The International Insitute for Learning New York,
New York
John Wiley & Sons, Inc.
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Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved
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Library of Congress Cataloging-in-Publication Data:
Kerzner, Harold.
Project management : a systems approach to planning, scheduling, and conrolling/Harold Kerzner.—10th ed.
p. cm.
Includes index.
ISBN 978-0-470-27870-3 (cloth : acid-free paper) 1. Project management. I. Title.
HD69.P75K47 2009
658.404—dc22
2008049907
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1

To
Dr. Herman Krier,
my Friend and Guru,
who taught me well the
meaning of the word “persistence”

Contents
Preface xxi
1 OVERVIEW 1
1.0 Introduction 1
1.1 Understanding Project Management 2
1.2 Defining Project Success 7
1.3 The Project Manager–Line Manager Interface 8
1.4 Defining the Project Manager’s Role 12
1.5 Defining the Functional Manager’s Role 14
1.6 Defining the Functional Employee’s Role 17
1.7 Defining the Executive’s Role 17
1.8 Working with Executives 18
1.9 The Project Manager as the Planning Agent 19
1.10 Project Champions 20
1.11 The Downside of Project Management 21
1.12 Project-Driven versus Non–Project-Driven Organizations 22
1.13 Marketing in the Project-Driven Organization 24
1.14 Classification of Projects 26
1.15 Location of the Project Manager 27
1.16 Differing Views of Project Management 29
1.17 Concurrent Engineering: A Project Management Approach 30
1.18 Studying Tips for the PMI
® Project Management Certification Exam 30
Problems 33
Case Study
Williams Machine Tool Company 35
vii
2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND
DEFINITIONS 37
2.0 Introduction 37
2.1 General Systems Management 38
2.2 Project Management: 1945–1960 38
2.3 Project Management: 1960–1985 39
2.4 Project Management: 1985–2009 45
2.5 Resistance to Change 50
2.6 Systems, Programs, and Projects: A Definition 54
2.7 Product versus Project Management: A Definition 57
2.8 Maturity and Excellence: A Definition 58
2.9 Informal Project Management: A Definition 59
2.10 The Many Faces of Success 60
2.11 The Many Faces of Failure 63
2.12 The Stage-Gate Process 66
2.13 Project Life Cycles 68
2.14 Gate Review Meetings (Project Closure) 74
2.15 Project Management Methodologies: A Definition 74
2.16 Organizational Change Management and Corporate Cultures 76
2.17 Project Management Intellectual Property 81
2.18 Systems Thinking 82
2.19 Studying Tips for the PMI
® Project Management Certification Exam 85
Problems 88
3 ORGANIZATIONAL STRUCTURES 91
3.0 Introduction 91
3.1 Organizational Work Flow 94
3.2 Traditional (Classical) Organization 95
3.3 Developing Work Integration Positions 98
3.4 Line–Staff Organization (Project Coordinator) 102
3.5 Pure Product (Projectized) Organization 103
3.6 Matrix Organizational Form 106
3.7 Modification of Matrix Structures 113
3.8 The Strong, Weak, Balanced Matrix 117
3.9 Center for Project Management Expertise 117
3.10 Matrix Layering 118
3.11 Selecting the Organizational Form 119
3.12 Structuring the Small Company 125
3.13 Strategic Business Unit (SBU) Project Management 128
3.14 Transitional Management 129
3.15 Studying Tips for the PMI
® Project Management Certification Exam 131
Problems 133
viii CONTENTS
Case Study
Jones and Shephard Accountants, Inc. 138
4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND
TEAM 141
4.0 Introduction 141
4.1 The Staffing Environment 142
4.2 Selecting the Project Manager: An Executive Decision 144
4.3 Skill Requirements for Project and Program Managers 148
4.4 Special Cases in Project Manager Selection 154
4.5 Selecting the Wrong Project Manager 154
4.6 Next Generation Project Managers 158
4.7 Duties and Job Descriptions 159
4.8 The Organizational Staffing Process 163
4.9 The Project Office 169
4.10 The Functional Team 174
4.11 The Project Organizational Chart 175
4.12 Special Problems 178
4.13 Selecting the Project Management Implementation Team 180
4.14 Studying Tips for the PMI
® Project Management Certification Exam 183
Problems 185
5 MANAGEMENT FUNCTIONS 191
5.0 Introduction 191
5.1 Controlling 193
5.2 Directing 193
5.3 Project Authority 198
5.4 Interpersonal Influences 206
5.5 Barriers to Project Team Development 209
5.6 Suggestions for Handling the Newly Formed Team 212
5.7 Team Building as an Ongoing Process 216
5.8 Dysfunctions of a Team 217
5.9 Leadership in a Project Environment 220
5.10 Life-Cycle Leadership 221
5.11 Organizational Impact 225
5.12 Employee–Manager Problems 227
5.13 Management Pitfalls 230
5.14 Communications 233
5.15 Project Review Meetings 242
5.16 Project Management Bottlenecks 243
5.17 Communication Traps 244
Contents ix
5.18 Proverbs and Laws 245
5.19 Human Behavior Education 248
5.20 Management Policies and Procedures 249
5.21 Studying Tips for the PMI
® Project Management Certification Exam 249
Problems 254
Case Studies
The Trophy Project 264
Leadership Effectiveness (A) 266
Leadership Effectiveness (B) 271
Motivational Questionnaire 277
6 MANAGEMENT OF YOUR TIME AND STRESS 285
6.0 Introduction 285
6.1 Understanding Time Management 286
6.2 Time Robbers 286
6.3 Time Management Forms 288
6.4 Effective Time Management 289
6.5 Stress and Burnout 290
6.6 Studying Tips for the PMI
® Project Management Certification Exam 292
Problems 293
Case Study
The Reluctant Workers 294
7 CONFLICTS 295
7.0 Introduction 295
7.1 Objectives 296
7.2 The Conflict Environment 297
7.3 Conflict Resolution 300
7.4 Understanding Superior, Subordinate, and Functional
Conflicts 301
7.5 The Management of Conflicts 303
7.6 Conflict Resolution Modes 304
7.7 Studying Tips for the PMI
® Project Management Certification Exam 306
Problems 308
Case Studies
Facilities Scheduling at Mayer Manufacturing 311
Telestar International 312
Handling Conflict in Project Management 313
x CONTENTS
8 SPECIAL TOPICS 319
8.0 Introduction 319
8.1 Performance Measurement 320
8.2 Financial Compensation and Rewards 327
8.3 Critical Issues with Rewarding Project Teams 333
8.4 Effective Project Management in the Small Business
Organization 336
8.5 Mega Projects 338
8.6 Morality, Ethics, and the Corporate Culture 339
8.7 Professional Responsibilities 342
8.8 Internal Partnerships 345
8.9 External Partnerships 346
8.10 Training and Education 348
8.11 Integrated Product/Project Teams 350
8.12 Virtual Project Teams 352
8.13 Breakthrough Projects 354
8.14 Studying Tips for the PMI
® Project Management Certification Exam 355
Problems 361
9 THE VARIABLES FOR SUCCESS 365
9.0 Introduction 365
9.1 Predicting Project Success 366
9.2 Project Management Effectiveness 370
9.3 Expectations 371
9.4 Lessons Learned 372
9.5 Understanding Best Practices 373
9.6 Studying Tips for the PMI
® Project Management Certification Exam 380
Problems 381
10 WORKING WITH EXECUTIVES 383
10.0 Introduction 383
10.1 The Project Sponsor 384
10.2 Handling Disagreements with the Sponsor 393
10.3 The Collective Belief 394
10.4 The Exit Champion 395
10.5 The In-House Representatives 396
10.6 Studying Tips for the PMI
® Project Management Certification Exam 397
Problems 398
Contents xi
xii CONTENTS
Case Study
Corwin Corporation 401
11 PLANNING 411
11.0 Introduction 411
11.1 Validating the Assumptions 414
11.2 General Planning 415
11.3 Life-Cycle Phases 418
11.4 Proposal Preparation 421
11.5 Kickoff Meetings 421
11.6 Understanding Participants’ Roles 424
11.7 Project Planning 424
11.8 The Statement of Work 426
11.9 Project Specifications 431
11.10 Milestone Schedules 433
11.11 Work Breakdown Structure 434
11.12 WBS Decomposition Problems 440
11.13 Role of the Executive in Project Selection 444
11.14 Role of the Executive in Planning 449
11.15 The Planning Cycle 449
11.16 Work Planning Authorization 450
11.17 Why Do Plans Fail? 451
11.18 Stopping Projects 452
11.19 Handling Project Phaseouts and Transfers 453
11.20 Detailed Schedules and Charts 454
11.21 Master Production Scheduling 457
11.22 Project Plan 459
11.23 Total Project Planning 464
11.24 The Project Charter 468
11.25 Management Control 469
11.26 The Project Manager–Line Manager Interface 472
11.27 Fast-Tracking 474
11.28 Configuration Management 475
11.29 Enterprise Project Management Methodologies 476
11.30 Project Audits 479
11.31 Studying Tips for the PMI
® Project Management Certification Exam 480
Problems 483
12 NETWORK SCHEDULING TECHNIQUES 493
12.0 Introduction 493
12.1 Network Fundamentals 495

12.2 Graphical Evaluation and Review Technique (GERT) 500
12.3 Dependencies 501
12.4 Slack Time 502
12.5 Network Replanning 508
12.6 Estimating Activity Time 512
12.7 Estimating Total Project Time 513
12.8 Total PERT/CPM Planning 514
12.9 Crash Times 516
12.10 PERT/CPM Problem Areas 519
12.11 Alternative PERT/CPM Models 522
12.12 Precedence Networks 523
12.13 Lag 526
12.14 Scheduling Problems 528
12.15 The Myths of Schedule Compression 528
12.16 Understanding Project Management Software 530
12.17 Software Features Offered 530
12.18 Software Classification 532
12.19 Implementation Problems 533
12.20 Critical Chain 534
12.21 Studying Tips for the PMI
® Project Management Certification Exam 536
Problems 539
Case Study
Crosby Manufacturing Corporation 552
13 PROJECT GRAPHICS 555
13.0 Introduction 555
13.1 Customer Reporting 556
13.2 Bar (Gantt) Chart 557
13.3 Other Conventional Presentation Techniques 564
13.4 Logic Diagrams/Networks 567
13.5 Studying Tips for the PMI
® Project Management Certification Exam 568
Problems 569
14 PRICING AND ESTIMATING 571
14.0 Introduction 571
14.1 Global Pricing Strategies 572
14.2 Types of Estimates 573
14.3 Pricing Process 576
14.4 Organizational Input Requirements 578
14.5 Labor Distributions 580
14.6 Overhead Rates 584
Contents xiii
14.7 Materials/Support Costs 586
14.8 Pricing Out the Work 589
14.9 Smoothing Out Department Man-Hours 590
14.10 The Pricing Review Procedure 592
14.11 Systems Pricing 594
14.12 Developing the Supporting/Backup Costs 595
14.13 The Low-Bidder Dilemma 599
14.14 Special Problems 599
14.15 Estimating Pitfalls 600
14.16 Estimating High-Risk Projects 601
14.17 Project Risks 602
14.18 The Disaster of Applying the 10 Percent Solution to Project Estimates 605
14.19 Life-Cycle Costing (LCC) 606
14.20 Logistics Support 613
14.21 Economic Project Selection Criteria: Capital Budgeting 614
14.22 Payback Period 614
14.23 The Time Value of Money 615
14.24 Net Present Value (NPV) 616
14.25 Internal Rate of Return (IRR) 617
14.26 Comparing IRR, NPV, and Payback 618
14.27 Risk Analysis 618
14.28 Capital Rationing 619
14.29 Project Financing 620
14.30 Studying Tips for the PMI
® Project Management Certification Exam 622
Problems 624
15 COST CONTROL 629
15.0 Introduction 629
15.1 Understanding Control 633
15.2 The Operating Cycle 636
15.3 Cost Account Codes 637
15.4 Budgets 644
15.5 The Earned Value Measurement System (EVMS) 645
15.6 Variance and Earned Value 647
15.7 The Cost Baseline 666
15.8 Justifying the Costs 668
15.9 The Cost Overrun Dilemma 671
15.10 Recording Material Costs Using Earned Value Measurement 672
15.11 The Material Accounting Criterion 675
15.12 Material Variances: Price and Usage 676
15.13 Summary Variances 677
15.14 Status Reporting 678
15.15 Cost Control Problems 685
xiv CONTENTS
15.16 Studying Tips for the PMI® Project Management Certification Exam 686
Problems 689
Case Studies
The Bathtub Period 708
Franklin Electronics 709
Trouble in Paradise 711
16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT 715
16.0 Introduction 715
16.1 Methodology for Trade-off Analysis 718
16.2 Contracts: Their Influence on Projects 735
16.3 Industry Trade-off Preferences 736
16.4 Conclusion 739
16.5 Studying Tips for the PMI
® Project Management Certification Exam 739
17 RISK MANAGEMENT 741
17.0 Introduction 741
17.1 Definition of Risk 743
17.2 Tolerance for Risk 745
17.3 Definition of Risk Management 746
17.4 Certainty, Risk, and Uncertainty 747
17.5 Risk Management Process 753
17.6 Plan Risk Management 753
17.7 Risk Identification 755
17.8 Risk Analysis 761
17.9 Qualitative Risk Analysis 766
17.10 Quantitative Risk Analysis 771
17.11 Probability Distributions and the Monte Carlo Process 772
17.12 Plan Risk Response 782
17.13 Monitoring and Control Risks 788
17.14 Some Implementation Considerations 788
17.15 The Use of Lessons Learned 790
17.16 Dependencies between Risks 793
17.17 The Impact of Risk Handling Measures 798
17.18 Risk and Concurrent Engineering 801
17.19 Studying Tips for the PMI
® Project Management Certification Exam 804
Problems 808
Case Studies
Teloxy Engineering (A) 815
Teloxy Engineering (B) 815
Contents xv
18 LEARNING CURVES 817
18.0 Introduction 817
18.1 General Theory 818
18.2 The Learning Curve Concept 818
18.3 Graphic Representation 820
18.4 Key Words Associated with Learning Curves 822
18.5 The Cumulative Average Curve 822
18.6 Sources of Experience 824
18.7 Developing Slope Measures 827
18.8 Unit Costs and Use of Midpoints 828
18.9 Selection of Learning Curves 829
18.10 Follow-on Orders 830
18.11 Manufacturing Breaks 830
18.12 Learning Curve Limitations 832
18.13 Prices and Experience 832
18.14 Competitive Weapon 835
18.15 Studying Tips for the PMI
® Project Management Certification Exam 835
Problems 836
19 CONTRACT MANAGEMENT 839
19.0 Introduction 839
19.1 Procurement 840
19.2 Plan Procurement 842
19.3 Conducting the Procurements 845
19.4 Conduct Procurements: Request Seller Responses 847
19.5 Conduct Procurements: Select Sellers 847
19.6 Types of Contracts 851
19.7 Incentive Contracts 855
19.8 Contract Type versus Risk 858
19.9 Contract Administration Cycle 859
19.10 Contract Closure 862
19.11 Using a Checklist 863
19.12 Proposal-Contractual Interaction 864
19.13 Summary 867
19.14 Studying Tips for the PMI
® Project Management Certification Exam 868
20 QUALITY MANAGEMENT 873
20.0 Introduction 874
20.1 Definition of Quality 875
20.2 The Quality Movement 877
20.3 Comparison of the Quality Pioneers 880
20.4 The Taguchi Approach 881
xvi CONTENTS
20.5 The Malcolm Baldrige National Quality Award 884
20.6 ISO 9000 885
20.7 Quality Management Concepts 887
20.8 The Cost of Quality 890
20.9 The Seven Quality Control Tools 893
20.10 Process Capability (
CP) 910
20.11 Acceptance Sampling 912
20.12 Implementing Six Sigma 912
20.13 Lean Six Sigma and DMAIC 914
20.14 Quality Leadership 915
20.15 Responsibility for Quality 916
20.16 Quality Circles 916
20.17 Just-in-Time Manufacturing (JIT) 917
20.18 Total Quality Management (TQM) 919
20.19 Studying Tips for the PMI
® Project Management Certification Exam 923
21 MODERN DEVELOPMENTS PROJECT MANAGEMENT 927
21.0 Introduction 927
21.1 The Project Management Maturity Model (PMMM) 928
21.2 Developing Effective Procedural Documentation 932
21.3 Project Management Methodologies 936
21.4 Continuous Improvement 937
21.5 Capacity Planning 942
21.6 Competency Models 943
21.7 Managing Multiple Projects 945
21.8 End-of-Phase Review Meetings 947
22 THE BUSINESS OF SCOPE CHANGES 949
22.0 Introduction 949
22.1 Need for Business Knowledge 951
22.2 Timing of Scope Changes 952
22.3 Business Need for a Scope Change 953
22.4 Rationale for Not Approving a Scope Change 954
23 THE PROJECT OFFICE 955
23.0 Introduction 955
23.1 Present-Day Project Office 956
23.2 Implementation Risks 957
23.3 Types of Project Offices 958
23.4 Networking Project Management Offices 959
23.5 Project Management Information Systems 959
23.6 Dissemination of Information 961
23.7 Mentoring 962
Contents xvii
23.8 Development of Standards and Templates 963
23.9 Project Management Benchmarking 963
23.10 Business Case Development 964
23.11 Customized Training (Related to Project Management) 965
23.12 Managing Stakeholders 966
23.13 Continuous Improvement 967
23.14 Capacity Planning 967
23.15 Risks of Using a Project Office 968
24 MANAGING CRISIS PROJECTS 971
24.0 Introduction 971
24.1 Understanding Crisis Management 971
24.2 Ford versus Firetone 973
24.3 The Air France
Concorde Crash 974
24.4 Intel and the Pentium Chip 975
24.5 The Russian Submarine
Kursk 975
24.6 The Tylenol Poisonings 976
24.7 Nestlé’s Marketing of Infant Formula 979
24.8 The Space Shuttle
Challenger Disaster 981
24.9 The Space Shuttle
Columbia Disaster 982
24.10 Victims versus Villains 983
24.11 Life-Cycle Phases 984
24.12 Project Management Implications 985
25 THE RISE, FALL, AND RESURRECTION OF IRIDIUM:
A PROJECT MANAGEMENT PERSPECTIVE 987
25.0 Introduction 987
25.1 Naming the Project “Iridium” 989
25.2 Obtaining Executive Support 990
25.3 Launching the Venture 990
25.4 The Iridium System 992
25.5 The Terrestial and Space-Based Network 992
25.6 Project Initiation: Developing the Business Case 993
25.7 The “Hidden” Business Case 995
25.8 Risk Management 995
25.9 The Collective Belief 997
25.10 The Exit Champion 997
25.11 Iridium’s Infancy Years 999
25.12 Debt Financing 1001
25.13 The M-Star Project 1002
25.14 A New CEO 1003
25.15 Satellite Launches 1003
xviii CONTENTS
25.16 An Initial Public Offering (IPO) 1004
25.17 Signing up Customers 1004
25.18 Iridium’s Rapid Ascent 1005
25.19 Iridium’s Rapid Descent 1007
25.20 The Iridium “Flu” 1012
25.21 Searching for a White Knight 1012
25.22 The Definition of Failure (October, 1999) 1012
25.23 The Satellite Deorbiting Plan 1013
25.24 Iridium Is Rescued for $25 Million 1014
25.25 Epilogue 1015
25.26 Shareholder Lawsuits 1015
25.27 The Bankruptcy Court Ruling 1016
25.28 Autopsy 1016
25.29 Financial Impact of the Bankruptcy 1018
25.30 What Really Went Wrong? 1018
25.31 Lessons Learned 1020
25.32 Conclusion 1023
Appendix A. Solutions to the Project Management Conflict Exercise 1025
Appendix B. Solution to Leadership Exercise 1031
Appendix C. Dorale Products Case Studies 1037
Appendix D. Solution to the Dorale Products Case Studies Answers 1049
Appendix E. Crosslisting of PMBOK® to the Text 1055
Author Index 1061
Subject Index 1065
Contents xix

Preface
Project management has evolved from a management philosophy restricted to a
few functional areas and regarded as something nice to have to an enterprise project management system affecting every functional unit of the company. Simply
stated, project management has evolved into a business process rather than
merely a project management process. More and more companies are now
regarding project management as being mandatory for the survival of the firm.
Organizations that were opponents of project management are now advocates.
Management educators of the past, who preached that project management could
not work and would be just another fad, are now staunch supporters. Project management is here to stay. Colleges and universities are now offering graduate
degrees in project management.
The text discusses the principles of project management. Students who are
interested in advanced topics, such as some of the material in Chapters 21 to 24
of this text, may wish to read one of my other texts,
Advanced Project
Management: Best Practices in Implementation
(Hoboken, NJ: Wiley, 2004), and
Project Management Best Practices: Achieving Global Excellence (Hoboken, NJ:
Wiley, 2006). John Wiley & Sons will also be introducing a five-book series on
project management best practices, co-authored by Frank Saladis and Harold
Kerzner, to accompany the above two books.
This book is addressed not only to those undergraduate and graduate students
who wish to improve upon their project management skills but also to those functional managers and upper-level executives who serve as project sponsors and
must provide continuous support for projects. During the past several years, management’s knowledge and understanding of project management has matured to
the point where almost every company is using project management in one form
or another. These companies have come to the realization that project management
xxi
xxii PREFACE
and productivity are related and that we are now managing our business as though
it is a series of projects. Project management coursework is now consuming more
of training budgets than ever before.
General reference is provided in the text to engineers. However, the reader
should not consider project management as strictly engineering related. The engineering examples are the result of the fact that project management first appeared
in the engineering disciplines, and we should be willing to learn from their mistakes. Project management now resides in every profession, including information systems, health care, consulting, pharmaceutical, banks, and government
agencies.
The text can be used for both undergraduate and graduate courses in business,
information systems, and engineering. The structure of the text is based upon my
belief that project management is much more behavioral than quantitative since
projects are managed by people rather than tools. The first five chapters are part
of the basic core of knowledge necessary to understand project management.
Chapters 6 through 8 deal with the support functions of managing your time effectively, conflicts, and other special topics. Chapters 9 and 10 describe factors for
predicting success and management support. It may seem strange that 10 chapters
on organizational behavior and structuring are needed prior to the “hard-core”
chapters of planning, scheduling, and controlling. These first 10 chapters are
needed to understand the cultural environment for all projects and systems. These
chapters are necessary for the reader to understand the difficulties in achieving
cross-functional cooperation on projects where team members are working on
multiple projects concurrently and why the people involved, all
of whom may have different backgrounds, cannot simply be forged into a cohesive work unit without friction. Chapters 11 through 20 are more of the quantitative chapters on planning, scheduling, cost control, estimating, procurement, and
quality. Chapters 21 through 24 are advanced topics and future trends. Chapter 25
is a capstone case study that can be related to almost all of the chapters in the text.
The changes that were made in the 10th edition include:
A chapter on the business of scope changes
A chapter on managing crises projects
A chapter on the Iridium Project, which serves as a capstone case
An appendix on using the book to study for the PMP® exam
A section on understanding the collective belief on a project
A section on the need for an exit champion
A section on project financing
A section on managing virtual teams
A section on rewarding project teams
A section on the need for an enterprise project management system
A section on kickoff meeting
A section on breakthrough projects
A section on project audits
A section on managing intellectual property
A section on the problems associated with project scheduling
A section on schedule compression myths
A section on human behavior education
A section on dysfunctional team behavior
A section on validating project assumptions
Existing sections from the 9th edition with expanded information
include: the new breed of project manager; additional scheduling problems; a discussion on the difference between active and passive involvement by the sponsor; the need for challenging the decisions of the
sponsor; information needed for effective estimating; managing stakeholder expectations; the project war room; power and authority; the management reserve; and Six Sigma. The chapters on risk management and
procurement were restructured to be in better alignment with the
PMBOK
® Guide, 4th edition.
The text contains more than 25 case studies, more than 125 multiple choice
questions, and nearly 400 discussion questions. In addition, there is a supplemental workbook (
Project Management Workbook to Accompany Project
Management,
tenth edition) that contains more than 600 multiple choice questions, additional case studies, challenging problems, and crossword puzzles.
There is also a separate book of cases (
Project Management Case Studies, third
edition) that provides additional real-world examples.
This text, the workbook, and the book of cases are ideal as self-study tools
for the Project Management Institute’s PMP
® Certification exam. Because of this,
there are tables of cross references on each chapter’s opening page in the
textbook detailing the sections from the book of cases, the workbook, and
the Guide to the Project Management Body of Knowledge (PMBOK
® Guide) that
apply to that chapter’s content. The left-hand margin of the pages in the text has
side bars that identify the cross-listing of the material on that page to the appropriate section(s) of the PMBOK
® Guide. At the end of most of the chapters is a
section on study tips for the PMP
® exam, including more than 125 multiple
choice questions.
This textbook is currently used in the college market, in the reference market, and for studying for the PMP
® Certification exam. Therefore, to satisfy the
needs of all markets, a compromise had to be reached on how much of the text
would be aligned to the PMBOK
® Guide and how much new material would
be included without doubling the size of the text. Some colleges and universities
use the textbook to teach project management fundamentals without reference
to the PMBOK
® Guide. The text does not contain all of the material necessary to
support each section of the PMBOK
® Guide. Therefore, to study for the PMP®
Certification exam, the PMBOK® Guide must also be used together with this text.
The text covers material for almost all of the PMBOK
® Guide knowledge areas
but not necessarily in the depth that appears in the PMBOK
® Guide.
An instructor’s manual is available only to college and university faculty
members by contacting your local Wiley sales representative or by visiting
Preface xxiii
the Wiley website at www.wiley.com/kerzner. This website includes not only the
instructor’s manual but also 500 PowerPoint slides that follow the content of
the book and help organize and execute classroom instruction and group learning.
Access to the instructor’s material can be provided only through John Wiley &
Sons Publishers, not the author.
One-, two-, and three-day seminars on project management and the PMP
®
Certification Training using the text are offered by contacting Lori Milhaven,
Executive Vice President, the International Institute for Learning, at 800-325-
1533, extension 5121 (email address: [email protected]).
The problems and case studies at the ends of the chapters cover a variety of
industries. Almost all of the case studies are real-world situations taken from my
consulting practice. Feedback from my colleagues who are using the text has provided me with fruitful criticism, most of which has been incorporated into the
tenth edition.
The majority of the articles on project management that have become classics have been referenced in the textbook throughout the first 11 chapters. These
articles were the basis for many of the modern developments in project management and are therefore identified throughout the text.
Many colleagues provided valuable criticism. In particular, I am indebted to
those industrial/government training managers whose dedication and commitment to quality project management education and training have led to valuable
changes in this and previous editions. In particular, I wish to thank Frank Saladis,
PMP
®, Senior Consultant and Trainer with the International Institute for
Learning, for his constructive comments, recommendations, and assistance with
the mapping of the text to the PMBOK
® Guide as well as recommended changes
to many of the chapters. I am indebted to Dr. Edmund Conrow, PMP
®, for a
decade of assistance with the preparation of the risk management chapters in all
of my texts.
To the management team and employees of the International Institute for
Learning, thank you all for 20 years of never-ending encouragement, support, and
assistance with all of my project management research and writings.
Harold Kerzner
The International Institute for Learning
2009
xxiv PREFACE
Overview
1

Related Case Studies
(from Kerzner/
Project
Management Case Studies,
3rd Edition)
Related Workbook Exercises (from
Kerzner/
Project Management
Workbook and PMP
®/CAPM® Exam
Study Guide,
10th Edition)
PMBOK® Guide, 4th
Edition, Reference
Section for the PMP
®
Certification Exam
• Kombs Engineering
• Williams Machine
Tool Company*
• Hyten Corporation
• Macon, Inc.
• Continental Computer
Corporation
• Jackson Industries
• Multiple Choice Exam • Integration
Management
• Scope
Management
• Human Resource
Management

1.0 INTRODUCTION
Executives will be facing increasingly complex challenges during the next decade. These challenges will
be the result of high escalation factors for salaries and raw materials, increased union demands, pressure
from stockholders, and the possibility of long-term high inflation accompanied by a mild recession and a
lack of borrowing power with financial institutions. These environmental conditions have existed before,
but not to the degree that they do today.
*Case Study also appears at end of chapter.
1
In the past, executives have attempted to ease the impact of these environmental conditions by embarking on massive cost-reduction programs. The usual results of these programs have been early retirement,
layoffs, and a reduction in manpower through attrition. As jobs become vacant, executives pressure line
managers to accomplish the same amount of work with fewer resources, either by improving efficiency or
by upgrading performance requirements to a higher position on the learning curve. Because people costs
are more inflationary than the cost of equipment or facilities, executives are funding more and more capital equipment projects in an attempt to increase or improve productivity without increasing labor.
Unfortunately, executives are somewhat limited in how far they can go to reduce manpower without
running a high risk to corporate profitability. Capital equipment projects are not always the answer. Thus,
executives have been forced to look elsewhere for the solutions to their problems.
Almost all of today’s executives are in agreement that the solution to the majority of corporate problems involves obtaining better control and use of existing corporate resources, looking internally rather than
externally for the solution. As part of the attempt to achieve an internal solution, executives are taking a
hard look at the ways corporate activities are managed. Project management is one of the techniques under
consideration.
The project management approach is relatively modern. It is characterized by methods of restructuring
management and adapting special management techniques, with the purpose of obtaining better control and
use of existing resources. Forty years ago project management was confined to U.S. Department of Defense
contractors and construction companies. Today, the concept behind project management is being applied in
such diverse industries and organizations as defense, construction, pharmaceuticals, chemicals, banking,
hospitals, accounting, advertising, law, state and local governments, and the United Nations.
The rapid rate of change in both technology and the marketplace has created enormous strains on existing organizational forms. The traditional structure is highly bureaucratic, and experience has shown that it
cannot respond rapidly enough to a changing environment. Thus, the traditional structure must be replaced
by project management, or other temporary management structures that are highly organic and can respond
very rapidly as situations develop inside and outside the company.
Project management has long been discussed by corporate executives and academics as one of several
workable possibilities for organizational forms of the future that could integrate complex efforts and reduce
bureaucracy. The acceptance of project management has not been easy, however. Many executives are not
willing to accept change and are inflexible when it comes to adapting to a different environment. The project management approach requires a departure from the traditional business organizational form, which is
basically vertical and which emphasizes a strong superior–subordinate relationship.
1.1 UNDERSTANDING PROJECT MANAGEMENT
In order to understand project management, one must begin with the
definition of a project. A project can be considered to be any series of
activities and tasks that:
Have a specific objective to be completed within certain specifications
Have defined start and end dates
Have funding limits (if applicable)
Consume human and nonhuman resources (i.e., money, people, equipment)
Are multifunctional (i.e., cut across several functional lines)
2 OVERVIEW
PMBOK® Guide, 4th Edition
1.2 What Is a Project?
1.3 What Is Project Management?

Project management, on the other hand, involves five process groups as identified in
the PMBOK
® Guide, namely:
Project initiation
Selection of the best project given resource limits
Recognizing the benefits of the project
Preparation of the documents to sanction the project
Assigning of the project manager
Project planning
Definition of the work requirements
Definition of the quality and quantity of work
Definition of the resources needed
Scheduling the activities
Evaluation of the various risks
Project execution
Negotiating for the project team members
Directing and managing the work
Working with the team members to help them improve
Project monitoring and control
Tracking progress
Comparing actual outcome to predicted outcome
Analyzing variances and impacts
Making adjustments
Project closure
Verifying that all of the work has been accomplished
Contractual closure of the contract
Financial closure of the charge numbers
Administrative closure of the papework
Successful project management can then be defined as having achieved the project
objectives:
Within time
Within cost
At the desired performance/technology level
While utilizing the assigned resources effectively and efficiently
Accepted by the customer
The potential benefits from project management are:
Identification of functional responsibilities to ensure that all activities are
accounted for, regardless of personnel turnover
Minimizing the need for continuous reporting
Identification of time limits for scheduling
Identification of a methodology for trade-off analysis
Measurement of accomplishment against plans
Understanding Project Management 3
Early identification of problems so that corrective action may follow
Improved estimating capability for future planning
Knowing when objectives cannot be met or will be exceeded
Unfortunately, the benefits cannot be achieved without overcoming obstacles such as:
Project complexity
Customer’s special requirements and scope changes
Organizational restructuring
Project risks
Changes in technology
Forward planning and pricing
Project management can mean different things to different people. Quite often, people
misunderstand the concept because they have ongoing projects within their company and
feel that they are using project management to control these activities. In such a case, the
following might be considered an appropriate definition:
Project management is the art of creating the illusion that any outcome is the
result of a series of predetermined, deliberate acts when, in fact, it was dumb luck.
Although this might be the way that some companies are running their projects, this is
not project management. Project management is designed to make better use of existing
resources by getting work to flow horizontally as well as vertically within the company. This
approach does not really destroy the vertical, bureaucratic flow of work but simply requires
that line organizations talk to one another horizontally so work will be accomplished more
smoothly throughout the organization. The vertical flow of work is still the responsibility of
the line managers. The horizontal flow of work is the responsibility of the project managers,
and their primary effort is to communicate and coordinate activities horizontally between the
line organizations.
Figure 1–1 shows how many companies are structured. There are
always “class or prestige” gaps between various levels of management.
There are also functional gaps between working units of the organization.
If we superimpose the management gaps on top of the functional gaps, we find that companies are made up of small operational islands that refuse to communicate with one
another for fear that giving up information may strengthen their opponents. The project
manager’s responsibility is to get these islands to communicate cross-functionally toward
common goals and objectives.
The following would be an overview definition of project management:
Project management is the planning, organizing, directing, and controlling of
company resources for a relatively short-term objective that has been established
to complete specific goals and objectives. Furthermore, project management utilizes the systems approach to management by having functional personnel (the
vertical hierarchy) assigned to a specific project (the horizontal hierarchy).
4 OVERVIEW
PMBOK® Guide, 4th Edition
1.6 Project Management Skills
The above definition requires further comment. Classical management is usually considered to have five functions or principles:
Planning
Organizing
Staffing
Controlling
Directing
You will notice that, in the above definition, the staffing function has been omitted.
This was intentional because the project manager does not staff the project. Staffing is a
line responsibility. The project manager has the right to request specific resources, but the
final decision of what resources will be committed rests with the line managers.
We should also comment on what is meant by a “relatively” short-term project. Not all
industries have the same definition for a short-term project. In engineering, the project might
be for six months or two years; in construction, three to five years; in nuclear components, ten
years; and in insurance, two weeks. Long-term projects, which consume resources full-time,
are usually set up as a separate division (if large enough) or simply as a line organization.
Figure 1–2 is a pictorial representation of project management. The objective of the
figure is to show that project management is designed to manage or control company
resources on a given activity, within time, within cost, and within performance. Time, cost,
and performance are the constraints on the project. If the project is to be accomplished for
an outside customer, then the project has a fourth constraint: good customer relations. The
reader should immediately realize that it is possible to manage a project internally within
time, cost, and performance and then alienate the customer to such a degree that no further
business will be forthcoming. Executives often select project managers based on who the
customer is and what kind of customer relations will be necessary.
Projects exist to produce deliverables. The person ultimately assigned as the project
manager may very well be assigned based upon the size, nature, and scope of the deliverables. Deliverables are outputs, or the end result of either the completion of the project or
the end of a life-cycle phase of the project. Deliverables are measurable, tangible outputs
and can take such form as:
Hardware Deliverables: These are hardware items, such as a table, a prototype,
or a piece of equipment.
Understanding Project Management 5
TOP
MANAGEMENT:
POLICY
MIDDLE
MANAGEMENT:
PLANNING
SUPERVISORS:
SCHEDULING
LABORERS:
OPERATIONS
MANAGEMENT GAPS FUNCTIONAL GAPS:
DEPARTMENTIZATION
OPERATIONAL
ISLANDS
+ =
FIGURE 1–1. Why are systems necessary?
PMBOK® Guide, 4th Edition
2.4.2 Organizational Structures
Software Deliverables: These items are similar to hardware deliverables but are
usually paper products, such as reports, studies, handouts, or documentation.
Some companies do not differentiate between hardware and software deliverables.
Interim Deliverables: These items can be either hardware or software deliverables and progressively evolve as the project proceeds. An example might be a
series of interim reports leading up to the final report.
Another factor influencing the selection of the project manager would be the stakeholders. Stakeholders are individuals or organizations that can be favorably or unfavorably
impacted by the project. As such, project managers must interface with these stakeholders, and
many of the stakeholders can exert their influence or pressure over the direction of the project.
Some stakeholders are referred to as “active” or “key” stakeholders that can possess
decision-making authority during the execution of the project. Each stakeholder can have
his or her own set of objectives, and this could place the project manager in a position of
having to balance a variety of stakeholder interests without creating a conflict-of-interest
situation for the project manager.
Each company has its own categorization system for identifying stakeholders. A typical system might be:
Organizational stakeholders
Executive officers
Line managers
Employees
Unions
6 OVERVIEW
WITHIN GOO
D CUSTOME
R RELAT
IONS
TIME
COST
RESOURCES
PERFORMANCE/TECHNOLOGY
FIGURE 1–2. Overview of project management.
Product/market stakeholders
Customers
Suppliers
Local committees
Governments (local, state, and federal)
General public
Capital market stakeholders
Shareholders
Creditors
Banks
1.2 DEFINING PROJECT SUCCESS
In the previous section, we defined project success as the completion of an activity within the
constraints of time, cost, and performance. This was the definition used for the past twenty
years or so. Today, the definition of project success has been modified to include completion:
Within the allocated time period
Within the budgeted cost
At the proper performance or specification level
With acceptance by the customer/user
With minimum or mutually agreed upon scope changes
Without disturbing the main work flow of the organization
Without changing the corporate culture
The last three elements require further explanation. Very few projects are completed
within the original scope of the project. Scope changes are inevitable and have the potential to destroy not only the morale on a project, but the entire project. Scope changes
must
be held to a minimum and those that are required must be approved by both the project
manager and the customer/user.
Project managers must be willing to manage (and make concessions/trade-offs, if necessary) such that the company’s main work flow is not altered. Most project managers
view themselves as self-employed entrepreneurs after project go-ahead, and would like to
divorce their project from the operations of the parent organization. This is not always possible. The project manager must be willing to manage within the guidelines, policies, procedures, rules, and directives of the parent organization.
All corporations have corporate cultures, and even though each project may be inherently different, the project manager should not expect his assigned personnel to deviate from
cultural norms. If the company has a cultural standard of openness and honesty when dealing with customers, then this cultural value should remain in place for all projects, regardless
of who the customer/user is or how strong the project manager’s desire for success is.
As a final note, it should be understood that simply because a project is a success does
not mean that the company as a whole is successful in its project management endeavors.
Excellence in project management is defined as a continuous stream of successfully
Defining Project Success 7
managed projects. Any project can be driven to success through formal authority and
strong executive meddling. But in order for a continuous stream of successful projects to
occur, there must exist a strong corporate commitment to project management, and this
commitment
must be visible.
1.3 THE PROJECT MANAGER–LINE MANAGER INTERFACE
We have stated that the project manager must control company resources
within time, cost, and performance. Most companies have six resources:
Money
Manpower
Equipment
Facilities
Materials
Information/technology
Actually, the project manager does
not control any of these resources directly, except
perhaps money (i.e., the project budget).
1 Resources are controlled by the line managers,
functional managers, or, as they are often called, resources managers. Project managers
must, therefore, negotiate with line managers for all project resources. When we say that
project managers control project resources, we really mean that they control those
resources (which are temporarily loaned to them)
through line managers.
Today, we have a new breed of project manager. Years ago, virtually all project managers were engineers with advanced degrees. These people had a command of technology
rather than merely an understanding of technology. If the line manager believed that the
project manager did in fact possess a command of technology, then the line manager would
allow the assigned functional employees to take direction from the project manager. The
result was that project managers were expected to manage people.
Most project managers today have an understanding of technology rather than a command of technology. As a result, the accountability for the success of the project is now
viewed as shared accountability between the project manager and all affected line managers. With shared accountability, the line managers must now have a good understanding
of project management, which is why more line managers are now becoming PMP
®S.
Project managers are now expected to focus more so on managing the project’s deliverables rather than providing technical direction to the project team. Management of the
assigned resources is more often than not a line function.
Another important fact is that project managers are treated as though they are managing part of a business rather than simply a project, and as such are expected to make sound
business decisions as well as project decisions. Project managers must understand business
principles. In the future, project managers may be expected to become externally certified
by PMI
® and internally certified by their company on the organization’s business processes.
8 OVERVIEW
1. Here we are assuming that the line manager and project manager are not the same individual. However, the
terms
line manager and functional manager are used interchangeably throughout the text.
PMBOK® Guide, 4th Edition
1.6 Project Management Skills
In recent years, the rapid acceleration of technology has forced the project manager to
become more business oriented. According to Hans Thamhain,
The new breed of business leaders must deal effectively with a broad spectrum of contemporary challenges that focus on time-to-market pressures, accelerating technologies,
innovation, resource limitations, technical complexities, social and ethical issues, operational dynamics, cost, risks, and technology itself as summarized below:
High task complexities, risks and uncertainties
Fast-changing markets, technology, regulations
Intense competition, open global markets
Resource constraint, tough performance requirements
Tight, end-date-driven schedules
Total project life-cycle considerations
Complex organizations and cross-functional linkages
Joint ventures, alliances and partnerships, need for dealing with different organizational cultures and values
Complex business processes and stakeholder communities
Need for continuous improvements, upgrades and enhancements
Need for sophisticated people skills, ability to deal with organizational conflict, power,
and politics
Increasing impact of IT and e-business2
Dr. Thamhain further believes that there are paradigm shifts in technology-oriented
business environments that will affect the business leaders of the future, including project
managers. According to Dr. Thamhain, we are shifting from…
… mostly linear work processes to highly dynamic, organic and integrated management systems
…efficiency toward effectiveness
…executing projects to enterprise-wide project management
…managing information to fully utilizing information technology
…managerial control to self-direction and accountability
…managing technology as part of a functional speciality ot management of technology as a distinct skill set and professional
…status3
Another example of the need for the project manager to become more actively
involved in business aspects has been identified by Gary Heerkens. Heerkens provides several revelations of why business knowledge has become important, a few of which are
4:
It really doesn’t matter how well you execute a project, if you’re working on the wrong
project!
The Project Manager–Line Manager Interface 9
2. H. J. Thamhain, Management of Technology, (Hoboken, NJ: Wiley, 2005), pp. 3–4.
3. See note 2; Thamhain; p. 28.
4. G. Heerkens,
The Business-Savvy Project Manager (New York: McGraw-Hill, 2006), pp. 4–8.
There are times when spending more money on a project could be smart business—
even if you exceed the original budget!
There are times when spending more money on a project could be smart business—
even if the project is delivered after the original deadline!
Forcing the project team to agree to an unrealistic deadline may not be very smart,
from a business standpoint.
A portfolio of projects that all generate a positive cash flow may not represent an organization’s best opportunity for investment.
It should become obvious at this point that successful project management is strongly
dependent on:
A good daily working relationship between the project manager and those line
managers who directly assign resources to projects
The ability of functional employees to report vertically to line managers at the
same time that they report horizontally to one or more project managers
These two items become critical. In the first item, functional employees who are
assigned to a project manager still take technical direction from their line managers.
Second, employees who report to multiple managers will always favor the manager who
controls their purse strings. Thus, most project managers appear always to be at the mercy
of the line managers.
Classical management has often been defined as a process in which the manager does
not necessarily perform things for himself, but accomplishes objectives through others in
a group situation. This basic definition also applies to the project manager. In addition, a
project manager must help himself. There is nobody else to help him.
If we take a close look at project management, we will see that the project manager actually works for the line managers, not vice versa. Many executives do not realize this. They
have a tendency to put a halo around the head of the project manager and give him a bonus
at project termination, when, in fact, the credit should go to the line managers, who are continually pressured to make better use of their resources. The project manager is simply the
agent through whom this is accomplished. So why do some companies glorify the project
management position?
To illustrate the role of the project manager, consider the time, cost, and performance
constraints shown in Figure 1–2. Many functional managers, if left alone, would recognize
only the performance constraint: “Just give me another $50,000 and two more months, and
I’ll give you the ideal technology.”
The project manager, as part of these communicating, coordinating, and integrating
responsibilities, reminds the line managers that there are also time and cost constraints on
the project. This is the starting point for better resource control.
Project managers depend on line managers. When the project manager gets in trouble,
the only place he can go is to the line manager because additional resources are almost
always required to alleviate the problems. When a line manager gets in trouble, he usually
goes first to the project manager and requests either additional funding or some type of
authorization for scope changes.
10 OVERVIEW
To illustrate this working relationship between the project and line managers, consider
the following situation:
Project Manager (addressing the line manager): “I have a serious problem. I’m looking at
a $150,000 cost overrun on my project and I need your help. I’d like you to do the same
amount of work that you are currently scheduled for but in 3,000 fewer man-hours. Since
your organization is burdened at $60/hour, this would more than compensate for the cost
overrun.”
Line Manager: “Even if I could, why should I? You know that good line managers can
always make work expand to meet budget. I’ll look over my manpower curves and let you
know tomorrow.”
The following day . . .
Line Manager: “I’ve looked over my manpower curves and I have enough work to keep
my people employed. I’ll give you back the 3,000 hours you need, but remember,
you owe
me one!”
Several months later . . .
Line Manager: “I’ve just seen the planning for your new project that’s supposed to start
two months from now. You’ll need two people from my department. There are two
employees that I’d like to use on your project. Unfortunately, these two people are available now. If I don’t pick these people up on your charge number right now, some other project might pick them up in the interim period, and they won’t be available when your
project starts.”
Project Manager: “What you’re saying is that you want me to let you sandbag against one
of my charge numbers, knowing that I really don’t need them.”
Line Manager: “That’s right. I’ll try to find other jobs (and charge numbers) for them to
work on temporarily so that your project won’t be completely burdened. Remember, you
owe me one.”
Project Manager: “O.K. I know that I owe you one, so I’ll do this for you. Does this make
us even?”
Line Manager: “Not at all! But you’re going in the right direction.”
When the project management–line management relationship begins to deteriorate,
the project almost always suffers. Executives must promote a good working relationship
between line and project management. One of the most common ways of destroying this
relationship is by asking, “Who contributes to profits—the line or project manager?”
Project managers feel that they control all project profits because they control the budget.
The Project Manager–Line Manager Interface 11
The line managers, on the other hand, argue that they must staff with appropriately budgeted-for personnel, supply the resources at the desired time, and supervise performance.
Actually, both the vertical and horizontal lines contribute to profits. These types of conflicts can destroy the entire project management system.
The previous examples should indicate that project management is more behavioral
than quantitative. Effective project management requires an understanding of:
Quantitative tools and techniques
Organizational structures
Organizational behavior
Most people understand the quantitative tools for planning, scheduling, and controlling work. It is imperative that project managers understand totally the operations of each
line organization. In addition, project managers must understand their own job description,
especially where their authority begins and ends. During an in-house seminar on engineering project management, the author asked one of the project engineers to provide a
description of his job as a project engineer. During the discussion that followed, several
proj-ect managers and line managers said that there was a great deal of overlap between
their job descriptions and that of the project engineer.
Organizational behavior is important because the functional employees at the interface position find themselves reporting to more than one boss—a line manager and one
project manager for each project they are assigned to. Executives must provide proper
training so functional employees can report effectively to multiple managers.
1.4 DEFINING THE PROJECT MANAGER’S ROLE
The project manager is responsible for coordinating and integrating activities across multiple, functional lines. The integration activities performed
by the project manager include:
Integrating the activities necessary to develop a project plan
Integrating the activities necessary to execute the plan
Integrating the activities necessary to make changes to the plan
These integrative responsibilities are shown in Figure 1–3 where the project manager must
convert the inputs (i.e., resources) into outputs of products, services, and ultimately profits.
In order to do this, the project manager needs strong communicative and interpersonal
skills, must become familiar with the operations of each line organization, and must have
knowledge of the technology being used.
An executive with a computer manufacturer stated that his company was looking
externally for project managers. When asked if he expected candidates to have a command
of computer technology, the executive remarked: “You give me an individual who has
12 OVERVIEW
PMBOK® Guide, 4th Edition
2.3 Stakeholders
2.3.8 Functional Managers
2.3.6 Project Managers
Chapter 4 Project
Integration Management

good communicative skills and interpersonal skills, and I’ll give that individual a job. I can
teach people the technology and give them technical experts to assist them in decision
making. But I cannot teach somebody how to work with people.”
The project manager’s job is not an easy one. Project managers may have increasing
responsibility, but very little authority. This lack of authority can force them to “negotiate”
with upper-level management as well as functional management for control of company
resources. They may often be treated as outsiders by the formal organization.
In the project environment, everything seems to revolve about the project manager.
Although the project organization is a specialized, task-oriented entity, it cannot exist apart
from the traditional structure of the organization. The project manager, therefore, must
walk the fence between the two organizations. The term
interface management is often
used for this role, which can be described as managing relationships:
Within the project team
Between the project team and the functional organizations
Between the project team and senior management
Between the project team and the customer’s organization, whether an internal or
external organization
To be effective as a project manager, an individual must have management as well as
technical skills. Because engineers often consider their careers limited in the functional
disciplines, they look toward project management and project engineering as career path
opportunities. But becoming a manager entails learning about psychology, human behavior, organizational behavior, interpersonal relations, and communications. MBA programs
have come to the rescue of individuals desiring the background to be effective project
managers.
In the past, executives motivated and retained qualified personnel primarily with
financial incentives. Today other ways are being used, such as a change in title or the
promise of more challenging work. Perhaps the lowest turnover rates of any professions in
the world are in project management and project engineering. In a project environment, the
Defining the Project Manager’s Role 13
Products
Profits
Services
Outputs
Capital
Materials
Equipment
Facilities
Information
Personnel
Resources
Integration
Management

Integrated
Processes

Inputs
FIGURE 1–3. Integration management.
PMBOK® Guide, 4th Edition
Chapter 4 Integration
Management

project managers and project engineers get to see their project through from “birth to
death.” Being able to see the fruits of one’s efforts is highly rewarding. A senior project
manager in a construction company commented on why he never accepted a vice presidency that had been offered to him: “I can take my children and grandchildren into ten
countries in the world and show them facilities that I have built as the project manager.
What do I show my kids as an executive? The size of my office? My bank account? A
stockholder’s report?”
The project manager is actually a general manager and gets to know the total operation of the company. In fact, project managers get to know more about the total operation
of a company than most executives. That is why project management is often used as a
training ground to prepare future general managers who will be capable of filling top management positions.
1.5 DEFINING THE FUNCTIONAL MANAGER’S ROLE
Assuming that the project and functional managers are not the same person, we can identify a specific role for the functional manager. There are
three elements to this role:
The functional manager has the responsibility to define how the
task will be done and
where the task will be done (i.e., the technical criteria).
The functional manager has the responsibility to provide sufficient resources to
accomplish the objective within the project’s constraints (i.e.,
who will get the job
done).
The functional manager has the responsibility for the deliverable.
In other words, once the project manager identifies the requirements for the project (i.e.,
what work has to be done and the constraints), it becomes the line manager’s responsibility
to identify the technical criteria. Except perhaps in R&D efforts, the line manager should be
the recognized technical expert. If the line manager believes that certain technical portions
of the project manager’s requirements are unsound, then the line manager has the right, by
virtue of his expertise, to take exception and plead his case to a higher authority.
In Section 1.1 we stated that all resources (including personnel) are controlled by the
line manager. The project manager has the right to request specific staff, but the final
appointments rest with line managers. It helps if project managers understand the line
manager’s problems:
Unlimited work requests (especially during competitive bidding)
Predetermined deadlines
All requests having a high priority
Limited number of resources
Limited availability of resources
14 OVERVIEW
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.1.2 HR Planning: Tools and
Techniques

Unscheduled changes in the project plan
Unpredicted lack of progress
Unplanned absence of resources
Unplanned breakdown of resources
Unplanned loss of resources
Unplanned turnover of personnel
Only in a very few industries will the line manager be able to identify to the project
manager in advance exactly what resources will be available when the project is scheduled
to begin. It is not important for the project manager to have the best available resources.
Functional managers should not commit to certain people’s availability. Rather, the functional manager should commit to achieving his portion of the objective within time, cost,
and performance even if he has to use average or below-average personnel. If the project
manager is unhappy with the assigned functional resources, then the project manager
should closely track that portion of the project. Only if and when the project manager is
convinced by the evidence that the assigned resources are unacceptable should he confront
the line manager and demand better resources.
The fact that a project manager is assigned does not relieve the line manager of his
functional responsibility to perform. If a functional manager assigns resources such that the
constraints are not met, then
both the project and functional managers will be blamed. One
company is even considering evaluating line managers for merit increases and promotion
based on how often they have lived up to their commitments to the project managers.
Therefore, it is extremely valuable to everyone concerned to have all project commitments
made visible to all.
Some companies carry the concept of commitments to extremes. An aircraft components manufacturer has a Commitment Department headed by a second-level manager. The
function of the Commitment Department is to track how well the line managers keep their
promises to the project managers. The department manager reports directly to the vice president of the division. In this company, line managers are extremely careful and cautious in
making commitments, but do everything possible to meet deliverables. This same company
has gone so far as to tell both project and line personnel that they run the risk of being discharged from the company for burying a problem rather than bringing the problem to the
surface
immediately.
In one automotive company, the tension between the project and line managers became
so combative that it was having a serious impact on the performance and constraints of the
project. The project managers argued that the line managers were not fulfilling their
promises whereas the line managers were arguing that the project managers’ requirements
were poorly defined. To alleviate the problem, a new form was created which served as a
contractual agreement between the project and the line managers who had to commit to the
deliverables. This resulted in “shared accountability” for the project’s deliverables.
Project management is designed to have shared authority and responsibility between
the project and line managers. Project managers plan, monitor, and control the project,
whereas functional managers perform the work. Table 1–1 shows this shared responsibility.
The one exception to Table 1–1 occurs when the project and line managers are the same person. This situation, which happens more often than not, creates a conflict of interest.
Defining the Functional Manager’s Role 15
If a line manager has to assign resources to six projects, one of which is under his direct
control, he might save the best resources for his project. In this case, his project will be a
success at the expense of all of the other projects.
The exact relationship between project and line managers is of paramount importance
in project management where multiple-boss reporting prevails. Table 1–2 shows that
the relationship between project and line managers is not always in balance and thus,
of course, has a bearing on who exerts more influence over the assigned functional
employees.
16 OVERVIEW
TABLE 1–2. REPORTING RELATIONSHIPS
Project Manager (PM)/Line Manager (LM)/Employee Relationship
Employee
Employees Take PM Receives Performance
Type of Project Type of Matrix Technical Direction Functional Progress Evaluations
Manager Structure* PM Negotiates For From From Made By
Lightweight Weak Deliverables LMs Primarily LMs LMs only with no
input from PM
Heavyweight Strong People who report PM and LMs Assigned employees LMs with input
informally to PM who report to LMs from PM
but formally to
LMs
Tiger teams Very strong People who report PM only Assigned employees PM only
entirely to PM who now report
full-time for directly to PM
duration of project
*The types of organizational structures are discussed in Chapter 3.
TABLE 1–1. DUAL RESPONSIBILITY
Responsibility
Topic Project Manager Line Manager
Rewards Give recommendation: Informal Provide rewards: Formal
Direction Milestone (summary) Detailed
Evaluation Summary Detailed
Measurement Summary Detailed
Control Summary Detailed
PMBOK® Guide, 4th Edition
2.4.2 Organizational Structure
Figure 2–7
PMBOK® Guide, 4th Edition
2.4.2 Organizational Structure
Figure 2–7

1.6 DEFINING THE FUNCTIONAL EMPLOYEE’S ROLE
Once the line managers commit to the deliverables, it is the responsibility of the assigned
functional employees to achieve the functional deliverables. For years the functional employees were called subordinates. Although this term still exists in textbooks, industry prefers to
regard the assigned employees as “associates” rather than subordinates. The reason for this
is that in project management the associates can be a higher pay grade than the project manager. The associates can even be a higher pay grade than their functional manager.
In most organizations, the assigned employees report on a “solid” line to their functional manager, even though they may be working on several projects simultaneously. The
employees are usually a “dotted” line to the project but solid to their function. This places
the employees in the often awkward position of reporting to multiple individuals. This situation is further complicated when the project manager has more technical knowledge
than the line manager. This occurs during R&D projects.
The functional employee is expected to accomplish the following activities when
assigned to projects:
Accept responsibility for accomplishing the assigned deliverables within the
project’s constraints
Complete the work at the earliest possible time
Periodically inform both the project and line manager of the project’s status
Bring problems to the surface quickly for resolution
Share information with the rest of the project team
1.7 DEFINING THE EXECUTIVE’S ROLE
In a project environment there are new expectations of and for the executives, as well as a
new interfacing role.
5 Executives are expected to interface a project as follows:
In project planning and objective-setting
In conflict resolution
In priority-setting
As project sponsor6
Executives are expected to interface with projects very closely at project initiation and
planning, but to remain at a distance during execution unless needed for priority-setting
and conflict resolution. One reason why executives “meddle” during project execution is
that they are not getting accurate information from the project manager as to project status. If project managers provide executives with meaningful status reports, then the
so-called meddling may be reduced or even eliminated.
Defining the Executive’s Role 17
5. The expectations are discussed in Section 9.3.
6. The role of the project sponsor is discussed in Section 10.1.

1.8 WORKING WITH EXECUTIVES
Success in project management is like a three-legged stool. The first leg is the project manager, the second leg is the line manager, and the third leg is senior management. If any of
the three legs fail, then even delicate balancing may not prevent the stool from toppling.
The critical node in project management is the project manager–line manager interface. At this interface, the project and line managers must view each other as equals and
be willing to share authority, responsibility, and accountability. In excellently managed
companies, project managers do not negotiate for resources but simply ask for the line
manager’s commitment to executing his portion of the work within time, cost, and performance. Therefore, in excellent companies, it should not matter who the line manager
assigns as long as the line manager lives up to his commitments.
Since the project and line managers are “equals,” senior management involvement is
necessary to provide advice and guidance to the project manager, as well as to provide
encouragement to the line managers to keep their promises. When executives act in this
capacity, they assume the role of project sponsors, as shown in Figure 1–4,
7 which also
shows that sponsorship need not always be at the executive levels. The exact person
appointed as the project sponsor is based on the dollar value of the project, the priority of
the project, and who the customer is.
18 OVERVIEW
PRIORITY PROJECTS
MAINTENANCE PROJECTS
PROJECT
MANAGER
PROJECT
SPONSOR
PROJECT
MANAGER
PROJECT SPONSOR:
SENIOR MANAGEMENT
PROJECT SPONSOR:
LOWER/MIDDLE MANAGEMENT
PROJECT
TEAM
RELATIONSHIP:
OBJECTIVE SETTING
UP-FRONT PLANNING
PROJECT ORGANIZATION
KEY STAFFING
MASTER PLAN
POLICIES
MONITORING EXECUTION
PRIORITY SETTING
CONFLICT RESOLUTION
EXECUTIVE-CLIENT CONTACT
FIGURE 1–4. The project sponsor interface.
7. Section 10.1 describes the role of the project sponsor in more depth.
PMBOK® Guide, 4th Edition
2.3.2 Sponsor
The ultimate objective of the project sponsor is to provide behind-the-scenes assistance
to project personnel for projects both “internal” to the company, as well as “external,” as
shown in Figure 1–4. Projects can still be successful without this commitment and support,
as long as all work flows smoothly. But in time of crisis, having a “big brother” available as
a possible sounding board will surely help.
When an executive is required to act as a project sponsor, then the executive has the
responsibility to make effective and timely project decisions. To accomplish this, the executive needs timely, accurate, and complete data for such decisions. Keeping management
informed serves this purpose, while the all-too-common practice of “stonewalling” prevents
an executive from making effective project decisions.
It is not necessary for project sponsorship to remain exclusively at the executive levels. As companies mature in their understanding and implementation of project management, project sponsorship may be pushed down to middle-level management. Committee
sponsorship is also possible.
1.9 THE PROJECT MANAGER AS THE PLANNING AGENT
The major responsibility of the project manager is planning. If project
planning is performed correctly, then it is conceivable that the project manager will work himself out of a job because the project can run itself. This
rarely happens, however. Few projects are ever completed without some
conflict or trade-offs for the project manager to resolve.
In most cases, the project manager provides overall or summary definitions of the
work to be accomplished, but the line managers (the true experts) do the detailed planning.
Although project managers cannot control or assign line resources, they must make sure
that the resources are adequate and scheduled to satisfy the needs of the project, not vice
versa. As the architect of the project plan, the project manager must provide:
Complete task definitions
Resource requirement definitions (possibly skill levels)
Major timetable milestones
Definition of end-item quality and reliability requirements
The basis for performance measurement
These factors, if properly established, result in:
Assurance that functional units will understand their total responsibilities toward
achieving project needs.
Assurance that problems resulting from scheduling and allocation of critical
resources are known beforehand.
Early identification of problems that may jeopardize successful project completion
so that effective corrective action and replanning can be taken to prevent or resolve
the problems.
The Project Manager as the Planning Agent 19
PMBOK® Guide, 4th Edition
Chapter 9 Project Human
Resources Management

Project managers are responsible for project administration and, therefore, must have
the right to establish their own policies, procedures, rules, guidelines, and directives—
provided these policies, guidelines, and so on, conform to overall company policy.
Companies with mature project management structures usually have rather loose company
guidelines, so project managers have some degree of flexibility in how to control their
projects. However, project managers cannot make any promises to a functional employee
concerning:
Promotion
Grade
Salary
Bonus
Overtime
Responsibility
Future work assignments
These seven items can be administered by line managers only, but the project manager
can have indirect involvement by telling the line manager how well an employee is doing
(and putting it in writing), requesting overtime because the project budget will permit it, and
offering individuals the opportunity to perform work above their current pay grade.
However, such work above pay grade can cause severe managerial headaches if not coordinated with the line manager, because the individual will expect immediate rewards if he performs well.
Establishing project administrative requirements is part of project planning. Executives
must either work with the project managers at project initiation or act as resources later.
Improper project administrative planning can create a situation that requires:
A continuous revision and/or establishment of company and/or project policies,
procedures, and directives
A continuous shifting in organizational responsibility and possible unnecessary
restructuring
A need for staff to acquire new knowledge and skills
If these situations occur simultaneously on several projects, there can be confusion
throughout the organization.
1.10 PROJECT CHAMPIONS
Corporations encourage employees to think up new ideas that, if approved by the corporation, will generate monetary and nonmonetary rewards for the idea generator. One such
reward is naming the individual the “project champion.” Unfortunately, the project champion often becomes the project manager, and, although the idea was technically sound, the
project fails.
20 OVERVIEW
Table 1–3 provides a comparison between project managers and project champions. It
shows that the project champions may become so attached to the technical side of the project that they become derelict in their administrative responsibilities. Perhaps the project
champion might function best as a project engineer rather than the project manager.
This comparison does not mean that technically oriented project managers-champions
will fail. Rather, it implies that the selection of the “proper” project manager should be
based on
all facets of the project.
1.11 THE DOWNSIDE OF PROJECT MANAGEMENT
Project management is often recognized only as a high-salaried, highly challenging position whereby the project manager receives excellent training in general management.
For projects that are done for external sources, the project manager is first viewed as
starting out with a pot of gold and then as having to manage the project so that sufficient
profits will be made for the stockholders. If the project manager performs well, the project will be successful. But the personal cost may be high for the project manager.
There are severe risks that are not always evident. Some project management positions may require a sixty-hour workweek and extensive time away from home. When a
project manager begins to fall in love more with the job than with his family, the result is
usually lack of friends, a poor home life, and possibly divorce. During the birth of the
missile and space programs, companies estimated that the divorce rate among project
managers and project engineers was probably twice the national average. Accepting a
project management assignment is not always compatible with raising a young family.
Characteristics of the workaholic project manager include:
Every Friday he thinks that there are only two more working days until Monday.
At 5:00 P.M. he considers the working day only half over.
He has no time to rest or relax.
He always takes work home from the office.
He takes work with him on vacations.
The Downside of Project Management 21
TABLE 1–3. PROJECT MANAGERS VERSUS PROJECT CHAMPIONS

Project Managers
Prefer to work in groups
Project Champions
Prefer working individually

Committed to their managerial and technical Committed to technology
responsibilities
Committed to the corporation Committed to the profession
Seek to achieve the objective Seek to exceed the objective
Are willing to take risks Are unwilling to take risks; try to test everything
Seek what is possible Seek perfection
Think in terms of short time spans Think in terms of long time spans
Manage people Manage things
Are committed to and pursue material values Are committed to and pursue intellectual values
1.12 PROJECT-DRIVEN VERSUS NON–PROJECT-DRIVEN
ORGANIZATIONS
On the micro level, virtually all organizations are either marketing-, engineering-, or manufacturing-driven. But on the macro level, organizations are
either project- or non–project-driven. The PMBOK
® Guide uses the terms
project-based and non–project-based, whereas in this text the terms
project-driven and non–project-driven or operational-driven are used. In a
project-driven organization, such as construction or aerospace, all work is characterized
through projects, with each proj-ect as a separate cost center having its own profit-and-loss
statement. The total profit to the corporation is simply the summation of the profits on all
projects. In a project-driven organization, everything centers around the projects.
In the non–project-driven organization, such as low-technology manufacturing, profit
and loss are measured on vertical or functional lines. In this type of organization, projects
exist merely to support the product lines or functional lines. Priority resources are assigned
to the revenue-producing functional line activities rather than the projects.
Project management in a non–project-driven organization is generally more difficult
for these reasons:
Projects may be few and far between.
Not all projects have the same project management requirements, and therefore
they cannot be managed identically. This difficulty results from poor understanding of project management and a reluctance of companies to invest in proper
training.
Executives do not have sufficient time to manage projects themselves, yet refuse
to delegate authority.
Projects tend to be delayed because approvals most often follow the vertical chain
of command. As a result, project work stays too long in functional departments.
Because project staffing is on a “local” basis, only a portion of the organization
understands project management and sees the system in action.
There is heavy dependence on subcontractors and outside agencies for project
management expertise.
Non–project-driven organizations may also have a steady stream of projects, all of
which are usually designed to enhance manufacturing operations. Some projects may be
customer-requested, such as:
The introduction of statistical dimensioning concepts to improve process control
The introduction of process changes to enhance the final product
The introduction of process change concepts to enhance product reliability
If these changes are not identified as specific projects, the result can be:
Poorly defined responsibility areas within the organization
Poor communications, both internal and external to the organization
22 OVERVIEW
PMBOK® Guide, 4th Edition
2.4.2 Organizational Systems
2.2 Project-Based and
Non–Project-Based

Project-Driven versus Non–Project-Driven Organizations 23
DELEGATION
OF
AUTHORITY
TO
PROJECT
MANAGER
EXECUTIVE
MEDDLING
LACK OF UNDERSTANDING OF HOW PROJECT
MANAGEMENT SHOULD WORK
LACK OF TRAINING IN COMMUNICATIONS/INTERPERSONAL SKILLS
MANY OF THE PROBLEMS SURFACE MUCH LATER IN
THE PROJECT AND RESULT IN A MUCH HIGHER COST
TO CORRECT AS WELL AS INCREASE PROJECT RISK
FIGURE 1–5. The tip-of-the-iceberg syndrome for matrix implementation.
RELATIVE
INFLUENCE

PRODUCT INFLUENCE
IN DECISION-MAKING
FUNCTIONAL INFLUENCE
IN DECISION-MAKING
DUAL INFLUENCE
FUNCTIONAL
ORGANIZATION
MATRIX PRODUCT
ORGANIZATION

NON–PROJECTDRIVEN
PROJECTDRIVEN
NON–PROJECTDRIVEN
INFORMAL
P.M.
INFORMAL
P.M.
FORMAL
P.M.
FIGURE 1–6. Decision-making influence.
Slow implementation
A lack of a cost-tracking system for implementation
Poorly defined performance criteria
Figure 1–5 shows the tip-of-the-iceberg syndrome, which can occur in all types of
organizations but is most common in non–project-driven organizations. On the surface, all
we see is a lack of authority for the project manager. But beneath the surface we see the
causes; there is excessive meddling due to lack of understanding of project management,
which, in turn, resulted from an inability to recognize the need for proper training.
In the previous sections we stated that project management could be handled on either
a formal or an informal basis. As can be seen from Figure 1–6, informal project management most often appears in non–project-driven organizations. It is doubtful that informal
project management would work in a project-driven organization where the project manager has profit-and-loss responsibility.
1.13 MARKETING IN THE PROJECT-DRIVEN
ORGANIZATION
Getting new projects is the lifeblood of any project-oriented business. The
practices of the project-oriented company are, however, substantially different from traditional product businesses and require highly specialized
and disciplined team efforts among marketing, technical, and operating personnel, plus significant customer involvement. Projects are different from
products in many respects, especially marketing. Marketing projects requires the ability to
identify, pursue, and capture one-of-a-kind business opportunities, and is characterized by:
A systematic effort. A systematic approach is usually required to develop a new
program lead into an actual contract. The project acquisition effort is often highly
integrated with ongoing programs and involves key personnel from both the potential customer and the performing organization.
Custom design. While traditional businesses provide standard products and services
for a variety of applications and customers, projects are custom-designed items to fit
specific requirements of a single-customer community.
Project life cycle. Project-oriented businesses have a well-defined beginning and
end and are not self-perpetuating. Business must be generated on a project-byproject basis rather than by creating demand for a standard product or service.
Marketing phase. Long lead times often exist between the product definition, startup, and completion phases of a project.
Risks. There are risks, especially in the research, design, and production of programs. The program manager not only has to integrate the multidisciplinary tasks
and project elements within budget and schedule constraints, but also has to
24 OVERVIEW
PMBOK® Guide, 4th Edition
1.4.3 Projects and Strategic
Planning

manage inventions and technology while working with a variety of technically oriented prima donnas.
The technical capability to perform. Technical ability is critical to the successful
pursuit and acquisition of a new project.
In spite of the risks and problems, profits on projects are usually very low in comparison with commerical business practices. One may wonder why companies pursue project
businesses. Clearly, there are many reasons why projects are good business:
Although immediate profits (as a percentage of sales) are usually small, the return
on capital investment is often very attractive. Progress payment practices keep
inventories and receivables to a minimum and enable companies to undertake projects many times larger in value than the assets of the total company.
Once a contract has been secured and is being managed properly, the project may
be of relatively low financial risk to the company. The company has little additional selling expenditure and has a predictable market over the life cycle of the
project.
Project business must be viewed from a broader perspective than motivation for
immediate profits. Projects provide an opportunity to develop the company’s technical capabilities and build an experience base for future business growth.
Winning one large project often provides attractive growth potential, such as
(1) growth with the project via additions and changes; (2) follow-on work;
(3) spare parts, maintenance, and training; and (4) being able to compete effectively in the next project phase, such as nurturing a study program into a development contract and finally a production contract.
Customers come in various forms and sizes. For small and medium businesses particularly, it is a challenge to compete for contracts from large industrial or governmental
organizations. Although the contract to a firm may be relatively small, it is often subcontracted via a larger organization. Selling to such a diversified heterogeneous customer is a
marketing challenge that requires a highly sophisticated and disciplined approach.
The first step in a new business development effort is to define the market to be pursued.
The market segment for a new program opportunity is normally in an area of relevant past
experience, technical capability, and customer involvement. Good marketers in the program
business have to think as product line managers. They have to understand all dimensions of
the business and be able to define and pursue market objectives that are consistent with the
capabilities of their organizations.
Program businesses operate in an opportunity-driven market. It is a common mistake,
however, to believe that these markets are unpredictable and unmanageable. Market planning
and strategizing is important. New project opportunities develop over periods of time, sometimes years for larger projects. These developments must be properly tracked and cultivated
to form the bases for management actions such as (1) bid decisions, (2) resource commitment, (3) technical readiness, and (4) effective customer liaison. This strategy of winning
new business is supported by systematic, disciplined approaches, which are illustrated in
Figure 1–7.
Marketing in the Project-Driven Organization 25
1.14 CLASSIFICATION OF PROJECTS
The principles of project management can be applied to any type of project and to any
industry. However, the relative degree of importance of these principles can vary from
project to project and industry to industry. Table 1–4 shows a brief comparison of certain
industries/projects.
For those industries that are project-driven, such as aerospace and large construction,
the high dollar value of the projects mandates a much more rigorous project management
approach. For non–project-driven industries, projects may be managed more informally than
formally, especially if no immediate profit is involved. Informal project management is similar to formal project management but paperwork requirements are kept at a minimum.
26 OVERVIEW
IDENTIFY
NEW
BUSINESS
OPPORTUNITY
PRELIM.
BID
DECISION

DEVELOP
THE NEW
OPPORTUNITY

BID
DECISION RFP

DEVELOP
PROPOSAL
& PRICING
NEGOTIATE
CONTRACT

WIN
SEARCH FOR NEW
BUSINESS
ANALYZE AND
EVALUATE
SELECT
DEDICATE
RESOURCES
SIGNIFICANT
CUSTOMER CONTACT
OBTAIN & ANALYZE
REQUIREMENTS
DEVELOP PROJECT
BASELINE
ESTABLISH R&D
PROGRAMS
BUILD FAVORABLE
IMAGE
ESTABLISH PROJECT
ORGANIZATION
PROPOSAL
PLANNING
PROPOSAL TEAM
ORGANIZATION
WIN STRATEGY
RFP ANALYSIS
CATEGORICAL
OUTLINE
TEXT & ART
GENERATION
COST ESTIMATING
& PRICING
REVIEWS
PROPOSAL
PUBLICATION
PRICING
POST SUBMITTAL
PLANNING
ORAL REVIEWS,
FACT FINDING,
QUESTIONS &
ANSWERS
MARKETING
NEGOTIATIONS
FIGURE 1–7. The phases of winning new contracts in project-oriented businesses.
TABLE 1–4. CLASSIFICATION OF PROJECTS/CHARACTERISTICS
Type of Project/Industry
In-house Small Large Aerospace/
R&D Construction Construction Defense MIS Engineering

Need for interpersonal skills Low Low High High High Low
Importance of organizational
structure
Low Low Low Low High Low
Time management difficulties Low Low High High High Low
Number of meetings Excessive Low Excessive Excessive High Medium
Project manager’s supervisor Middle Top
management
No
Low
Low
Top
management
Yes
High
High
Detailed plan
Top
management
Yes
High
High
Detailed plan
Middle
management
No
High
Low
Middle
management
No
Low
Low
management
Yes
Low
Low
Project sponsor present
Conflict intensity
Cost control level
Level of planning/scheduling Milestones Milestones
only
Milestones
only
Milestones
only
only

1.15 LOCATION OF THE PROJECT MANAGER
The success of project management could easily depend on the location of the project
manager within the organization. Two questions must be answered:
What salary should the project manager earn?
To whom should the project manager report?
Figure 1–8 shows a typical organizational hierarchy (the numbers represent pay
grades). Ideally, the project manager should be at the same pay grade as the individuals
with whom he must negotiate on a daily basis. Using this criterion, and assuming that the
project manager interfaces at the department manager level, the project manager should
earn a salary between grades 20 and 25. A project manager earning substantially more or
less money than the line manager will usually create conflict. The ultimate reporting location of the project manager (and perhaps his salary) is heavily dependent on whether the
Location of the Project Manager 27

VICE PRESIDENT
PRESIDENT
DIRECTOR
DIVISION
DEPARTMENT
SECTION
LABORER

50
60
40
30
20
10
1–9
PROJECT-DRIVEN
NON–PROJECT-DRIVEN
Typical position
of a project manager
FIGURE 1–8. Organizational hierarchy.
PMBOK® Guide, 4th Edition
2.4 Organizational Influences
organization is project- or non–project-driven, and whether the project manager is responsible for profit or loss.
Project managers can end up reporting both high and low in an organization during
the life cycle of the project. During the planning phase of the project, the project manager
may report high, whereas during implementation, he may report low. Likewise, the positioning of the project manager may be dependent on the risk of the project, the size of the
project, or the customer.
Finally, it should be noted that even if the project manager reports low, he should still
have the right to interface with top executives during project planning although there may
be two or more reporting levels between the project manager and executives. At the opposite end of the spectrum, the project manager should have the right to go directly into the
depths of the organization instead of having to follow the chain of command downward,
especially during planning. As an example, see Figure 1–9. The project manager had two
weeks to plan and price out a small project. Most of the work was to be accomplished
within one section. The project manager was told that all requests for work, even estimating, had to follow the chain of command from the executive down through the section
supervisor. By the time the request was received by the section supervisor, twelve of the
fourteen days were gone, and only an order-of-magnitude estimate was possible. The lesson to be learned here is:
The chain of command should be used for approving projects, not planning them.
Forcing the project manager to use the chain of command (in either direction) for project
planning can result in a great deal of unproductive time and idle time cost.
28 OVERVIEW
PROJECT
MANAGER

VICE PRESIDENT
ENGINEERING
SECTION
SUPERVISOR

DIVISION
MANAGER
DEPARTMENT
MANAGER
INFORMATION REQUEST
FIGURE 1–9. The organizational hierarchy: for planning and /or approval?
1.16 DIFFERING VIEWS OF PROJECT MANAGEMENT
Many companies, especially those with project-driven organizations, have differing views
of project management. Some people view project management as an excellent means to
achieving objectives, while others view it as a threat. In project-driven organizations, there
are three career paths that lead to executive management:
Through project management
Through project engineering
Through line management
In project-driven organizations, the fast-track position is in project management,
whereas in a non–project-driven organization, it would be line management. Even though
line managers support the project management approach, they resent the project manager
because of his promotions and top-level visibility. In one construction company, a department manager was told that he had no chance for promotion above his present department
manager position unless he went into project management or project engineering where he
could get to know the operation of the whole company. A second construction company
requires that individuals aspiring to become a department manager first spend a “tour of
duty” as an assistant project manager or project engineer.
Executives may dislike project managers because more authority and control must be
delegated. However, once executives realize that it is a sound business practice, it becomes
important, as shown in the following letter
8:
In order to sense and react quickly and to insure rapid decision-making, lines of communication should be the shortest possible between all levels of the organization. People with
the most knowledge must be available at the source of the problem, and they must have
decision-making authority and responsibility. Meaningful data must be available on a
timely basis and the organization must be structured to produce this environment.
In the aerospace industry, it is a serious weakness to be tied to fixed organization charts,
plans, and procedures. With regard to organization, we successfully married the project
concept of management with a central function concept. What we came up with is an organization within an organization—one to ramrod the day-to-day problems; the other to provide support for existing projects and to anticipate the requirements for future projects.
The project system is essential in getting complicated jobs done well and on time, but it
solves only part of the management problem. When you have your nose to the project
grindstone, you are often not in a position to see much beyond that project. This is where
the central functional organization comes in. My experience has been that you need this
central organization to give you depth, flexibility, and perspective. Together, the two parts
permit you to see both the woods and the trees.
Initiative is essential at all levels of the organization. We try to press the level of decision to the lowest possible rung of the managerial ladder. This type of decision-making
provides motivation and permits recognition for the individual and the group at all levels.
It stimulates action and breeds dedication.
Differing Views of Project Management 29
8. Letter from J. Donald Rath, Vice President of Martin-Marietta Corporation, Denver Division, to J. E. Webb,
of NASA, October 18, 1963.

With this kind of encouragement, the organization can become a live thing—sensitive
to problems and able to move in on them with much more speed and understanding than
would be normally expected in a large operation. In this way, we can regroup or reorganize easily as situations dictate and can quickly focus on a “crisis.” In this industry a company must always be able to reorient itself to meet new objectives. In a more staid, old-line
organization, frequent reorientation usually accompanied by a corresponding shift of people’s activities, could be most upsetting. However, in the aerospace industry, we must be
prepared for change. The entire picture is one of change.
1.17 CONCURRENT ENGINEERING: A PROJECT
MANAGEMENT APPROACH
In the past decade, organizations have become more aware of the fact that America’s most
formidable weapon is its manufacturing ability, and yet more and more work seems to be
departing for Southeast Asia and the Far East. If America and other countries are to remain
competitive, then survival may depend on the manufacturing of a quality product and a
rapid introduction into the marketplace. Today, companies are under tremendous pressure
to rapidly introduce new products because product life cycles are becoming shorter. As a
result, organizations no longer have the luxury of performing work in series.
Concurrent or simultaneous engineering is an attempt to accomplish work in parallel
rather than in series. This requires that marketing, R&D, engineering, and production are all
actively involved in the early project phases and making plans even before the product
design has been finalized. This concept of current engineering will accelerate product development, but it does come with serious and potentially costly risks, the largest one being the
cost of rework.
Almost everyone agrees that the best way to reduce or minimize risks is for the organization to plan better. Since project management is one of the best methodologies to foster
better planning, it is little wonder that more organizations are accepting project management
as a way of life.
1.18 STUDYING TIPS FOR THE PMI® PROJECT
MANAGEMENT CERTIFICATION EXAM
This section is applicable as a review of the principles or to support an understanding of
the knowledge areas and domain groups in the PMBOK
® Guide. This chapter addresses
some material from the PMBOK
® Guide knowledge areas:
Integration Management
Scope Management
Human Resources Management
Understanding the following principles is beneficial if the reader is using this textbook
together with the PMBOK
® Guide to study for the PMP® Certification Exam:
30 OVERVIEW
Definition of a project
Definition of the triple constraint
Definition of successful execution of a project
Benefits of using project management
Responsibility of the project manager in dealing with stakeholders and how stakeholders can affect the outcome of the project
Responsibility of the project manager in meeting deliverables
The fact that the project manager is ultimately accountable for the success of the
project
Responsibilities of the line manager during project management staffing and
execution
Role of the executive sponsor and champion
Difference between a project-driven and non–project-driven organization
Be sure to review the appropriate sections of the PMBOK
® Guide and the glossary of
terms at the end of the PMBOK
® Guide.
Some multiple-choice questions are provided in this section as a review of the material. There are other sources for practice review questions that are specific for the PMP
®
Exam, namely:
Project Management IQ® from the International Institute for Learning (iil.com)
PMP® Exam Practice Test and Study Guide, by J. LeRoy Ward, PMP, editor
PMP® Exam Prep, by Rita Mulcahy
Q & As for the PMBOK® Guide, Project Management Institute
The more practice questions reviewed, the better prepared the reader will be for the PMP
®
Certification Exam.
In Appendix C, there are a series of mini–case studies called Dorale Products that
reviews some of the concepts. The minicases can be used as either an introduction to the
chapter or as a review of the chapter material. These mini–case studies were placed in
Appendix C because they can be used for several chapters in the text. For this chapter, the
following are applicable:
Dorale Products (A) [Integration and Scope Management]
Dorale Products (B) [Integration and Scope Management]
Answers to the Dorale Products minicases appear in Appendix D.
The following multiple-choice questions will be helpful in reviewing the above
principles:
1. The triple constraints on a project are:
A. Time, cost, and profitability
B. Resources required, sponsorship involvement, and funding
C. Time, cost, and quality and/or scope
D. Calendar dates, facilities available, and funding
Studying Tips for the PMI® Project Management Certification Exam 31
2. Which of the following is not part of the definition of a project?
A. Repetitive activities
B. Constraints
C. Consumption of resources
D. A well-defined objective
3. Which of the following is usually not part of the criteria for project success?
A. Customer satisfaction
B. Customer acceptance
C. Meeting at least 75 percent of specification requirements.
D. Meeting the triple-constraint requirements
4. Which of the following is generally not a benefit achieved from using project management?
A. Flexibility in the project’s end date
B. Improved risk management
C. Improved estimating
D. Tracking of projects
5. The person responsible for assigning the resources to a project is most often:
A. The project manager
B. The Human Resources Department
C. The line manager
D. The executive sponsor
6. Conflicts between the project and line managers are most often resolved by:
A. The assistant project manager for conflicts
B. The project sponsor
C. The executive steering committee
D. The Human Resources Department
7. Your company does only projects. If the projects performed by your company are for customers external to your company and a profit criterion exists on the project, then your organization is most likely:
A. Project-driven
B. Non–project-driven
C. A hybrid
D. All of the above are possible based upon the size of the profit margin.
ANSWERS
1. C
2. A
3. C
4. A
5. C
6. B
7. A
32 OVERVIEW
PROBLEMS
1–1 In the project environment, cause-and-effect relationships are almost always readily
apparent. Good project management will examine the effect in order to better understand the
cause and possibly prevent it from occurring again. Below are causes and effects. For each one
of the effects, select the possible cause or causes that may have existed to create this situation:
Effects
1. Late completion of activities
2. Cost overruns
3. Substandard performance
4. High turnover in project staff
5. High turnover in functional staff
6. Two functional departments performing the same activities on one project
Causes
a. Top management not recognizing this activity as a project
b. Too many projects going on at one time
c. Impossible schedule commitments
d. No functional input into the planning phase
e. No one person responsible for the total project
f. Poor control of design changes
g. Poor control of customer changes
h. Poor understanding of the project manager’s job
i. Wrong person assigned as project manager
j. No integrated planning and control
k. Company resources are overcommitted
l. Unrealistic planning and scheduling
m. No project cost accounting ability
n. Conflicting project priorities
o. Poorly organized project office
(This problem has been adapted from Russell D. Archibald,
Managing High-Technology
Programs and Projects,
New York: John Wiley, 1976, p. 10.)
1–2 Because of the individuality of people, there always exist differing views of what management is all about. Below are lists of possible perspectives and a selected group of organizational members. For each individual select the possible ways that this individual might view
project management:
Individuals
1. Upper-level manager
2. Project manager
3. Functional manager
4. Project team member
5. Scientist and consultant
Perspectives
a. A threat to established authority
b. A source for future general managers
c. A cause of unwanted change in ongoing procedures
Problems 33
d. A means to an end
e. A significant market for their services
f. A place to build an empire
g. A necessary evil to traditional management
h. An opportunity for growth and advancement
i. A better way to motivate people toward an objective
j. A source of frustration in authority
k. A way of introducing controlled changes
l. An area of research
m. A vehicle for introducing creativity
n. A means of coordinating functional units
o. A means of deep satisfaction
p. A way of life
1–3 Consider an organization that is composed of upper-level managers, middle- and lowerlevel managers, and laborers. Which of the groups should have first insight that an organizational restructuring toward project management may be necessary?
1–4 How would you defend the statement that a project manager must help himself?
1–5 Will project management work in all companies? If not, identify those companies in
which project management may not be applicable and defend your answers.
1–6 In a project organization, do you think that there might be a conflict in opinions over
whether the project managers or functional managers contribute to profits?
1–7 What attributes should a project manager have? Can an individual be trained to become
a project manager? If a company were changing over to a project management structure, would
it be better to promote and train from within or hire from the outside?
1–8 Do you think that functional managers would make good project managers?
1–9 What types of projects might be more appropriate for functional management rather than
project management, and vice versa?
1–10 Do you think that there would be a shift in the relative degree of importance of the following terms in a project management environment as opposed to a traditional management
environment?
a. Time management
b. Communications
c. Motivation
1–11 Classical management has often been defined as a process in which the manager does not
necessarily perform things for himself, but accomplishes objectives through others in a group
situation. Does this definition also apply to project management?
1–12 Which of the following are basic characteristics of project management?
a. Customer problem
b. Responsibility identification
c. Systems approach to decision-making
d. Adaptation to a changing environment
34 OVERVIEW
e. Multidisciplinary activity in a finite time duration
f. Horizontal and vertical organizational relationships
1–13 Project managers are usually dedicated and committed to the project. Who should be
“looking over the shoulder” of the project manager to make sure that the work and requests
are also in the best interest of the company? Does your answer depend on the priority of the
project?
1–14 Is project management designed to transfer power from the line managers to the project
manager?
1–15 Explain how career paths and career growth can differ between project-driven and
non–project-driven organizations. In each organization, is the career path fastest in project management, project engineering, or line management?
1–16 Explain how the following statement can have a bearing on who is ultimately selected as
part of the project team:
“There comes a time in the life cycle of all projects when one must shoot the design engineers
and begin production.”
1–17 How do you handle a situation where the project manager has become a generalist, but
still thinks that he is an expert?
WILLIAMS MACHINE TOOL COMPANY
For 85 years, the Williams Machine Tool Company had provided quality products to its clients,
becoming the third largest U.S.-based machine tool company by 1990. The company was
highly profitable and had an extremely low employee turnover rate. Pay and benefits were
excellent.
Between 1980 and 1990, the company’s profits soared to record levels. The company’s success was due to one product line of standard manufacturing machine tools. Williams spent most of
its time and effort looking for ways to improve its bread-and-butter product line rather than to
develop new products. The product line was so successful that companies were willing to modify
their production lines around these machine tools rather than asking Williams for major modifications to the machine tools.
By 1990, Williams Company was extremely complacent, expecting this phenomenal success with one product line to continue for 20 to 25 more years. The recession of the early 1990s
forced management to realign their thinking. Cutbacks in production had decreased the demand
for the standard machine tools. More and more customers were asking for either major modifications to the standard machine tools or a completely new product design.
The marketplace was changing and senior management recognized that a new strategic
focus was necessary. However, lower-level management and the work force, especially engineering, were strongly resisting a change. The employees, many of them with over 20 years of
employment at Williams Company, refused to recognize the need for this change in the belief
that the glory days of yore would return at the end of the recession.
Case Study 35
CASE STUDY
By 1995, the recession had been over for at least two years yet Williams Company had
no new product lines. Revenue was down, sales for the standard product (with and without
modifications) were decreasing, and the employees were still resisting change. Layoffs were
imminent.
In 1996, the company was sold to Crock Engineering. Crock had an experienced machine
tool division of its own and understood the machine tool business. Williams Company was
allowed to operate as a separate entity from 1995 to 1996. By 1996, red ink had appeared on
the Williams Company balance sheet. Crock replaced all of the Williams senior managers with
its own personnel. Crock then announced to all employees that Williams would become a specialty machine tool manufacturer and that the “good old days” would never return. Customer
demand for specialty products had increased threefold in just the last twelve months alone.
Crock made it clear that employees who would not support this new direction would be
replaced.
The new senior management at Williams Company recognized that 85 years of traditional
management had come to an end for a company now committed to specialty products. The
company culture was about to change, spearheaded by project management, concurrent engineering, and total quality management.
Senior management’s commitment to product management was apparent by the time and
money spent in educating the employees. Unfortunately, the seasoned 20-year-plus veterans
still would not support the new culture. Recognizing the problems, management provided continuous and visible support for project management in addition to hiring a project management
consultant to work with the people. The consultant worked with Williams from 1996 to 2001.
From 1996 to 2001, the Williams Division of Crock Engineering experienced losses in 24
consecutive quarters. The quarter ending March 31, 2002, was the first profitable quarter in
over six years. Much of the credit was given to the performance and maturity of the project
management system. In May 2002, the Williams Division was sold. More than 80% of the
employees lost their jobs when the company was relocated over 1,500 miles away.
36 OVERVIEW
Project Management Growth:
Concepts and Definitions
37

Related Case Studies
(from Kerzner/
Project
Management Case Studies,
3rd Edition)
Related Workbook Exercises (from
Kerzner/
Project Management
Workbook and PMP
®/CAPM® Exam
Study Guide,
10th Edition)
PMBOK® Guide, 4th
Edition, Reference
Section for the PMP
®
Certification Exam
• Goshe Corporation
• MIS Project Management
at First National Bank
• Cordova Research Group
• Cortez Plastics
• L. P. Manning Corporation
• Project Firecracker
• Apache Metals, Inc.
• Haller Specialty Manufacturing
• Multiple Choice Exam
• Integration
Management
• Scope
Management

2.0 INTRODUCTION
The growth and acceptance of project management has changed significantly over the past forty years, and these changes are expected to continue
well into the twenty-first century, especially in the area of multinational
project management. It is interesting to trace the evolution and growth of project management from the early
days of systems management to what some people call “modern project management.”
PMBOK® Guide, 4th Edition
Chapter 4 Integration Management
2
The growth of project management can be traced through topics such as roles and responsibilities, organizational structures, delegation of authority and decision-making, and especially corporate profitability. Twenty
years ago, companies had the choice of whether or not to accept the project management approach. Today, some
companies foolishly think that they still have the choice. Nothing could be further from the truth. The survival
of the firm may very well rest upon how well project management is implemented, and how quickly.
2.1 GENERAL SYSTEMS MANAGEMENT
Organizational theory and management philosophies have undergone a dramatic change in
recent years with the emergence of the project management approach to management. Because
project management is an outgrowth of systems management, it is only fitting that the underlying principles of general systems theory be described. Simply stated, general systems theory
can be classified as a management approach that attempts to integrate and unify scientific information across many fields of knowledge. Systems theory attempts to solve problems by looking at the total picture, rather than through an analysis of the individual components.
General systems theory has been in existence for more than four decades. Unfortunately,
as is often the case with new theory development, the practitioners require years of study and
analysis before implementation. General systems theory is still being taught in graduate programs. Today, project management is viewed as applied systems management.
In 1951, Ludwig von Bertalanffy, a biologist, described so-called open systems using
anatomy nomenclature. The body’s muscles, skeleton, circulatory system, and so on, were
all described as subsystems of the total system (the human being). Dr. von Bertalanffy’s
contribution was important in that he identified how specialists in each subsystem could
be integrated so as to get a better understanding of the interrelationships, thereby contributing to the overall knowledge of the operations of the system. Thus, the foundation
was laid for the evolution and outgrowth of project management.
In 1956, Kenneth Boulding identified the communications problems that can occur during systems integration. Professor Boulding was concerned with the fact that subsystem specialists (i.e., physicists, economists, chemists, sociologists, etc.) have their own languages.
He advocated that, in order for successful integration to take place, all subsystem specialists
must speak a common language, such as mathematics. Today we use the PMBOK
® Guide,
the Project Management Body of Knowledge, to satisfy this need for project management.
General systems theory implies the creation of a management technique that is able to
cut across many organizational disciplines—finance, manufacturing, engineering, marketing, and so on—while still carrying out the functions of management. This technique has
come to be called systems management, project management, or matrix management (the
terms are used interchangeably).
2.2 PROJECT MANAGEMENT: 1945–1960
During the 1940s, line managers used the concept of over-the-fence management to manage projects. Each line manager, wearing the hat of a project manager, would perform the
work necessitated by their line organization, and when completed, would throw the “ball”
38 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
over the fence in hopes that someone would catch it. Once the ball was thrown over the
fence, the line managers would wash their hands of any responsibility for the project
because the ball was no longer in their yard. If a project failed, blame was placed on
whichever line manager had the ball at that time.
The problem with over-the-fence management was that the customer had no single
contact point for questions. The filtering of information wasted precious time for both the
customer and the contractor. Customers who wanted firsthand information had to seek out
the manager in possession of the ball. For small projects, this was easy. But as projects
grew in size and complexity, this became more difficult.
Following World War II, the United States entered into the Cold War. To win a Cold
War, one must compete in the arms race and rapidly build weapons of mass destruction.
The victor in a Cold War is the one who can retaliate with such force as to obliterate the
enemy.
The arms race made it clear that the traditional use of over-the-fence management would
not be acceptable to the Department of Defense (DoD) for projects such as the B52 Bomber,
the Minuteman Intercontinental Ballistic Missile, and the Polaris Submarine. The government wanted a single point of contact, namely, a project manager who had total accountability through all project phases. The use of project management was then mandated for
some of the smaller weapon systems such as jet fighters and tanks. NASA mandated the use
of project management for all activities related to the space program.
Projects in the aerospace and defense industries were having cost overruns in excess of
200 to 300%. Blame was erroneously placed upon improper implementation of project
management when, in fact, the real problem was the inability to forecast technology.
Forecasting technology is extremely difficult for projects that could last ten to twenty years.
By the late 1950s and early 1960s, the aerospace and defense industries were using
project management on virtually all projects, and they were pressuring their suppliers to
use it as well. Project management was growing, but at a relatively slow rate except for
aerospace and defense.
Because of the vast number of contractors and subcontractors, the government needed
standardization, especially in the planning process and the reporting of information. The
government established a life-cycle planning and control model and a cost monitoring system, and created a group of project management auditors to make sure that the government’s money was being spent as planned. These practices were to be used on all
government programs above a certain dollar value. Private industry viewed these practices
as an over-management cost and saw no practical value in project management.
2.3 PROJECT MANAGEMENT: 1960–1985
The growth of project management has come about more through necessity than through
desire. Its slow growth can be attributed mainly to lack of acceptance of the new management techniques necessary for its successful implementation. An inherent fear of the
unknown acted as a deterrent for managers.
Between the middle and late 1960s, more executives began searching for new management techniques and organizational structures that could be quickly adapted to a changing
Project Management: 1960–1985 39
environment. The table below and Figure 2–1 identify two major variables that executives
consider with regard to organizational restructuring.
40 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Type of Industry Tasks Environment
A Simple Dynamic
B Simple Static
C Complex Dynamic
D Complex Static
Almost all type C and most type D industries have project management–related structures. The key variable appears to be task complexity. Companies that have complex tasks
and that also operate in a dynamic environment find project management mandatory. Such
industries would include aerospace, defense, construction, high-technology engineering,
computers, and electronic instrumentation.
Other than aerospace, defense, and construction, the majority of the companies in the
1960s maintained an informal method for managing projects. In informal project management, just as the words imply, the projects were handled on an informal basis whereby the
D Y N A M I C
(INFORMAL
PROJECT
MGT.)
STATIC
SIMPLE COMPLEX
O P E R AT I O N A L E N V I R O N M E N T
1960s: TOTALLY
PROJECT DRIVEN
1970s
1980s
TYPE OF TASKS
GREATER NEED FOR UNDERSTANDING HUMAN BEHAVIOR
FIGURE 2–1. Matrix implementation scheme.
authority of the project manager was minimized. Most projects were handled by functional
managers and stayed in one or two functional lines, and formal communications were either
unnecessary or handled informally because of the good working relationships between line
managers. Many organizations today, such as low-technology manufacturing, have line managers who have been working side by side for ten or more years. In such situations, informal
project management may be effective on capital equipment or facility development projects.
By 1970 and again during the early 1980s, more companies departed from informal
project management and restructured to formalize the project management process, mainly
because the size and complexity of their activities had grown to a point where they were
unmanageable within the current structure. Figure 2–2 shows what happened to one such
construction company. The following five questions help determine whether formal project management is necessary:
Are the jobs complex?
Are there dynamic environmental considerations?
Are the constraints tight?
Are there several activities to be integrated?
Are there several functional boundaries to be crossed?
If any of these questions are answered yes, then some form of formalized project management may be necessary. It is possible for formalized project management to exist in
only one functional department or division, such as for R&D or perhaps just for certain
types of projects. Some companies have successfully implemented both formal and informal project management concurrently, but these companies are few and far between.
Today we realize that the last two questions may be the most important.
Project Management: 1960–1985 41
AVERAGE
VALUE
OF
PROJECT
($MM)
100
80
60
40
20
1960 ’62 ’64 ’66 ’68 ’70 ’72 ’74 ’76 ’78 ’80 ’82 ’84
FIGURE 2–2. Average project size capability for a construction company, 1960–1984.
The moral here is that not all industries need project management, and executives
must determine whether there is an actual need before making a commitment. Several
industries with simple tasks, whether in a static or a dynamic environment, do not need
project management. Manufacturing industries with slowly changing technology do not
need project management, unless of course they have a requirement for several special projects, such as capital equipment activities, that could interrupt the normal flow of work in
the routine manufacturing operations. The slow growth rate and acceptance of project
management were related to the fact that the limitations of project management were readily apparent, yet the advantages were not completely recognizable. Project management
requires organizational restructuring. The question, of course, is “How much restructuring?” Executives have avoided the subject of project management for fear that “revolutionary” changes must be made in the organization. As will be seen in Chapter 3, project
management can be achieved with little departure from the existing traditional structure.
Project management restructuring has permitted companies to:
Accomplish tasks that could not be effectively handled by the traditional structure
Accomplish onetime activities with minimum disruption of routine business
The second item implies that project management is a “temporary” management
structure and, therefore, causes minimum organizational disruption. The major problems
identified by those managers who endeavored to adapt to the new system all revolved
around conflicts in authority and resources.
Three major problems were identified by Killian
1:
Project priorities and competition for talent may interrupt the stability of the organization and interfere with its long-range interests by upsetting the normal business of the functional organization.
Long-range planning may suffer as the company gets more involved in meeting
schedules and fulfilling the requirements of temporary projects.
Shifting people from project to project may disrupt the training of new employees
and specialists. This may hinder their growth and development within their fields
of specialization.
Another major concern was that project management required upper-level managers
to relinquish some of their authority through delegation to the middle managers. In several
situations, middle managers soon occupied the power positions, even more so than upperlevel managers.
Despite these limitations, there were several driving forces behind the project management approach. According to John Kenneth Galbraith, these forces stem from “the
imperatives of technology.” The six imperatives are
2:
42 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
1. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review, Vol. 2,
1971, pp. 90–107.
2. Excerpt from John Kenneth Galbraith,
The New Industrial State, 3rd ed. Copyright © 1967, 1971, 1978, by
John Kenneth Galbraith. Reprinted by permission of Houghton Mifflin Company. All rights reserved.

The time span between project initiation and completion appears to be increasing.
The capital committed to the project prior to the use of the end item appears to be
increasing.
As technology increases, the commitment of time and money appears to become
inflexible.
Technology requires more and more specialized manpower.
The inevitable counterpart of specialization is organization.
The above five “imperatives” identify the necessity for more effective planning,
scheduling, and control.
As the driving forces overtook the restraining forces, project management began to
mature. Executives began to realize that the approach was in the best interest of the company. Project management, if properly implemented, can make it easier for executives to
overcome such internal and external obstacles as:
Unstable economy
Shortages
Soaring costs
Increased complexity
Heightened competition
Technological changes
Societal concerns
Consumerism
Ecology
Quality of work
Project management may not eliminate these problems, but may make it easier for the
company to adapt to a changing environment.
If these obstacles are not controlled, the results may be:
Decreased profits
Increased manpower needs
Cost overruns, schedule delays, and penalty payments occurring earlier and earlier
An inability to cope with new technology
R&D results too late to benefit existing product lines
New products introduced into the marketplace too late
Temptation to make hasty decisions that prove to be costly
Management insisting on earlier and greater return on investment
Greater difficulty in establishing on-target objectives in real time
Problems in relating cost to technical performance and scheduling during the execution of the project
Project management became a necessity for many companies as they expanded into
multiple product lines, many of which were dissimilar, and organizational complexities
grew. This growth can be attributed to:
Technology increasing at an astounding rate
More money invested in R&D
Project Management: 1960–1985 43
More information available
Shortening of project life cycles
To satisfy the requirements imposed by these four factors, management was “forced”
into organizational restructuring; the traditional organizational form that had survived for
decades was inadequate for integrating activities across functional “empires.”
By 1970, the environment began to change rapidly. Companies in aerospace, defense,
and construction pioneered in implementing project management, and other industries
soon followed, some with great reluctance. NASA and the Department of Defense
“forced” subcontractors into accepting project management. The 1970s also brought much
more published data on project management. As an example
3:
Project teams and task forces will become more common in tackling complexity. There will
be more of what some people call temporary management systems as project management
systems where the men [and women] who are needed to contribute to the solution meet,
make their contribution, and perhaps never become a permanent member of any fixed or
permanent management group.
The definition simply states that the purpose of project management is to put together
the best possible team to achieve the objective, and, at termination, the team is disbanded.
Nowhere in the definition do we see the authority of the project manager or his rank, title,
or salary.
Because current organizational structures are unable to accommodate the wide variety
of interrelated tasks necessary for successful project completion, the need for project management has become apparent. It is usually first identified by those lower-level and middle managers who find it impossible to control their resources effectively for the diverse
activities within their line organization. Quite often middle managers feel the impact of a
changing environment more than upper-level executives.
Once the need for change is identified, middle management must convince upper-level
management that such a change is actually warranted. If top-level executives cannot recognize the problems with resource control, then project management will not be adopted,
at least formally. Informal acceptance, however, is another story.
As project management developed, some essential factors in its successful implementation were recognized. The major factor was the role of the project manager, which
became the focal point of integrative responsibility. The need for integrative responsibility
was first identified in research and development activities
4:
Recently, R&D technology has broken down the boundaries that used to exist between
industries. Once-stable markets and distribution channels are now in a state of flux. The
industrial environment is turbulent and increasingly hard to predict. Many complex facts
44 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
3. Reprinted from the October 17, 1970, issue of BusinessWeek by special permission, © 1970 by McGraw-Hill,
Inc., New York, New York 10020. All rights reserved.
4. Reprinted by permission of
Harvard Business Review. From Paul R. Lawrence and Jay W. Lorsch, “New
Management Job: The Integrator,”
Harvard Business Review, November–December 1967, p. 142. Copyright ©
1967 by the Harvard Business School Publishing Corporation; all rights reserved.

about markets, production methods, costs and scientific potentials are related to investment
decisions.
All of these factors have combined to produce a king-size managerial headache. There
are just too many crucial decisions to have them all processed and resolved through regular line hierarchy at the top of the organization. They must be integrated in some other way.
Providing the project manager with integrative responsibility resulted in:
Total accountability assumed by a single person
Project rather than functional dedication
A requirement for coordination across functional interfaces
Proper utilization of integrated planning and control
Without project management, these four elements have to be accomplished by executives, and it is questionable whether these activities should be part of an executive’s job
description. An executive in a Fortune 500 corporation stated that he was spending seventy
hours a week acting as an executive and as a project manager, and he did not feel that he
was performing either job to the best of his abilities. During a presentation to the staff, the
executive stated what he expected of the organization after project management implementation:
Push decision-making down in the organization
Eliminate the need for committee solutions
Trust the decisions of peers
Those executives who chose to accept project management soon found the advantages
of the new technique:
Easy adaptation to an ever-changing environment
Ability to handle a multidisciplinary activity within a specified period of time
Horizontal as well as vertical work flow
Better orientation toward customer problems
Easier identification of activity responsibilities
A multidisciplinary decision-making process
Innovation in organizational design
2.4 PROJECT MANAGEMENT: 1985–2009
By the 1990s, companies had begun to realize that implementing project management was
a necessity, not a choice. The question was not how to implement project management, but
how fast could it be done?
Table 2–1 shows the typical life-cycle phases that an organization goes through to
implement project management. In the first phase, the Embryonic Phase, the organization
recognizes the apparent need for project management. This recognition normally takes
Project Management: 1985–2009 45
place at the lower and middle levels of management where the project activities actually
take place. The executives are then informed of the need and assess the situation.
There are six driving forces that lead executives to recognize the need for project
management:
Capital projects
Customer expectations
Competitiveness
Executive understanding
New project development
Efficiency and effectiveness
Manufacturing companies are driven to project management because of large capital
projects or a multitude of simultaneous projects. Executives soon realize the impact on
cash flow and that slippages in the schedule could end up idling workers.
Companies that sell products or services, including installation, to their clients must
have good project management practices. These companies are usually non–project-driven
but function as though they were project-driven. These companies now sell solutions to
their customers rather than products. It is almost impossible to sell complete solutions
to customers without having superior project management practices because what you are
actually selling is your project management expertise.
There are two situations where competitiveness becomes the driving force: internal projects and external (outside customer) projects. Internally, companies get into trouble when
the organization realizes that much of the work can be outsourced for less than it would cost
to perform the work themselves. Externally, companies get into trouble when they are no
longer competitive on price or quality, or simply cannot increase their market share.
46 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
TABLE 2–1. LIFE-CYCLE PHASES FOR PROJECT MANAGEMENT MATURITY

Executive Management Line Management
Embryonic Phase
Recognize need
Acceptance Phase
Visible executive
Acceptance Phase
Line management
Growth Phase
Use of life-cycle
Maturity Phase
Development of a

support support phases management cost/
schedule control
system
Recognize benefits Executive understanding Line management Development of a Integrating cost and
of project management commitment project management schedule control
methodology
Recognize Project sponsorship Line management Commitment to Developing an
applications education planning educational program
to enhance project
management skills
Recognize what Willingness to Willingness to Minimization of
must be done change way of doing release employees “creeping scope”
business for project
management training
Selection of a
project tracking
system
Executive understanding is the driving force in those organizations that have a rigid
traditional structure that performs routine, repetitive activities. These organizations are
quite resistant to change unless driven by the executives. This driving force can exist in
conjunction with any of the other driving forces.
New product development is the driving force for those organizations that are heavily
invested in R&D activities. Given that only a small percentage of R&D projects ever make
it into commercialization where the R&D costs can be recovered, project management
becomes a necessity. Project management can also be used as an early warning system that
a project should be cancelled.
Efficiency and effectiveness, as driving forces, can exist in conjunction with any other
driving forces. Efficiency and effectiveness take on paramount importance for small companies experiencing growing pains. Project management can be used to help such companies remain competitive during periods of growth and to assist in determining capacity
constraints.
Because of the interrelatedness of these driving forces, some people contend that the
only true driving force is survival. This is illustrated in Figure 2–3. When the company recognizes that survival of the firm is at stake, the implementation of project management
becomes easier.
The speed by which companies reach some degree of maturity in project management
is most often based upon how important they perceive the driving forces to be. This is illustrated generically in Figure 2–4. Non–project-driven and hybrid organizations move
quickly to maturity if increased internal efficiencies and effectiveness are needed.
Competitiveness is the slowest path because these types of organizations do not recognize
that project management affects their competitive position directly. For project-driven
organizations, the path is reversed. Competitiveness is the name of the game and the vehicle used is project management.
Once the organization perceives the need for project management, it enters the second
life-cycle phase of Table 2–1, Executive Acceptance. Project management cannot be
Project Management: 1985–2009 47
SURVIVAL
Efficiency and
Effectiveness
New Product
Development
Executive
Understanding
Capital
Projects
Customers’
Expectations
Competitiveness
FIGURE 2–3. The components of survival. Source: Reprinted from H. Kerzner, In Search of
Excellence in Project Management.
New York: Wiley, 1998, p. 51.
implemented rapidly in the near term without executive support. Furthermore, the support
must be visible to all.
The third life-cycle phase is Line Management Acceptance. It is highly unlikely that
any line manager would actively support the implementation of project management without first recognizing the same support coming from above. Even minimal line management
support will still cause project management to struggle.
The fourth life-cycle phase is the Growth Phase, where the organization becomes
committed to the development of the corporate tools for project management. This
includes the project management methodology for planning, scheduling, and controlling,
as well as selection of the appropriate supporting software. Portions of this phase can begin
during earlier phases.
The fifth life-cycle phase is Maturity. In this phase, the organization begins using the
tools developed in the previous phase. Here, the organization must be totally dedicated to
project management. The organization must develop a reasonable project management
curriculum to provide the appropriate training and education in support of the tools, as well
as the expected organizational behavior.
By the 1990s, companies finally began to recognize the benefits of project management. Table 2–2 shows the benefits of project management and how our view of project
management has changed.
Recognizing that the organization can benefit from the implementation of project
management is just the starting point. The question now becomes, “How long will it take
us to achieve these benefits?” This can be partially answered from Figure 2–5. In the
beginning of the implementation process, there will be added expenses to develop the project management methodology and establish the support systems for planning, scheduling,
and control. Eventually, the cost will level off and become pegged. The question mark in
Figure 2–5 is the point at which the benefits equal the cost of implementation. This point
can be pushed to the left through training and education.
48 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Fast Slow
Speed of Maturity
Non–Project-Driven

and Hybrid
Organizations
Organizations

Project-Driven
Internal
Efficiencies &
Effectiveness
Customer
Expectations
Competitiveness
FIGURE 2–4. The speed of maturity.
Project Management: 1985–2009 49
TABLE 2–2. BENEFITS OF PROJECT MANAGEMENT
Past View
Project management will require more
people and add to the overhead costs.
Profitability may decrease.
Project management will increase the
amount of scope changes.
Project management creates
organizational instability and increases
conflicts.
Project management is really “eye
wash” for the customer’s benefit.
Project management will create
problems.
Only large projects need project
management.
Project management will increase
quality problems.
Project management will create power
and authority problems.
Project management focuses on
suboptimization by looking at only the
project.
Project management delivers products
to a customer.
The cost of project management may
make us noncompetitive.
Present View
Project management allows us to
accomplish more work in less time, with
fewer people.
Profitability will increase.
Project management will provide better
control of scope changes.
Project management makes the
organization more efficient and
effective through better organizational
behavior principles.
Project management will allow us to
work more closely with our customers.
Project management provides a means
for solving problems.
All projects will benefit from project
management.
Project management increases quality.
Project management will reduce power
struggles.
Project management allows people to
make good company decisions.
Project management delivers solutions.
Project management will increase our
business.
PMBOK® Guide, 4th Edition
1.5 Project Management in
Operations Management
? Time
$
Cost of Project
Management Additional

Profits from
Better Project
Management
Pegged

FIGURE 2–5. Project management costs versus benefits.
2.5 RESISTANCE TO CHANGE
Why was project management so difficult for companies to accept and implement? The
answer is shown in Figure 2–6. Historically, project management resided only in the projectdriven sectors of the marketplace. In these sectors, the project managers were given the
responsibility for profit and loss, which virtually forced companies to treat project management as a profession.
In the non–project-driven sectors of the marketplace, corporate survival was based
upon products and services, rather than upon a continuous stream of projects. Profitability
was identified through marketing and sales, with very few projects having an identifiable
P&L. As a result, project management in these firms was never viewed as a profession.
In reality, most firms that believed that they were non–project-driven were actually
hybrids. Hybrid organizations are typically non–project-driven firms with one or two divisions that are project-driven. Historically, hybrids have functioned as though they were
non–project-driven, as shown in Figure 2–6, but today they are functioning like projectdriven firms. Why the change? Management has come to the realization that they can most
effectively run their organization on a “management by project” basis, and thereby achieve
the benefits of both a project management organization and a traditional organization. The
rapid growth and acceptance of project management during the last ten years has taken
place in the non–project-driven/hybrid sectors. Now, project management is being promoted by marketing, engineering, and production, rather than only by the project-driven
departments (see Figure 2–7).
A second factor contributing to the acceptance of project management was the economy, specifically the recessions of 1979–1983 and 1989–1993. This can be seen from
Table 2–3. By the end of the recession of 1979–1983, companies recognized the benefits
of using project management but were reluctant to see it implemented. Companies
50 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS

Project-Driven
PM has P&L
responsibility
PM is a recognized
profession
Multiple career
paths
Income comes from
projects
• • • •

Project
Management

Non–
Project-Driven
Very few projects
Profitability from
production

Large brick walls
Long life-cycle
products

Product
Management

Hybrid
Primarily production
driven but with
many projects
Emphasis on new
product development
• •
Marketing-oriented
Short product life
cycles

Need for rapid
development process
Past

Program
Management
Present FIGURE 2–6. Industry classification (by project management utilization).
PMBOK® Guide, 4th Edition
2.2 Projects vs. Operational Work
returned to the “status quo” of traditional management. There were no allies or alternative
management techniques that were promoting the use of project management.
The recession of 1989–1993 finally saw the growth of project management in the
non–project-driven sector. This recession was characterized by layoffs in the white
collar/management ranks. Allies for project management were appearing and emphasis was
being placed upon long-term solutions to problems. Project management was here to stay.
The allies for project management began surfacing in 1985 and continued throughout
the recession of 1989–1993. This is seen in Figure 2–8.
1985: Companies recognize that they must compete on the basis of quality as well
as cost. Companies begin using the principles of project management for the
implementation of total quality management (TQM). The first ally for project
management surfaces with the “marriage” of project management and TQM.
1990: During the recession of 1989–1993, companies recognize the importance
of schedule compression and being the first to market. Advocates of concurrent
engineering begin promoting the use of project management to obtain better scheduling techniques. Another ally for project management is born.
Resistance to Change 51

1960–1990 1990–2009
Hybrid Hybrid

 

Traditional Project
Management
Modern Project
Management

Entrance via projectdriven divisions such
as MIS and R&D
Entrance via
marketing,
engineering, and R&D
FIGURE 2–7. From hybrid to project-driven.
TABLE 2–3. RECESSIONARY EFFECTS
Characteristics
Solutions Results of the
Recession Layoffs R&D Training Sought Recessions
1979–1983 Blue collar Eliminated Eliminated Short-term Return to status quo
No project management
support
No allies for project
management
1989–1993 White collar Focused Focused Long-term
Change way of doing
business
Risk management
Examine lessons
learned

1991–1992: Executives realize that project management works best if decisionmaking and authority are decentralized, but recognize that control can still be
achieved at the top by functioning as project sponsors.
1993: As the recession of 1989–1993 comes to an end, companies begin
“re-engineering” the organization, which really amounts to elimination of organizational “fat.” The organization is now a “lean and mean” machine. People are
asked to do more work in less time and with fewer people; executives recognize
that being able to do this is a benefit of project management.
1994: Companies recognize that a good project cost control system (i.e., horizontal accounting) allows for improved estimating and a firmer grasp of the real cost
of doing work and developing products.
1995: Companies recognize that very few projects are completed within the
framework of the original objectives without scope changes. Methodologies are
created for effective change management.
1996: Companies recognize that risk management involves more than padding an
estimate or a schedule. Risk management plans are now included in the project plans.
1997–1998: The recognition of project management as a professional career path
mandates the consolidation of project management knowledge and a centrally
located project management group. Benchmarking for best practices forces the
creation of centers for excellence in project management.
1999: Companies that recognize the importance of concurrent engineering and
rapid product development find that it is best to have dedicated resources for the
duration of the project. The cost of overmanagement may be negligible compared
to risks of undermanagement. More organizations begin to use colocated teams all
housed together.
2000: Mergers and acquisitions create more multinational companies.
Multinational project management becomes a major challenge.
52 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Increasing Support

1960–
1985
No
Allies

 

1985 1990 1993 1994 1995 1996 1999 1991–
1992
1997–
1998
Total
Quality
Manage
ment
Concurrent
Engineer
ing
Re
Engineering
Life
Cycle
Costing
Scope
Change
Control
Risk
Management
Co
Located
Teams
Empower
ment and
Self
Directed
Teams
Project
Offices
and
COEs

 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Multi
National
Teams
Maturity
Models
Strategic
Planning
for
Project
Management
Six Sigma
Project
Management
Intranet
Status
Reports
Capacity
Planning
Models
Virtual
Project Teams
Lean
Project Teams
Best
Practice
Libraries
Business
Processes

FIGURE 2–8. New processes supporting project management.
2001: Corporations are under pressure to achieve maturity as quickly as possible.
Project management maturity models help companies reach this goal.
2002: The maturity models for project management provide corporations with a
basis to perform strategic planning for project management. Project management
is now viewed as a strategic competency for the corporation.
2003: Intranet status reporting comes of age. This is particularly important for
multinational corporations that must exchange information quickly.
2004: Intranet reporting provides corporations with information on how resources
are being committed and utilized. Corporations develop capacity planning models
to learn how much additional work the organization can take on.
2005: The techniques utilized in Six Sigma are being applied to project management, especially for continuous improvement to the project management methodology. This will result in the establishment of categories of Six Sigma applications
some of which are nontraditional.
2006: Virtual project teams and virtual project management offices will become
more common. The growth of virtual teams relies heavily upon trust, teamwork,
cooperation, and effective communication.
2007: The concepts of lean manufacturing will be applied to project management.
2008: Companies will recognize the value of capturing best practices in project
management and creating a best practices library or knowledge repository.
2009: Project management methodologies will include more business processes to
support project management.
As project management continues to grow and mature, it will have more allies. In the
twenty-first century, second and third world nations will come to recognize the benefits
and importance of project management. Worldwide standards for project management will
be established.
If a company wishes to achieve excellence in project management, then it must go
through a successful implementation process. This is illustrated in Situation 2–1.
Situation 2–1: The aerospace division of a Fortune 500 company had been using
project management for more than thirty years. Everyone in the organization had
attended courses in the principles of project management. From 1985 to 1994, the
division went through a yearly ritual of benchmarking themselves against other aerospace and defense organizations. At the end of the benchmarking period, the staff
would hug and kiss one another, believing that they were performing project management as well as could be expected.
In 1995, the picture changed. The company decided to benchmark itself against
organizations that were not in the aerospace or defense sector. It soon learned that
there were companies that had been using project management for fewer than six
years but whose skills at implementation had surpassed the aerospace/defense firms.
It was a rude awakening.
Another factor that contributed to resistance to change was senior management’s preference for the status quo. Often this preference was based upon what was in the executives’
Resistance to Change 53
best interest rather than the best interest of the organization. It was also common for
someone to attend basic project management programs and then discover that the organization would not allow full implementation of project management, leading to frustration
for those in the lower and middle levels of management. Consider Situation 2–2:
Situation 2–2: The largest division of a Fortune 500 company recognized the need
for project management. Over a three-year period, 200 people were trained in the
basics of project management, and 18 people passed the national certification exam
for project management. The company created a project management division and
developed a methodology. As project management began to evolve in this division,
the project managers quickly realized that the organization would not allow their
“illusions of grandeur” to materialize. The executive vice president made it clear that
the functional areas, rather than the project management division, would have budgetary control. Project managers would
not be empowered with authority or critical
decision-making opportunities. Simply stated, the project managers were being
treated as expediters and coordinators, rather than real project managers.
Even though project management has been in existence for more than forty years,
there are still different views and misconceptions about what it really is. Textbooks on
operations research or management science still have chapters entitled “Project
Management” that discuss only PERT scheduling techniques. A textbook on organizational design recognized project management as simply another organizational form.
All companies sooner or later understand the basics of project management. But companies that have achieved excellence in project management have done so through successful implementation and execution of processes and methodologies.
2.6 SYSTEMS, PROGRAMS, AND PROJECTS:
A DEFINITION
In the preceding sections the word “systems” has been used rather loosely. The exact definition of a system depends on the users, environment, and ultimate goal. Business practitioners define a system as:
A group of elements, either human or nonhuman, that is organized and arranged in such
a way that the elements can act as a whole toward achieving some common goal or
objective.
Systems are collections of interacting subsystems that, if properly organized, can provide
a synergistic output. Systems are characterized by their boundaries or interface conditions.
For example, if the business firm system were completely isolated from the environmental system, then a
closed system would exist, in which case management would have complete control over all system components. If the business system reacts with the
environment, then the system is referred to as
open. All social systems, for example, are
categorized as open systems. Open systems must have permeable boundaries.
54 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
If a system is significantly dependent on other systems for its survival, then it is an
extended system. Not all open systems are extended systems. Extended systems are everchanging and can impose great hardships on individuals who desire to work in a regimented atmosphere.
Military and government organizations were the first to attempt to define the boundaries of systems, programs, and projects. Below are two definitions for systems:
Air Force Definition: A composite of equipment, skills, and techniques capable of
performing and/or supporting an operational role. A complete system includes
related facilities, equipment, material services, and personnel required for its operation to the degree that it can be considered as a self-sufficient unit in its intended
operational and/or support environment.
NASA Definition: One of the principal functioning entities comprising the project
hardware within a project or program. The meaning may vary to suit a particular
project or program area. Ordinarily a “system” is the first major subdivision of project work (spacecraft systems, launch vehicle systems).
Programs can be construed as the necessary first-level elements of a
system. Two representative definitions of programs are given below:
Air Force Definition: The integrated, time-phased tasks necessary to accomplish a particular purpose.
NASA Definition: A relative series of undertakings that continue over a period of
time (normally years) and that are designed to accomplish a broad, scientific or
technical goal in the NASA long-range plan (lunar and planetary exploration,
manned spacecraft systems).
Programs can be regarded as subsystems. However, programs are generally defined as
time-phased efforts, whereas systems exist on a continuous basis.
Projects are also time-phased efforts (much shorter than programs) and are the first
level of breakdown of a program. A typical definition would be:
NASA/Air Force Definition: A project is within a program as an undertaking that
has a scheduled beginning and end, and that normally involves some primary
purpose.
As shown in Table 2–4, the government sector tends to run efforts as programs,
headed by a program manager. The majority of the industrial sector, on the other hand,
prefers to describe efforts as projects, headed by a project manager. Whether we call our
undertaking project management or program management is inconsequential because the
same policies, procedures, and guidelines tend to regulate both. For the remainder of this
text, programs and projects will be discussed interchangeably. However, the reader should
be aware that projects are normally the first-level subdivision of a program and that programs are more ongoing than projects. This breakdown will be discussed in more detail in
Chapter 11.
Systems, Programs, and Projects: A Definition 55
PMBOK® Guide, 4th Edition
1.4.2 Program Management
Definition

Once a group of tasks is selected and considered to be a project, the next step is to
define the kinds of project units. There are four categories of projects:
Individual projects: These are short-duration projects normally assigned to a
single individual who may be acting as both a project manager and a functional
manager.
Staff projects: These are projects that can be accomplished by one organizational
unit, say a department. A staff or task force is developed from each section
involved. This works best if only one functional unit is involved.
Special projects: Often special projects occur that require certain primary functions and/or authority to be assigned temporarily to other individuals or units. This
works best for short-duration projects. Long-term projects can lead to severe conflicts under this arrangement.
Matrix or aggregate projects: These require input from a large number of functional units and usually control vast resources.
Project management may now be defined as the process of achieving project objectives through the traditional organizational structure and over the specialties of the individuals concerned. Project management is applicable for any ad hoc (unique, one-time,
one-of-a-kind) undertaking concerned with a specific end objective. In order to complete
a task, a project manager must:
Set objectives
Establish plans
Organize resources
Provide staffing
Set up controls
Issue directives
Motivate personnel
Apply innovation for alternative actions
Remain flexible
The type of project will often dictate which of these functions a project manager will be
required to perform.
56 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
TABLE 2–4. DEFINITION SUMMARY
Level Sector Title

System*
Program

Government

Program managers
Project Industry Project managers

*Definitions, as used here, do not include in-house industrial systems such as
management information systems or shop floor control systems.
PMBOK® Guide, 4th Edition
1.3 What Is Project Management?
2.7 PRODUCT VERSUS PROJECT MANAGEMENT:
A DEFINITION
For all practical purposes, there is no major difference between a project
and a program other than the time duration. Project managers focus on the
end date of their project from the day they are assigned as project manager.
Program managers usually have a much longer time frame that project
managers and never want to see their program come to an end. In the early
years of project management with the Department of Defense serving as
the primary customer, aerospace and defense project managers were called
program managers because the intent was to get follow-on government contracts each year.
But what about the definition of product management or product line management?
Product managers function closely like program managers. The product manager wants his
or her product to be as long-lived as possible and as profitable as possible. Even when the
demand for the product diminishes, the product manager will always look for spin-offs to
keep a product alive.
Although the PMBOK
® Guide does not differentiate between project and program
scope, it does differentiate between project and product scope:
Project scope defines the work that must be accomplished to produce a deliverable
with specified features or functions. The deliverable can be a product, service, or
other result.
Product scope defines the features or functions that characterize the deliverable.
Figure 2–9 shows the relationship between project and product management. When the
project is in the R&D phase, a project manager is involved. Once the product is developed
and introduced into the marketplace, the product manager takes control. In some situations,
the project manager can become the product manager. Product and project management
can, and do, exist concurrently within companies.
Figure 2–9 shows that product management can operate horizontally as well as vertically.
When a product is shown horizontally on the organizational chart, the implication is that the
product line is not big enough to control its own resources full-time and therefore shares key
functional resources. If the product line were large enough to control its own resources fulltime, it would be shown as a separate division or a vertical line on the organization chart.
Also shown in Figure 2–9 is the remarkable fact that the project manager (or project
engineer) is reporting to a marketing-type person. The reason is that technically oriented
project leaders get too involved with the technical details of the project and lose sight of
when and how to “kill” a project. Remember, most technical leaders have been trained in
an academic rather than a business environment. Their commitment to success often does
not take into account such important parameters as return on investment, profitability,
competition, and marketability.
To alleviate these problems, project managers and project engineers, especially on
R&D-type projects, are now reporting to marketing so that marketing input will be
included in all R&D decisions because of the high costs incurred during R&D. Executives
must exercise caution with regard to this structure in which both product and project
Product versus Project Management: A Definition 57
PMBOK® Guide, 4th Edition
4.1.1 Inputs to Project
Charter
4.1.1.1 Product Scope and Project
Scope and Chapter 5 Introduction

managers report to the marketing function. The marketing executive could become the
focal point of the entire organization, with the capability of building a very large empire.
2.8 MATURITY AND EXCELLENCE: A DEFINITION
Some people contend that maturity and excellence in project management are the same.
Unfortunately, this is not the case. Consider the following definition:
Maturity in project management is the implementation of a standard methodology and
accompanying processes such that there exists a high likelihood of repeated successes.
This definition is supported by the life-cycle phases shown in Table 2–1. Maturity
implies that the proper foundation of tools, techniques, processes, and even culture, exists.
When projects come to an end, there is usually a debriefing with senior management to
discuss how well the methodology was used and to recommend changes. This debriefing
looks at “key performance indicators,” which are shared learning topics, and allows the
organization to maximize what it does right and to correct what it did wrong.
The definition of excellence can be stated as:
Organizations excellent in project management are those that create the environment in
which there exists a
continuous stream of successfully managed projects and where success is measured by what is in the best interest of both the company and the project (i.e.,
customer).
58 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
VICE PRESIDENT
GENERAL
MANAGER
NEW
BUSINESS
MARKET
RESEARCH PLANNING
ONGOING
BUSINESS MANU. ENG. FINANCE PERS. ADM.
A X
B Y
C Z
PROJECT MANAGERS PRODUCT MANAGERS
RESEARCH SALES/
MARKETING PRODUCTION ADMIN
FIGURE 2–9. Organizational chart.
Excellence goes well beyond maturity. You must have maturity to achieve excellence.
Figure 2–10 shows that once the organization completes the first four life-cycle phases in
Table 2–1, it may take two years or more to reach some initial levels of maturity.
Excellence, if achievable at all, may take an additional five years or more.
Figure 2–10 also brings out another important fact. During maturity, more successes
than failures occur. During excellence, we obtain a continuous stream of successful
projects. Yet, even after having achieved excellence, there will still be some failures.
Informal Project Management: A Definition 59
Projects

Time
Failures Successes
MATURITY
EXCELLENCE
2 YEARS
5 YEARS

FIGURE 2–10. The growth of excellence.
Executives who always make the right decision are not making enough decisions. Likewise, organizations in which all projects are completed successfully
are not taking enough risks and are not working on enough projects.
It is unrealistic to believe that all projects will be completed successfully. Some people contend that the only true project failures are the ones from which nothing is learned.
Failure can be viewed as success if the failure is identified early enough so that the
resources can be reassigned to other more opportunistic activities.
2.9 INFORMAL PROJECT MANAGEMENT: A DEFINITION
Companies today are managing projects more informally than before. Informal project
management does have some degree of formality but emphasizes managing the project with
a minimum amount of paperwork. Furthermore, informal project management is based
upon guidelines rather than the policies and procedures that are the basis for formal project

management. This was shown previously to be a characteristic of a good project management methodology. Informal project management mandates:
Effective communications
Effective cooperation
Effective teamwork
Trust
These four elements are absolutely essential for effective informal project management.
Figure 2–11 shows the evolution of project documentation over the years. As companies
become mature in project management, emphasis is on guidelines and checklists. Figure
2–12 shows the critical issues as project management matures toward more informality.
As a final note, not all companies have the luxury of using informal project management.
Customers often have a strong voice in whether formal or informal project management will
be used.
2.10 THE MANY FACES OF SUCCESS
Historically, the definition of success has been meeting the customer’s expectations
regardless of whether or not the customer is internal or external. Success also includes getting the job done within the constraints of time, cost, and quality. Using this standard definition, success is defined as a point on the time, cost, quality/performance grid. But how
many projects, especially those requiring innovation, are accomplished at this point?
Very few projects are ever completed without trade-offs or scope changes on time,
cost, and quality. Therefore, success could still occur without exactly hitting this singular
point. In this regard, success could be defined as a cube, such as seen in Figure 2–13. The
singular point of time, cost, and quality would be a point within the cube, constituting
the convergence of the critical success factors (CSFs) for the project.
Another factor to consider is that there may exist both primary and secondary definitions of success, as shown in Table 2–5. The primary definitions of success are seen through
60 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
CONVENTIONAL PROJECT MANAGEMENT PROJECT
MANAGEMENT
WITH

CONCURRENT
ENGINEERING
Checklists with
Periodic Review
Points
Life-Cycle
Phases
Policy and
Procedure
Manuals
Guidelines
per Life-Cycle
Phase
General
Project
Guidelines

1970s
Early 1980s Mid-1980s Late 1980s 1990s
FIGURE 2–11. Evolution of policies, procedures, and guidelines. Source: Reprinted from H. Kerzner,
In Search of Excellence in Project Management. New York: Wiley, 1998, p. 196.
the eyes of the customer. The secondary definitions of success are usually internal benefits.
If achieving 86 percent of the specification is acceptable to the customer and follow-on
work is received, then the original project might very well be considered a success.
The definition of success can also vary according to who the stakeholder is. For example, each of the following can have his or her own definition of success on a project:
Consumers: safety in its use
Employees: guaranteed employment
Management: bonuses
Stockholders: profitability
Government agencies: compliance with federal regulations
The Many Faces of Success 61
GENERAL MATURITY PATH
CRITICAL
ISSUES
RELATIVE
MAGNITUDE OF
DOCUMENTATION

POLICIES AND
PROCEDURES
GUIDELINES
PER LIFE
CYCLE PHASE
GUIDELINES
PER PROJECT
CHECKLISTS FOR
END-OF-PHASE REVIEWS
HIGH-
CONTINUOUS
COMPETITION
FOR
RESOURCES
CONSTANTLY
CHANGING
PRIORITIES
POOR
MOTIVATION
PROTECTION
MEMOS
FORMAL PROJECT MANAGEMENT
SCHEDULE
SLIPPAGES
CREEPING
SCOPE
RESISTANCE
RELIANCE ON
INVISIBLE
SPONSORS
POWER/
AUTHORITY
PROBLEMS
CONTINUOUS
MEETINGS
INTENSITY
CONFLICTS
TO MULTIPLE
BOSS
REPORTING
POLICIES/
PROCEDURES

TRUST
COMMUNICATION
COOPERATION
TEAMWORK
DEVELOPMENT OF A
METHODOLOGY
INFORMAL PROJECT
MANAGEMENT
LIFE-CYCLE
PHASES
CORE SKILLS
TRAINING
FIGURE 2–12. Maturity path.
It is possible for a project management methodology to identify primary and secondary
success factors. This could provide guidance to a project manager for the development of a
risk management plan and for deciding which risks are worth taking and which are not.
Critical success factors identify what is necessary to meet the desired deliverables of the
customer. We can also look at key performance indicators (KPIs), which measure the quality
of the process used to achieve the end results. KPIs are internal measures or metrics that can
be reviewed on a periodic basis throughout the life cycle of the project. Typical KPIs include:
Use of the project management methodology
Establishment of the control processes
Use of interim metrics
Quality of resources assigned versus planned for
Client involvement
62 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Cost
Time
Quality
FIGURE 2–13. (or Scope)
Success: point or cube?
TABLE 2–5. SUCCESS FACTORS
Primary Secondary
Within time Follow-on work from this customer
Within cost Using the customer’s name as a reference on your literature
Within quality limits Commercialization of a product
Accepted by the customer With minimum or mutually agreed upon scope changes
Without disturbing the main flow of work
Without changing the corporate culture
Without violating safety requirements
Providing efficiency and effectiveness of operations
Satisfying OSHA/EPA requirements
Maintaining ethical conduct
Providing a strategic alignment
Maintaining a corporate reputation
Maintaining regulatory agency relations
Key performance indicators answer such questions as: Did we use the methodology correctly? Did we keep management informed, and how frequently? Were the proper
resources assigned and were they used effectively? Were there lessons learned that could
necessitate updating the methodology or its use? Companies excellent in project management measure success both internally and externally using CSFs and KPIs.
2.11 THE MANY FACES OF FAILURE5
Previously we stated that success might be a cube rather than a point. If we stay within the
cube but miss the point, is that a failure? Probably not! The true definition of failure is
when the final results are not what were expected, even though the original expectations
may or may not have been reasonable. Sometimes customers and even internal executives
set performance targets that are totally unrealistic in hopes of achieving 80–90 percent. For
simplicity’s sake, let us define failure as unmet expectations.
With unmeetable expectations, failure is virtually assured since we have defined failure as unmet expectations. This is called a
planning failure and is the difference between
what was planned and what was, in fact, achieved. The second component of failure is
poor performance or
actual failure. This is the difference between what was achievable
and what was actually accomplished.
Perceived failure is the net sum of actual failure and planning failure. Figures 2–14
and 2–15 illustrate the components of perceived failure. In Figure 2–14,
project management has planned a level of accomplishment (C) lower than what is achievable given
project circumstances and resources (D). This is a classic underplanning situation. Actual
accomplishment (B), however, was less than planned.
A slightly different case is illustrated in Figure 2–15. Here, we have planned to
accomplish more than is achievable. Planning failure is again assured even if no actual failure occurs. In both of these situations (overplanning and underplanning), the actual failure
is the same, but the perceived failure can vary considerably.
Today, most project management practitioners focus on the
planning failure term. If
this term can be compressed or even eliminated, then the magnitude of the actual failure,
should it occur, would be diminished. A good project management methodology helps to
reduce this term. We now believe that the existence of this term is largely due to the
project manager’s inability to perform effective risk management. In the 1980s, we
believed that the failure of a project was largely a quantitative failure due to:
Ineffective planning
Ineffective scheduling
Ineffective estimating
Ineffective cost control
Project objectives being “moving targets”
The Many Faces of Failure 63
5. Adapted from Robert D. Gilbreath, Winning at Project Management. New York: Wiley, 1986, pp. 2–6.
During the 1990s, we changed our view of failure from being quantitatively oriented
to qualitatively oriented. A failure in the 1990s was largely attributed to:
Poor morale
Poor motivation
Poor human relations
Poor productivity
No employee commitment
64 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS

None Actual
A B

Accomplishment Perceived
Failure
Actual Failure
Planning
Failure

Achievable Perfection
D E

C FIGURE 2–14. Components of failure (pessimistic planning).

None Actual
A B

Accomplishment
Perceived Failure
Actual
Failure
Planning
Failure

Planned Perfection
D E

C FIGURE 2–15. Components of failure (optimistic planning).
No functional commitment
Delays in problem solving
Too many unresolved policy issues
Conflicting priorities between executives, line managers, and project
managers
Although these quantitative and qualitative approaches still hold true to some degree,
today we believe that the major component of planning failure is inappropriate or inadequate risk management, or having a project management methodology that does not provide any guidance for risk management.
Sometimes, the risk management component of failure is not readily identified. For
example, look at Figure 2–16. The actual performance delivered by the contractor was significantly less than the customer’s expectations. Is the difference due to poor technical
ability or a combination of technical inability and poor risk management? Today we
believe that it is a combination.
When a project is completed, companies perform a lessons-learned review.
Sometimes lessons learned are inappropriately labeled and the true reason for the risk
event is not known. Figure 2–17 illustrates the relationship between the marketing personnel and technical personnel when undertaking a project to develop a new product. If the
project is completed with actual performance being less than customer expectations, is it
because of poor risk management by the technical assessment and forecasting personnel
or poor marketing risk assessment? The relationship between marketing and technical risk
management is not always clear.
Figure 2–17 also shows that opportunities for trade-offs diminish as we get further
downstream on the project. There are numerous opportunities for trade-offs prior to establishing the final objectives for the project. In other words, if the project fails, it may be
because of the timing when the risks were analyzed.
The Many Faces of Failure 65
Poor Risk
Management
Technical
Inability
Customer Expectations
Actual Performance
Performance
Time
FIGURE 2–16. Risk planning.
2.12 THE STAGE-GATE PROCESS
When companies recognize the need to begin developing processes for
project management, the starting point is normally the stage-gate process.
The stage-gate process was created because the traditional organizational
structure was designed primarily for top-down, centralized management,
control, and communications, all of which were no longer practical for
organizations that use project management and horizontal work flow. The
stage-gate process eventually evolved into life-cycle phases.
Just as the words imply, the process is composed of stages and gates. Stages are
groups of activities that can be performed either in series or parallel based upon the magnitude of the risks the project team can endure. The stages are managed by cross-functional
teams. The gates are structured decision points at the end of each stage. Good project management processes usually have no more than six gates. With more than six gates, the
project team focuses too much attention on preparing for the gate reviews rather than on
the actual management of the project.
Project management is used to manage the stages between the gates, and can shorten
the time between the gates. This is a critical success factor if the stage-gate process is to
be used for the development and launch of new products. A good corporate methodology
for project management will provide checklists, forms, and guidelines to make sure that
critical steps are not omitted.
Checklists for gate reviews are critical. Without these checklists, project managers can
waste hours preparing gate review reports. Good checklists focus on answering these questions:
Where are we today (i.e., time and cost)?
Where will we end up (i.e., time and cost)?
66 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Technical Risk
Assessment
and Forecasting
Financial Risk
Assessment
Project
Objectives
Numerous
Opportunities for Trade-offs
Resulting from Risk Analyses
Limited
Market Risk
Assessment
and Forecasting
Schedule Risk
Assessment
Project
Planning
Project
Execution
Technical
Strategy
Product/Market
Strategy
FIGURE 2–17. Mitigation strategies available.
PMBOK® Guide, 4th Edition
Chapter 2 Project Life Cycle and
Organization
2.1.1 Characteristics of Project
Phases

What are the present and future risks?
What assistance is needed from management?
Project managers are never allowed to function as their own gatekeepers. The gatekeepers are either individuals (i.e., sponsors) or groups of individuals designated by senior
management and empowered to enforce the structured decision-making process. The gatekeepers are authorized to evaluate the performance to date against predetermined criteria
and to provide the project team with additional business and technical information.
Gatekeepers must be willing to make decisions. The four most common decisions are:
Proceed to the next gate based upon the original objectives
Proceed to the next gate based upon revised objectives
Delay making a gate decision until further information is obtained
Cancel the project
Sponsors must also have the courage to terminate a project. The purpose of the gates is not
only to obtain authorization to proceed, but to identify failure early enough so that
resources will not be wasted but will be assigned to more promising activities.
We can now identify the three major benefits of the stage-gate process:
Providing structure to project management
Providing possible standardization in planning, scheduling, and control (i.e.,
forms, checklists, and guidelines)
Allowing for a structured decision-making process
Companies embark upon the stage-gate process with good intentions, but there are pitfalls that may disrupt the process. These include:
Assigning gatekeepers and not empowering them to make decisions
Assigning gatekeepers who are afraid to terminate a project
Denying the project team access to critical information
Allowing the project team to focus more on the gates than on the stages
It should be recognized that the stage-gate process is neither an end result nor a selfsufficient methodology. Instead, it is just one of several processes that provide structure to
the overall project management methodology.
Today, the stage-gate process appears to have been replaced by life-cycle phases.
Although there is some truth in this, the stage-gate process is making a comeback. Since
the stage-gate process focuses on decision-making more than life-cycle phases, the stagegate process is being used as an internal, decision-making tool within each of the lifecycle phases. The advantage is that, while life-cycle phases are the same for every project,
the stage-gate process can be custom-designed for each project to facilitate decisionmaking and risk management. The stage-gate process is now an integral part of project
management, whereas previously it was used primarily for new product development
efforts.
The Stage-Gate Process 67
2.13 PROJECT LIFE CYCLES
Every program, project, or product has certain phases of development
known as life-cycle phases. A clear understanding of these phases permits
managers and executives to better control resources to achieve goals.
During the past few years, there has been at least partial agreement
about the life-cycle phases of a product. They include:
Research and development
Market introduction
Growth
Maturity
Deterioration
Death
Today, there is no agreement among industries, or even companies within the same
industry, about the life-cycle phases of a project. This is understandable because of the
complex nature and diversity of projects.
The theoretical definitions of the life-cycle phases of a system can be applied to a
project. These phases include:
Conceptual
Planning
Testing
Implementation
Closure
The first phase, the conceptual phase, includes the preliminary evaluation of an idea.
Most important in this phase is a preliminary analysis of risk and the resulting impact on
the time, cost, and performance requirements, together with the potential impact on company resources. The conceptual phase also includes a “first cut” at the feasibility of the
effort.
The second phase is the planning phase. It is mainly a refinement of the elements in the
conceptual phase and requires a firm identification of the resources required and the establishment of realistic time, cost, and performance parameters. This phase also includes the
initial preparation of documentation necessary to support the system. For a project based
on competitive bidding, the conceptual phase would include the decision of whether to bid,
and the planning phase would include the development of the total bid package (i.e., time,
schedule, cost, and performance).
Because of the amount of estimating involved, analyzing system costs during the conceptual and planning phases is not an easy task. As shown in Figure 2–18, most project or
system costs can be broken down into operating (recurring) and implementation (nonrecurring) categories. Implementation costs include one-time expenses such as construction
of a new facility, purchasing computer hardware, or detailed planning. Operating costs
include recurring expenses such as manpower. The operating costs may be reduced as
68 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
PMBOK® Guide, 4th Edition
Chapter 2
2.1.2 and 2.1.3

shown in Figure 2–18 if personnel perform at a higher position on the learning curve. The
identification of a learning curve position is vitally important during the planning phase
when firm cost positions must be established. Of course, it is not always possible to know
what individuals will be available or how soon they will perform at a higher learning curve
position.
Once the approximate total cost of the project is determined, a cost-benefit analysis
should be conducted (see Figure 2–19) to determine if the estimated value of the information obtained from the system exceeds the cost of obtaining the information. This
analysis is often included as part of a feasibility study. There are several situations, such
as in competitive bidding, where the feasibility study is actually the conceptual and
definition phases. Because of the costs that can be incurred during these two phases,
top-management approval is almost always necessary before the initiation of such a feasibility study.
The third phase—testing—is predominantly a testing and final standardization effort
so that operations can begin. Almost all documentation must be completed in this phase.
The fourth phase is the implementation phase, which integrates the project’s product
or services into the existing organization. If the project was developed for establishment of
a marketable product, then this phase could include the product life-cycle phases of market introduction, growth, maturity, and a portion of deterioration.
The final phase is closure and includes the reallocation of resources. Consider a company that sells products to consumers. As one product begins the deterioration and death
phases of its life cycle (i.e., the divestment phase of a system), new products or projects
must be established. Such a company would, therefore, require a continuous stream of
projects to survive, as shown in Figure 2–20. As projects A and B begin their decline, new
Project Life Cycles 69
COSTS
TIME
IMPLEMENTATION COST (NONRECURRING)
REDUCED COSTS DUE TO
IMPROVED POSITION ON LEARNING CURVE
OPERATING COSTS
(RECURRING—MANPOWER, EQUIPMENT, FACILITIES)
SAVINGS
FIGURE 2–18. System costs.
70 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
COST AND VALUE OF THE INFORMATION
TIME
FAVORABLE COST/BENEFIT POSITION
ESTIMATED VALUE OF
THE INFORMATION
COST OF OBTAINING
INFORMATION
FIGURE 2–19. Cost-benefit analysis.
REVENUE
TOTAL REVENUE
PROJECT A
PROJECT B
PROJECT C
TIME
FIGURE 2–20. A stream of projects.
efforts (project C) must be developed for resource reallocation. In the ideal situation these
new projects will be established at such a rate that total revenue will increase and company
growth will be clearly visible.
The closure phase evaluates the efforts of the total system and serves as input to the
conceptual phases for new projects and systems. This final phase also has an impact on
other ongoing projects with regard to identifying priorities.
Thus far no attempt has been made to identify the size of a project or system. Large
projects generally require full-time staffs, whereas small projects, although they undergo
the same system life-cycle phases, may require only part-time people. This implies that an
individual can be responsible for multiple projects, possibly with each project existing in
a different life-cycle phase. The following questions must be considered in multiproject
management:
Are the project objectives the same?
For the good of the project?
For the good of the company?
Is there a distinction between large and small projects?
How do we handle conflicting priorities?
Critical versus critical projects
Critical versus noncritical projects
Noncritical versus noncritical projects
Later chapters discuss methods of resolving conflicts and establishing priorities.
The phases of a project and those of a product are compared in Figure 2–21. Notice
that the life-cycle phases of a product generally do not overlap, whereas the phases of a
project can and often do overlap.
Table 2–6 identifies the various life-cycle phases that are commonly used. Even in
mature project management industries such as construction, one could survey ten different
construction companies and find ten different definitions for the life-cycle phases.
The life-cycle phases for computer programming, as listed in Table 2–6, are also
shown in Figure 2–22, which illustrates how manpower resources can build up and decline
during a project. In Figure 2–22, PMO stands for the present method of operations, and
PMO
 will be the “new” present method of operations after conversion. This life cycle
would probably be representative of a twelve-month activity. Most executives prefer short
data processing life cycles because computer technology changes rapidly. An executive of
a major utility commented that his company was having trouble determining how to terminate a computer programming project to improve customer service because, by the time
a package is ready for full implementation, an updated version appears on the scene.
Should the original project be canceled and a new project begun? The solution appears to
lie in establishing short data processing project life-cycle phases, perhaps through segmented implementation.
Top management is responsible for the periodic review of major projects. This should
be accomplished, at a minimum, at the completion of each life-cycle phase.
Project Life Cycles 71
INVESTMENT RETURN

RESEARCH AND DEVELOPMENT
PURE
BASIC
RESEARCH
APPLIED RESEARCH
MARKET
INTRODUCTION
GROWTH
REVENUE
PROFIT
MATURITY DETERIORATION
ROI
DEATH
BREAKEVEN POINT
INVESTMENT

$0
PLANNING
TESTING
IMPLEMENTATION
CLOSURE
CONCEPTUAL
FIGURE 2–21. System/product life cycles.
72
More companies are preparing procedural manuals for project management and for
structuring work using life-cycle phases. There are several reasons for this trend:
Clear delineation of the work to be accomplished in each phase may be possible.
Pricing and estimating may be easier if well-structured work definitions exist.
Key decision points exist at the end of each life-cycle phase so that incremental
funding is possible.
As a final note, the reader should be aware that not all projects can be simply transposed into life-cycle phases (e.g., R&D). It might be possible (even in the same company)
for different definitions of life-cycle phases to exist because of schedule length, complexity, or just the difficulty of managing the phases.
Project Life Cycles 73
CONCEPTUAL
PHASE
PMO
PLANNING
PHASE
DEFINITION AND
DESIGN PHASE
IMPLEMENTATION
PHASE
CONVERSION
PHASE
REQUIRED RESOURCES
T
END
PMO

RESOURCES
FIGURE 2–22. Definition of a project life cycle.
TABLE 2–6. LIFE-CYCLE PHASE DEFINITIONS
Engineering Manufacturing Computer Programming Construction
Start-up Formation Conceptual Planning, data gathering, and
Definition Buildup Planning procedures
Main Production Definition and design Studies and basic engineering
Termination Phase-out Implementation Major review
Final audit Conversion Detail engineering
Detail engineering/
construction overlap
Construction
Testing and commissioning
2.14 GATE REVIEW MEETINGS (PROJECT CLOSURE)
Gate review meetings are a form of project closure. Gate review meetings could result in
the closure of a life-cycle phase or the closure of the entire project. Gate review meetings
must be planned for, and this includes the gathering, analysis, and dissemination of pertinent information. This can be done effectively with the use of forms, templates, and
checklists.
There are two forms of closure pertinent to gate review meetings: contractual closure
and administrative closure. Contractual closure precedes administrative closure.
Contractual closure is the verification and signoff that all deliverables required for this
phase have been completed and all action items have been fulfilled. Contractual closure is
the responsibility of both the project manager and the contract administrator.
Administrative closure is the updating of all pertinent records required for both the
customer and the contractor. Customers are particularly interested in documentation on
any as-built or as-installed changes or deviations from the specifications. Also required is
an archived trail of all scope changes agreed to during the life of the project. Contractors
are interested in archived data that include project records, minutes, memos, newsletters,
change management documentation, project acceptance documentation, and the history of
audits for lessons learned and continuous improvement.
A subset of administrative closure is financial closure, which is the closing out of all
charge numbers for the work completed. Even though contractual closure may have taken
place, there may still exist open charge numbers for the repair of defects or to complete
archived paperwork. Closure must be planned for, and this includes setting up a timetable
and budget.
2.15 PROJECT MANAGEMENT METHODOLOGIES:
A DEFINITION
Achieving project management excellence, or maturity, is more likely
with a repetitive process that can be used on each and every project. This
repetitive process is referred to as the project management methodology.
If possible, companies should maintain and support a single methodology for project management. Good methodologies integrate other
processes into the project management methodology, as shown in Figure
2–23. Companies such as Nortel, Ericsson, and Johnson Controls
Automotive have all five of these processes integrated into their project management
methodology.
During the 1990s, the following processes were integrated into a single methodology:
Project Management: The basic principles of planning, scheduling, and controlling work
Total Quality Management: The process of ensuring that the end result will meet
the quality expectations of the customer
74 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
PMBOK® Guide, 4th Edition
Chapter 4 Integration Management
4.2.1.4 Project Management
Methodology
2.4.3 Organizational Process
Assets

Concurrent Engineering: The process of performing work in parallel rather than
series in order to compress the schedule without incurring serious risks
Scope Change Control: The process of controlling the configuration of the end
result such that value added is provided to the customer
Risk Management: The process of identifying, quantifying, and responding to the
risks of the project without any material impact on the project’s objectives
In the coming years, companies can be expected to integrate more of their business
processes in the project management methodology. This is shown in Figure 2–24.
Project Management Methodologies: A Definition 75
Project Management
Concurrent
Engineering
Change
Management
Total Quality
Management
Risk
Management
FIGURE 2–23. Integrated processes for the twenty-first century.

Project management
Total quality
management

Concurrent
engineering

Scope change
management

Risk management
Yrs: 1990–2000
Integrated
Processes

 

Current
Integrated
Processes

 

Yrs: 2000–2010
Integrated
Processes
Supply chain
management

Business processes
Feasibility studies
Cost-benefit
analyses (ROI)

Capital budgeting

FIGURE 2–24. Integrated processes (past, present, and future).
Managing off of a single methodology lowers cost, reduces resource requirements for
support, minimizes paperwork, and eliminates duplicated efforts.
The characteristics of a good methodology based upon integrated processes include:
A recommended level of detail
Use of templates
Standardized planning, scheduling, and cost control techniques
Standardized reporting format for both in-house and customer use
Flexibility for application to all projects
Flexibility for rapid improvements
Easy for the customer to understand and follow
Readily accepted and used throughout the entire company
Use of standardized life-cycle phases (which can overlap) and end of phase
reviews (Section 2.13)
Based upon guidelines rather than policies and procedures (Section 2.9)
Based upon a good work ethic
Methodologies do not manage projects; people do. It is the corporate culture that executes the methodology. Senior management must create a corporate culture that supports
project management and demonstrates faith in the methodology. If this is done successfully, then the following benefits can be expected:
Faster “time to market” through better control of the project’s scope
Lower overall project risk
Better decision-making process
Greater customer satisfaction, which leads to increased business
More time available for value-added efforts, rather than internal politics and internal competition
One company found that its customers liked its methodology so much and that the projects
were so successful, that the relationship between the contractor and the customer improved
to the point where the customers began treating the contractor as a partner rather than as a
supplier.
2.16 ORGANIZATIONAL CHANGE MANAGEMENT AND
CORPORATE CULTURES
It has often been said that the most difficult projects to manage are those
that involve the management of change. Figure 2–25 shows the four basic
inputs needed to develop a project management methodology. Each has a
“human” side that may require that people change.
76 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
PMBOK® Guide, 4th Edition
Chapter 4 Integration Management
4.5 Integrated Change Control
2.4.1 Organizational Culture

Successful development and implementation of a project management methodology
requires:
Identification of the most common reasons for change in project management
Identification of the ways to overcome the resistance to change
Application of the principles of organizational change management to ensure that
the desired project management environment will be created and sustained
For simplicity’s sake, resistance can be classified as professional resistance and personal resistance to change. Professional resistance occurs when each functional unit as a
whole feels threatened by project management. This is shown in Figure 2–26. Examples
include:
Sales: The sales staff’s resistance to change arises from fear that project management will take credit for corporate profits, thus reducing the year-end bonuses
for the sales force. Sales personnel fear that project managers may become
involved in the sales effort, thus diminishing the power of the sales force.
Marketing: Marketing people fear that project managers will end up working so
closely with customers that project managers may eventually be given some of the
marketing and sales functions. This fear is not without merit because customers
often want to communicate with the personnel managing the project rather than
those who may disappear after the sale is closed.
Finance (and Accounting): These departments fear that project management will
require the development of a project accounting system (such as earned value measurement) that will increase the workload in accounting and finance, and that they
will have to perform accounting both horizontally (i.e., in projects) and vertically
(i.e., in line groups).
Organizational Change Management and Corporate Cultures 77
Project
Management
Methodology

People

 

Organization

 

Work

 

Tools

(Tasks)
FIGURE 2–25. Methodology inputs.
Procurement: The fear in this group is that a project procurement system will
be implemented in parallel with the corporate procurement system, and that the
project managers will perform their own procurement, thus bypassing the procurement department.
Human Resources Management: The HR department may fear that a project
management career path ladder will be created, requiring new training programs.
This will increase their workloads.
Manufacturing: Little resistance is found here because, although the manufacturing segment is not project-driven, there are numerous capital installation and
maintenance projects which will have required the use of project management.
Engineering, R&D, and Information Technology: These departments are almost
entirely project-driven with very little resistance to project management.
Getting the support of and partnership with functional management can usually overcome the functional resistance. However, the individual resistance is usually more complex and more difficult to overcome. Individual resistance can stem from:
Potential changes in work habits
Potential changes in the social groups
Embedded fears
Potential changes in the wage and salary administration program
Tables 2–7 through 2–10 show the causes of resistance and possible solutions.
Workers tend to seek constancy and often fear that new initiatives will push them outside
their comfort zones. Most workers are already pressed for time in their current jobs and
fear that new programs will require more time and energy.
78 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
Marketing Procurement Manu. R&D
Sales
High

Neutral
Low

Finance H.R. Eng. I.T.
FIGURE 2–26. Resistance to change.
Some companies feel compelled to continually undertake new initiatives, and people
may become skeptical of these programs, especially if previous initiatives have not been
successful. The worst case scenario is when employees are asked to undertake new initiatives, procedures, and processes that they do not understand.
It is imperative that we understand resistance to change. If individuals are happy with
their current environment, there will be resistance to change. But what if people are
unhappy? There will still be resistance to change unless (1) people believe that the change
is possible, and (2) people believe that they will somehow benefit from the change.
Management is the architect of the change process and must develop the appropriate
strategies so the organization can change. This is done best by developing a shared understanding with employees by doing the following:
Explaining the reasons for the change and soliciting feedback
Explaining the desired outcomes and rationale
Championing the change process
Empowering the appropriate individuals to institutionalize the changes
Investing in training necessary to support the changes
For most companies, the change management process will follow the pattern shown in
Figure 2–27. Employees initially refuse to admit the need for change. As management
begins pursuing the change, the support for the change diminishes and pockets of resistance crop up. Continuous support for the change by management encourages employees
to explore the potential opportunities that will result from the change about to take place.
Unfortunately, this exploration often causes additional negative information to surface,
thus reinforcing the resistance to change. As pressure by management increases, and
employees begin to recognize the benefits of the proposed change, support begins to grow.
Organizational Change Management and Corporate Cultures 79
TABLE 2–8. RESISTANCE: SOCIAL GROUPS
Cause of Resistance Ways to Overcome
Unknown new relationships Maintain existing relationships
Multiple bosses Avoid cultural shock
Multiple, temporary assignments Find an acceptable pace for rate of change
Severing of established ties
TABLE 2–7. RESISTANCE: WORK HABITS
Cause of Resistance Ways to Overcome
New guidelines/processes Dictate mandatory conformance from above
Need to share “power” information Create new comfort zones at an acceptable pace
Creation of a fragmented work environment Identify tangible/intangible individual benefits
Need to give up established work patterns
(learn new skills)
Change in comfort zones
80 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
TABLE 2–9. RESISTANCE: EMBEDDED FEARS
Cause of Resistance Ways to Overcome
Fear of failure Educate workforce on benefits of changes to the
Fear of termination individual/corporation
Fear of added workload Show willingness to admit/accept mistakes
Fear or dislike of uncertainty/unknowns Show willingness to pitch in
Fear of embarrassment Transform unknowns into opportunities
Fear of a “we/they” organization Share information
TABLE 2–10. RESISTANCE: WAGE AND SALARY ADMINISTRATION
Causes of Resistance Ways to Overcome
Shifts in authority and power Link incentives to change
Lack of recognition after the changes Identify future advancement opportunities/career path
Unknown rewards and punishment
Improper evaluation of personal performance
Multiple bosses
Support for Change
Denial
Resistance
Exploration
Resistance
Support
Time
FIGURE 2–27. Change process.
The ideal purpose of change management is to create a superior culture. There are different types of project management cultures based upon the nature of the business, the amount
of trust and cooperation, and the competitive environment. Typical types of cultures include:
Cooperative cultures: These are based upon trust and effective communications,
internally and externally.
Noncooperative cultures: In these cultures, mistrust prevails. Employees worry
more about themselves and their personal interests than what’s best for the team,
company, or customer.

Competitive cultures: These cultures force project teams to compete with one
another for valuable corporate resources. In these cultures, project managers often
demand that the employees demonstrate more loyalty to the project than to their
line managers. This can be disastrous when employees are working on many
projects at the same time.
Isolated cultures: These occur when a large organization allows functional units
to develop their own project management cultures and can result in a culturewithin-a-culture environment.
Fragmented cultures: These occur when part of the team is geographically separated from the rest of the team. Fragmented cultures also occur on multinational projects, where the home office or corporate team may have a strong culture for project
management but the foreign team has no sustainable project management culture.
Cooperative cultures thrive on effective communication, trust, and cooperation.
Decisions are based upon the best interest of all of the stakeholders. Executive sponsorship
is passive, and very few problems go to the executive levels for resolution. Projects are managed informally and with minimal documentation and few meetings. This culture takes
years to achieve and functions well during favorable and unfavorable economic conditions.
Noncooperative cultures are reflections of senior management’s inability to cooperate
among themselves and with the workforce. Respect is nonexistent. These cultures are not
as successful as a cooperative culture.
Competitive cultures can be healthy in the short term, especially if there is abundant
work. Long-term effects are usually not favorable. In one instance, an electronics firm regularly bid on projects that required the cooperation of three departments. Management
then implemented the unhealthy decision of allowing each of the three departments to bid
on every job. The two “losing” departments would be treated as subcontractors.
Management believed that this competitiveness was healthy. Unfortunately, the longterm results were disastrous. The three departments refused to talk to one another and
stopped sharing information. In order to get the job done for the price quoted, the departments began outsourcing small amounts of work rather than using the other departments
that were more expensive. As more work was outsourced, layoffs occurred. Management
then realized the disadvantages of the competitive culture it had fostered.
2.17 PROJECT MANAGEMENT INTELLECTUAL
PROPERTY
We believe today that we are managing our business by projects. As such, project managers
are expected to make business decisions as well as project decisions. This also implies that
we must capture not only project-related best practices, but business best practices as well.
For the past decade, whenever we would capture project management best practices,
they would be placed in a project management best practices library. But as we capture
business best practices, we begin replacing the project management best practices library
with a knowledge repository that includes both project management and business-related
best practices. This is shown in Figure 2–28.
Project Management Intellectual Property 81
Another reason for the growth in intellectual property is because of the benchmarking
activities that companies are performing, most likely using the project management office.
Figure 2–29 shows typical benchmarking activities and the types of information being
sought.
2.18 SYSTEMS THINKING
Ultimately, all decisions and policies are made on the basis of judgments; there is no other
way, and there never will be. In the end, analysis is but an aid to the judgment and intuition
82 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS

Integration of Business
Processes into the EPM
Methodology
PM Best
Practices
Libraries
(PKB) or Technica

Time
PM Best
Practices
Knowledge
Repositories
(PM and
Business
Knowledge)
Quantity of Information
Project Knowledge Base
Knowledge Base (TKB)
World-Class Benchmarking
Industry Benchmarking
Process Benchmarking
Types of
Benchmarking

Customer
and
Performance
Surveys
Maturity
Profiles
Strategic,
Financial
and Business
Objectives
CSFs
KPIs
Quality
Factors and
Strategic
Integration
Strategic
Goals and
Targets
Milestones
Budgets, and
PM BP
Library
BP Imple
mentation
and KM
Repository
Change
Management
Processes

PM
Processes
Integrated
Processes
PM Strategy
and Structure
Basis for Comparison
Strategic Issues
PM Strategic
Measurement
PM Interim
Metrics
PM
Establishment
and
Implementation
Figure 2–28. Growth of knowledge management.
Figure 2–29. PM benchmarking and knowledge management (KM).
Systems Thinking 83
of the decision maker. These principles hold true for project management as well as for
systems management.
The systems approach may be defined as a logical and disciplined process of problemsolving. The word
process indicates an active ongoing system that is fed by input from its parts.
The systems approach:
Forces review of the relationship of the various subsystems
Is a dynamic process that integrates all activities into a meaningful total system
Systematically assembles and matches the parts of the system into a unified whole
Seeks an optimal solution or strategy in solving a problem
The systems approach to problem-solving has phases of development similar to the lifecycle phases shown in Figure 2–21. These phases are defined as follows:
Translation: Terminology, problem objective, and criteria and constraints are
defined and accepted by all participants.
Analysis: All possible approaches to or alternatives to the solution of the problem
are stated.
Trade-off: Selection criteria and constraints are applied to the alternatives to meet
the objective.
Synthesis: The best solution in reaching the objective of the system is the result of
the combination of analysis and trade-off phases.
Other terms essential to the systems approach are:
Objective: The function of the system or the strategy that must be achieved.
Requirement: A partial need to satisfy the objective.
Alternative: One of the selected ways to implement and satisfy a requirement.
Selection criteria: Performance factors used in evaluating the alternatives to select
a preferable alternative.
Constraint: An absolute factor that describes conditions that the alternatives
must meet.
A common error by potential decision makers (those dissatisfied individuals with
authority to act) who base their thinking solely on subjective experience, judgment, and
intuition is that they fail to recognize the existence of alternatives. Subjective thinking is
inhibited or affected by personal bias.
Objective thinking, on the other hand, is a fundamental characteristic of the systems
approach and is exhibited or characterized by emphasis on the tendency to view events,
phenomena, and ideas as external and apart from self-consciousness. Objective thinking
is unprejudiced.
The systems analysis process, as shown in Figure 2–30, begins with systematic examination and comparison of those alternative actions that are related to the accomplishment
of the desired objective. The alternatives are then compared on the basis of the resource
costs and the associated benefits. The loop is then completed using feedback to determine
how compatible each alternative is with the objectives of the organization.

84

TRADE OFF ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
ALTERNATIVE
SYSTEM

 

REQUIREMENT
REQUIREMENT
REQUIREMENT
REQUIREMENT
O B J E C T I V E

TRANSLATION
ANALYSIS
FEEDBACK
TRADE-OFF SYNTHESIS
SELECTION CRITERIA
• PERFORMANCE
• COST/BENEFIT
• RESPONSE TIME
• POLICY
CONSTRAINTS
• LEGISLATIVE
• FINANCIAL
• TIMING
• POLICY
FIGURE 2–30. The systems approach.
The above analysis can be arranged in steps:
Input data to mental process
Analyze data
Predict outcomes
Evaluate outcomes and compare alternatives
Choose the best alternative
Take action
Measure results and compare them with predictions
The systems approach is most effective if individuals can be trained to be ready with
alternative actions that directly tie in with the prediction of outcomes. The basic tool is the
outcome array, which represents the matrix of all possible circumstances. This outcome
array can be developed only if the decision maker thinks in terms of the wide scope of possible outcomes. Outcome descriptions force the decision maker to spell out clearly just
what he is trying to achieve (i.e., his objectives).
Systems thinking is vital for the success of a project. Project management systems
urgently need new ways of strategically viewing, questioning, and analyzing project needs
for alternative nontechnical and technical solutions. The ability to analyze the total project,
rather than the individual parts, is essential for successful project management.
2.19 STUDYING TIPS FOR THE PMI® PROJECT
MANAGEMENT CERTIFICATION EXAM
This section is applicable as a review of the principles to support the knowledge areas and
domain groups in the PMBOK
® Guide. This chapter addresses:
Integration Management
Scope Management
Closure
Understanding the following principles is beneficial if the reader is using this text to
study for the PMP
® Certification Exam:
Brief historical background of project management
That, early on, project managers were assigned from engineering
Benefits of project management
Barriers to project management implementation and how to overcome them
Differences between a program and a project
What is meant by informal project management
How to identify success and failure in project management
Project life-cycle phases
What is meant by closure to a life-cycle phase or to the entire project
Studying Tips for the PMI® Project Management Certification Exam 85
What is meant by a project management methodology
What is meant by critical success factors (CSFs) and key performance indicators
(KPIs)
In Appendix C, the following Dorale Products mini–case studies are applicable:
Dorale Products (A) [Integration and Scope Management]
Dorale Products (B) [Integration and Scope Management]
Dorale Products (C) [Integration and Scope Management]
Dorale Products (D) [Integration and Scope Management]
Dorale Products (E) [Integration and Scope Management]
Dorale Products (F) [Integration and Scope Management]
The following multiple-choice questions will be helpful in reviewing the principles of
this chapter:
1. A structured process for managing a multitude of projects is most commonly referred
to as:
A. Project management policies
B. Project management guidelines
C. Industrywide templates
D. A project management methodology
2. The most common terminology for a reusable project management methodology is:
A. Template
B. Concurrent scheduling technique
C. Concurrent planning technique
D. Skeleton framework document
3. The major behavioral issue in getting an organization to accept and use a project management methodology effectively is:
A. Lack of executive sponsorship
B. Multiple boss reporting
C. Inadequate policies and procedures
D. Limited project management applications
4. The major difference between a project and a program is usually:
A. The role of the sponsor
B. The role of the line manager
C. The timeframe
D. The specifications
5. Projects that remain almost entirely within one functional area are best managed by the:
A. Project manager
B. Project sponsor
C. Functional manager
D. Assigned functional employees
6. Large projects are managed by:
A. The executive sponsor
B. The project or program office for that project
86 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
C. The manager of project managers
D. The director of marketing
7. The most common threshold limits on when to use the project management methodology are:
A. The importance of the customer and potential profitability
B. The size of the project (i.e., $) and duration
C. The reporting requirements and position of the sponsor
D. The desires of management and functional boundaries crossed
8. A grouping of projects is called a:
A. Program
B. Project template
C. Business template
D. Business plan
9. Project management methodologies often work best if they are structured around:
A. Rigid policies
B. Rigid procedures
C. Minimal forms and checklists
D. Life-cycle phases
10. One way to validate the successful implementation of project management is by looking at
the number and magnitude of the conflicts requiring:
A. Executive involvement
B. Customer involvement
C. Line management involvement
D. Project manager involvement
11. Standardization and control are benefits usually attributed to:
A. Laissez-faire management
B. Project management on R&D efforts
C. Use of life cycle-phases
D. An organization with weak executive sponsorship
12. The most difficult decision for an executive sponsor to make at the end-of-phase review
meeting is to:
A. Allow the project to proceed to the next phase based upon the original objective
B. Allow the project to proceed to the next phase based upon a revised objective
C. Postpone making a decision until more information is processed
D. Cancel the project
13. Having too many life-cycle phases may be detrimental because:
A. Executive sponsors will micromanage.
B. Executive sponsors will become “invisible.”
C. The project manager will spend too much time planning for gate review meetings rather
than managing the phases.
D. The project manager will need to develop many different plans for each phase.
14. A project is terminated early because the technology cannot be developed, and the
resources are applied to another project that ends up being successful. Which of the following is true concerning the first project?
A. The first project is regarded as a failure.
B. The first project is a success if the termination is done early enough before additional
resources are squandered.
Studying Tips for the PMI® Project Management Certification Exam 87
C. The first project is a success if the project manager gets promoted.
D. The first project is a failure if the project manager gets reassigned to a less important
project.
15. Which of the following would not be regarded as a secondary definition of project success?
A. The customer is unhappy with the deliverable, but follow-on business is awarded based
on effective customer relations.
B. The deliverables are met but OSHA and EPA laws are violated.
C. The customer is displeased with the performance, but you have developed a new technology that could generate many new products.
D. The project’s costs were overrun by 40 percent, but the customer funds an enhancement
project.
ANSWERS
1. D
2. A
3. B
4. C
5. C
6. B
7. B
8. A
9. D
10. A
11. C
12. D
13. C
14. B
15. B
PROBLEMS
2–1 Can the organizational chart of a company be considered as a systems model? If so, what
kind of systems model?
2–2 Do you think that someone could be a good systems manager but a poor project manager? What about the reverse situation? State any assumptions that you may have to make.
2–3 Can we consider R&D as a system? If so, under what circumstances?
2–4 For each of the following projects, state whether we are discussing an open, closed, or
extended system:
a. A high-technology project
b. New product R&D
88 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS
c. An on-line computer system for a bank
d. Construction of a chemical plant
e. Developing an in-house cost accounting reporting system
2–5 Can an entire organization be considered as a model? If so, what type?
2–6 Systems can be defined as a combination or interrelationship of subsystems. Does a
project have subsystems?
2–7 If a system can, in fact, be broken down into subsystems, what problems can occur during integration?
2–8 How could suboptimization occur during systems thinking and analysis?
2–9 Would a cost-benefit analysis be easier or harder to perform in a traditional or project
management organizational structure?
2–10 What impact could the product life cycle have on the selection of the project organizational structure?
2–11 In the development of a system, what criteria should be used to determine where one
phase begins and another ends and where overlap can occur?
2–12 Consider the following expression: “Damn the torpedoes: full-speed ahead.” Is it possible that this military philosophy can be applied to project management and lead to project
success?
Problems 89

Organizational Structures
91

Related Case Studies
(from Kerzner/
Project
Management Case Studies,
3rd Edition)
Related Workbook Exercises (from
Kerzner/
Project Management
Workbook and PMP
®/CAPM® Exam
Study Guide,
10th Edition)
PMBOK® Guide, 4th
Edition, Reference
Section for the PMP
®
Certification Exam
• Quasar
Communications, Inc.
• Jones and Shephard
Accountants, Inc.*
• Fargo Foods
• Mohawk National Bank
• The Struggle with
Implementation
• Multiple Choice Exam
• Human Resource
Management

3.0 INTRODUCTION
During the past thirty years there has been a so-called hidden revolution
in the introduction and development of new organizational structures.
Management has come to realize that organizations must be dynamic in
nature; that is, they must be capable of rapid restructuring should environmental conditions so dictate. These environmental factors evolved
* Case Study also appears at end of chapter.
PMBOK® Guide, 4th Edition
2.4.2 Organizational Structure
Chapter 9 Human Resource
Management
3
from the increasing competitiveness of the market, changes in technology, and a requirement for better
control of resources for multiproduct firms. More than forty years ago, Wallace identified four major
factors that caused the onset of the organizational revolution
1:
The technology revolution (complexity and variety of products, new materials and processes, and
the effects of massive research)
Competition and the profit squeeze (saturated markets, inflation of wage and material costs, and
production efficiency)
The high cost of marketing
The unpredictability of consumer demands (due to high income, wide range of choices available,
and shifting tastes)
Much has been written about how to identify and interpret those signs that indicate that a new organizational form may be necessary. According to Grinnell and Apple, there are five general indications that
the traditional structure may not be adequate for managing projects
2:
Management is satisfied with its technical skills, but projects are not meeting time, cost, and other
project requirements.
There is a high commitment to getting project work done, but great fluctuations in how well performance specifications are met.
Highly talented specialists involved in the project feel exploited and misused.
Particular technical groups or individuals constantly blame each other for failure to meet specifications or delivery dates.
Projects are on time and to specifications, but groups and individuals aren’t satisfied with the
achievement.
Unfortunately, many companies do not realize the necessity for organizational change until it is too
late. Management looks externally (i.e., to the environment) rather than internally for solutions to problems.
A typical example would be that new product costs are rising while the product life cycle may be decreasing. Should emphasis be placed on lowering costs or developing new products?
If we assume that an organizational system is composed of both human and nonhuman resources, then
we must analyze the sociotechnical subsystem whenever organizational changes are being considered. The
social system is represented by the organization’s personnel and their group behavior. The technical system includes the technology, materials, and machines necessary to perform the required tasks.
Behavioralists contend that there is no one best structure to meet the challenges of tomorrow’s organizations. The structure used, however, must be one that optimizes company performance by achieving a
balance between the social and the technical requirements. According to Sadler
3:
Since the relative influence of these (sociotechnical) factors change from situation to situation, there can be
no such thing as an ideal structure making for effectiveness in organizations of all kinds, or even appropriate
to a single type of organization at different stages in its development.
92 ORGANIZATIONAL STRUCTURES
1. W. L. Wallace, “The Winchester-Western Division Concept of Product Planning” (New Haven: Olin Mathieson Corporation,
January 1963), pp. 2–3.
2. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,”
Machine Design, January 1975, pp. 84–87.
3. Philip Sadler, “Designing an Organizational Structure,”
Management International Review, Vol. 11, No. 6, 1971, pp. 19–33.
There are often real and important conflicts between the type of organizational structure called for if the tasks
are to be achieved with minimum cost, and the structure that will be required if human beings are to have their
needs satisfied. Considerable management judgment is called for when decisions are made as to the allocation of
work activities to individuals and groups. High standardization of performance, high manpower utilization and
other economic advantages associated with a high level of specialization and routinization of work have to be
balanced against the possible effects of extreme specialization in lowering employee attitudes and motivation.
Organizations can be defined as groups of people who must coordinate their activities in order to meet
organizational objectives. The coordination function requires strong communications and a clear understanding of the relationships and interdependencies among people. Organizational structures are dictated
by such factors as technology and its rate of change, complexity, resource availability, products and/or services, competition, and decision-making requirements. The reader must keep in mind that
there is no such
thing as a good or bad organizational structure; there are only appropriate or inappropriate ones
.
Even the simplest type of organizational change can induce major conflicts. The creation of a new position, the need for better planning, the lengthening or shortening of the span of control, the need for additional
technology (knowledge), and centralization or decentralization can result in major changes in the sociotechnical subsystem. Argyris has defined five conditions that form the basis for organizational change requirements
4:
These requirements . . . depend upon (1) continuous and open access between individuals and groups,
(2) free, reliable communication, where (3) independence is the foundation for individual and departmental
cohesiveness and (4) trust, risk-taking and helping each other is prevalent so that (5) conflict is identified and
managed in such a way that the destructive win-lose stances with their accompanying polarization of views
are minimized. . . . Unfortunately these conditions are difficult to create. . . . There is a tendency toward conformity, mistrust and lack of risk-taking among the peers that results in focusing upon individual survival,
requiring the seeking out of the scarce rewards, identifying one’s self with a successful venture (be a hero)
and being careful to avoid being blamed for or identified with a failure, thereby becoming a “bum.” All these
adaptive behaviors tend to induce low interpersonal competence and can lead the organization, over the longrun, to become rigid, sticky, and less innovative, resulting in less than effective decisions with even less internal commitment to the decision on the part of those involved.
Organizational restructuring is a compromise between the traditional (classical) and the behavioral
schools of thought; management must consider the needs of individuals as well as the needs of the company. Is the organization structured to manage people or to manage work?
There is a wide variety of organizational forms for restructuring management. The exact method
depends on the people in the organization, the company’s product lines, and management’s philosophy.
A poorly restructured organization can sever communication channels that may have taken months or years
to cultivate; cause a restructuring of the informal organization, thus creating new power, status, and political positions; and eliminate job satisfaction and motivational factors to such a degree that complete discontent results.
Sadler defines three tasks that must be considered because of the varied nature of organizations: control,
integration, and external relationships.
5 If the company’s position is very sensitive to the environment, then
management may be most concerned with the control task. For an organization with multiple products, each
requiring a high degree of engineering and technology, the integration task can become primary. Finally, for
Introduction 93
4. Chris Argyris, “Today’s Problems with Tomorrow’s Organizations,” The Journal of Management Studies, February 1967,
pp. 31–55.
5. See note 3.

situations with strong labor unions and repetitive tasks, external relations can predominate, especially in
strong technological and scientific environments where strict government regulations must be adhered to.
In the sections that follow, a variety of organizational forms will be presented. Obviously, it is an
impossible task to describe all possible organizational structures. Each form describes how the project management organization evolved from the classical theories of management. Advantages and disadvantages
are listed for technology and social systems. Sadler has prepared a six-question checklist that explores a
company’s tasks, social climate, and relationship to the environment.
6
To what extent does the task of organization call for close control if it is to be performed efficiently?
What are the needs and attitudes of the people performing the tasks? What are the likely effects of
control mechanisms on their motivation and performance?
What are the natural social groupings with which people identify themselves? To what extent are
satisfying social relationships important in relation to motivation and performance?
What aspect of the organization’s activities needs to be closely integrated if the overall task is to
be achieved?
What organizational measures can be developed that will provide an appropriate measure of control and integration of work activities, while at the same time meeting the needs of people and providing adequate motivation?
What environmental changes are likely to affect the future trend of company operations? What
organizational measures can be taken to insure that the enterprise responds to these effectively?
The answers to these questions are not easy. For the most part, they are a matter of the judgment exercised
by organizational and behavioral managers.
3.1 ORGANIZATIONAL WORK FLOW
Organizations are continually restructured to meet the demands imposed by the environment. Restructuring can change the role of individuals in the formal and the informal organization. Many researchers believe that the greatest usefulness of behavioralists lies in
their ability to help the informal organization adapt to changes and resolve the resulting
conflicts. Unfortunately, behavioralists cannot be totally effective unless they have input
into the formal organization as well. Whatever organizational form is finally selected, formal channels must be developed so that each individual has a clear description of the
authority, responsibility, and accountability necessary for the work to proceed.
In the discussion of organizational structures, the following definitions will be used:
Authority is the power granted to individuals (possibly by their position) so that
they can make final decisions.
Responsibility is the obligation incurred by individuals in their roles in the formal
organization to effectively perform assignments.
94 ORGANIZATIONAL STRUCTURES
6. See note 3.
Accountability is being answerable for the satisfactory completion of a specific
assignment. (Accountability
 authority responsibility.)
Authority and responsibility can be delegated to lower levels in the organization,
whereas accountability usually rests with the individual. Yet many executives refuse to delegate and argue that an individual can have total accountability just through responsibility.
Even with these clearly definable divisions of authority, responsibility, and accountability, establishing good relationships between project and functional managers can take
a great deal of time, especially during the conversion from a traditional to a project organizational form. Trust is the key to success here. The normal progression in the growth of
trust is as follows:
Even though a problem exists, both the project and functional managers deny that
any problem exists.
When the problem finally surfaces, each manager blames the other.
As trust develops, both managers readily admit responsibility for the problems.
The project and functional managers meet face-to-face to work out the problem.
The project and functional managers begin to formally and informally anticipate
problems.
For each of the organizational structures described in the following sections, advantages and disadvantages are listed. Many of the disadvantages stem from possible conflicts
arising from problems in authority, responsibility, and accountability.
3.2 TRADITIONAL (CLASSICAL) ORGANIZATION
The traditional management structure has survived for more than two centuries. However,
recent business developments, such as the rapid rate of change in technology and increased
stockholder demands, have created strains on existing organizational forms. Fifty years
ago companies could survive with only one or two product lines. The classical management organization, as shown in Figure 3–1, was satisfactory for control, and conflicts were
minimal.
7
However, with the passing of time, companies found that survival depended on multiple product lines (i.e., diversification) and vigorous integration of technology into the
existing organization. As organizations grew and matured, managers found that company
activities were not being integrated effectively, and that new conflicts were arising in the
well-established formal and informal channels. Managers began searching for more innovative organizational forms that would alleviate these problems.
Traditional (Classical) Organization 95
7. Many authors refer to classical organizations as pure functional organizations. This can be seen from Figure
3–1. Also note that the department level is below the division level. In some organizations these titles are
reversed.

Before a valid comparison can be made with the newer forms, the advantages and disadvantages of the traditional structure must be shown. Table 3–1 lists the advantages of the
traditional organization. As seen in Figure 3–1, the general manager has all of the functional entities necessary to perform R&D or develop and manufacture a product. All activities are performed within the functional groups and are headed by a department (or, in
some cases, a division) head. Each department maintains a strong concentration of technical expertise. Since all projects must flow through the functional departments, each
project can benefit from the most advanced technology, thus making this organizational
form well suited to mass production. Functional managers can hire a wide variety of specialists and provide them with easily definable paths for career progression.
96 ORGANIZATIONAL STRUCTURES
EXECUTIVE
OFFICE
DIVISION
DEPARTMENT
SECTION

FUNCTIO
ENGINEERING OPERATIONS FINANCIAL
ADMIN
ISTRATION
MARKETING
NA ON Y
L RESP SIBILIT

FIGURE 3–1. The traditional management structure.
TABLE 3–1. ADVANTAGES OF THE TRADITIONAL (CLASSICAL) ORGANIZATION
Easier budgeting and cost control are possible.
Better technical control is possible.
Specialists can be grouped to share knowledge and responsibility.
Personnel can be used on many different projects.
All projects will benefit from the most advanced technology (better utilization of scarce personnel).
Flexibility in the use of manpower.
A broad manpower base to work with.
Continuity in the functional disciplines; policies, procedures, and lines of responsibility are easily defined
and understandable.
Admits mass production activities within established specifications.
Good control over personnel, since each employee has one and only one person to report to.
Communication channels are vertical and well established.
Quick reaction capability exists, but may be dependent upon the priorities of the functional managers.
The functional managers maintain absolute control over the budget. They establish their
own budgets, on approval from above, and specify requirements for additional personnel.
Because the functional manager has manpower flexibility and a broad base from which to
work, most projects are normally completed within cost.
Both the formal and informal organizations are well established, and levels of authority
and responsibility are clearly defined. Because each person reports to only one individual,
communication channels are well structured. If a structure has this many advantages, then
why are we looking for other structures?
For each advantage, there is almost always a corresponding disadvantage (see Table
3–2). The majority of these disadvantages are related to the absence of a strong central
authority or individual responsible for the total project. As a result, integration of activities that cross functional lines becomes difficult, and top-level executives must get
involved with the daily routine. Conflicts occur as each functional group struggles for
power. Ideas may remain functionally oriented with very little regard for ongoing projects,
and the decision-making process will be slow and tedious.
Because there is no customer focal point, all communications must be channeled
through upper-level management. Upper-level managers then act in a customer-relations
capacity and refer all complex problems down through the vertical chain of command to
the functional managers. The response to the customer’s needs therefore becomes a slow
and aggravating process.
Projects have a tendency to fall behind schedule in the classical organizational structure. Incredibly large lead times are required. Functional managers attend to those tasks
that provide better benefits to themselves and their subordinates first.
With the growth of project management in the late 1960s, executives began to realize
that many of the problems were the result of weaknesses in the traditional structure.
William Goggin identified the problems that faced Dow Corning
8:
Although Dow Corning was a healthy corporation in 1967, it showed difficulties that troubled many of us in top management. These symptoms were, and still are, common ones in
Traditional (Classical) Organization 97
TABLE 3–2. DISADVANTAGES OF THE TRADITIONAL (CLASSICAL) ORGANIZATION
No one individual is directly responsible for the total project (i.e., no formal authority; committee
solutions).
Does not provide the project-oriented emphasis necessary to accomplish the project tasks.
Coordination becomes complex, and additional lead time is required for approval of decisions.
Decisions normally favor the strongest functional groups.
No customer focal point.
Response to customer needs is slow.
Difficulty in pinpointing responsibility; this is the result of little or no direct project reporting, very little
project-oriented planning, and no project authority.
Motivation and innovation are decreased.
Ideas tend to be functionally oriented with little regard for ongoing projects.
8. Reprinted by permission of
Harvard Business Review. From William C. Goggin, “How the Multidimensional
Structure Works at Dow Corning,”
Harvard Business Review, January–February 1974, p. 54. Copyright © 1973
by the Harvard Business School Publishing Corporation; all rights reserved.

U.S. business and have been described countless times in reports, audits, articles and
speeches. Our symptoms took such form as:
Executives did not have adequate financial information and control of their operations.
Marketing managers, for example, did not know how much it cost to produce a product. Prices and margins were set by division managers.
Cumbersome communications channels existed between key functions, especially
manufacturing and marketing.
In the face of stiffening competition, the corporation remained too internalized in its
thinking and organizational structure. It was insufficiently oriented to the outside
world.
Lack of communications between divisions not only created the antithesis of a corporate team effort but also was wasteful of a precious resource—people.
Long-range corporate planning was sporadic and superficial; this was leading to overstaffing, duplicated effort and inefficiency.
3.3 DEVELOPING WORK INTEGRATION POSITIONS
As companies grew in size, more emphasis was placed on multiple ongoing programs with
high-technology requirements. Organizational pitfalls soon appeared, especially in the
integration of the flow of work. As management discovered that the critical point in any
program is the interface between functional units, the new theories of “interface management” developed.
Because of the interfacing problems, management began searching for innovative
methods to coordinate the flow of work between functional units without modification to
the existing organizational structure. This coordination was achieved through several integrating mechanisms
9:
Rules and procedures
Planning processes
Hierarchical referral
Direct contact
By specifying and documenting management policies and procedures, management
attempted to eliminate conflicts between functional departments. Management felt that,
even though many of the projects were different, the actions required by the functional personnel were repetitive and predictable. The behavior of the individuals should therefore be
easily integrated into the flow of work with minimum communication between individuals
or functional groups.
98 ORGANIZATIONAL STRUCTURES
9. Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons,
February 1971, pp. 29–40. Copyright © 1971 by the Board of Trustees at Indiana University. Galbraith defines a
fifth mechanism, liaison departments, that will be discussed later in this section.

Another means of reducing conflicts and minimizing the need for communication was
detailed planning. Functional representation would be present at all planning, scheduling,
and budget meetings. This method worked best for nonrepetitive tasks and projects.
In the traditional organization, one of the most important responsibilities of upperlevel management was the resolution of conflicts through “hierarchical referral.” The continuous conflicts and struggle for power between the functional units consistently required
that upper-level personnel resolve those problems resulting from situations that were either
nonroutine or unpredictable and for which no policies or procedures existed.
The fourth method is direct contact and interactions by the functional managers. The
rules and procedures, as well as the planning process method, were designed to minimize
ongoing communications between functional groups. The quantity of conflicts that executives had to resolve forced key personnel to spend a great percentage of their time as arbitrators, rather than as managers. To alleviate problems of hierarchical referral, upper-level
management requested that all conflicts be resolved at the lowest possible levels. This
required that functional managers meet face-to-face to resolve conflicts.
In many organizations, these new methods proved ineffective, primarily because there
still existed a need for a focal point for the project to ensure that all activities would be
properly integrated.
When the need for project managers was acknowledged, the next logical question was
where in the organization to place them. Executives preferred to keep project managers
low in the organization. After all, if they reported to someone high up, they would have to
be paid more and would pose a continuous threat to management.
The first attempt to resolve this problem was to develop project leaders or coordinators within each functional department, as shown in Figure 3–2. Section-level personnel
were temporarily assigned as project leaders and would return to their former positions at
project termination. This is why the term “project leader” is used rather than “project manager,” as the word “manager” implies a permanent relationship. This arrangement proved
effective for coordinating and integrating work within one department, provided that the
correct project leader was selected. Some employees considered this position an increase
in power and status, and conflicts occurred about whether assignments should be based on
experience, seniority, or capability. Furthermore, the project leaders had almost no authority, and section-level managers refused to take directions from them, fearing that the
project leaders might be next in line for the department manager’s position.
When the activities required efforts that crossed more than one functional boundary, conflicts arose. The project leader in one department did not have the authority to coordinate activities in any other department. Furthermore, the creation of this new position caused internal
conflicts within each department. As a result, many employees refused to become dedicated to
project management and were anxious to return to their “secure” jobs. Quite often, especially
when cross-functional integration was required, the division manager was forced to act as the
project manager. If the employee enjoyed the assignment of project leader, he would try to
“stretch out” the project as long as possible.
Even though we have criticized this organizational form, it does not mean that it cannot work. Any organizational form will work if the employees want it to work. As an
example, a computer manufacturer has a midwestern division with three departments, as
in Figure 3–2, and approximately fourteen people per department. When a project comes
Developing Work Integration Positions 99
in, the division manager determines which department will handle most of the work. Let
us say that the work load is 60 percent department X, 30 percent department Y, and 10 percent department Z. Since most of the effort is in department X, the project leader is
selected from that department. When the project leader goes into the other two departments to get resources, he will almost always get the resources he wants. This organizational form works in this case because:
The other department managers know that they may have to supply the project
leader on the next activity.
There are only three functional boundaries or departments involved (i.e., a small
organization).
The next step in the evolution of project management was the task force concept. The
rationale behind the task force concept was that integration could be achieved if each functional unit placed a representative on the task force. The group could then jointly solve
problems as they occurred, provided that budget limitations were still adhered to.
Theoretically, decisions could now be made at the lowest possible levels, thus expediting
information and reducing, or even eliminating, delay time.
The task force was composed of both part-time and full-time personnel from each
department involved. Daily meetings were held to review activities and discuss potential
problems. Functional managers soon found that their task force employees were spending
100 ORGANIZATIONAL STRUCTURES
DIVISION MANAGER
DEPARTMENT X DEPARTMENT Y DEPARTMENT Z
PROJECT LEADERS PROJECT LEADERS PROJECT LEADERS
SECTION LEVEL SECTION LEVEL SECTION LEVEL
FIGURE 3–2. Departmental project management.
more time in unproductive meetings than in performing functional activities. In addition,
the nature of the task force position caused many individuals to shift membership within the
informal organization. Many functional managers then placed nonqualified and inexperienced individuals on task forces. The result was that the group soon became ineffective
because they either did not have the information necessary to make the decisions, or lacked
the authority (delegated by the functional managers) to allocate resources and assign work.
Development of the task force concept was a giant step toward conflict resolution:
Work was being accomplished on time, schedules were being maintained, and costs were
usually within budget. But integration and coordination were still problems because there
were no specified authority relationships or individuals to oversee the entire project
through completion. Attempts were made to overcome this by placing various people in
charge of the task force: Functional managers, division heads, and even upper-level management had opportunities to direct task forces. However, without formal project authority relationships, task force members remained loyal to their functional organizations, and
when conflicts came about between the project and functional organization, the project
always suffered.
Although the task force concept was a step in the right direction, the disadvantages
strongly outweighed the advantages. A strength of the approach was that it could be established very rapidly and with very little paperwork. Integration, however, was complicated;
work flow was difficult to control; and functional support was difficult to obtain because
it was almost always strictly controlled by the functional manager. In addition, task forces
were found to be grossly ineffective on long-range projects.
The next step in the evolution of work integration was the establishment of liaison
departments, particularly in engineering divisions that perform multiple projects involving
a high level of technology (see Figure 3–3). The purpose of the liaison department was to
Developing Work Integration Positions 101

LIAISON DEPT ELECTRONICS STRUCTURES R&D
ENGINEERING
DIVISION

THERMODYNAMICS

LEGEND
FORMAL AUTHORITY FLOW
INFORMAL/REPORTING
AUTHORITY FLOW

FIGURE 3–3. Engineering division with liaison department (The Expeditor).
handle transactions between functional units within the (engineering) division. The liaison
personnel received their authority through the division head. The liaison department did
not actually resolve conflicts. Their prime function was to assure that all departments
worked toward the same requirements and goals. Liaison departments are still in existence
in many large companies and typically handle engineering changes and design problems.
Unfortunately, the liaison department is simply a scaleup of the project coordinator
within the department. The authority given to the liaison department extends only to the
outer boundaries of the division. If a conflict arose between the manufacturing and engineering divisions, for example, it would still be referred to upper management for resolution. Today, liaison departments are synonymous with project engineering and systems
engineering departments, and the individuals in these departments have the authority to
span the entire organization.
3.4 LINE–STAFF ORGANIZATION
(PROJECT COORDINATOR)
It soon became obvious that control of a project must be given to personnel whose first
loyalty is directed toward the completion of the project. Thus the project management
position must not be controlled by the functional managers. Figure 3–4 shows a typical
line–staff organization.
Two possible situations can exist with this form of line–staff project control. In the
first, the project manager serves only as the focal point for activity control, that is, a center for information. The prime responsibility of the project manager is to keep the division
manager informed of the status of the project and to “harass” or attempt to “influence”
managers into completing activities on time. Referring to such early project managers,
Galbraith stated, “Since these men had no formal authority, they had to resort to their technical competence and their interpersonal skills in order to be effective.”
10
The project manager in the first situation maintained monitoring authority only, despite
the fact that both he and the functional manager reported to the same individual. Both work
assignments and merit reviews were made by the functional managers. Department managers
refused to take direction from the project managers because to do so would seem an admission that the project manager was next in line to be the division manager.
The amount of authority given to the project manager posed serious problems. Almost
all upper-level and division managers were from the classical management schools and
therefore maintained serious reservations about how much authority to relinquish. Many
of these managers considered it a demotion if they had to give up any of their longestablished powers.
In the second situation, the project manager is given more authority; using the authority vested in him by the division manager, he can assign work to individuals in the functional organizations. The functional manager, however, still maintains the authority to
102 ORGANIZATIONAL STRUCTURES
10. Jay R. Galbraith, “Matrix Organization Designs.” Business Horizons, February 1971, pp. 29–40.
perform merit reviews, but cannot enforce both professional and organizational standards
in the completion of an activity. The individual performing the work is now caught in a
web of authority relationships, and additional conflicts develop because functional managers are forced to share their authority with the project manager.
Although this second situation did occur during the early stages of matrix project
management, it did not last because:
Upper-level management was not ready to cope with the problems arising from
shared authority.
Upper-level management was reluctant to relinquish any of its power and authority to project managers.
Line–staff project managers who reported to a division head did not have any
authority or control over those portions of a project in other divisions; that is, the
project manager in the engineering division could not direct activities in the manufacturing division.
3.5 PURE PRODUCT (PROJECTIZED) ORGANIZATION
The pure product organization, as shown in Figure 3–5, develops as a division within a
division. As long as there exists a continuous flow of projects, work is stable and conflicts
are at a minimum. The major advantage of this organizational flow is that one individual,
the program manager, maintains complete line authority over the entire project. Not only
does he assign work, but he also conducts merit reviews. Because each individual reports
Pure Product (Projectized) Organization 103

LEGEND
FORMAL AUTHORITY
FORMAL OR INFORMAL
AUTHORITY OR
INFORMATION FLOW

DIVISION MANAGER
PROJECT
MANAGER
DEPARTMENT
MANAGER
DEPARTMENT
MANAGER
FIGURE 3–4. Line–staff organization (Project Coordinator).
to only one person, strong communication channels develop that result in a very rapid
reaction time.
In pure product organizations, long lead times became a thing of the past. Trade-off
studies could be conducted as fast as time would permit without the need to look at the
impact on other projects (unless, of course, identical facilities or equipment were
required). Functional managers were able to maintain qualified staffs for new product
development without sharing personnel with other programs and projects.
The responsibilities attributed to the project manager were entirely new. First, his
authority was now granted by the vice president and general manager. The program manager handled all conflicts, both those within his organization and those involving other projects. Interface management was conducted at the program manager level. Upper-level
management was now able to spend more time on executive decision-making than on conflict arbitration.
The major disadvantage with the pure project form is the cost of maintaining the organization. There is no chance for sharing an individual with another project in order to
reduce costs. Personnel are usually attached to these projects long after they are needed
because once an employee is given up, the project manager might not be able to get him
back. Motivating personnel becomes a problem. At project completion, functional personnel do not “have a home” to return to. Many organizations place these individuals into an
overhead labor pool from which selection can be made during new project development.
People remaining in the labor pool may be laid off. As each project comes to a close,
104 ORGANIZATIONAL STRUCTURES

GENERAL MANAGER
PROD
MANA
UCT A
GER
PROD
MANA
UCT B
GER
PROD
MANA
UCT C
GER
ENG. MANU. ENG. MANU. ENG. MANU.

FIGURE 3–5. Pure product or projectized structure.
people become uneasy and often strive to prove their worth to the company by overachieving, a condition that is only temporary. It is very difficult for management to convince key functional personnel that they do, in fact, have career opportunities in this type
of organization.
In pure functional (traditional) structures, technologies are well developed, but project
schedules often fall behind. In the pure project structure, the fast reaction time keeps activities on schedule, but technology suffers because without strong functional groups, which
maintain interactive technical communication, the company’s outlook for meeting the
competition may be severely hampered. The engineering department for one project might
not communicate with its counterpart on other projects, resulting in duplication of efforts.
The last major disadvantage of this organizational form lies in the control of facilities
and equipment. The most frequent conflict occurs when two projects require use of the
same piece of equipment or facilities at the same time. Upper-level management must then
assign priorities to these projects. This is normally accomplished by defining certain
projects as strategic, tactical, or operational—the same definitions usually given to plans.
Tables 3–3 and 3–4 summarize the advantages and disadvantages of this organizational form.
Pure Product (Projectized) Organization 105
TABLE 3–3. ADVANTAGES OF THE PRODUCT ORGANIZATIONAL FORM
Provides complete line authority over the project (i.e., strong control through a single project authority).
Participants work directly for the project manager. Unprofitable product lines are easily identified and can
be eliminated.
Strong communications channels.
Staffs can maintain expertise on a given project without sharing key personnel.
Very rapid reaction time is provided.
Personnel demonstrate loyalty to the project; better morale with product identification.
A focal point develops for out-of-company customer relations.
Flexibility in determining time (schedule), cost, and performance trade-offs.
Interface management becomes easier as unit size is decreased.
Upper-level management maintains more free time for executive decision-making.
TABLE 3–4. DISADVANTAGES OF THE PRODUCT ORGANIZATIONAL FORM
Cost of maintaining this form in a multiproduct company would be prohibitive due to duplication of effort,
facilities, and personnel; inefficient usage.
A tendency to retain personnel on a project long after they are needed. Upper-level management must
balance workloads as projects start up and are phased out.
Technology suffers because, without strong functional groups, outlook of the future to improve company’s
capabilities for new programs would be hampered (i.e., no perpetuation of technology).
Control of functional (i.e., organizational) specialists requires top-level coordination.
Lack of opportunities for technical interchange between projects.
Lack of career continuity and opportunities for project personnel.
3.6 MATRIX ORGANIZATIONAL FORM
The matrix organizational form is an attempt to combine the advantages
of the pure functional structure and the product organizational structure.
This form is ideally suited for companies, such as construction, that are
“project-driven.” Figure 3–6 shows a typical matrix structure. Each project manager reports directly to the vice president and general manager. Since each project
represents a potential profit center, the power and authority used by the project manager
come directly from the general manager. The project manager has total responsibility and
accountability for project success. The functional departments, on the other hand, have
functional responsibility to maintain technical excellence on the project. Each functional
unit is headed by a department manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for
each project. Department managers must also keep their people aware of the latest technical accomplishments in the industry.
Project management is a “coordinative” function, whereas matrix management is a collaborative function division of project management. In the coordinative or project organization,
work is generally assigned to specific people or units who “do their own thing.” In the collaborative or matrix organization, information sharing may be mandatory, and several people may
be required for the same piece of work. In a project organization, authority for decisionmaking and direction rests with the project leader, whereas in a matrix it rests with the team.
Certain ground rules exist for matrix development:
Participants must spend full time on the project; this ensures a degree of loyalty.
Horizontal as well as vertical channels must exist for making commitments.
There must be quick and effective methods for conflict resolution.
106 ORGANIZATIONAL STRUCTURES
GENERAL MANAGER
ENGINEERING OPERATIONS FINANCIAL OTHERS
PROJECT MGR.
X
PROJECT MGR.
Y
PROJECT MGR.
Z
PROJECT RESPONSIBILITY
FUNCTIONAL RESPONSIBILITY
FIGURE 3–6. Typical matrix structure.
PMBOK® Guide, 4th Edition
Matrix Organizational Structures
Figures 2–8, 2–9, 2–10

There must be good communication channels and free access between managers.
All managers must have input into the planning process.
Both horizontally and vertically oriented managers must be willing to negotiate for
resources.
The horizontal line must be permitted to operate as a separate entity except for
administrative purposes.
Before describing the advantages and disadvantages of this structure, the organization
concepts must be introduced. The basis for the matrix approach is an attempt to create synergism through shared responsibility between project and functional management. Yet this
is easier said than done.
No two working environments are the same, and, therefore, no two
companies will have the same matrix design.
The following questions must be answered
before a matrix structure can be successful:
If each functional unit is responsible for one aspect of a project, and other parts are
conducted elsewhere (possibly subcontracted to other companies), how can a synergistic environment be created?
Who decides which element of a project is most important?
How can a functional unit (operating in a vertical structure) answer questions and
achieve project goals and objectives that are compatible with other projects?
The answers to these questions depend on mutual understanding between the project
and functional managers. Since both individuals maintain some degree of authority,
responsibility, and accountability on each project, they must continuously negotiate.
Unfortunately, the program manager might only consider what is best for his project (disregarding all others), whereas the functional manager might consider his organization
more important than each project.
In order to get the job done, project managers need organizational status and authority.
A corporate executive contends that the organization chart shown in Figure 3–6 can be modified to show that the project managers have adequate organizational authority by placing the
department manager boxes at the tip of the functional responsibility arrowheads. With this
approach, the project managers appear to be higher in the organization than their departmental
counterparts but are actually equal in status. Executives who prefer this method must exercise
caution because the line and project managers may not feel that there is still a balance of power.
Problem-solving in this environment is fragmented and diffused. The project manager
acts as a unifying agent for project control of resources and technology. He must maintain
open channels of communication to prevent suboptimization of individual projects.
In many situations, functional managers have the power to make a project manager
look good, if they can be motivated to think about what is best for the project.
Unfortunately, this is not always accomplished. As stated by Mantell
11:
There exists an inevitable tendency for hierarchically arrayed units to seek solutions and
to identify problems in terms of scope of duties of particular units rather than looking
Matrix Organizational Form 107
11. Leroy H. Mantell, “The Systems Approach and Good Management.” Reprinted with permission from
Business Horizons, October 1972 (p. 50). Copyright © 1972 by the Board of Trustees at Indiana University.
beyond them. This phenomenon exists without regard for the competence of the executive
concerned. It comes about because of authority delegation and functionalism.
The project environment and functional environment cannot be separated; they must
interact. The location of the project and functional unit interface is the focal point for all
activities.
The functional manager controls departmental resources (i.e., people). This poses a
problem because, although the project manager maintains the maximum control (through
the line managers) over all resources including cost and personnel, the functional manager
must provide staff for the project’s requirements. It is therefore inevitable that conflicts
occur between functional and project managers
12:
These conflicts revolve about items such as project priority, manpower costs, and the assignment of functional personnel to the project manager. Each project manager will, of course,
want the best functional operators assigned to his program. In addition to these problems, the
accountability for profit and loss is much more difficult in a matrix organization than in a
project organization. Project managers have a tendency to blame overruns on functional managers, stating that the cost of the function was excessive. Whereas functional managers have
a tendency to blame excessive costs on project managers with the argument that there were
too many changes, more work required than defined initially and other such arguments.
The individual placed at the interface position has two bosses: He must take direction
from both the project manager and the functional manager. The merit review and hiring and
firing responsibilities still rest with the department manager. Merit reviews are normally
made by the functional manager after discussions with the program manager. The functional manager may not have the time to measure the progress of this individual continuously. He must rely on the word of the program manager for merit review and promotion.
The interface members generally give loyalty to the person signing their merit review. This
poses a problem, especially if conflicting orders are given by the functional and project
managers. The simplest solution is for the individual at the interface to ask the functional
and project managers to communicate with each other to resolve the problem. This type of
situation poses a problem for project managers:
How does a project manager motivate an individual working on a project (either
part-time or full-time) so that his loyalties are with the project?
How does a project manager convince an individual to perform work according to
project direction and specifications when these requests may be in conflict with
department policy, especially if the individual feels that his functional boss may
not regard him favorably?
There are many advantages to matrix structures, as shown in Table 3–5. Functional
units exist primarily to support a project. Because of this, key people can be shared and
108 ORGANIZATIONAL STRUCTURES
12. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review,
Vol. 2, 1971, pp. 90–107.
costs can be minimized. People can be assigned to a variety of challenging problems. Each
person, therefore, has a “home” after project completion and a career path. People in these
organizations are especially responsive to motivation and end-item identification.
Functional managers find it easy to develop and maintain a strong technical base and can,
therefore, spend more time on complex problem-solving. Knowledge can be shared for all
projects.
The matrix structure can provide a rapid response to changes, conflicts, and other
project needs. Conflicts are normally minimal, but those requiring resolution are easily
resolved using hierarchical referral.
This rapid response is a result of the project manager’s authority to commit company
resources, provided that scheduling conflicts with other projects can be eliminated.
Furthermore, the project manager has the authority independently to establish his own
project policies and procedures, provided that they do not conflict with company policies. This can do away with red tape and permit a better balance among time, cost, and
performance.
The matrix structure provides us with the best of two worlds: the traditional structure
and the matrix structure. The advantages of the matrix structure eliminate almost all of the
disadvantages of the traditional structure. The word “matrix” often brings fear to the hearts
of executives because it implies radical change, or at least they think that it does. If we take
a close look at Figure 3–6, we can see that the traditional structure is still there. The matrix
is simply horizontal lines superimposed over the traditional structure. The horizontal lines
will come and go as projects start up and terminate, but the traditional structure will
remain.
Matrix structures are not without their disadvantages, as shown in Table 3–6. The first
three elements are due to the horizontal and vertical work flow requirements of a matrix.
Actually the flow may even be multidimensional if the project manager has to report to
Matrix Organizational Form 109
TABLE 3–5. ADVANTAGES OF A PURE MATRIX ORGANIZATIONAL FORM
The project manager maintains maximum project control (through the line managers) over all resources,
including cost and personnel.
Policies and procedures can be set up independently for each project, provided that they do not contradict
company policies and procedures.
The project manager has the authority to commit company resources, provided that scheduling does not
cause conflicts with other projects.
Rapid responses are possible to changes, conflict resolution, and project needs (as technology or schedule).
The functional organizations exist primarily as support for the project.
Each person has a “home” after project completion. People are susceptible to motivation and end-item
identification. Each person can be shown a career path.
Because key people can be shared, the program cost is minimized. People can work on a variety of
problems; that is, better people control is possible.
A strong technical base can be developed, and much more time can be devoted to complex problemsolving. Knowledge is available for all projects on an equal basis.
Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved.
There is a better balance among time, cost, and performance.
Rapid development of specialists and generalists occurs.
Authority and responsibility are shared.
Stress is distributed among the team (and the functional managers).
customers or corporate or other personnel in addition to his superior and the functional line
managers.
Most companies believe that if they have enough resources to staff all of the projects
that come along, then the company is “overstaffed.” As a result of this philosophy, priorities may change continuously, perhaps even daily. Management’s goals for a project may
be drastically different from the project’s goals, especially if executive involvement is
lacking during the definition of a project’s requirements in the planning phase. In a matrix,
conflicts and their resolution may be a continuous process, especially if priorities change
continuously. Regardless of how mature an organization becomes, there will always exist
difficulty in monitoring and control because of the complex, multidirectional work flow.
Another disadvantage of the matrix organization is that more administrative personnel are
needed to develop policies and procedures, and therefore both direct and indirect administrative costs will increase. In addition, it is impossible to manage projects with a matrix if
there are steep horizontal or vertical pyramids for supervision and reporting, because each
manager in the pyramid will want to reduce the authority of the managers operating within
the matrix. Each project organization operates independently. Duplication of effort can
easily occur; for example, two projects might be developing the same cost accounting procedure, or functional personnel may be doing similar R&D efforts on different projects.
Both vertical and horizontal communication is a must in a project matrix organization.
One of the advantages of the matrix is a rapid response time for problem resolution.
This rapid response generally applies to slow-moving projects where problems occur
within each functional unit. On fast-moving projects, the reaction time can become quite
slow, especially if the problem spans more than one functional unit. This slow reaction
110 ORGANIZATIONAL STRUCTURES
TABLE 3–6. DISADVANTAGES OF A PURE MATRIX ORGANIZATIONAL FORM
Multidimensional information flow.
Multidimensional work flow.
Dual reporting.
Continuously changing priorities.
Management goals different from project goals.
Potential for continuous conflict and conflict resolution.
Difficulty in monitoring and control.
Company-wide, the organizational structure is not cost-effective because more people than necessary are
required, primarily administrative.
Each project organization operates independently. Care must be taken that duplication of efforts does not
occur.
More effort and time are needed initially to define policies and procedures, compared to traditional form.
Functional managers may be biased according to their own set of priorities.
Balance of power between functional and project organizations must be watched.
Balance of time, cost, and performance must be monitored.
Although rapid response time is possible for individual problem resolution, the reaction time can become
quite slow.
Employees and managers are more susceptible to role ambiguity than in traditional form.
Conflicts and their resolution may be a continuous process (possibly requiring support of an organizational
development specialist).
People do not feel that they have any control over their own destiny when continuously reporting to multiple managers.
time exists because the functional employees assigned to the project do not have the
authority to make decisions, allocate functional resources, or change schedules. Only
the line managers have this authority. Therefore, in times of crisis, functional managers
must be actively brought into the “big picture” and invited to team meetings.
Middleton has listed four additional undesirable results of matrix organizations,
results that can affect company capabilities
13:
Project priorities and competition for talent may interrupt the stability of the organization and interfere with its long-range interests by upsetting the traditional business of functional organizations.
Long-range plans may suffer as the company gets more involved in meeting schedules and fulfilling the requirements of temporary projects.
Shifting people from project to project may disrupt the training of employees and
specialists, thereby hindering the growth and development within their fields of
specialization.
Lessons learned on one project may not be communicated to other projects.
Davis and Lawrence have identified nine additional matrix pathologies
14:
Power struggles: The horizontal versus vertical hierarchy.
Anarchy: Formation of organizational islands during periods of stress.
Groupitis: Confusing the matrix as being synonymous with group decision making.
Collapse during economic crunch: Flourishing during periods of growth and collapsing during lean times.
Excessive overhead: How much matrix supervision is actually necessary?
Decision strangulation: Too many people involved in decision-making.
Sinking: Pushing the matrix down into the depths of the organization.
Layering: A matrix within a matrix.
Navel gazing: Becoming overly involved in the internal relationships of the
organization.
The matrix structure therefore becomes a compromise in an attempt to obtain the best of
two worlds. In pure product management, technology suffered because there wasn’t a single
group for planning and integration. In the pure functional organization, time and schedule
were sacrificed. Matrix project management is an attempt to obtain maximum technology and
performance in a cost-effective manner and within time and schedule constraints.
We should note that with proper executive-level planning and control, all of the disadvantages can be eliminated. This is the only organizational form where such control is possible.
But companies must resist creating more positions in executive management than are
Matrix Organizational Form 111
13. Reprinted by permission of Harvard Business Review. From C. J. Middleton, “How to Set Up a Project
Organization,”
Harvard Business Review, March–April 1967. Copyright © 1967 by the Harvard Business School
Publishing Corporation; all rights reserved.
14. Stanley M. Davis and Paul R. Lawrence,
Matrix (adapted from pp. 129–144), © 1977. Adapted by permission of Pearson Education, Inc., Upper Saddle River, NJ.
actually necessary as this will drive up overhead rates. However, there is a point where the
matrix will become mature and fewer people will be required at the top levels of management.
Previously we identified the necessity for the project manager to be able to establish
his own policies, procedures, rules, and guidelines. Obviously, with personnel reporting in
two directions and to multiple managers, conflicts over administration can easily occur.
Most practitioners consider the matrix to be a two-dimensional system where each
project represents a potential profit center and each functional department represents a cost
center. (This interpretation can also create conflict because functional departments may
feel that they no longer have an input into corporate profits.) For large corporations with
multiple divisions, the matrix is no longer two-dimensional, but multidimensional.
William C. Goggin has described geographical area and space and time as the third
and fourth dimensions of the Dow Corning matrix
15:
Geographical areas . . . business development varied widely from area to area, and the profitcenter and cost-center dimensions could not be carried out everywhere in the same manner.
. . . Dow Corning area organizations are patterned after our major U.S. organizations.
Although somewhat autonomous in their operation, they subscribe to the overall corporate
objectives, operating guidelines, and planning criteria. During the annual planning cycle, for
example, there is a mutual exchange of sales, expense, and profit projections between the
functional and business managers headquartered in the United States and the area managers
around the world.
Space and time. . . . A fourth dimension of the organization denotes fluidity and movement through time. . . . The multidimensional organization is far from rigid; it is constantly
changing. Unlike centralized or decentralized systems that are too often rooted deep in the
past, the multidimensional organization is geared toward the future: Long-term planning is
an inherent part of its operation.
Goggin then went on to describe the advantages that Dow Corning expected to gain from
the multidimensional organization:
Higher profit generation even in an industry (silicones) price-squeezed by competition. (Much of our favorable profit picture seems due to a better overall understanding and practice of expense controls through the company.)
Increased competitive ability based on technological innovation and product quality without a sacrifice in profitability.
Sound, fast decision-making at all levels in the organization, facilitated by stratified but open channels of communications, and by a totally participative working
environment.
A healthy and effective balance of authority among the businesses, functions, and
areas.
Progress in developing short- and long-range planning with the support of all
employees.
112 ORGANIZATIONAL STRUCTURES
15. Reprinted by permission of Harvard Business Review. From William C. Goggin, “How the Multidimensional
Structure Works at Dow Corning,”
Harvard Business Review, January–February 1974, pp. 56–57. Copyright ©
1973 by the Harvard Business School Publishing Corporation; all rights reserved.

Resource allocations that are proportional to expected results.
More stimulating and effective on-the-job training.
Accountability that is more closely related to responsibility and authority.
Results that are visible and measurable.
More top-management time for long-range planning and less need to become
involved in day-to-day operations.
Obviously, the matrix structure is the most complex of all organizational forms.
Grinnell and Apple define four situations where it is most practical to consider a matrix
16:
When complex, short-run products are the organization’s primary output.
When a complicated design calls for both innovation and timely completion.
When several kinds of sophisticated skills are needed in designing, building, and
testing the products—skills then need constant updating and development.
When a rapidly changing marketplace calls for significant changes in products,
perhaps between the time they are conceived and delivered.
Matrix implementation requires:
Training in matrix operations
Training in how to maintain open communications
Training in problem solving
Compatible reward systems
Role definitions
3.7 MODIFICATION OF MATRIX STRUCTURES
The matrix can take many forms, but there are basically three common varieties. Each type
represents a different degree of authority attributed to the program manager and indirectly
identifies the relative size of the company. As an example, in the matrix of Figure 3–6, all
program managers report directly to the general manager. This type of arrangement works
best for small companies that have few projects and assumes that the general manager has
sufficient time to coordinate activities between his project managers. In this type of arrangement, all conflicts between projects are referred to the general manager for resolution.
As companies grow in size and the number of projects, the general manager will find
it increasingly difficult to act as the focal point for all projects. A new position must be
created, that of director of programs, or manager of programs or projects, who is responsible for all program management. See Figure 3–7.
Executives contend that an effective span of control is five to seven people. Does this
apply to the director of project management as well? Consider a company that has fifteen
Modification of Matrix Structures 113
16. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,” Machine Design, January 1975,
pp. 84–87.

projects going on at once. There are three projects over $5 million, seven are between
$1 and $3 million, and five projects are under $700,000. Each project has a full-time
project manager. Can all fifteen project managers report to the same person? The company
solved this problem by creating a deputy director of project management. All projects over
$1 million reported to the director, and all projects under $1 million went to the deputy
director. The director’s rationale soon fell by the wayside when he found that the more
severe problems that were occupying his time were occurring on projects with a smaller
dollar volume, where flexibility in time, cost, and performance was nonexistent and tradeoffs were almost impossible. If the project manager is actually a general manager, then the
director of project management should be able to supervise effectively more than seven
project managers. The desired span of control, of course, will vary from company to company and must take into account:
The demands imposed on the organization by task complexity
Available technology
The external environment
The needs of the organizational membership
The types of customers and/or products
114 ORGANIZATIONAL STRUCTURES
GENERAL
MANAGER
DIRECTOR:
PROJECT MGMT
DIRECTOR:
ENGINEERING
DIRECTOR:
OPERATIONS OTHERS
PROJECT MGR.
X
PROJECT MGR.
Y
PROJECT MGR.
Z
FIGURE 3–7. Development of a director of project management.
As companies expand, it is inevitable that new and more complex conflicts arise. The
control of the engineering functions poses such a problem:
Should the project manager have ultimate responsibility for the engineering functions of a project, or should there be a deputy project manager who reports to the
director of engineering and controls all technical activity?
Although there are pros and cons for both arrangements, the problem resolved itself in
the company mentioned above when projects grew so large that the project manager became
unable to handle both the project management and project engineering functions. Then, as
shown in Figure 3–8, a chief project engineer was assigned to each project as deputy project
manager, but remained functionally assigned to the director of engineering. The project manager was now responsible for time and cost considerations, whereas the project engineer was
concerned with technical performance. The project engineer can be either “solid” vertically
and “dotted” horizontally, or vice versa. There are also situations where the project engineer
may be “solid” in both directions. The decision usually rests with the director of engineering.
Of course, in a project where the project engineer would be needed on a part-time basis only,
he would be solid vertically and dotted horizontally.
Engineering directors usually demand that the project engineer be solid vertically in
order to give technical direction. As one director of engineering stated, “Only engineers
that report to me will have the authority to give technical direction to other engineers. After
all, how else can I be responsible for the technical integrity of the product when direction
comes from outside my organization?”
This subdivision of functions is necessary in order to control large projects adequately.
However, for small projects, say $100,000 or less, it is quite common on R&D projects for
Modification of Matrix Structures 115
GENERAL
MANAGER
DIRECTOR:
PROJECT MGT.
DIRECTOR:
ENGINEERING
DIRECTOR:
OPERATIONS OTHERS
PROJECT
ENGINEERING
OTHER
UNITS
MANAGER X
MANAGER Y
MANAGER Z
X Y Z
PROJECT OFFICE CONTROL
FIGURE 3–8. Placing project engineering in the project office.
an engineer to serve as the project manager as well as the project engineer. Here, the
project manager must have technical expertise, not merely understanding. Furthermore, this
individual can still be attached to a functional engineering support unit other than project
engineering. As an example, a mechanical engineering department receives a government
contract for $75,000 to perform tests on a new material. The proposal is written by an engineer attached to the department. When the contract is awarded, this individual, although not
in the project engineering department, can fulfill the role of project manager and project
engineer while still reporting to the manager of the mechanical engineering department. This
arrangement works best (and is cost-effective) for short-duration projects that cross a minimum number of functional units.
Finally, we must discuss the characteristics of a project engineer. In Figure 3–9, most
people would place the project manager to the right of center with stronger human skills
than technical skills, and the project engineer to the left of center with stronger technical
skills than human skills. How far from the center point will the project manager and project
engineer be? Today, many companies are merging project management and project engineering into one position. This can be seen in Table 3–7. The project manager and project
116 ORGANIZATIONAL STRUCTURES
JUNIOR
CLERK
SENIOR
CLERK
SUPERVISOR MIDDLE
MANAGER
MANAGER SENIOR
OFFICER
PRESIDENT
HIGH
LOW
TECHNICAL SKILLS
HUMAN SKILLS
FIGURE 3–9. Philosophy of management.
TABLE 3–7. PROJECT MANAGEMENT COMPARED TO PROJECT ENGINEERING
Project Management Project Engineering
Total project planning Total project planning
Cost control Cost control
Schedule control Schedule control
System specifications System specifications
Logistics support Logistics support
Contract control Configuration control
Report preparation and distribution Fabrication, testing, and production technical
Procurement leadership support
Identification of reliability and
maintainability requirements
Staffing
Priority scheduling
Management information systems
engineer have similar functions above the line but different ones below the line.17 The main
reason for separating project management from project engineering is so that the project
engineer will remain “solid” to the director of engineering in order to have the full authority to give technical direction to engineering.
3.8 THE STRONG, WEAK, OR BALANCED MATRIX
Matrix structures can be strong, weak, or balanced. The strength of the
matrix is based upon who has more influence over the daily performance
of the workers: project manager or line managers. If the project manager
has more influence over the worker, then the matrix structure functions as
a strong matrix as seen through the eyes of the project manager. If the line manager has
more influence than does the project manager, then the organization functions as a weak
matrix as seen by the project manager.
The most common differentiator between a strong and weak matrix is where the command of technology resides: project manager or line managers. If the project manager has
a command of technology and is recognized by the line managers and the workers as being
a technical expert, then the line managers will allow the workers to take technical direction from the project manager. This will result in a strong matrix structure. Workers will
seek solutions to their problems from the project manager first and the line managers second. The reverse is true for a weak matrix. Project managers in a strong matrix generally
possess more authority than in a weak matrix.
When a company desires a strong matrix, the project manager is generally promoted from
within the organization and may have had assignments in several line functions throughout the
organization. In a weak matrix, the company may hire from outside the organization but
should at least require that the person selected understand the technology and the industry.
3.9 CENTER FOR PROJECT MANAGEMENT EXPERTISE
In project-driven companies, the creation of a project management division
is readily accepted as a necessity to conduct business. Organizational restructuring can quite often occur based on environmental changes and customer
needs. In non–project-driven organizations, employees are less tolerant of organizational
change. Power, authority, and turf become important. The implementation of a separate division for project management is extremely difficult. Resistance can become so strong that the
entire project management process can suffer.
Recently, non–project-driven companies have created centers for project management
expertise. These centers are not necessarily formal line organizations, but more informal
committees whose membership may come from each functional unit of the company. The
assignment to the center for expertise can be part-time or full-time; it may be only for six
Center for Project Management Expertise 117
17. Procurement, reliability, and maintainability may fall under the responsibility of the project engineer in some
companies.
PMBOK® Guide, 4th Edition
1.4.4 Project Management Office
PMBOK® Guide, 4th Edition
Matrix Organizational Structures
Figures 2–8, 2–9, 2–10

months to a year; and it may or may not require the individual to manage projects. Usually,
the center for expertise has as its charter:
To develop and update a methodology for project management. The methodology
usually advocates informal project management.
To act as a facilitator or trainer in conducting project management training programs.
To provide project management assistance to any employee who is currently managing projects and requires support in planning, scheduling, and controlling projects.
To develop or maintain files on “lessons learned” and to see that this information
is made available to all project managers.
Since these centers pose no threat to the power and authority of line managers, support is
usually easy to obtain.
3.10 MATRIX LAYERING
Matrix layering can be defined as the creation of one matrix within a second matrix. For
example, a company can have a total company matrix, and each division or department
(i.e., project engineering) can have its own internalized matrix. In the situation of a matrix
within a matrix, all matrices are formal operations.
Matrix layering can also be a mix of formal and informal organizations. The formal matrix
exists for work flow, but there can also exist an informal matrix for information flow. There are
also authority matrices, leadership matrices, reporting matrices, and informal technical direction matrices.
An example of layering would be the multidimensional matrix, shown in Figure 3–10,
where each slice represents either time, distance, or geographic area. For example, a New York
118 ORGANIZATIONAL STRUCTURES
Time, distance, or space
FIGURE 3–10. The multidimensional matrix.
bank utilizes a multinational matrix to control operations in foreign countries. In this case,
each foreign country would represent a different slice of the total matrix.
3.11 SELECTING THE ORGANIZATIONAL FORM
Project management has matured as an outgrowth of the need to develop and
produce complex and/or large projects in the shortest possible time, within
anticipated cost, with required reliability and performance, and (when applicable) to realize a profit. Granted that organizations have become so complex that traditional
organizational structures and relationships no longer allow for effective management, how can
executives determine which organizational form is best, especially since some projects last for
only a few weeks or months while others may take years?
To answer this question, we must first determine whether the necessary characteristics
exist to warrant a project management organizational form. Generally speaking,
the project management approach can be effectively applied to a onetime undertaking
that is
18:
Definable in terms of a specific goal
Infrequent, unique, or unfamiliar to the present organization
Complex with respect to interdependence of detailed tasks
Critical to the company
Once a group of tasks is selected and considered to be a project, the next step is to
define the kinds of projects, described in Section 2.5. These include individual, staff, special, and matrix or aggregate projects.
Unfortunately, many companies do not have a clear definition of what a project is. As
a result, large project teams are often constructed for small projects when they could be
handled more quickly and effectively by some other structural form. All structural forms
have their advantages and disadvantages, but the project management approach appears to
be the best possible alternative.
The basic factors that influence the selection of a project organizational form are:
Project size
Project length
Experience with project management organization
Philosophy and visibility of upper-level management
Project location
Available resources
Unique aspects of the project
Selecting the Organizational Form 119
18. John M. Stewart, “Making Project Management Work.” Reprinted with permission from Business Horizons,
Fall 1965 (p. 54). Copyright © 1964 by the Board of Trustees at Indiana University.
PMBOK® Guide, 4th Edition
2.4 Organizational Influences
This last item requires further comment. Project management (especially with a
matrix) usually works best for the control of human resources and thus may be more applicable to labor-intensive projects rather than capital-intensive projects. Labor-intensive
organizations have formal project management, whereas capital-intensive organizations
may use informal project management. Figure 3–11 shows how matrix management was
implemented by an electric equipment manufacturer. The company decided to use fragmented matrix management for facility development projects. After observing the success
of the fragmented matrix, the executives expanded matrix operations to include interim
and ongoing capital equipment projects. The first three levels were easy to implement. The
fourth level, ongoing business, was more difficult to convert to matrix because of functional management resistance and the fear of losing authority.
Four fundamental parameters must be analyzed when considering implementation of
a project organizational form:
Integrating devices
Authority structure
Influence distribution
Information system
Project management is a means of integrating all company efforts, especially research
and development, by selecting an appropriate organizational form. Two questions arise
when we think of designing the organization to facilitate the work of the integrators
19:
Is it better to establish a formal integration department, or simply to set up integrating positions independent of one another?
If individual integrating positions are set up, how should they be related to the
larger structure?
120 ORGANIZATIONAL STRUCTURES
Facilities Development
Interim Capital Equipment Projects
Ongoing Capital Equipment Projects
Ongoing Business
FIGURE 3–11. Matrix development in manufacturing.
19. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review,
Vol. 2, 1971, pp. 90–107.
Informal integration works best if, and only if, effective collaboration can be achieved
between conflicting units. Without any clearly defined authority, the role of the integrator
is simply to act as an exchange medium across the interface of two functional units. As the
size of the organization increases, formal integration positions must exist, especially in situations where intense conflict can occur (e.g., research and development).
Not all organizations need a pure matrix structure to achieve this integration. Many
problems can be solved simply through the chain of command, depending on the size of
the organization and the nature of the project. The organization needed to achieve project
control can vary in size from one person to several thousand people. The organizational
structure needed for effective project control is governed by the desires of top management
and project circumstances.
Top management must decide on the authority structure that will control the integration mechanism. The authority structure can range from pure functional authority (traditional management), to product authority (product management), and finally to dual
authority (matrix management). This range is shown in Figure 3–12. From a management
point of view, organizational forms are often selected based on how much authority top
management wishes to delegate or surrender.
Integration of activities across functional boundaries can also be accomplished by
influence. Influence includes such factors as participation in budget planning and approval,
design changes, location and size of offices, salaries, and so on. Influence can also cut
administrative red tape and develop a much more unified informal organization.
Matrix structures are characterized as strong or weak based on the relative influence
that the project manager possesses over the assigned functional resources. When the
Selecting the Organizational Form 121
FUNCTIONAL AUTHORITY
STRUCTURE
FUNCTIONAL ORGANIZATION MATRIX ORGANIZATION PRODUCT ORGANIZATION
A.
B.
C.
RELATIVE
INFLUENCE
DUAL
AUTHORITY
PRODUCT AUTHORITY
STRUCTURE
PRODUCT TASK FORCES
PRODUCT TEAMS
PRODUCT MANAGERS
PRODUCT
DEPARTMENTS
FUNCTIONAL REPORTING
SYSTEM
DUAL INFORMATION AND
REPORTING SYSTEM
PRODUCT REPORTING
SYSTEM
FUNCTIONAL
DEPARTMENTS
FUNCTIONAL MANAGERS
FUNCTIONAL TEAMS
FUNCTIONAL TASK FORCES

FUNCTIONAL INFLUENCE IN DECISION -MAKING
1
PRODUC
2
T INFLUENCE IN DECISION-MAKING
3

FIGURE 3–12. The range of alternatives. Source: Jay R. Galbraith, “Matrix Organization Designs.”
Reprinted with permission from
Business Horizons, February 1971 (p. 37). Copyright © 1971 by the
Board of Trustees at Indiana University.

project manager has more “relative influence” over the performance of the assigned
resources than does the line manager, the matrix structure is a strong matrix. In this case,
the project manager usually has the knowledge to provide technical direction, assign
responsibilities, and may even have a strong input into the performance evaluation of the
assigned personnel. If the balance of influence tilts in favor of the line manager, then
the matrix is referred to as a weak matrix.
Information systems also play an important role. Previously we stated that one of the
advantages of several project management structures is the ability to make both rapid and
timely decisions with almost immediate response to environmental changes. Information
systems are designed to get the right information to the right person at the right time in a
cost-effective manner. Organizational functions must facilitate the flow of information
through the management network.
Galbraith has described additional factors that can influence organizational selection.
These factors are
20:
Diversity of product lines
Rate of change of the product lines
Interdependencies among subunits
Level of technology
Presence of economies of scale
Organizational size
A diversity of project lines requires both top-level and functional managers to maintain
knowledge in all areas. Diversity makes it more difficult for managers to make realistic estimates concerning resource allocations and the control of time, cost, schedules, and technology. The systems approach to management requires sufficient information and alternatives to
be available so that effective trade-offs can be established. For diversity in a high-technology
environment, the organizational choice might, in fact, be a trade-off between the flow of work
and the flow of information. Diversity tends toward strong product authority and control.
Many functional organizations consider themselves companies within a company and
pride themselves on their independence. This attitude poses a severe problem in trying to
develop a synergistic atmosphere. Successful project management requires that functional
units recognize the interdependence that must exist in order for technology to be shared
and schedule dates to be met. Interdependency is also required in order to develop strong
communication channels and coordination.
The use of new technologies poses a serious problem in that technical expertise must be
established in all specialties, including engineering, production, material control, and safety.
Maintaining technical expertise works best in strong functional disciplines, provided the
information is not purchased outside the organization. The main problem, however, is how
to communicate this expertise across functional lines. Independent R&D units can be established, as opposed to integrating R&D into each functional department’s routine efforts.
Organizational control requirements are much more difficult in high-technology industries
with ongoing research and development than with pure production groups.
122 ORGANIZATIONAL STRUCTURES
20. Jay R. Galbraith, “Matrix Organization Designs.” Reprinted with permission from Business Horizons, February
1971, pp. 29–40. Copyright © 1971 by the Board of Trustees at Indiana University.

Economies of scale and size can also affect organizational selection. The economies
of scale are most often controlled by the amount of physical resources that a company has
available. For example, a company with limited facilities and resources might find it
impossible to compete with other companies on production or competitive bidding for
larger dollar-volume products. Such a company must rely heavily on maintaining multiple
projects (or products), each of low cost or volume, whereas a larger organization may need
only three or four projects large enough to sustain the organization. The larger the
economies of scale, the more the organization tends to favor pure functional management.
The size of the organization is important in that it can limit the amount of technical
expertise in the economies of scale. While size may have little effect on the organizational
structure, it does have a severe impact on the economies of scale. Small companies, for
example, cannot maintain large specialist staffs and, therefore, incur a larger cost for lost
specialization and lost economies of scale.
The four factors described above for organizational form selections together with the
six alternatives of Galbraith can be regarded as universal. Beyond these universal factors,
we must look at the company in terms of its product, business base, and personnel.
Goodman has defined a set of subfactors related to R&D groups
21:
Clear location of responsibility
Ease and accuracy of communication
Effective cost control
Ability to provide good technical supervision
Flexibility of staffing
Importance to the company
Quick reaction capability to sudden changes in the project
Complexity of the project
Size of the project with relation to other work in-house
Form desired by customer
Ability to provide a clear path for individual promotion
Goodman asked general managers and project managers to select from the above list
and rank the factors from most important to least important in designing an organization.
With one exception—flexibility of staffing—the response from both groups correlated to
a coefficient of 0.811. Clear location of responsibility was seen as the most important factor, and a path for promotion the least important.
Middleton conducted a mail survey of aerospace firms in an attempt to determine how
well the companies using project management met their objectives. Forty-seven responses
were received. Tables 3–8 and 3–9 identify the results. Middleton stated, “In evaluating the
results of the survey, it appears that a company taking the project organization approach
can be reasonably certain that it will improve controls and customer (out-of-company)
relations, but internal operations will be more complex.”
22
Selecting the Organizational Form 123
21. Richard A. Goodman, “Organizational Preference in Research and Development,” Human Relations, Vol. 3,
No. 4, 1970, pp. 279–298.
22. Reprinted with permission of
Harvard Business Review. From C. J. Middleton, “How to Set Up a Project
Organization,”
Harvard Business Review, March–April 1967, pp. 73–82. Copyright © 1967 by the Harvard
Business School Publishing Corporation; all rights reserved.

The way in which companies operate their project organization is bound to affect the organization, both during the operation of the project and after the project has been completed and
personnel have been disbanded. The overall effects on the company must be looked at from a
personnel and cost control standpoint. This will be accomplished, in depth, in later chapters.
Although project management is growing, the creation of a project organization does not necessarily ensure that an assigned objective will be accomplished successfully. Furthermore,
weaknesses can develop in the areas of maintaining capability and structural changes.
124 ORGANIZATIONAL STRUCTURES
TABLE 3–8. MAJOR COMPANY ADVANTAGES OF PROJECT MANAGEMENT
Advantages Percent of Respondents
Better control of projects 92%
Better customer relations 80%
Shorter product development time 40%
Lower program costs 30%
Improved quality and reliability 26%
Higher profit margins 24%
Better control over program security 13%
Other Benefits
Better project visibility and focus on results
Improved coordination among company divisions doing work on the project
Higher morale and better mission orientation for employees working on the project
Accelerated development of managers due to breadth of project responsibilities
Source: Reprinted by permission of Harvard Business Review. An exhibit from “How to Set Up a Project Organization,” by
C. J. Middleton, March–April, 1967 (pp. 73–82). Copyright © 1967 by the Harvard Business School Publishing Corporation; all
rights reserved.
TABLE 3–9. MAJOR COMPANY DISADVANTAGES OF PROJECT MANAGEMENT
Disadvantages Percent of Respondents
More complex internal operations 51%
Inconsistency in application of company policy 32%
Lower utilization of personnel 13%
Higher program costs 13%
More difficult to manage 13%
Lower profit margins 2%
Other Disadvantages
Tendency for functional groups to neglect their job and let the project organization do everything
Too much shifting of personnel from project to project
Duplication of functional skills in project organization
Source: Reprinted by permission of Harvard Business Review. An exhibit from “How to Set Up a Project Organization,” by
C. J. Middleton, March–April, 1967 (pp. 73–82). Copyright © 1967 by the Harvard Business School Publishing Corporation; all
rights reserved.

An almost predictable result of using the project management approach is the increase
in management positions. Killian describes the results of two surveys
23:
One company compared its organization and management structure as it existed before it
began forming project units with the structure that existed afterward. The number of
departments had increased from 65 to 106, while total employment remained practically
the same. The number of employees for every supervisor had dropped from 13.4 to 12.8.
The company concluded that a major cause of this change was the project groups [see footnote 26 for reference article].
Another company uncovered proof of its conclusion when it counted the number of
second-level and higher management positions. It found that it had 11 more vice presidents
and directors, 35 more managers, and 56 more second-level supervisors. Although the
company attributed part of this growth to an upgrading of titles, the effect of the project
organization was the creation of 60 more management positions.
Although the project organization is a specialized, task-oriented entity, it seldom, if
ever, exists apart from the traditional structure of the organization.
24 All project management structures overlap the traditional structure. Furthermore, companies can have more
than one project organizational form in existence at one time. A major steel product, for
example, has a matrix structure for R&D and a product structure elsewhere.
Accepting a project management structure is a giant step from which there may be no
return. The company may have to create more management positions without changing the
total employment levels. In addition, incorporation of a project organization is almost
always accompanied by the upgrading of jobs. In any event, management must realize that
whichever project management structure is selected, a dynamic state of equilibrium will
be necessary.
3.12 STRUCTURING THE SMALL COMPANY
Small and medium companies generally prefer to have the project manager report fairly
high up in the chain of command, even though the project manager may be working on a
relatively low-priority project. Project managers are usually viewed as less of a threat in
small organizations than in the larger ones, thus creating less of a problem if they report
high up.
Organizing the small company for projects involves two major questions:
Where should the project manager be placed within the organization?
Are the majority of the projects internal or external to the organization?
Structuring the Small Company 125
23. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review,
Vol. 2, 1971, pp. 90–107.
24. Allen R. Janger, “Anatomy of the Project Organization,”
Business Management Record, November 1963,
pp. 12–18.

These two questions are implicitly related. For either large, complex projects or those
involving outside customers, project managers generally report to a high level in the organization. For small or internal projects, the project manager reports to a middle- or lowerlevel manager.
Small and medium companies have been very successful in managing internal
projects using departmental project management (see Figure 3–2), especially when only a
few functional groups must interface with one another. Quite often, line managers are permitted to wear multiple hats and also act as project managers, thereby reducing the need
for hiring additional project managers.
Customers external to the organization are usually favorably impressed if a small
company identifies a project manager who is dedicated and committed to their project,
even if only on a part-time basis. Thus outside customers, particularly through a competitive bidding environment, respond favorably to a matrix structure, even if the matrix structure is simply eyewash for the customer. For example, consider the matrix structure shown
in Figure 3–13. Both large and small companies that operate on a matrix usually develop
a separate organizational chart for each customer. Figure 3–13 represents the organizational chart that would be presented to Alpha Company. The Alpha Company project
would be identified with bold lines and would be placed immediately below the vice president, regardless of the priority of the project. After all, if you were the Alpha Company
customer, would you want your project to appear at the bottom of the list?
126 ORGANIZATIONAL STRUCTURES
PRESIDENT
V.P. MARKETING V.P. ENGINEERING V.P. PRODUCTION V.P. ADMINISTRATION
ALPHA CO.
BOB RAY
IBM
BETA CO.
GAMMA CO.
DELTA CO.
FIGURE 3–13. Matrix for a small company.
Figure 3–13 also identifies two other key points that are important to small companies.
First, only the name of the Alpha Company project manager, Bob Ray, need be identified.
The reason for this is that Bob Ray may also be the project manager for one or more of the
other projects, and it is usually not a good practice to let the customer know that Bob Ray
will have loyalties split among several projects. Actually, the organization chart shown in
Figure 3–13 is for a machine tool company employing 280 people, with five major and
thirty minor projects. The company has only two full-time project managers. Bob Ray
manages the projects for Alpha, Gamma, and Delta Companies; the Beta Company project
has the second full-time project manager; and the IBM project is being managed personally by the vice president of engineering, who happens to be wearing two hats.
The second key point is that small companies generally should not identify the names
of functional employees because:
The functional employees are probably part-time.
It is usually best in small companies for all communications to be transmitted
through the project manager.
Another example of how a simple matrix structure can be used to impress customers
is shown in Figure 3–14. The company identified here actually employs only thirty-eight
people. Very small companies normally assign the estimating department to report directly
to the president, as shown in Figure 3–14. In addition, the senior engineers, who appear to
Structuring the Small Company 127
PRESIDENT
ESTIMATING ACCOUNTING
V.P. ENGINEERING V.P. PRODUCTION
DRAFTING START UP
DESIGN
ENGINEERING
SENIOR
ENGINEER
SENIOR
ENGINEER
PLANT MANAGER
PANELS
PLANT MANAGER
METALS
FIGURE 3–14. Matrix for a small company.
be acting in the role of project managers, may simply be the department managers for
drafting, startup, and/or design engineering. Yet, from an outside customer’s perspective,
the company has a dedicated and committed project manager for the project.
3.13 STRATEGIC BUSINESS UNIT (SBU)
PROJECT MANAGEMENT
During the past ten years, large companies have restructured into strategic business units
(SBUs). An SBU is a grouping of functional units that have the responsibility for profit (or
loss) of part of the organization’s core businesses. Figure 3–15 shows how one of the automotive suppliers restructured into three SBUs; one each for Ford, Chrysler, and General
Motors. Each strategic business unit is large enough to maintain its own project and program managers. The executive in charge of the strategic business unit may act as the sponsor for all of the program and project managers within the SBU. The major benefit of these
types of project management SBUs is that it allows the SBU to work more closely with the
customer. It is a customer-focused organizational structure.
It is possible for some resources to be shared across several SBUs. Manufacturing
plants can end up supporting more than one SBU. Also, corporate may provide the
resources for cost accounting, human resource management, and training.
A more recent organizational structure, and a more complex one, is shown in Figure
3–16. In this structure, each SBU may end up using the same platform (i.e., powertrain,
chassis, and other underneath components). The platform managers are responsible for the
design and enhancements of each platform, whereas the SBU program managers must
adapt this platform to a new model car. This type of matrix is multidimensional inasmuch
as each SBU could already have an internal matrix. Also, each manufacturing plant could
128 ORGANIZATIONAL STRUCTURES
SBU
Ford
Programs
SBU
GM
Programs
SBU
Chrysler
Programs
Program
Managers
FIGURE 3–15. Strategic business unit project management.
be located outside of the continental United States, making this structure a multinational,
multidimensional matrix.
3.14 TRANSITIONAL MANAGEMENT
Organizational redesign is occurring at a rapid rate because of shorter product life cycles,
rapidly changing environments, accelerated development of sophisticated information systems, and increased marketplace competitiveness. Because of these factors, more companies are considering project management organizations as a solution.
Why have some companies been able to implement this change in a short period of
time while other companies require years? The answer is that successful implementation
requires good transitional management.
Transitional management is the art and science of managing the conversion period
from one organizational design to another. Transitional management necessitates an understanding of the new goals, objectives, roles, expectations, and employees’ fears.
A survey was conducted of executives, managers, and employees in thirty-eight companies that had implemented matrix management. Almost all executives felt that the greatest success could be achieved through proper training and education, both during and after
transition. In addition to training, executives stated that the following fifteen challenges
must be accounted for during transition:
Transfer of power. Some line managers will find it extremely difficult to accept
someone else managing their projects, whereas some project managers will find it
difficult to give orders to workers who belong to someone else.
Transitional Management 129
Platform
Project
Management
SBU
Program
Managers
Platform
Platform
Platform
SBU SBU SBU
FIGURE 3–16. SBU project management using platform management.
Trust. The secret to a successful transition without formal executive authority will be
trust between line managers, between project managers, and between project and
line managers. It takes time for trust to develop. Senior management should encourage it throughout the transition life cycle.
Policies and procedures. The establishment of well-accepted policies and procedures
is a slow and tedious process. Trying to establish rigid policies and procedures at
project initiation will lead to difficulties.
Hierarchical consideration. During transition, every attempt should be made to
minimize hierarchical considerations that could affect successful organizational
maturity.
Priority scheduling. Priorities should be established only when needed, not on a continual basis. If priority shifting is continual, confusion and disenchantment will occur.
Personnel problems. During transition there will be personnel problems brought on
by moving to new locations, status changes, and new informal organizations. These
problems should be addressed on a continual basis.
Communications. During transition, new channels of communications should be
built but not at the expense of old ones. Transition phases should show employees
that communication can be multidirectional, for example, a project manager talking directly to functional employees.
Project manager acceptance. Resistance to the project manager position can be controlled through proper training. People tend to resist what they do not understand.
Competition. Although some competition is healthy within an organization, it can
be detrimental during transition. Competition should not be encouraged at the
expense of the total organization.
Tools. It is common practice for each line organization to establish its own tools and
techniques. During transition, no attempt should be made to force the line organizations to depart from their current practices. Rather, it is better for the project managers to develop tools and techniques that can be integrated with those in the
functional groups.
Contradicting demands. During transition and after maturity, contradicting
demands will be a way of life. When they first occur during transition, they should
be handled in a “working atmosphere” rather than a crisis mode.
Reporting. If any type of standardization is to be developed, it should be for
project status reporting, regardless of the size of the project.
Teamwork. Systematic planning with strong functional input will produce teamwork. Using planning groups during transition will not obtain the necessary functional and project commitments.
Theory X–Theory Y. During transition, functional employees may soon find themselves managed under either Theory X or Theory Y approaches. People must realize (through training) that this is a way of life in project management, especially
during crises.
Overmanagement costs. A mistake often made by executives is thinking that
projects can be managed with fewer resources. This usually leads to disaster
because undermanagement costs may be an order of magnitude greater than overmanagement costs.
130 ORGANIZATIONAL STRUCTURES
Transition to a project-driven matrix organization is not easy. Managers and professionals contemplating such a move should know:
Proper planning and organization of the transition on a life-cycle basis will facilitate a successful change.
Training of the executives, line managers, and employees in project management
knowledge, skills, and attitudes is critical to a successful transition and probably
will shorten the transition time.
Employee involvement and acceptance may be the single most important function
during transition.
The strongest driving force of success during transition is a demonstration of commitment to and involvement in project management by senior executives.
Organizational behavior becomes important during transition.
Commitments made by senior executives prior to transition must be preserved during and following transition.
Major concessions by senior management will come slowly.
Schedule or performance compromises are not acceptable during transition; cost
overruns may be acceptable.
Conflict among participants increases during transition.
If project managers are willing to manage with only implied authority during transition, then the total transition time may be drastically reduced.
It is not clear how long transition will take.
Transition from a classical or product organization to a project-driven organization is
not easy. With proper understanding, training, demonstrated commitment, and patience,
transition will have a good chance for success.
3.15 STUDYING TIPS FOR THE PMI® PROJECT MANAGEMENT
CERTIFICATION EXAM
This section is applicable as a review of the principles to support the knowledge areas and
domain groups in the PMBOK
® Guide. This chapter addresses:
Human Resources Management
Planning
Understanding the following principles is beneficial if the reader is using this text to
study for the PMP
® Certification Exam:
Different types of organizational structures
Advantages and disadvantages of each structure
Studying Tips for the PMI® Project Management Certification Exam 131
In which structure the project manager possesses the greatest amount of authority
In which structure the project manager possesses the least amount of authority
Three types of matrix structures
In Appendix C, the following Dorale Products mini–case studies are applicable:
Dorale Products (G) [Human Resources Management]
Dorale Products (H) [Human Resources Management]
Dorale Products (J) [Human Resources Management]
Dorale Products (K) [Human Resources Management]
The following multiple-choice questions will be helpful in reviewing the principles of
this chapter:
1. In which organizational form is it most difficult to integrate project activities?
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
2. In which organization form would the project manager possess the greatest amount of
authority?
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
3. In which organizational form does the project manager often have the least amount of
authority?
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
4. In which organizational form is the project manager least likely to share resources with other
projects?
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
5. In which organizational form do project managers have the greatest likelihood of possessing reward power and have a wage-and-salary administration function? (The project and line
manager are the same person.)
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
132 ORGANIZATIONAL STRUCTURES
6. In which organizational form is the worker in the greatest jeopardy of losing his or her job
if the project gets canceled?
A. Classical/traditional
B. Projectized
C. Strong matrix
D. Weak matrix
7. In which type of matrix structure would a project manager most likely have a command of
technology?
A. Strong matrix
B. Balanced matrix
C. Weak matrix
D. Cross-cultural matrix
ANSWERS
1. A
2. B
3. D
4. B
5. A
6. B
7. A
PROBLEMS
3–1 Much has been written about how to identify and interpret signs that indicate that a new
organizational form is needed. Grinnell and Apple have identified five signs in addition to those
previously described in Section 3.6
25:
Management is satisfied with its technical skills, but projects are not meeting time,
cost, and other project requirements.
There is a high commitment to getting project work done, but great fluctuation in how
well performance specifications are met.
Highly talented specialists involved in the project feel exploited and misused.
Particular technical groups or individuals constantly blame each other for failure to
meet specifications or delivery dates.
Projects are on time and to specification, but groups and individuals aren’t satisfied
with the achievement.
Grinnell and Apple state that there is a good chance that a matrix structure will eliminate or
alleviate these problems. Do you agree or disagree? Does your answer depend on the type of
project? Give examples or counterexamples to defend your answers.
Problems 133
25. See note 16.
3–2 One of the most difficult problems facing management is that of how to minimize the
transition time between changeover from a purely traditional organizational form to a project
organizational form. Managing the changeover is difficult in that management must consistently “provide individual training on teamwork and group problem solving; also, provide the
project and functional groups with assignments to help build teamwork.”
3–3 Do you think that personnel working in a project organizational structure should undergo
“therapy” sessions or seminars on a regular basis so as to better understand their working environment? If yes, how frequently? Does the frequency depend upon the project organizational
form selected, or should they all be treated equally?
3–4 Which organizational form would be best for the following corporate strategies?
a. Developing, manufacturing, and marketing many diverse but interrelated technological products and materials
b. Having market interests that span virtually every major industry
c. Becoming multinational with a rapidly expanding global business
d. Working in a business environment of rapid and drastic change, together with strong
competition
3–5 Do you think that documenting relationships is necessary in order to operate effectively in
any project organizational structure? How would you relate your answer to a statement made in the
previous chapter that each project can set up its own policies, procedures, rules, and directives as
long as they conform to company guidelines?
3–6 In general, how could each of the following parameters influence your choice for an
organizational structure? Explain your answers in as much depth as possible.
a. The project cost
b. The project schedule
c. The project duration
d. The technology requirements
e. The geographical locations
f. The required working relationships with the customer
3–7 In general, what are the overall advantages and disadvantages of superimposing one
organizational form over another?
3–8 In deciding to go to a new organizational form, what impact should the capabilities of the
following groups have on your decision?
a. Top management
b. Middle management
c. Lower-level management
3–9 Should a company be willing to accept a project that requires immediate organizational
restructuring? If so, what factors should it consider?
3–10 Table 2–6 identifies the different life cycles of programs, projects, systems, and products.
For each of the life cycles’ phases, select a project organizational form that you feel would work
best. Defend your answer with examples, advantages, and disadvantages.
3–11 A major steel producer in the United States uses a matrix structure for R&D. Once the
product is developed, the product organizational structure is used. Are there any advantages to
this setup?
134 ORGANIZATIONAL STRUCTURES
3–12 A major American manufacturer of automobile parts has a division that has successfully
existed for the past ten years with multiple products, a highly sophisticated R&D section, and a
pure traditional structure. The growth rate for the past five years has been 12 percent. Almost all
middle and upper-level managers who have worked in this division have received promotions
and transfers to either another division or corporate headquarters. According to “the book,” this
division has all the prerequisites signifying that they should have a project organizational form
of some sort, and yet they are extremely successful without it. Just from the amount of information presented, how can you account for their continued success? What do you think would be
the major obstacles in convincing the personnel that a new organizational form would be better?
Do you think that continued success can be achieved under the present structure?
3–13 Several authors contend that technology suffers in a pure product organizational form
because there is no one group responsible for long-range planning, whereas the pure functional
organization tends to sacrifice time and schedule. Do you agree or disagree with this statement?
Defend your choice with examples.
3–14 Below are three statements that are often used to describe the environment of a matrix.
Do you agree or disagree? Defend your answer.
a. Project management in a matrix allows for fuller utilization of personnel.
b. The project manager and functional manager must agree on priorities.
c. Decision-making in a matrix requires continual trade-offs on time, cost, technical risk,
and uncertainty.
3–15 Assume that you have to select a project organizational form for a small company. For
each form described in this chapter, discuss the applicability and state the advantages and disadvantages as they apply to this small company. (You may find it necessary to first determine
the business base of the small company.)
3–16 How would each person identified below respond to the question, “How many bosses do
you have?”
a. Project manager
b. Functional team member
c. Functional manager
(Repeat for each organizational form discussed in this chapter.)
3–17 If a project were large enough to contain its own resources, would a matrix organizational
form be acceptable?
3–18 One of the most common reasons for not wanting to adopt a matrix is the excessive
administrative costs and accompanying overhead rates. Would you expect the overhead rates to
decrease as the matrix matures? (Disregard other factors that can influence the overhead rates,
such as business base, growth rate, etc.)
3–19 Which type of organizational structure is best for R&D personnel to keep in touch with
other researchers?
3–20 Which type of organizational form fosters teamwork in the best manner?
3–21 Canadian bankers have been using the matrix organizational structure to create “banking
general managers” for all levels of a bank. Does the matrix structure readily admit itself to a
banking environment in order to create future managers? Can we consider a branch manager as
a matrix project manager?
Problems 135
3–22 A major utility company in Cleveland has what is commonly called “fragmented”
project management, where each department maintains project managers through staff positions. The project managers occasionally have to integrate activities that involve departments
other than their own. Each project normally requires involvement of several people. The company also has product managers operating out of a rather crude project (product) organizational
structure. Recently, the product managers and project managers were competing for resources
within the same departments.
To complicate matters further, management has put a freeze on hiring. Last week top management identified 120 different projects that could be undertaken. Unfortunately, under the
current structure there are not enough staff project managers available to handle these projects.
Also, management would like to make better use of the scarce functional resources.
Staff personnel contend that the solution to the above problems is the establishment of a
project management division under which there will be a project management department and
a product management department. The staff people feel that under this arrangement better
utilization of line personnel will be made, and that each project can be run with fewer staff people, thus providing the opportunity for more projects. Do you agree or disagree, and what problems do you foresee?
3–23 Some organizational structures are considered to be “project-driven.” Define what is
meant by “project-driven.” Which organizational forms described in this chapter would fall
under your definition?
3–24 Are there any advantages to having a single project engineer as opposed to having a committee of key functional employees who report to the director of engineering?
3–25 The major difficulty in the selection of a project organizational form involves placement
of the project manager. In the evolutionary process, the project manager started out reporting
to a department head and ultimately ended up reporting to a senior executive. In general, what
were the major reasons for having the project manager report higher and higher in the organizational structure?
3–26 Ralph is a department manager who is quite concerned about the performance of the people beneath him. After several months of analysis, Ralph has won the acceptance of his superiors for setting up a project management structure in his department. Out of the twenty-three
departments in the company, his will be the only one with formalized project management.
Can this situation be successful even though several projects require interfacing with other
departments?
3–27 A large electronics corporation has a multimillion dollar project in which 90 percent of the
work stays within one division. The division manager wants to be the project manager. Should this
be allowed even though there exists a project management division?
3–28 The internal functioning of an organization must consider:
The demands imposed on the organization by task complexity
Available technology
The external environment
The needs of the organizational membership
Considering these facts, should an organization search for the one best way to organize under
all conditions? Should managers examine the functioning of an organization relative to its
needs, or vice versa?
136 ORGANIZATIONAL STRUCTURES
3–29 Project managers, in order to get the job accomplished, need adequate organizational
status and authority. One corporate executive contends that an organizational chart such as that
in Figure 3–6 can be modified to show that the project managers have adequate authority by
placing the department managers in boxes at the top of the functional responsibility arrowheads. The executive further contends that, with this approach, the project managers appear to
be higher in the organization than their departmental counterparts but are actually equal in
status. Do you agree or disagree with the executive’s idea? Will there be a proper balance of
power between project and department managers with this organizational structure?
3–30 Defend or attack the following two statements concerning the operation of a matrix:
There should be no disruption due to dual accountability.
A difference in judgment should not delay work in progress.
3–31 A company has fifteen projects going on at once. Three projects are over $5 million,
seven projects are between $1 million and $3 million, and five projects are between $500,000
and $700,000. Each project has a full-time project manager. Just based upon this information,
which organizational form would be best? Can all the project managers report to the same
person?
3–32 A major insurance company is considering the implementation of project management.
The majority of the projects in the company are two weeks in duration, with very few existing
beyond one month. Can project management work here?
3–33 The definition of project management in Section 1.9 identifies project teams and task
forces. How would you distinguish between a project team and a task force, and what industries and/or projects would be applicable to each?
3–34 Can informal project management work in a structured environment at the same time as
formal project management and share the same resources?
3–35 Several people believe that the matrix structure can be multidimensional (as shown in
Figure 3–12). Explain the usefulness of such a structure.
3–36 Many companies have informal project management where work flows horizontally, but
in an informal manner. What are the characteristics of informal project management? Which
types of companies can operate effectively with informal project management?
3–37 Some companies have tried to develop a matrix within a matrix. Is it possible to have a
matrix for formal project control and an internal authority matrix, communication matrix,
responsibility matrix, or a combination of several of these?
3–38 Is it possible for a matrix to get out of control because of too many small projects, each
competing for the same shared resources? If so, how many projects are too many? How can
management control the number of projects? Does your answer depend on whether the organization is project-driven or non–project-driven?
3–39 A government subcontractor operates with a pure specialized product management organizational structure and has four product lines. All employees are required to have a top secret
security clearance. The subcontractor’s plant is structured such that each of the four product
lines occupies a secured area in the building. Employees wear security badges that give them
access to the different areas. Most of the employees are authorized to have access only to their
area. Only the executives have access to all four areas. For security reasons, functional employees are not permitted to discuss the product lines with each other.
Problems 137
Many of the projects performed in each of the product lines are identical, and severe duplication of efforts exist. Management is interested in converting over to a matrix structure to minimize the duplication of effort. What problems must be overcome before and during matrix
implementation?
3–40 A company has decided to go to full project management utilizing a matrix structure. Can
the implementation be done in stages? Can the matrix be partially implemented, say, in one portion of the organization, and then gradually expanded across the rest of the company?
3–41 A company has two major divisions, both housed under the same roof. One division is
the aerospace group, where all activities are performed within a formal matrix. The second division is the industrial group, which operates with pure product management, except for the MIS
department, which has an informal matrix. If both divisions have to share common corporate
resources, what problems can occur?
3–42 Several Fortune 100 corporations have a corporate engineering group that assumes the
responsibility of the project management–project engineering function for all major capital
projects in all divisions worldwide. Explain how the corporate engineering function should
work, as well as its advantages and disadvantages.
138 ORGANIZATIONAL STRUCTURES
CASE STUDY
JONES AND SHEPHARD ACCOUNTANTS, INC.*
By 1990, Jones and Shephard Accountants, Inc. (J&S) was a midsized company and ranked 38th
in size by the American Association of Accountants. In order to compete with the larger firms,
J&S formed an Information Services Division designed primarily for studies and analyses. By
1995, the Information Services Division (ISD) had fifteen employees.
In 1997, the ISD purchased three largecomputers. With this increased capacity, J&S expanded
its services to help satisfy the needs of outside customers. By September 1998, the internal and
external workloads had increased to a point where the ISD now employed over fifty people.
The director of the division was very disappointed in the way that activities were being
handled. There was no single person assigned to push through a project, and outside customers
did not know whom to call to get answers regarding project status. The director found that most
of his time was being spent on day-to-day activities such as conflict resolution instead of strategic planning and policy formulation.
The biggest problems facing the director were the two continuous internal projects (called
Project X and Project Y, for simplicity) that required month-end data collation and reporting.
The director felt that these two projects were important enough to require a full-time project
manager on each effort.
* Revised 2007.
In October 1998, corporate management announced that the ISD director would be
reassigned on February 1, 1999, and that the announcement of his replacement would not
be made until the middle of January. The same week that the announcement was made, two
individuals were hired from outside the company to take charge of Project X and Project Y.
Exhibit 3–1 shows the organizational structure of the ISD.
Within the next thirty days, rumors spread throughout the organization about who would
become the new director. Most people felt that the position would be filled from within the division and that the most likely candidates would be the two new project managers. In addition,
the associate director was due to retire in December, thus creating two openings.
On January 3, 1999, a confidential meeting was held between the ISD director and the
systems manager.
ISD Director: “Corporate has approved my request to promote you to division director.
Unfortunately, your job will not be an easy one. You’re going to have to restructure the organization somehow so that our employees will not have as many conflicts as they are now faced
with. My secretary is typing up a confidential memo for you explaining my observations on the
problems within our division.
“Remember, your promotion should be held in the strictest confidence until the final
announcement later this month. I’m telling you this now so that you can begin planning the
restructuring. My memo should help you.” (See Exhibit 3–2 for the memo.)
The systems manager read the memo and, after due consideration, decided that some form
of matrix would be best. To help him structure the organization properly, an outside consultant
Case Study 139
Exhibit 3–1. ISD organizational chart
*DENOTES THE NUMBER OF ADDITIONAL FUNCTIONAL EMPLOYEES
DIRECTOR,
ISD
ASSOCIATE
DIRECTOR
SECRETARY
SUP., TECH.
WRITING
SUPERVISOR,
PROCEDURES SECRETARY
SECRETARY
POOL
PROJECT
X
PROJECT
Y
MANAGER,
OPERATIONS
MGR., ADMIN.
SERVICES
MGR., COMP.
SYSTEMS
SUP., INTERNAL
AUDIT
SUP., ACCT.
SERVICES
SUP., GEN.
LEDGER
SUP., COST
ACCOUNTING
2* 2
4
3
3
10
6 8 7

The systems manager evaluated the consultant’s comments and then prepared a list of
questions to ask the consultant at their next meeting:
1. What should the new organizational structure look like? Where should I put each person, specifically the managers?
2. When should I announce the new organizational change? Should it be at the same
time as my appointment or at a later date?
3. Should I invite any of my people to provide input to the organizational restructuring?
Can this be used as a technique to ease power plays?
4. Should I provide inside or outside seminars to train my people for the new organizational structure? How soon should they be held?
was hired to help identify the potential problems with changing over to a matrix. The following problem areas were identified by the consultant:
1. The operations manager controls more than 50 percent of the people resources. You
might want to break up his empire. This will have to be done very carefully.
2. The secretary pool is placed too high in the organization.
3. The supervisors who now report to the associate director will have to be reassigned
lower in the organization if the associate director’s position is abolished.
4. One of the major problem areas will be trying to convince corporate management
that their change will be beneficial. You’ll have to convince them that this change can
be accomplished without having to increase division manpower.
5. You might wish to set up a separate department or a separate project for customer
relations.
6. Introducing your employees to the matrix will be a problem. Each employee will
look at the change differently. Most people have the tendency of looking first at the
shift in the balance of power—have I gained or have I lost power and status?
140 ORGANIZATIONAL STRUCTURES
Exhibit 3–2. Confidential memo
From: ISD Director
To: Systems Manager
Date: January 3, 1999
Congratulations on your promotion to division director. I sincerely hope that your tenure will be productive both personally and for corporate. I have prepared a short list of the major obstacles that you will have to
consider when you take over the controls.
1. Both Project X and Project Y managers are highly competent individuals. In the last four or five days,
however, they have appeared to create more conflicts for us than we had previously. This could be my
fault for not delegating them sufficient authority, or could be a result of the fact that several of our people consider these two individuals as prime candidates for my position. In addition, the operations manager does not like other managers coming into his “empire” and giving direction.
2. I’m not sure that we even need an associate director. That decision will be up to you.
3. Corporate has been very displeased with our inability to work with outside customers. You must consider
this problem with any organizational structure you choose.
4. The corporate strategic plan for our division contains an increased emphasis on special, internal MIS projects. Corporate wants to limit our external activities for a while until we get our internal affairs in order.
5. I made the mistake of changing our organizational structure on a day-to-day basis. Perhaps it would have
been better to design a structure that could satisfy advanced needs, especially one that we can grow into.

Organizing and Staffing the
Project Office and Team
141

Related Case Studies
(from Kerzner/
Project
Management Case Studies,
3rd Edition)
Related Workbook Exercises (from
Kerzner/
Project Management
Workbook and PMP
®/CAPM® Exam
Study Guide,
10th Edition)
PMBOK® Guide, 4th
Edition, Reference
Section for the PMP
®
Certification Exam
• Government Project
Management
• Falls Engineering
• White Manufacturing
• Martig Construction
Company
• Ducor Chemical
• The Carlson Project
• The Bad Apple
• Multiple Choice Exam
• Human Resource
Management

4.0 INTRODUCTION
Successful project management, regardless of the organizational structure, is
only as good as the individuals and leaders who are managing the key functions. Project management is not a one-person operation; it requires a group
of individuals dedicated to the achievement of a specific goal. Project management includes:
A project manager
An assistant project manager
PMBOK® Guide, 4th Edition
Chapter 9 Human Resource
Management
4
A project (home) office
A project team
Generally, project office personnel are assigned full-time to the project and work out of the project office,
whereas the project team members work out of the functional units and may spend only a small percentage
of their time on the project. Normally, project office personnel report directly to the project manager, but they
may still be solid to their line function just for administrative control. A project office usually is not required
on small projects, and sometimes the project can be accomplished by just one person who may fill all of the
project office positions.
Before the staffing function begins, five basic questions are usually considered:
What are the requirements for an individual to become a successful project manager?
Who should be a member of the project team?
Who should be a member of the project office?
What problems can occur during recruiting activities?
What can happen downstream to cause the loss of key team members?
On the surface, these questions may not seem especially complex. But when we apply them to a
project environment (which is by definition a “temporary” situation) where a constant stream of projects
is necessary for corporate growth, the staffing problems become complex, especially if the organization is
understaffed.
4.1 THE STAFFING ENVIRONMENT
To understand the problems that occur during staffing, we must first investigate the characteristics of project management, including the project
environment, the project management process, and the project manager.
Two major kinds of problems are related to the project environment: personnel performance problems and personnel policy problems. Performance is difficult for many individuals in the project environment because it represents a change in the way of doing business.
Individuals, regardless of how competent they are, find it difficult to adapt continually to a
changing situation in which they report to multiple managers.
On the other hand, many individuals thrive on temporary assignments because it gives
them a “chance for glory.” Unfortunately, some employees might consider the chance for
glory more important than the project. For example, an employee may pay no attention to
the instructions of the project manager and instead perform the task his own way. In this
situation, the employee wants only to be recognized as an achiever and really does not care
if the project is a success or failure, as long as he still has a functional home to return to
where he will be identified as an achiever with good ideas.
The second major performance problem lies in the project–functional interface, where
an individual suddenly finds himself reporting to two bosses, the functional manager and the
project manager. If the functional manager and the project manager are in agreement about
the work to be accomplished, then performance may not be hampered. But if conflicting
142 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
PMBOK® Guide, 4th Edition
9.1 Human Resource Planning
directions are received, then the individual may let his performance suffer because of his
compromising position. In this case, the employee will “bend” in the direction of the manager who controls his purse strings.
Personnel policy problems can create havoc in an organization, especially if the “grass is
greener” in a project environment than in the functional environment. Functional organizations normally specify grades and salaries for employees. Project offices, on the other hand,
have no such requirements and can promote and pay according to achievement. The difficulty
here is that one can distinguish between employees in grades 7, 8, 9, 10, and 11 in a line organization, whereas for a project manager the distinction might appear only in the size of the
project or the amount of responsibility. Bonuses are also easier to obtain in the project office
but may create conflict and jealousy between the horizontal and vertical elements.
Because each project is different, the project management process allows each project
to have its own policies, procedures, rules, and standards, provided they fall within broad
company guidelines. Each project must be recognized as a project by top management so
that the project manager has the delegated authority necessary to enforce the policies, procedures, rules, and standards.
Project management is successful only if the project manager and his team are totally
dedicated to the successful completion of the project. This requires each team member of
the project team and office to have a good understanding of the fundamental project
requirements, which include:
Customer liaison
Project direction
Project planning
Project control
Project evaluation
Project reporting
Ultimately, the person with the greatest influence during the staffing phase is the
project manager. The personal attributes and abilities of project managers will either attract
or deter highly desirable individuals. Basic characteristics include:
Honesty and integrity
Understanding of personnel problems
Understanding of project technology
Business management competence
Management principles
Communications
Alertness and quickness
Versatility
Energy and toughness
Decision-making ability
Ability to evaluate risk and uncertainty
Project managers must exhibit honesty and integrity to foster an atmosphere of trust.
They should not make impossible promises, such as immediate promotions for everyone
if a follow-on contract is received. Also, on temporarily assigned activities, such as a
The Staffing Environment 143
project, managers cannot wait for personnel to iron out their own problems because time,
cost, and performance requirements will not be satisfied.
Project managers should have both business management and technical expertise.
They must understand the fundamental principles of management, especially those involving the rapid development of temporary communication channels. Project managers must
understand the technical implications of a problem, since they are ultimately responsible
for all decision-making. However, many good technically oriented managers have failed
because they have become too involved with the technical side of the project rather than
the management side. There are strong arguments for having a project manager who has
more than just an understanding of the necessary technology.
Because a project has a relatively short time duration, decision-making must be rapid
and effective. Managers must be alert and quick in their ability to perceive “red flags” that
can eventually lead to serious problems. They must demonstrate their versatility and
toughness in order to keep subordinates dedicated to goal accomplishment. Executives
must realize that the project manager’s objectives during staffing are to:
Acquire the best available assets and try to improve them
Provide a good working environment for all personnel
Make sure that all resources are applied effectively and efficiently so that all constraints are met, if possible
4.2 SELECTING THE PROJECT MANAGER:
AN EXECUTIVE DECISION
Probably the most difficult decision facing upper-level management is the
selection of project managers. Some managers work best on long-duration
projects where decision-making can be slow; others may thrive on shortduration projects that can result in a constant-pressure environment.
A director was asked whom he would choose for a key project manager position—an
individual who had been a project manager on previous programs in which there were
severe problems and cost overruns, or a new aggressive individual who might have the
capability to be a good project manager but had never had the opportunity. The director
responded that he would go with the seasoned veteran assuming that the previous mistakes
would not be made again. The argument here is that the project manager must learn from
his own mistakes so they will not be made again. The new individual is apt to make the
same mistakes the veteran made. However, this may limit career path opportunities for
younger personnel. Stewart has commented on the importance of experience
1:
Though the project manager’s previous experience is apt to have been confined to a single
functional area of business, he must be able to function on the project as a kind of general
144 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
1. John M. Stewart, “Making Project Management Work.” Reprinted with permission from Business Horizons,
Fall 1965, p. 63. Copyright © 1965 by the Board of Trustees at Indiana University.
PMBOK® Guide, 4th Edition
9.2.1 Acquire Project Team
9.3.1 General Management Skills

manager in miniature. He must not only keep track of what is happening but also play the
crucial role of advocate for the project. Even for a seasoned manager, this task is not likely
to be easy. Hence, it is important to assign an individual whose administrative abilities and
skills in personal relations have been convincingly demonstrated under fire.
The selection process for project managers is not easy. Five basic questions must be
considered:
What are the internal and external sources?
How do we select?
How do we provide career development in project management?
How can we develop project management skills?
How do we evaluate project management performance?
Project management cannot succeed unless a good project manager is at the controls. It
is far more likely that project managers will succeed if it is obvious to the subordinates that
the general manager has appointed them. Usually, a brief memo to the line managers will suffice. The major responsibilities of the project manager include:
To produce the end-item with the available resources and within the constraints of
time, cost, and performance/technology
To meet contractual profit objectives
To make all required decisions whether they be for alternatives or termination
To act as the customer (external) and upper-level and functional management
(internal) communications focal point
To “negotiate” with all functional disciplines for accomplishment of the necessary
work packages within the constraints of time, cost, and performance/technology
To resolve all conflicts
If these responsibilities were applied to the total organization, they might reflect the job
description of the general manager. This analogy between project and general managers is one
of the reasons why future general managers are asked to perform functions that are implied,
rather than spelled out, in the job description. As an example, you are the project manager on a
high-technology project. As the project winds down, an executive asks you to write a paper so
that he can present it at a technical meeting in Tokyo. His name will appear first on the paper.
Should this be a part of your job? As this author sees it, you really don’t have much of a choice.
In order for project managers to fulfill their responsibilities successfully, they are constantly required to demonstrate their skills in interface, resource, and planning and control
management. These implicit responsibilities are shown below:
Interface Management
Product interfaces
Performance of parts or subsections
Physical connection of parts or subsections
Project interfaces
Customer
Management (functional and upper-level)
Selecting the Project Manager: An Executive Decision 145
Change of responsibilities
Information flow
Material interfaces (inventory control)
Resource Management
Time (schedule)
Manpower
Money
Facilities
Equipment
Material
Information/technology
Planning and Control Management
Increased equipment utilization
Increased performance efficiency
Reduced risks
Identification of alternatives to problems
Identification of alternative resolutions to conflicts
Consider the following advertisement for a facilities planning and development
project manager (adapted from
The New York Times, January 2, 1972):
Personable, well-educated, literate individual with college degree in Engineering to work
for a small firm. Long hours, no fringe benefits, no security, little chance for advancement
are among the inducements offered. Job requires wide knowledge and experience in manufacturing, materials, construction techniques, economics, management and mathematics.
Competence in the use of the spoken and written English is required. Must be willing to
suffer personal indignities from clients, professional derision from peers in the more conventional jobs, and slanderous insults from colleagues.
Job involves frequent extended trips to inaccessible locations throughout the world,
manual labor and extreme frustration from the lack of data on which to base decisions.
Applicant must be willing to risk personal and professional future on decisions based upon
inadequate information and complete lack of control over acceptance of recommendations
by clients. Responsibilities for the work are unclear and little or no guidance is offered.
Authority commensurate with responsibility is not provided either by the firm or its clients.
Applicant should send resume, list of publications, references and other supporting documentation to. . . .
Fortunately, these types of job descriptions are very rare today.
Finding the person with the right qualifications is not an easy task because the selection
of project managers is based more on personal characteristics than on the job description.
In Section 4.1 a brief outline of desired characteristics was presented. Russell Archibald
defines a broader range of desired personal characteristics
2:
Flexibility and adaptability
Preference for significant initiative and leadership
146 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
2. Russell D. Archibald, Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 55.
Copyright © 1976 by John Wiley & Sons, Inc. Reprinted by permission of the publisher.

Aggressiveness, confidence, persuasiveness, verbal fluency
Ambition, activity, forcefulness
Effectiveness as a communicator and integrator
Broad scope of personal interests
Poise, enthusiasm, imagination, spontaneity
Able to balance technical solutions with time, cost, and human factors
Well organized and disciplined
A generalist rather than a specialist
Able and willing to devote most of his time to planning and controlling
Able to identify problems
Willing to make decisions
Able to maintain proper balance in the use of time
This ideal project manager would probably have doctorates in engineering, business, and
psychology, and experience with ten different companies in a variety of project office positions,
and would be about twenty-five years old. Good project managers in industry today would
probably be lucky to have 70 to 80 percent of these characteristics. The best project managers
are willing and able to identify their own shortcomings and know when to ask for help.
The difficulty in staffing, especially for project managers or assistant project managers, is in determining what questions to ask during an interview to see if an individual
has the necessary or desired characteristics. Individuals may be qualified to be promoted
vertically but not horizontally. An individual with poor communication skills and interpersonal skills can be promoted to a line management slot because of his technical expertise,
but this same individual is not qualified for project management promotion.
One of the best ways to interview is to read each element of the job description to the
potential candidate. Many individuals want a career path in project management but are
totally unaware of what the project manager’s duties are.
So far we have discussed the personal characteristics of the project manager. There are
also job-related questions to consider, such as:
Are feasibility and economic analyses necessary?
Is complex technical expertise required? If so, is it within the individual’s
capabilities?
If the individual is lacking expertise, will there be sufficient backup strength in the
line organizations?
Is this the company’s or the individual’s first exposure to this type of project and/or
client? If so, what are the risks to be considered?
What is the priority for this project, and what are the risks?
With whom must the project manager interface, both inside and outside the
organization?
Most good project managers know how to perform feasibility studies and costbenefit analyses. Sometimes these studies create organizational conflict. A major utility
Selecting the Project Manager: An Executive Decision 147
PMBOK® Guide, 4th Edition
9.3 Develop Project Team
company begins each computer project with a feasibility study in which a cost-benefit
analysis is performed. The project managers, all of whom report to a project management
division, perform the study themselves without any direct functional support. The functional managers argue that the results are grossly inaccurate because the functional experts
are not involved. The project managers, on the other hand, argue that they never have sufficient time or money to perform a complete analysis. Some companies resolve this by
having a special group perform these studies.
Most companies would prefer to find project managers from within. Unfortunately,
this is easier said than done.
There are also good reasons for recruiting from outside the company. A new project
manager hired from the outside would be less likely to have strong informal ties to any one
line organization and thus could be impartial. Some companies further require that the
individual spend an apprenticeship period of twelve to eighteen months in a line organization to find out how the company functions, to become acquainted with the people, and to
understand the company’s policies and procedures.
One of the most important but often least understood characteristics of good project
managers is the ability to know their own strengths and weaknesses and those of their
employees. Managers must understand that in order for employees to perform efficiently:
They must know what they are supposed to do.
They must have a clear understanding of authority and its limits.
They must know what their relationship with other people is.
They should know what constitutes a job well done in terms of specific results.
They should know where and when they are falling short.
They must be made aware of what can and should be done to correct unsatisfactory results.
They must feel that their superior has an interest in them as individuals.
They must feel that their superior believes in them and wants them to succeed.
4.3 SKILL REQUIREMENTS FOR PROJECT AND
PROGRAM MANAGERS
Managing complex programs represents a challenge requiring skills in
team building, leadership, conflict resolution, technical expertise, planning, organization, entrepreneurship, administration, management support, and the allocation of resources. This section examines these skills
relative to program management effectiveness. A key factor to good program performance is the program manager’s ability to integrate personnel
from many disciplines into an effective work team.
To get results, the program manager must relate to (1) the people to be managed,
(2) the task to be done, (3) the tools available, (4) the organizational structure, and (5) the
organizational environment, including the customer community.
With an understanding of the interaction of corporate organization and behavior elements, the manager can build an environment conducive to the working team’s needs. The
148 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.3.2.1 Interpersonal Skills
1.4.2 Program Management

internal and external forces that impinge on the organization of the project must be reconciled to mutual goals. Thus the program manager must be both socially and technically
aware to understand how the organization functions and how these functions will affect the
program organization of the particular job to be done. In addition, the program manager
must understand the culture and value system of the organization he is working with.
Effective program management is directly related to proficiency in these ten skills:
Team building
Leadership
Conflict resolution
Technical expertise
Planning
Organization
Entrepreneurship
Administration
Management support
Resource allocation
It is important that the personal management style underlying these skills facilitate the
integration of multidisciplinary program resources for synergistic operation. The days of
the manager who gets by with technical expertise alone or pure administrative skills are gone.

Building the program team is one of the prime responsibilities of the
program manager. Team building involves a whole spectrum of man
Team-Building Skills

agement skills required to identify, commit, and integrate the various task groups from the
traditional functional organization into a single program management system.
To be effective, the program manager must provide an atmosphere conducive to teamwork. He must nurture a climate with the following characteristics:
Team members committed to the program
Good interpersonal relations and team spirit
The necessary expertise and resources
Clearly defined goals and program objectives
Involved and supportive top management
Good program leadership
Open communication among team members and support organizations
A low degree of detrimental interpersonal and intergroup conflict
Three major considerations are involved in all of the above factors: (1) effective
communications, (2) sincere interest in the professional growth of team members, and
(3) commitment to the project.

A prerequisite for program success is the program manager’s ability to
lead the team within a relatively unstructured environment. It involves
Leadership Skills

Skill Requirements for Project and Program Managers 149

dealing effectively with managers and supporting personnel across functional lines and the
ability to collect and filter relevant data for decision-making in a dynamic environment. It
involves the ability to integrate individual demands, requirements, and limitations into
decisions and to resolve intergroup conflicts.
As with a general manager, quality leadership depends heavily on the program manager’s personal experience and credibility within the organization. An effective management style might be characterized this way:
Clear project leadership and direction
Assistance in problem-solving
Facilitating the integration of new members into the team
Ability to handle interpersonal conflict
Facilitating group decisions
Capability to plan and elicit commitments
Ability to communicate clearly
Presentation of the team to higher management
Ability to balance technical solutions against economic and human factors
The personal traits desirable and supportive of the above skills are:
Project management experience
Flexibility and change orientation
Innovative thinking
Initiative and enthusiasm
Charisma and persuasiveness
Organization and discipline
Conflict is fundamental to complex task management. Understanding
the determinants of conflicts is important to the program manager’s ability to deal with conflicts effectively. When conflict becomes dysfunctional, it often results in
poor program decision-making, lengthy delays over issues, and a disruption of the team’s
efforts, all negative influences to program performance. However, conflict can be beneficial
when it produces involvement and new information and enhances the competitive spirit.
To successfully resolve conflict and improve overall program performance, program
managers must:
Understand interaction of the organizational and behavioral elements in order to
build an environment conducive to their team’s motivational needs. This will
enhance active participation and minimize unproductive conflict.
Communicate effectively with all organizational levels regarding both project
objectives and decisions. Regularly scheduled status review meetings can be an
important communication vehicle.
Recognize the determinants of conflict and their timing in the project life cycle.
Effective project planning, contingency planning, securing of commitments, and
150 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Conflict Resolution Skills
involving top management can help to avoid or minimize many conflicts before
they impede project performance.
The accomplished manager needs a “sixth sense” to indicate when conflict is desirable, what kind of conflict will be useful, and how much conflict is optimal for a given
situation. In the final analysis, he has the sole responsibility for his program and how conflict will contribute to its success or failure.
The program manager rarely has all the technical, administrative, and
marketing expertise needed to direct the program single-handedly. It is
essential, however, for the program manager to understand the technology, the markets,
and the environment of the business. Without this understanding, the consequences of local
decisions on the total program, the potential growth ramifications, and relationships to
other business opportunities cannot be foreseen by the manager. Further technical expertise is necessary to evaluate technical concepts and solutions, to communicate effectively
in technical terms with the project team, and to assess risks and make trade-offs between
cost, schedule, and technical issues. This is why in complex problem-solving situations so
many project managers must have an engineering background.
Technical expertise is composed of an understanding of the:
Technology involved
Engineering tools and techniques employed
Specific markets, their customers, and requirements
Product applications
Technological trends and evolutions
Relationship among supporting technologies
People who are part of the technical community
The technical expertise required for effective management of engineering programs is normally developed through progressive growth in engineering or supportive project assignments in a specific technology area. Frequently, the project begins with an exploratory
phase leading into a proposal. This is normally an excellent testing ground for the future
program manager. It also allows top management to judge the new candidate’s capacity for
managing the technological innovations and integration of solutions.
Planning skills are helpful for any undertaking; they are absolutely
essential for the successful management of large complex programs.
The project plan is the road map that defines how to get from the start to the final results.
Program planning is an ongoing activity at all organizational levels. However, the
preparation of a project summary plan, prior to project start, is the responsibility of the program manager. Effective project planning requires particular skills far beyond writing a document with schedules and budgets. It requires communication and information
processing skills to define the actual resource requirements and administrative support
Skill Requirements for Project and Program Managers 151
Technical Skills
Planning Skills

necessary. It requires the ability to negotiate the necessary resources and commitments from
key personnel in various support organizations with little or no formal authority.
Effective planning requires skills in the areas of:
Information processing
Communication
Resource negotiations
Securing commitments
Incremental and modular planning
Assuring measurable milestones
Facilitating top management involvement
In addition, the program manager must assure that the plan remains a viable document. Changes in project scope and depth are inevitable. The plan should reflect necessary
changes through formal revisions and should be the guiding document throughout the life
cycle of the program. An obsolete or irrelevant plan is useless.
Finally, program managers need to be aware that planning can be overdone. If not controlled, planning can become an end in itself and a poor substitute for innovative work. It
is the responsibility of the program manager to build flexibility into the plan and police
it against misuse.
The program manager must be a social architect; that is, he must
understand how the organization works and how to work with the
organization. Organizational skills are particularly important during project formation and
startup when the program manager is integrating people from many different disciplines
into an effective work team. It requires defining the reporting relationships, responsibilities, lines of control, and information needs. A good program plan and a task matrix are
useful organizational tools. In addition, the organizational effort is facilitated by clearly
defined program objectives, open communication channels, good program leadership, and
senior management support.
The program manager also needs a general management perspective.
For example, economic considerations affect the organization’s financial performance, but objectives often are much broader than profits. Customer satisfaction, future growth, cultivation of related market activities, and minimum organizational
disruptions of other programs might be equally important goals. The effective program
manager is concerned with all these issues.
Entrepreneurial skills are developed through actual experience. However, formal
MBA-type training, special seminars, and cross-functional training programs can help to
develop the entrepreneurial skills needed by program managers.

Administrative skills are essential. The program manager must be
experienced in planning, staffing, budgeting, scheduling, and other
Administrative Skills

152 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Organizational Skills
Entrepreneurial Skills

control techniques. In dealing with technical personnel, the problem is seldom to make people understand administrative techniques such as budgeting and scheduling, but to impress
on them that costs and schedules are just as important as elegant technical solutions.
Particularly on larger programs, managers rarely have all the administrative skills
required. While it is important that program managers understand the company’s operating procedures and available tools, it is often necessary for the program manager to free
himself from administrative details regardless of his ability to handle them. He has to delegate considerable administrative tasks to support groups or hire a project administrator.
Some helpful tools for the manager in the administration of his program include:
(1) the meeting, (2) the report, (3) the review, and (4) budget and schedule controls.
Program managers must be thoroughly familiar with these available tools and know how
to use them effectively.
The program manager is surrounded by a myriad of organizations that
either support him or control his activities. An understanding of these
interfaces is important to program managers as it enhances their ability
to build favorable relationships with senior management. Project organizations are sharedpower systems with personnel of many diverse interests and “ways of doing things.” Only a
strong leader backed by senior management can prevent the development of unfavorable
biases.
Four key variables influence the project manager’s ability to create favorable relationships with senior management: (1) his ongoing credibility, (2) the visibility of his
program, (3) the priority of his program relative to other organizational undertakings,
and (4) his own accessibility.
A program organization has many bosses. Functional lines often shield
support organizations from direct financial control by the project office.
Once a task has been authorized, it is often impossible to control the personnel assignments,
priorities, and indirect manpower costs. In addition, profit accountability is difficult owing
to the interdependencies of various support departments and the often changing work
scope and contents.
Effective and detailed program planning may facilitate commitment and reinforce
control. Part of the plan is the “Statement of Work,” which establishes a basis for resource
allocation. It is also important to work out specific agreements with all key contributors
and their superiors on the tasks to be performed and the associated budgets and schedules.
Measurable milestones are not only important for hardware components, but also for the
“invisible” program components such as systems and software tasks. Ideally, these commitments on specs, schedules, and budgets should be established through involvement by
key personnel in the early phases of project formation, such as the proposal phase. This is
the time when requirements are still flexible, and trade-offs among performance, schedule,
and budget parameters are possible. Further, this is normally the time when the competitive spirit among potential contributors is highest, often leading to a more cohesive and
challenging work plan.
Skill Requirements for Project and Program Managers 153
Management Support
Building Skills
Resource Allocation Skills

4.4 SPECIAL CASES IN PROJECT MANAGER SELECTION
Thus far we have assumed that the project is large enough for a full-time project manager
to be appointed. This is not always the case. There are four major problem areas in staffing
projects:
Part-time versus full-time assignments
Several projects assigned to one project manager
Projects assigned to functional managers
The project manager role retained by the general manager
The first problem is generally related to the size of the project. If the project is small
(in time duration or cost), a part-time project manager may be selected. Many executives
have fallen into the trap of letting line personnel act as part-time project managers while
still performing line functions. If the employee has a conflict between what is best for the
project and what is best for his line organization, the project will suffer. It is only natural
that the employee will favor the place the salary increases come from.
It is a common practice for one project manager to control several projects, especially
if they are either related or similar. Problems come about when the projects have drastically
different priorities. The low-priority efforts will be neglected.
If the project is a high-technology effort that requires specialization and can be performed by one department, then it is not unusual for the line manager to take on a dual role
and act as project manager as well. This can be difficult to do, especially if the project manager is required to establish the priorities for the work under his supervision. The line
manager may keep the best resources for the project, regardless of the priority. Then that
project will be a success at the expense of every other project he must supply resources to.
Probably the worst situation is that in which an executive fills the role of project manager
for a particular effort. The executive may not have the time necessary for total dedication to
the achievement of the project. He cannot make effective decisions as a project manager
while still discharging normal duties. Additionally, the executive may hoard the best
resources for his project.
4.5 SELECTING THE WRONG PROJECT MANAGER
Even though executives know the personal characteristics and traits that project managers
should possess, and even though job descriptions are often clearly defined, management may
still select the wrong person because they base their decision on the following criteria.
Some executives consider gray hair to be a sure indication of maturity,
but this is not the type of maturity needed for project management.
Maturity in project management generally comes from exposure to several types of projects
154 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Maturity
in a variety of project office positions. In aerospace and defense, it is possible for a project
manager to manage the same type of project for ten years or more. When placed on a new
project, the individual may try to force personnel and project requirements to adhere to the
same policies and procedures that existed on the ten-year project. The project manager may
know only one way of managing projects.
Applying hard-nosed tactics to subordinates can be very demoralizing.
Project managers must give people sufficient freedom to get the job
done, without providing continuous supervision and direction. A line employee who is
given “freedom” by his line manager but suddenly finds himself closely supervised by the
project manager will be very unhappy.
Line managers, because of their ability to control an employee’s salary, need only one
leadership style and can force the employees to adapt. The project manager, on the other
hand, cannot control salaries and must have a wide variety of leadership styles. The
project manager must adapt a leadership style to the project employees, whereas the reverse
is true in the line organization.
Executives should not assign individuals as project managers simply
because of availability. People have a tendency to cringe when you suggest that project managers be switched halfway through a project. For example, manager X is
halfway through his project. Manager Y is waiting for an assignment. A new project comes
up, and the executive switches managers X and Y. There are several reasons for this. The most
important phase of a project is planning, and, if it is accomplished correctly, the project could
conceivably run itself. Therefore, manager Y should be able to handle manager X’s project.
There are several other reasons why this switch may be necessary. The new project
may have a higher priority and require a more experienced manager. Second, not all
project managers are equal, especially when it comes to planning. When an executive finds
a project manager who demonstrates extraordinary talents at planning, there is a natural
tendency for the executive to want this project manager to plan all projects.
Executives quite often promote technical line managers without realizing the consequences. Technical specialists may not be able to
divorce themselves from the technical side of the house and become project managers
rather than project doers. There are also strong reasons to promote technical specialists to
project managers. These people often:
Have better relationships with fellow researchers
Can prevent duplication of effort
Can foster teamwork
Have progressed up through the technical ranks
Are knowledgeable in many technical fields
Understand the meaning of profitability and general management philosophy
Selecting the Wrong Project Manager 155
Hard-Nosed Tactics
Availability
Technical Expertise

Are interested in training and teaching
Understand how to work with perfectionists
Promoting an employee to project management because of his technical expertise may
be acceptable if, and only if, the project requires this expertise and technical direction, as
in R&D efforts. For projects in which a “generalist” is acceptable as a project manager,
there may be a great danger in assigning highly technical personnel. According to
Wilemon and Cicero
3:
The greater the project manager’s technical expertise, the higher the propensity
that he will overly involve himself in the technical details of the project.
The greater the project manager’s difficulty in delegating technical task responsibilities, the more likely it is that he will overinvolve himself in the technical
details of the project. (Depending upon his expertise to do so.)
The greater the project manager’s interest in the technical details of the project, the
more likely it is that he will defend the project manager’s role as one of a technical specialist.
The lower the project manager’s technical expertise, the more likely it is that he will
overstress the nontechnical project functions (administrative functions).

Executives quite often place individuals as project managers simply to
satisfy a customer request. Being able to communicate with the customer
Customer Orientation

does not guarantee project success, however. If the choice of project manager is simply a concession to the customer, then the executive must insist on providing a strong supporting team.
Executives run the risk of project failure if an individual is appointed
project manager simply to gain exposure to project management. An
executive of a utility company wanted to rotate his line personnel into project management
for twelve to eighteen months and then return them to the line organization where they
would be more well-rounded individuals and better understand the working relationship
between project management and line management. There are two major problems with
this. First, the individual may become technically obsolete after eighteen months in project management. Second, and more important, individuals who get a taste of project management will generally not want to return to the line organization.
The mere fact that individuals have worked in a variety of divisions
does not guarantee that they will make good project managers. Their
working in a variety of divisions may indicate that they couldn’t hold any one job. In that
case, they have reached their true level of incompetency, and putting them into project
156 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
3. D. L. Wilemon and J. P. Cicero, “The Project Manager—Anomalies and Ambiguities,” Academy of
Management Journal,
Vol. 13, 1970, pp. 269–282.
New Exposure
Company Exposure

management will only maximize the damage they can do to the company. Some executives
contend that the best way to train a project manager is by rotation through the various functional disciplines for two weeks to a month in each organization. Other executives maintain
that this is useless because the individual cannot learn anything in so short a period of time.
Tables 4–1 and 4–2 identify current thinking on methods for training project
managers.
Finally, there are three special points to consider:
Individuals should not be promoted to project management simply because they
are at the top of their pay grade.
Project managers should be promoted and paid based on performance, not on the
number of people supervised.
It is not necessary for the project manager to be the highest ranking or salaried
individual on the project team with the rationale that sufficient “clout” is needed.
Selecting the Wrong Project Manager 157
TABLE 4–1. METHODS AND TECHNIQUES FOR DEVELOPING PROJECT MANAGERS
I. Experiential training/on-the-job
Working with experienced professional leader
Working with project team member
Assigning a variety of project management responsibilities, consecutively
Job rotation
Formal on-the-job training
Supporting multifunctional activities
Customer liaison activities
II. Conceptual training/schooling
Courses, seminars, workshops
Simulations, games, cases
Group exercises
Hands-on exercises in using project management techniques
Professional meetings
Conventions, symposia
Readings, books, trade journals, professional magazines
III. Organizational development
Formally established and recognized project management function
Proper project organization
Project support systems
Project charter
Project management directives, policies, and procedures
TABLE 4–2. HOW TO TRAIN PROJECT MANAGERS
Company Management Say Project Managers Can Be Trained
in a Combination of Ways:

Experiential learning, on-the-job
Formal education and special courses
Professional activities, seminars
Readings
60%
20%
10%
10%

4.6 NEXT GENERATION PROJECT MANAGERS
The skills needed to be an effective, twenty-first century project manager have changed from
those needed during the 1980s. Historically, only engineers were given the opportunity to
become project managers. The belief was that the project manager had to have a command of
technology in order to make all of the technical decisions. As projects became larger and more
complex, it became obvious that project managers might need simply an understanding rather
than a command of technology. The true technical expertise would reside with the line managers, except for special situations such as R&D project management.
As project management began to grow and mature, the project manager was converted
from a technical manager to a business manager. The primary skills needed to be an effective project manager in the twenty-first century are:
Knowledge of the business
Risk management
Integration skills
The critical skill is risk management. However, to perform risk management effectively, a sound knowledge of the business is required. Figure 4–1 shows the changes in
project management skills needed between 1985 and 2008.
As projects become larger, the complexities of integration management become more
pronounced. Figure 4–2 illustrates the importance of integration management. In 1985,
project managers spent most of their time planning and replanning with their team. This
was necessary because the project manager was the technical expert. Today, line managers
are the technical experts and perform the majority of the planning and replanning within
their line. The project manager’s efforts are now heavily oriented toward integration of the
158 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM

Technical
Skills
Quantitative
Skills
Prob.
Solv.
Skills
Behav
ioral
Skills
Bus.
Con
ceptual
Skills
Tech
nical
Skills
Quantitative
Skills
Prob.
Solv.
Skills
Behav
ioral
Skills
Business
Conceptual
Skills

Year
1985
2008
FIGURE 4–1. Project management skills.
function plans into a total project plan. Some people contend that, with the increased risks
and complexities of integration management, the project manager of the future will
become an expert in damage control.
4.7 DUTIES AND JOB DESCRIPTIONS
Since projects, environments, and organizations differ from company to company as well as
project to project, it is not unusual for companies to struggle to provide reasonable job descriptions of the project manager and associated personnel. Below is a simple list identifying the
duties of a project manager in the construction industry
4:
Planning
Become completely familiar with all contract documents
Develop the basic plan for executing and controlling the project
Direct the preparation of project procedures
Direct the preparation of the project budget
Direct the preparation of the project schedule
Direct the preparation of basic project design criteria and general specifications
Direct the preparation of the plan for organizing, executing, and controlling
field construction activities
Review plans and procedures periodically and institute changes if necessary
Duties and Job Descriptions 159
Planning and

Replanning
with Team
Management

Integration
1985 2003
Year
Magnitude
of
Time
FIGURE 4–2. How do project managers spend their time?
4. Source unknown.
Organizing
Develop organization chart for project
Review project position descriptions, outlining duties, responsibilities, and
restrictions for key project supervisors
Participate in the selection of key project supervisors
Develop project manpower requirements
Continually review project organization and recommend changes in organizational structure and personnel, if necessary
Directing
Direct all work on the project that is required to meet contract obligations
Develop and maintain a system for decision-making within the project team
whereby decisions are made at the proper level
Promote the growth of key project supervisors
Establish objectives for project manager and performance goals for key project
supervisors
Foster and develop a spirit of project team effort
Assist in resolution of differences or problems between departments or groups
on assigned projects
Anticipate and avoid or minimize potential problems by maintaining current
knowledge of overall project status
Develop clear written strategy guidelines for all major problems with clear
definitions of responsibilities and restraints
Controlling
Monitor project activities for compliance with company purpose and philosophy and general corporate policies
Interpret, communicate, and require compliance with the contract, the
approved plan, project procedures, and directives of the client
Maintain personal control of adherence to contract warranty and guarantee provisions
Closely monitor project activities for conformity to contract scope provisions.
Establish change notice procedure to evaluate and communicate scope
changes
See that the plans for controlling and reporting on costs, schedule, and quality
are effectively utilized
Maintain effective communications with the client and all groups performing
project work
A more detailed job description of a construction project manager (for a utility company) appears below:
Duties
Under minimum supervision establishes the priorities for and directs the efforts of
personnel (including their consultants or contractors) involved or to be involved on
160 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
project controlled tasks to provide required achievement of an integrated approved set of
technical, manpower, cost, and schedule requirements.
1. Directs the development of initial and revised detailed task descriptions and forecasts of their associated technical, manpower, cost, and schedule requirements for
tasks assigned to the Division.
2. Directs the regular integration of initial and revised task forecasts into Divisional technical, manpower, cost, and schedule reports and initiates the approval cycle for the reports.
3. Reviews conflicting inter- and extra-divisional task recommendations or actions that
may occur from initial task description and forecast development until final task
completion and directs uniform methods for their resolution.
4. Evaluates available and planned additions to Division manpower resources, including
their tasks applications, against integrated technical and manpower reports and
initiates actions to assure that Division manpower resources needs are met by the
most economical mix of available qualified consultant and contractor personnel.
5. Evaluates Divisional cost and schedule reports in light of new tasks and changes in
existing tasks and initiates actions to assure that increases or decreases in task cost and
schedule are acceptable and are appropriately approved.
6. Prioritizes, adjusts, and directs the efforts of Division personnel (including their
consultants and contractors) resource allocations as necessary to both assure the
scheduled achievement of state and federal regulatory commitments and maintain
Divisional adherence to integrated manpower, cost, and schedule reports.
7. Regularly reports the results of Divisional manpower, cost, and schedule evaluations
to higher management.
8. Regularly directs the development and issue of individual task and integrated Project
programs reports.
9. Recommends new or revised Division strategies, goals, and objectives in light of
anticipated long-term manpower and budget needs.
10. Directly supervises project personnel in the regular preparation and issue of individual
task descriptions and their associated forecasts, integrated Division manpower, cost,
and schedule reports, and both task and Project progress reports.
11. Establishes basic organizational and personnel qualification requirements for
Division (including their consultants or contractors) performance on tasks.
12. Establishes the requirements for, directs the development of, and approves control
programs to standardize methods used for controlling similar types of activities in
the Project and in other Division Departments.
13. Establishes the requirements for, directs the development of, and approves administrative and technical training programs for Divisional personnel.
14. Approves recommendations for the placement of services or material purchase
orders by Division personnel and assures that the cost and schedule data associated
with such orders is consistent with approved integrated cost and schedule reports.
15. Promotes harmonious relations among Division organizations involved with Project
tasks.
16. Exercises other duties related to Divisional project controls as assigned by the
project manager.
Duties and Job Descriptions 161
162 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
TABLE 4–3. PROJECT MANAGEMENT POSITIONS AND RESPONSIBILITIES
Project Management
Position Typical Responsibility Skill Requirements
Project Administrator Coordinating and integrating of Planning
Project Coordinator subsystem tasks. Assisting in Coordinating
Technical Assistant determining technical and Analyzing
manpower requirements,
Understanding the organization
schedules, and budgets. Measuring
and analyzing project performance
regarding technical progress,
schedules, and budgets.
Task Manager Same as above, but stronger role in Technical expertise
Project Engineer establishing and maintaining Assessing trade-offs
Assistant Project project requirements. Conducting Managing task implementation
Manager trade-offs. Directing the technical
Leading task specialists
implementation according to
established schedules and budgets.
Project Manager Same as above, but stronger role in Overall program leadership
Program Manager project planning and controlling. Team building
Coordinating and negotiating
Resolving conflict
requirements between sponsor and
Managing multidisciplinary tasks
performing organizations. Bid
Planning and allocating resources
proposal development and pricing.
Interfacing with customers/
Establishing project organization sponsors
and staffing. Overall leadership
toward implementing project plan.
Project profit. New business
development.
Executive Program Title reserved for very large Business leadership
Manager programs relative to host
Managing overall program
organization. Responsibilities same businesses
as above. Focus is on directing
Building program organizations
overall program toward desired
Developing personnel
business results. Customer liaison.
Developing new business
Profit performance. New business
development. Organizational
development.
Director of Programs Responsible for managing Leadership
V.P. Program multiprogram businesses via Strategic planning
Development various project organizations, each
Directing and managing program
led by a project manager. Focus is businesses
on business planning and
Building organizations
development, profit performance,
Selecting and developing key
technology development, personnel
establishing policies and
Identifying and developing new
procedures, program management business
guidelines, personnel development,
organizational development.
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management

Qualifications
1.8 A Bachelor of Science Degree in Engineering or a Business Degree with a minor in
Engineering or Science from an accredited four (4) year college or university.
2.
8 a) (For Engineering Graduate) Ten (10) or more years of Engineering and
Construction experience including a minimum of five (5) years of supervisory
experience and two (2) years of management and electric utility experience.
2.8 b) (For Business Graduate) Ten (10) or more years of management experience
including a minimum of five (5) years of supervisory experience in an engineering
and construction related management area and two (2) years of experience as the
manager or assistant manager of major engineering and construction related projects
and two (2) recent years of electric utility experience.
3.
8 Working knowledge of state and federal regulations and requirements that apply to
major design and construction projects such as fossil and nuclear power stations.
4.
8 Demonstrated ability to develop high level management control programs.
5.
8 Experience related to computer processing of cost and schedule information.
6.
8 Registered Professional Engineer and membership in appropriate management and
technical societies is desirable (but not necessary).
7.
5 At least four (4) years of experience as a staff management member in an operating
nuclear power station or in an engineering support on- or off-site capacity.
8.
5 Detailed knowledge of federal licensing requirement for nuclear power stations.
9.
5 Reasonably effective public speaker.
Because of the potential overlapping nature of job descriptions in a project management environment, some companies try to define responsibilities for each project management position, as shown in Table 4–3.
4.8 THE ORGANIZATIONAL STAFFING PROCESS
Staffing the project organization can become a long and tedious effort,
especially on large and complex engineering projects. Three major questions must be answered:
What people resources are required?
Where will the people come from?
What type of project organizational structure will be best?
To determine the people resources required, the types of individuals (possibly job
descriptions) must be decided on, as well as how many individuals from each job category
are necessary and when these individuals will be needed.
The Organizational Staffing Process 163
5. Qualifications 7 through 9 apply only for Nuclear Project Directors.
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.2 Acquire Project Team

Consider the following situation: As a project manager, you have an activity that
requires three separate tasks, all performed within the same line organization. The line
manager promises you the best available resources right now for the first task but cannot
make any commitments beyond that. The line manager may have only below-average
workers available for the second and third tasks. However, the line manager is willing to
make a deal with you. He can give you an employee who can do the work but will only
give an average performance. If you accept the average employee, the line manager will
guarantee that the employee will be available to you for all three tasks. How important is
continuity to you? There is no clearly definable answer to this question. Some people will
always want the best resources and are willing to fight for them, whereas others prefer
continuity and dislike seeing new people coming and going. The author prefers continuity, provided that the assigned employee has the ability to do the up-front planning needed
during the first task. The danger in selecting the best employee is that a higher-priority
project may come along, and you will lose the employee; or if the employee is an exceptional worker, he may simply be promoted off your project.
Sometimes, a project manager may have to make concessions to get the right people.
For example, during the seventh, eighth, and ninth months of your project you need two
individuals with special qualifications. The functional manager says that they will be available two months earlier, and that if you don’t pick them up then, there will be no guarantee of their availability during the seventh month. Obviously, the line manager is
pressuring you, and you may have to give in. There is also the situation in which the line
manager says that he’ll have to borrow people from another department in order to fulfill
his commitments for your project. You may have to live with this situation, but be very
careful—these employees will be working at a low level on the learning curve, and overtime will not necessarily resolve the problem. You must expect mistakes here.
Line managers often place new employees on projects so they can be upgraded. Project
managers often resent this and immediately go to top management for help. If
a line manager says that he can do the work with lower-level people, then the project
manager must believe the line manager. After all, the line manager, not the assigned employees, makes the commitment to do the work, and it is the line manager’s neck that is stuck out.
Mutual trust between project and line managers is crucial, especially during staffing
sessions. Once a project manager has developed a good working relationship with employees, the project manager would like to keep those individuals assigned to his activities.
There is nothing wrong with a project manager requesting the same administrative and/or
technical staff as before. Line managers realize this and usually agree to it.
There must also be mutual trust between the project managers themselves. Project
managers must work as a team, recognize each other’s needs, and be willing to make decisions that are in the best interest of the company.
Once the resources are defined, the next question must be whether staffing will be
from within the existing organization or from outside sources, such as new hires or consultants. Outside consultants are advisable if, and only if, internal manpower resources are
being fully utilized on other programs, or if the company does not possess the required
project skills. The answer to this question will indicate which organizational form is best
for achievement of the objectives. The form might be a matrix, product, or staff project
management structure.
164 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Not all companies permit a variety of project organizational forms to exist within the
main company structure. Those that do, however, consider the basic questions of classical
management before making a decision. These include:
How is labor specialized?
What should the span of management be?
How much planning is required?
Are authority relationships delegated and understood?
Are there established performance standards?
What is the rate of change of the job requirements?
Should we have a horizontal or vertical organization?
What are the economics?
What are the morale implications?
Do we need a unity-of-command position?
As in any organization, the subordinates can make the superior look good in the performance of his duties. Unfortunately, the project environment is symbolized by temporary
assignments in which the main effort put forth by the project manager is to motivate his
(temporary) subordinates toward project dedication and to make them fully understand
that:
Teamwork is vital for success.
Esprit de corps contributes to success.
Conflicts can occur between project and functional tiers.
Communication is essential for success.
Conflicting orders may be given by the:
Project manager
Functional manager
Upper-level manager
Unsuccessful performance may result in transfer or dismissal from the project as
well as disciplinary action.
Earlier we stated that a project operates as a separate entity but remains attached to
the company through company administration policies and procedures. Although project
managers can establish their own policies, procedures, and rules, the criteria for promotion
must be based on company standards. Project managers should be careful about making
commitments they can’t keep. After unkept promises on previous projects, a project manager will find it very difficult to get top-quality personnel to volunteer for another project.
Even if top management orders key individuals to be assigned to his project, they will
always be skeptical about any promises that he may make.
Selecting the project manager is only one-third of the staffing problem. The next step,
selecting the project office personnel and team members, can be a time-consuming chore. The
project office consists of personnel who are usually assigned as full-time members of the project. The evaluation process should include active project team members, functional team
members available for promotion or transfer, and outside applicants.
The Organizational Staffing Process 165
Upon completion of the evaluation process, the project manager meets with upperlevel management. This coordination is required to assure that:
All assignments fall within current policies on rank, salary, and promotion.
The individuals selected can work well with both the project manager (formal
reporting) and upper-level management (informal reporting).
The individuals selected have good working relationships with the functional
personnel.
Good project office personnel usually have experience with several types of projects
and are self-disciplined.
The third and final step in the staffing of the project office is a meeting between the project manager, upper-level management, and the project manager on whose project the
requested individuals are currently assigned. Project managers are very reluctant to give up
qualified personnel to other projects, but unfortunately, this procedure is a way of life in a
project environment. Upper-level management attends these meetings to show all negotiating parties that top management is concerned with maintaining the best possible mix of individuals from available resources and to help resolve staffing conflicts. Staffing from within
is a negotiation process in which upper-level management establishes the ground rules and
priorities.
The selected individuals are then notified of the anticipated change and asked their
opinions. If individuals have strong resentment to being transferred or reassigned, alternate
personnel may be selected to avoid potential problems.
Figure 4–3 shows the typical staffing pattern as a function of time. There is a manpower buildup in the early phases and a manpower decline in the later stages. This means
166 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
TO OTHER PROJECTS
OR FUNCTIONAL GROUPS
FROM OTHER PROJECTS
OR FUNCTIONAL GROUPS
STAFFING
PROJECT PHASE
TIME
I II III IV V VI
FIGURE 4–3. Staffing pattern versus time.
that the project manager should bring people on board as needed and release them as early
as possible.
There are several psychological approaches that the project manager can use during
the recruitment and staffing process. Consider the following:
Line managers often receive no visibility or credit for a job well done. Be willing
to introduce line managers to the customer.
Be sure to show people how they can benefit by working for you or on your project.
Any promises made during recruitment should be documented. The functional
organization will remember them long after your project terminates.
As strange as it may seem, the project manager should encourage conflicts to take
place during recruiting and staffing. These conflicts should be brought to the surface and resolved. It is better for conflicts to be resolved during the initial planning
stages than to have major confrontations later.
It is unfortunate that recruiting and retaining good personnel are more difficult in a
project organizational structure than in a purely traditional one. Clayton Reeser identifies
nine potential problems that can exist in project organizations
6:
Personnel connected with project forms of organization suffer more anxieties about
possible loss of employment than members of functional organizations.
Individuals temporarily assigned to matrix organizations are more frustrated by
authority ambiguity than permanent members of functional organizations.
Personnel connected with project forms of organization that are nearing their
phase-out are more frustrated by what they perceive to be “make work” assignments than members of functional organizations.
Personnel connected with project forms of organization feel more frustrated
because of lack of formal procedures and role definitions than members of functional organizations.
Personnel connected with project forms of organization worry more about being
set back in their careers than members of functional organizations.
Personnel connected with project forms of organization feel less loyal to their
organization than members of functional organizations.
Personnel connected with project forms of organization have more anxieties in
feeling that there is no one concerned about their personal development than members of functional organizations.
Permanent members of project forms of organization are more frustrated by multiple levels of management than members of functional organizations.
Frustrations caused by conflict are perceived more seriously by personnel
connected with project forms of organization than members of functional
organizations.
The Organizational Staffing Process 167
6. Clayton Reeser, “Some Potential Human Problems of the Project Form of Organization,” Academy of
Management Journal,
Vol. XII, 1969, pp. 462–466.
Employees are more likely to be motivated to working on a project if the employee had
been given the right to accept or refuse the assignment. Although employees usually do not
refuse assignments, there is still the question of how much permissiveness should be given
to the worker. The following would be a listing or possible degrees of permissiveness:
The line manager (or project manager) explains the project to the worker and the
worker has the right to refuse the assignment. The worker does not need to explain
the reason for refusing the assignment and the refusal does not limit the worker’s
opportunity for advancement or assignment to other project teams.
With this degree of permissiveness, the worker has the right to refuse the assignment but must provide a reason for the refusal. The reason could be due to personal or career preference considerations such as having to travel, relocation,
health reasons, possibly too much overtime involved, simply not an assignment
that is viewed as enhancing the individual’s career, or the employee wants an
assignment on some other project.
With this degree of permissiveness, the worker has no choice but to accept the
assignment. Only an emergency would be considered as a valid reason for refusing the assignment. In this case, refusing the assignment might be damaging to the
employee’s career.
Grinnell and Apple have identified four additional major problems associated with
staffing
7:
People trained in single line-of-command organizations find it hard to serve more
than one boss.
People may give lip service to teamwork, but not really know how to develop and
maintain a good working team.
Project and functional managers sometimes tend to compete rather than cooperate
with each other.
Individuals must learn to do more “managing” of themselves.
Thus far we have discussed staffing the project. Unfortunately, there are also situations in which employees must be terminated from the project because of:
Nonacceptance of rules, policies, and procedures
Nonacceptance of established formal authority
Professionalism being more important to them than company loyalty
Focusing on technical aspects at the expense of the budget and schedule
Incompetence
There are three possible solutions for working with incompetent personnel. First,
the project manager can provide an on-the-spot appraisal of the employee. This includes
identification of weaknesses, corrective action to be taken, and threat of punishment if the
situation continues. A second solution is reassignment of the employee to less critical
activities. This solution is usually not preferred by project managers. The third and most
frequent solution is the removal of the employee.
168 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
7. S. K. Grinnell and H. P. Apple, “When Two Bosses Are Better Than One,” Machine Design, January 1975,
pp. 84–87.

Although project managers can get project office people (who report to the project
manager) removed directly, the removal of a line employee is an indirect process and must
be accomplished through the line manager. The removal of the line employee should be
made to look like a transfer; otherwise the project manager will be branded as an individual who fires people.
Executives must be ready to cope with the staffing problems that can occur in a
project environment. C. Ray Gullett has summarized these major problems
8:
Staffing levels are more variable in a project environment.
Performance evaluation is more complex and more subject to error in a matrix
form of organization.
Wage and salary grades are more difficult to maintain under a matrix form of
organization. Job descriptions are often of less value.
Training and development are more complex and at the same time more necessary
under a project form of organization.
Morale problems are potentially greater in a matrix organization.
4.9 THE PROJECT OFFICE
The project team is a combination of the project office and functional employees as shown in Figure 4–4. Although the figure identifies the project office
personnel as assistant project managers, some employees may not have any
such title. The advantage of such a title is that it entitles the employee to speak directly to the
customer. For example, the project engineer might also be called the assistant project manager
for engineering. The title is important because when the assistant project manager speaks to the
customer, he represents the company, whereas the functional employee represents himself.
The project office is an organization developed to support the project manager in carrying out his duties. Project office personnel must have the same dedication toward the project as the project manager and must have good working relationships with both the project
and functional managers. The responsibilities of the project office include:
Acting as the focal point of information for both in-house control and customer
reporting
Controlling time, cost, and performance to adhere to contractual requirements
Ensuring that all work required is documented and distributed to all key personnel
Ensuring that all work performed is both authorized and funded by contractual
documentation
The major responsibility of the project manager and the project office personnel is the
integration of work across the functional lines of the organization. Functional units, such
as engineering, R&D, and manufacturing, together with extra-company subcontractors,
must work toward the same specifications, designs, and even objectives. The lack of proper
The Project Office 169
8. C. Ray Gullett, “Personnel Management in the Project Environment,” Personnel Administration/Public
Personnel Review,
November–December 1972, pp. 17–22.
PMBOK® Guide, 4th Edition
1.4.4 Project Management Office
integration of these functional units is the most common cause of project failure. The team
members must be dedicated to all activities required for project success, not just their own
functional responsibilities. The problems resulting from lack of integration can best be
solved by full-time membership and participation of project office personnel. Not all team
members are part of the project office. Functional representatives, performing at the interface position, also act as integrators but at a closer position to where the work is finally
accomplished (i.e., the line organization).
One of the biggest challenges facing project managers is determining the size of the project office. The optimal size is determined by a trade-off between the maximum number of
members necessary to assure compliance with requirements and the maximum number for
keeping the total administrative costs under control. Membership is determined by factors
such as project size, internal support requirements, type of project (i.e., R&D, qualification,
production), level of technical competency required, and customer support requirements.
Membership size is also influenced by how strategic management views the project to be.
There is a tendency to enlarge project offices if the project is considered strategic, especially
if follow-on work is possible.
On large projects, and even on some smaller efforts, it is often impossible to achieve
project success without permanently assigned personnel. The four major activities of
the project office, shown below, indicate the need for using full-time people:
Integration of activities
In-house and out-of-house communication
Scheduling with risk and uncertainty
Effective control
These four activities require continuous monitoring by trained project personnel. The
training of good project office members may take weeks or even months, and can extend
beyond the time allocated for a project. Because key personnel are always in demand,
project managers should ask themselves and upper-level management one pivotal question
when attempting to staff the project office:
Are there any projects downstream that could cause me to lose key members of my team?
170 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM

PROJECT
MANAGER

ASSISTANT PROJECT
MANAGERS
PROJECT OFFICE
PROJECT TEAM
FUNCTIONAL
MANAGERS
FUNCTIONAL
EMPLOYEES
FIGURE 4–4. Project organization.
If the answer to this question is yes, then it might benefit the project to have the secondor third-choice person selected for the position or even to staff the position on a part-time
basis. Another alternative, of course, would be to assign the key members to activities that
are not so important and that can be readily performed by replacement personnel. This,
however, is impractical because such personnel will not be employed efficiently.
Program managers would like nothing better than to have all of their key personnel
assigned full-time for the duration of the program. Unfortunately, this is undesirable, if not
impossible, for many projects because
9:
Skills required by the project vary considerably as the project matures through
each of its life-cycle phases.
Building up large permanently assigned project offices for each project inevitably
causes duplication of certain skills (often those in short supply), carrying of people who are not needed on a full-time basis or for a long period, and personnel difficulties in reassignment.
The project manager may be diverted from his primary task and become the
project engineer, for example, in addition to his duties of supervision, administration, and dealing with the personnel problems of a large office rather than concentrating on managing all aspects of the project itself.
Professionally trained people often prefer to work within a group devoted to their
professional area, with permanent management having qualifications in the same
field, rather than becoming isolated from their specialty peers by being assigned
to a project staff.
Projects are subject to sudden shifts in priority or even to cancellation, and fulltime members of a project office are thus exposed to potentially serious threats
to their job security; this often causes a reluctance on the part of some people to
accept a project assignment.
All of these factors favor keeping the full-time project office as small as possible and
dependent on established functional departments and specialized staffs. The approach
places great emphasis on the planning and control procedures used on the project. On the
other hand, there are valid reasons for assigning particular people of various specialties to
the project office. These specialties usually include:
Systems analysis and engineering (or equivalent technical discipline) and product
quality and configuration control, if the product requires such an effort
Project planning, scheduling, control, and administrative support
Many times a project office is staffed by promotion of functional specialists. This situation is quite common to engineering firms with a high percentage of technical employees, but is not without problems.
The Project Office 171
9. Russell D. Archibald, Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 82.
Copyright © 1976 by John Wiley & Sons, Inc. Reprinted by permission of the publisher.

In professional firms, personnel are generally promoted to management on the basis of their
professional or technical competence rather than their managerial ability. While this practice
may be unavoidable, it does tend to promote men with insufficient knowledge of management techniques and creates a frustrating environment for the professional down the line.
10
There is an unfortunate tendency for executives to create an environment where line
employees feel that the “grass is greener” in project management and project engineering
than in the line organization. How should an executive handle a situation where line specialists continually apply for transfer to project management? One solution is the development of a dual ladder system, with a pay scale called “consultant.” This particular company
created the consultant position because:
There were several technical specialists who were worth more money to the company but who refused to accept a management position to get it.
Technical specialists could not be paid more money than line managers.
Promoting technical specialists to a management slot simply to give them more
money can:
Create a poor line manager
Turn a specialist into a generalist
Leave a large technical gap in the line organization
Line managers often argue that they cannot perform their managerial duties and control these “prima donnas” who earn more money and have a higher pay grade than the line
managers. That is faulty reasoning. Every time the consultants do something well, it
reflects on the entire line organization, not merely on themselves.
The concept of having functional employees with a higher pay grade than the line manager can also be applied to the horizontal project. It is possible for a junior project manager
suddenly to find that the line managers have a higher pay grade than the project manager. It
is also possible for assistant project managers (as project engineers) to have a higher pay
grade than the project manager. Project management is designed to put together the best mix
of people to achieve the objective. If this best mix requires that a grade 7 report to a grade 9
(on a “temporary” project), then so be it. Executives should not let salaries, and pay grades,
stand in the way of constructing a good project organization.
Another major concern is the relationship that exists between project office personnel
and functional managers. In many organizations, membership in the project office is considered to be more important than in the functional department. Functional members have a tendency to resent an individual who has just been promoted out of a functional department and
into project management. Killian has described ways of resolving potential conflicts
11:
It must be kept in mind that veteran functional managers cannot be expected to accept
direction readily from some lesser executive who is suddenly labelled a Project Manager.
Management can avoid this problem by:
Selecting a man who already has a high position of responsibility or placing him high
enough in the organization.
172 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
10. William P. Killian, “Project Management—Future Organizational Concept,” Marquette Business Review,
1971, pp. 90–107.
11. William P. Killian, “Project Management—Future Organizational Concept,”
Marquette Business Review,
1971, pp. 90–107.
The Project Office 173
Assigning him a title as important-sounding as those of functional managers.
Supporting him in his dealings with functional managers.
If the Project Manager is expected to exercise project control over the functional departments, then he must report to the same level as the departments, or higher.
Executives can severely hinder project managers by limiting their authority to select
and organize (when necessary) a project office and team. According to Cleland
12:
His [project manager’s] staff should be qualified to provide personal administrative and
technical support. He should have sufficient authority to increase or decrease his staff as
necessary throughout the life of the project. The authorization should include selective
augmentation for varying periods of time from the supporting functional areas.
Many executives have a misconception concerning the makeup and usefulness of the
project office. People who work in the project office should be individuals whose first concern is project management, not the enhancement of their technical expertise. It is almost
impossible for individuals to perform for any extended period of time in the project office
without becoming cross-trained in a second or third project office function. For example,
the project manager for cost could acquire enough expertise eventually to act as the assistant to the assistant project manager for procurement. This technique of project office
cross-training is an excellent mechanism for creating good project managers.
We have mentioned two important facts concerning the project management staffing
process:
The individual who aspires to become a project manager must be willing to give
up technical expertise and become a generalist.
Individuals can be qualified to be promoted vertically but not horizontally.
Once an employee has demonstrated the necessary attributes to be a good project manager, there are three ways the individual can become a project manager or part of the project
office. The executive can:
Promote the individual in salary and grade and transfer him into project management.
Laterally transfer the individual into project management without any salary or
grade increase. If, after three to six months, the employee demonstrates that he can
perform, he will receive an appropriate salary and grade increase.
Give the employee a small salary increase without any grade increase or a grade
increase without any salary increase, with the stipulation that additional awards
will be forthcoming after the observation period, assuming that the employee can
handle the position.
12. David I. Cleland, “Why Project Management?” Reprinted with permission from Business Horizons, Winter
1964, p. 85. Copyright © 1964 by the Board of Trustees at Indiana University.

174 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Many executives believe in the philosophy that once an individual enters the world of
project management, there are only two places to go: up in the organization or out the door.
If an individual is given a promotion and pay increase and is placed in project management
and fails, his salary may not be compatible with that of his previous line organization, and
now there is no place for him to go. Most executives, and employees, prefer the second
method because it actually provides some protection for the employee.
Many companies don’t realize until it is too late that promotions to project management may be based on a different set of criteria from promotions to line management.
Promotions on the horizontal line are strongly based on communicative skills, whereas line
management promotions are based on technical skills.
4.10 THE FUNCTIONAL TEAM
The project team consists of the project manager, the project office
(whose members may or may not report directly to the project manager),
and the functional or interface members (who must report horizontally as
well as vertically for information flow). Functional team members are
often shown on organizational charts as project office team members. This
is normally done to satisfy customer requirements.
Upper-level management can have an input into the selection process for functional
team members but should not take an active role unless the project and functional managers cannot agree. Functional management must be represented at all staffing meetings
because functional staffing is directly dependent on project requirements and because:
Functional managers generally have more expertise and can identify high-risk
areas.
Functional managers must develop a positive attitude toward project success. This
is best achieved by inviting their participation in the early activities of the planning
phase.
Functional team members are not always full-time. They can be full-time or part-time
for either the duration of the project or only specific phases.
The selection process for both the functional team member and the project office must
include evaluation of any special requirements. The most common special requirements
develop from:
Changes in technical specifications
Special customer requests
Organizational restructuring because of deviations from existing policies
Compatibility with the customer’s project office
A typical project office may include between ten and thirty members, whereas the
total project team may be in excess of a hundred people, causing information to be shared
slowly. For large projects, it is desirable to have a full-time functional representative from
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
2.3 Project Team Definition

The Project Organizational Chart 175
each major division or department assigned permanently to the project, and perhaps even
to the project office. Such representation might include:
Program management
Project engineering
Engineering operations
Manufacturing operations
Procurement
Quality control
Cost accounting
Publications
Marketing
Sales
Both the project manager and team members must understand fully the responsibilities and
functions of each other team member so that total integration can be achieved rapidly
and effectively. On high-technology programs the chief project engineer assumes the role
of deputy project manager. Project managers must understand the problems that the line
managers have when selecting and assigning the project staff. Line managers try to staff
with people who understand the need for teamwork.
When employees are attached to a project, the project manager must identify the
“star” employees. These are the employees who are vital for the success of the project and
who can either make or break the project manager. Most of the time, star employees are
found in the line organization, not the project office.
As a final point, project managers can assign line employees added responsibilities
within the scope of the project. If the added responsibilities can result in upgrading, then
the project manager should consult with the line manager before such situations are initiated. Quite often, line managers (or even personnel representatives) send “check” people
into the projects to verify that employees are performing at their proper pay grade. This is
very important when working with blue-collar workers who, by union contractual agreements, must be paid at the grade level at which they are performing.
Also, project managers must be willing to surrender resources when they are no longer
required. If the project manager constantly cries wolf in a situation where a problem really
does not exist, the line manager will simply pull away the resources (this is the line manager’s right), and a deteriorating working relationship will result.
4.11 THE PROJECT ORGANIZATIONAL CHART
One of the first requirements of the project startup phase is to develop the organizational
chart for the project and determine its relationship to the parent organizational structure.
Figure 4–5 shows, in abbreviated form, the six major programs at Dalton Corporation. Our
concern is with the Midas Program. Although the Midas Program may have the lowest
priority of the six programs, it is placed at the top, and in boldface, to give the impression

176 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
that it is the top priority. This type of representation usually makes the client or customer
feel that his program is important to the contractor.
The employees shown in Figure 4–5 may be part-time or full-time, depending upon the
project’s requirements. Perturbations on Figure 4–5 might include one employee’s name identified on two or more vertical positions (i.e., the project engineer on two projects) or the same
name in two horizontal boxes (i.e., for a small project, the same person could be the project
manager and project engineer). Remember, this type of chart is for the customer’s benefit and
may not show the true “dotted/solid” reporting relationships in the company.
VICE PRESIDENT AND
GENERAL MANAGER
RICHARD GREEN
PROGRAM
MANAGEMENT
ARTHUR LENZ
DIRECTOR
ENGINEERING
MANAGEMENT
DR. HENRY WICKS
DIRECTOR
OPERATIONS
MANAGEMENT
STEVEN KRANSKY
DIRECTOR
MIDAS
PROGRAM
PAUL JONES
MIDAS
PROGRAM
AL TANDY
MIDAS
PROGRAM
DON DAVIS
AXLE PROGRAM
LES WHITE
AXLE PROGRAM
DR. MAX MOY
AXLE PROGRAM
AL BLACK
LEX PROGRAM
GEORGE MAY
LEX PROGRAM
LEE ABLE
LEX PROGRAM
SID JONES
UMB PROGRAM
JOHN TURNER
UMB PROGRAM
RICHARD LORD
UMB PROGRAM
ALEX CORD
TALON
PROGRAM
FRED DARK
TALON
PROGRAM
LON CHANK
TALON
PROGRAM
PAUL STERNS
MM PROGRAM
RALPH DAVIS
MM PROGRAM
FRED BERN
MM PROGRAM
LOU BLUHM
FIGURE 4–5. Dalton Corporation.
The Project Organizational Chart 177
The next step is to show the program office structure, as illustrated in Figure 4–6. Note
that the chief of operations and the chief engineer have dual reporting responsibility; they
report directly to the program manager and indirectly to the directors. Again, this may be
just for the customer’s benefit with the real reporting structure being reversed. Beneath the
chief engineer, there are three positions. Although these positions appear as solid lines,
they might actually be dotted lines. For example, Ed White might be working only parttime on the Midas Program but is still shown on the chart as a permanent program office
member. Jean Flood, under contracts, might be spending only ten hours per week on the
Midas Program.
If the function of two positions on the organizational chart takes place at different
times, then both positions may be shown as manned by the same person. For example, Ed
White may have his name under both engineering design and engineering testing if the two
activities are far enough apart that he can perform them independently.
The people shown in the project office organizational chart, whether full-time or parttime, may not be physically sitting in the project office. For full-time, long-term assignments,
as in construction projects, the employees may be physically sitting side by side, whereas for
part-time assignments, it may be imperative for them to sit in their functional group.
Remember, these types of charts may simply be eyewash for the customer.
Most customers realize that the top-quality personnel may be shared with other programs
and projects. Project manning charts, such as the one shown in Figure 4–7, can be used for
this purpose. These manning charts are also helpful in preparing the management volume of
proposals to show the customer that key personnel will be readily available on his project.
DIRECTOR
ENGINEERING
DIRECTOR
PROGRAM
MANAGEMENT
PAUL JONES
MIDAS PROGRAM
MANAGER
ED WHITE
ENG DESIGN
LOU PEARLY
ENG TESTING
FERD CAIN
PROJECT ENG
ANDY LINK
Q.A.
JOHN ROYAL
MANU. ENG
REX WHITE
PRODUCTION
REPORTING LEGEND
ERNIE JONES
COST ACCT
JEAN FLOOD
CONTRACTS
TED BLACK
SCHEDULES
DIRECT
INDIRECT
DIRECTOR
OPERATIONS
AL TANDY
CHIEF ENGINEER
DON DAVIS
CHIEF
OPERATIONS
FIGURE 4–6. Midas Program office.
178 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
4.12 SPECIAL PROBLEMS
There are always special problems that influence the organizational staffing process. For
example, the department shown in Figure 4–8 has a departmental matrix. All activities stay
within the department. Project X and project Y are managed by line employees who have
been temporarily assigned to the projects, whereas project Z is headed by supervisor B.
The department’s activities involve high-technology engineering as well as R&D.
The biggest problem facing the department managers is that of training their new
employees. The training process requires nine to twelve months. The employees become
familiar with the functioning of all three sections, and only after training is an employee
assigned to one of the sections. Line managers claim that they do not have sufficient time to
supervise training. As a result, the department manager in the example found staff person C
to be the most competent person to supervise training. A special department training
project was set up, as shown in Figure 4–8.

FERD CAIN
CHIEF PROJECT
ENGINEER
FRED TAYLOR
PROJECT ENG.
RUBBER
TONY PALO
PH.D.
PROJECT ENG.
ADHESIVES
TED FLYNN
PH.D.
PROJECT ENG.
STRUCTURES
ED MAPLE
PROJECT ENG.
THERMODYNAMIC
LOU HAZEL
PH.D.
PROJECT ENG.
CONFIGURATION

EXPERTISE:
EXPERTISE:
EXPERTISE:
EXPERTISE:
EXPERTISE:
EXPERTISE:
PERCENT TIME ON PROGRAM
PERCENT TIME ON PROGRAM
PERCENT TIME ON PROGRAM
PERCENT TIME ON PROGRAM
PERCENT TIME ON PROGRAM
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
0 20 40 60 80 100
PERCENT TIME ON PROGRAM
0 20 40 60 80 100
FIGURE 4–7. Project engineering department manning for the Midas Program.
Special Problems 179
Figure 4–9 shows a utility company that has three full-time project managers controlling three projects, all of which cut across the central division. Unfortunately, the three
full-time project managers cannot get sufficient resources from the central division
because the line managers are also acting as divisional project managers and saving the
best resources for their own projects.
The obvious solution to the problem is that the central division line managers not be
permitted to wear two hats. Instead, one full-time project manager can be added to the left
division to manage all three central division projects. It is usually best for all project managers to report to the same division for priority setting and conflict resolution.
Line managers have a tendency to feel demoted when they are suddenly told that they
can no longer wear two hats. For example, Mr. Adams was a department manager with
thirty years of experience in a company. For the last several years, he had worn two hats
and acted as both project manager and functional manager on a variety of projects. He was
regarded as an expert in his field. The company decided to incorporate formal project management and established a project management department. Mr. Bell, a thirty-year-old
employee with three years of experience with the company, was assigned as the project
manager. In order to staff his project, Bell asked Adams for Mr. Cane (Bell’s friend) to be
assigned to the project as the functional representative. Cane had been with the company
for two years. Adams agreed to the request and informed Cane of his new assignment,
DEPARTMENT
MANAGER
DEPARTMENT MANAGER EVALUATES
ALL NEW EMPLOYEES DURING TRAINING.
AFTER TRAINING, EMPLOYEE WILL WORK
FOR A SECTION SUPERVISOR.
NOTE:
STAFF
PERSON A
STAFF
PERSON B
STAFF
PERSON C

TRAINING
(SUPERVISOR B)
PROJECT Z

STAFF
PERSON
C
NEW
EMPLOYEES
SUPERVISOR
SECTION A
SUPERVISOR
SECTION B
SUPERVISOR
SECTION C
PROJECT X
PROJECT Y
FIGURE 4–8. The training problem.
180 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
closing with the remarks, “This project is yours all the way. I don’t want to have anything
to do with it. I’ll be busy with paperwork as a result of the new organizational structure.
Just send me a memo once in a while telling me what’s happening.”
During the project kickoff meeting, it became obvious to everyone that the only
person with the necessary expertise was Adams. Without his support, the duration of the
project could be expected to double.
The real problem here was that Adams wanted to feel important and needed, and was
hoping that the project manager would come to him asking for his assistance. The project
manager correctly analyzed the situation but refused to ask for the line manager’s help.
Instead, the project manager asked an executive to step in and force the line manager to
help. The line manager gave his help, but with great reluctance. Today, the line manager
provides poor support to the projects that come across his line organization.
4.13 SELECTING THE PROJECT MANAGEMENT
IMPLEMENTATION TEAM
The implementation of project management within an organization
requires strong executive support and an implementation team that is
dedicated to making project management work. Selecting the wrong
team players can either lengthen the implementation process or reduce

VICE
PRESIDENT
DIVISION
MANAGER
DIVISION
MANAGER
X X X X X X X

DIVISION
MANAGER
NOTE: X INDICATES FULL–TIME FUNCTIONAL MANAGERS
Y INDICATES FULL–TIME PROJECT MANAGERS
X X X
Y Y Y
FIGURE 4–9. Utility service organization.
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.2 Acquire Project Team

Selecting The Project Management Implementation Team 181
employee morale. Some employees may play destructive roles on a project team. These
roles, which undermine project management implementation, are shown in Figure 4–10
and described below:
The aggressor
Criticizes everybody and everything on project management
Deflates the status and ego of other team members
Always acts aggressively
The dominator
Always tries to take over
Professes to know everything about project management
Tries to manipulate people
Will challenge those in charge for leadership role
The devil’s advocate
Finds fault in all areas of project management
Refuses to support project management unless threatened
Acts more of a devil than an advocate
The topic jumper
Must be the first one with a new idea/approach to project management
Constantly changes topics
Cannot focus on ideas for a long time unless it is his/her idea
Tries to keep project management implementation as an action item forever
The recognition seeker
Always argues in favor of his/her own ideas
Always demonstrates status consciousness
Volunteers to become the project manager if status is recognized
Likes to hear himself/herself talk
Likes to boast rather than provide meaningful information
Aggressor

Blocker

 

Dominator

 

Destructive
Roles

 

Withdrawer

 

Devil’s
Advocate

 

Recognition
Seeker

 

Topic
Jumper

FIGURE 4–10. Roles people play that undermine project management implementation.
182 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
The withdrawer
Is afraid to be criticized
Will not participate openly unless threatened
May withhold information
May be shy
The blocker
Likes to criticize
Rejects the views of others
Cites unrelated examples and personal experiences
Has multiple reasons why project management will not work
These types of people should not be assigned to project management implementation
teams. The types of people who should be assigned to implementation teams are shown in
Figure 4–11 and described below. Their roles are indicated by their words:
The initiators
“Is there a chance that this might work?”
“Let’s try this.”
The information seekers
“Have we tried anything like this before?”
“Do we know other companies where this has worked?”
“Can we get this information?”
The information givers
“Other companies found that . . .”
“The literature says that . . .”
“Benchmarking studies indicate that . . .”
The encouragers
“Your idea has a lot of merit.”
“The idea is workable, but we may have to make small changes.”
“What you said will really help us.”

Supportive
Roles

Initiators Information
Seekers
Gate
Keepers

Consensus
Takers

 

Harmonizers

 

Clarifiers

 

Information
Givers

 

Encouragers

FIGURE 4–11. Roles people play that support project management implementation.
Studying Tips for the PMI® Project Management Certification Exam 183
The clarifiers
“Are we saying that . . . ?”
“Let me state in my own words what I’m hearing from the team.”
“Let’s see if we can put this into perspective.”
The harmonizers
“We sort of agree, don’t we?”
“Your ideas and mine are close together.”
“Aren’t we saying the same thing?”
The consensus takers
“Let’s see if the team is in agreement.”
“Let’s take a vote on this.”
“Let’s see how the rest of the group feels about this.”
The gate keepers
“Who has not given us their opinions on this yet?”
“Should we keep our options open?”
“Are we prepared to make a decision or recommendation, or is there additional
information to be reviewed?”
4.14 STUDYING TIPS FOR THE PMI® PROJECT
MANAGEMENT CERTIFICATION EXAM
This section is applicable as a review of the principles to support the knowledge areas and
domain groups in the PMBOK
® Guide. This chapter addresses:
Human Resources Management
Planning
Project Staffing
Understanding the following principles is beneficial if the reader is using this text to
study for the PMP
® Certification Exam:
What is meant by a project team
Staffing process and environment
Role of the line manager in staffing
Role of the executive in staffing
Skills needed to be a project manager
That the project manager is responsible for helping the team members grow and
learn while working on the project
In Appendix C, the following Dorale Products mini–case studies are applicable:
Dorale Products (G) [Human Resources Management]
Dorale Products (H) [Human Resources Management]
184 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Dorale Products (I) [Human Resources Management]
Dorale Products (J) [Human Resources Management]
Dorale Products (K) [Human Resources Management]
The following multiple-choice questions will be helpful in reviewing the principles of
this chapter:
1. During project staffing, the primary role of senior management is in the selection of the:
A. Project manager
B. Assistant project managers
C. Functional team
D. Executives do not get involved in staffing.
2. During project staffing, the primary role of line management is:
A. Approving the selection of the project manager
B. Approving the selection of assistant project managers
C. Assigning functional resources based upon who is available
D. Assigning functional resources based upon availability and the skill set needed
3. A project manager is far more likely to succeed if it is obvious to everyone that:
A. The project manager has a command of technology.
B. The project manager is a higher pay grade than everyone else on the team.
C. The project manager is over 45 years of age.
D. Executive management has officially appointed the project manager.
4. Most people believe that the best way to train someone in project management is through:
A. On-the-job training
B. University seminars
C. Graduate degrees in project management
D. Professional seminars and meeting
5. In staffing negotiations with the line manager, you identify a work package that requires a
skill set of a grade 7 worker. The line manager informs you that he will assign a grade 6 and
a grade 8 worker. You should:
A. Refuse to accept the grade 6 because you are not responsible for training
B. Ask for two different people
C. Ask the sponsor to interfere
D. Be happy! You have two workers.
6. You priced out a project at 1000 hours assuming a grade 7 employee would be assigned. The
line manager assigns a grade 9 employee. This will result in a significant cost overrun.
The project manager should:
A. Reschedule the start date of the project based upon the availability of a grade 7
B. Ask the sponsor for a higher priority for your project
C. Reduce the scope of the project
D. See if the grade 9 can do the job in less time
7. As a project begins to wind down, the project manager should:
A. Release all nonessential personnel so that they can be assigned to other projects
B. Wait until the project is officially completed before releasing anyone
C. Wait until the line manager officially requests that the people be released
D. Talk to other project managers to see who wants your people

ANSWERS
1. A
2. D
3. D
4. A
5. D
6. D
7. A
PROBLEMS
4–1 From S. K. Grinnell and H. P. Apple (“When Two Bosses Are Better Than One,”
Machine Design, January 1975, pp. 84–87):
People trained in single-line-of-command organizations find it hard to serve more
than one boss.
People may give lip service to teamwork, but not really know how to develop and
maintain a good working team.
Project and functional managers sometimes tend to compete rather than cooperate
with each other.
Individuals must learn to do more “managing” of themselves.
The authors identify the above four major problems associated with staffing. Discuss each
problem and identify the type of individual most likely to be involved (i.e., engineer, contract
administrator, cost accountant, etc.) and in which organizational form this problem would be
most apt to occur.
4–2 David Cleland (“Why Project Management?” Reprinted from Business Horizons, Winter
1964, p. 85. Copyright © 1964 by the Foundation for the School of Business at Indiana
University. Used with permission) made the following remarks:
His [project manager’s] staff should be qualified to provide personal administrative and technical support. He should have sufficient authority to increase or decrease his staff as necessary
throughout the life of the project. This authorization should include selective augmentation for
varying periods of time from the supporting functional areas.
Do you agree or disagree with these statements? Should the type of project or type of organization play a dominant role in your answer?
4–3 The contractor’s project office is often structured to be compatible with the customer’s
project office, sometimes on a one-to-one basis. Some customers view the contractor’s project
organization merely as an extension of their own company. Below are three statements concerning this relationship. Are these statements true or false? Defend your answers.
There must exist mutual trust between the customer and contractor together with a
close day-to-day working relationship.
Problems 185
The project manager and the customer must agree on the hierarchy of decision that
each must make, either independently or jointly. (Which decisions can each make
independently or jointly?)
Both the customer and contractor’s project personnel must be willing to make decisions as fast as possible.
4–4 C. Ray Gullet (“Personnel Management in the Project Organization,” Personnel
Administration/Public Personnel Review,
November–December 1972, pp. 17–22) has identified
five personnel problems. How would you, as a project manager, cope with each problem?
Staffing levels are more variable in a project environment.
Performance evaluation is more complex and more subject to error in a matrix form
of organization.
Wage and salary grades are more difficult to maintain under a matrix form of organization. Job descriptions are often of less value.
Training and development are more complex and at the same time more necessary
under a project form of organization.
Morale problems are potentially greater in a matrix organization.
4–5 Some people believe that a project manager functions, in some respects, like a physician. Is
there any validity in this?
4–6 Paul is a project manager for an effort that requires twelve months. During the seventh,
eighth, and ninth months he needs two individuals with special qualifications. The functional manager has promised that these individuals will be available two months before they are needed. If
Paul does not assign them to his project at that time, they will be assigned elsewhere and he will
have to do with whomever will be available later. What should Paul do? Do you have to make any
assumptions in order to defend your answer?
4–7 Some of the strongest reasons for promoting functional engineers to project engineers are:
Better relationships with fellow researchers
Better prevention of duplication of effort
Better fostering of teamwork
These reasons are usually applied to R&D situations. Could they also be applied to product lifecycle phases other than R&D?
4–8 The following have been given as qualifications for a successful advanced-technology
project manager:
Career has progressed up through the technical ranks
Knowledgeable in many engineering fields
Understands general management philosophy and the meaning of profitability
Interested in training and teaching his superiors
Understands how to work with perfectionists
Can these same qualifications be modified for non-R&D project management? If so, how?
4–9 W. J. Taylor and T. F. Watling (Successful Project Management, London: Business
Books, 1972, p. 32) state:
It is often the case, therefore, that the Project Manager is more noted for his management
technique expertise, his ability to “get things done” and his ability to “get on with people” than for his sheer technical prowess. However, it can be dangerous to minimize this
latter talent when choosing Project Managers dependent upon project type and size. The
186 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Project Manager should preferably be an expert either in the field of the project task or
a subject allied to it.
How dangerous can it be if this latter talent is minimized? Will it be dangerous under all
circumstances?
4–10 Frank Boone is the most knowledgeable piping engineer in the company. For five years,
the company has turned down his application for transfer to project engineering and project
management stating that he is too valuable to the company in his current position. If you were
a project manager, would you want this individual as part of your functional team? How should
an organization cope with this situation?
4–11 Tom Weeks is manager of the insulation group. During a recent group meeting, Tom
commented, “The company is in trouble. As you know, we’re bidding on three programs right
now. If we win just one of them, we can probably maintain our current work level. If, by some
slim chance, we were to win all three, you’ll all be managers tomorrow.” The company won all
three programs, but the insulation group did not hire anyone, and there were no promotions.
What would you, as a project manager on one of the new projects, expect your working relations to be with the insulation group?
4–12 You are a project engineer on a high-technology program. As the project begins to wind
down, your boss asks you to write a paper so that he can present it at a technical meeting. His name
goes first on the paper. Should this be part of your job? How do you feel about this situation?
4–13 Research has indicated that the matrix structure is often confusing because it requires
multiple roles for people, with resulting confusion about these roles (Keith Davis,
Human
Relations at Work,
New York: McGraw-Hill, 1967, pp. 296–297). Unfortunately, not all program managers, project managers, and project engineers possess the necessary skills to operate
in this environment. Stuckenbruck has stated, “The path to success is strewn with the bodies of
project managers who were originally functional line managers and then went into project management” (Linn Stuckenbruck, “The Effective Project Manager,”
Project Management
Quarterly,
Vol. VII, No. 1, March 1976, pp. 26–27). What do you feel is the major cause for
this downfall of the functional manager?
4–14 For each of the organizational forms shown below, who determines what resources are
needed, when they are needed, and how they will be employed? Who has the authority and
responsibility to mobilize these resources?
a. Traditional organization
b. Matrix organization
c. Product line organization
d. Line/staff project organization
4–15 Do you agree or disagree that project organizational forms encourage peer-to-peer communications and dynamic problem-solving?
4–16 The XYZ Company operates on a traditional structure. The company has just received a
contract to develop a new product line for a special group of customers. The company has
decided to pull out selected personnel from the functional departments and set up a single product organizational structure to operate in parallel with the functional departments.
a. Set up the organizational chart.
b. Do you think this setup can work? Does your answer depend on how many years this
situation must exist?
Problems 187
4–17 You are the project engineer on a program similar to one that you directed previously.
Should you attempt to obtain the same administrative and/or technical staff that you had
before?
4–18 A person assigned to your project is performing unsatisfactorily. What should you do?
Will it make a difference if he is in the project office or a functional employee?
4–19 You have been assigned to the project office as an assistant project engineer. You are to
report to the chief project engineer who reports formally to the project manager and informally
to the vice president of engineering. You have never worked with this chief project engineer
before. During the execution of the project, it becomes obvious to you that the chief project
engineer is making decisions that do not appear to be in the best interest of the project. What
should you do about this?
4–20 Should individuals be promoted to project management because they are at the top of
their functional pay grade?
4–21 Should one functional department be permitted to “borrow” (on a temporary basis) people from another functional department in order to fulfill project manning requirements?
Should this be permitted if overtime is involved?
4–22 Should a project manager be paid for performance or for the number of people he
supervises?
4–23 Should a project manager try to upgrade his personnel?
4–24 Why should a functional manager assign his best people to you on a long-term project?
4–25 A coal company has adopted the philosophy that the project manager for new mine
startup projects will be the individual who will eventually become the mine superintendent. The
coal company believes that this type of “ownership” philosophy is good. Do you agree?
4–26 Can a project manager be considered as a “hired gun”?
4–27 Manufacturing organizations are using project management/project engineering strictly
to give new employees exposure to total company operations. After working on one or two
projects, each approximately one to two years in duration, the employee is transferred to line
management for his career path and opportunities for advancement. Can a situation such as this,
where there is no career path in either project management or project engineering, work successfully? Could there be any detrimental effects on the projects?
4–28 Can a project manager create dedication and a true winning spirit and still be hated
by all?
4–29 Can anyone be trained to be a project manager?
4–30 A power and light company has part-time project management in which an individual
acts as both a project manager and a functional employee at the same time. The utility company
claims that this process prevents an employee from becoming “technically obsolete,” and that
when the employee returns to full-time functional duties, he is a more well-rounded individual.
Do you agree or disagree? What are the arrangement’s advantages and disadvantages?
4–31 Some industries consider the major criterion for promotion and advancement to be gray
hair and/or baldness. Is this type of maturity advantageous?
188 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
Problems 189
4–32 In Figure 4–8 we showed that Al Tandy and Don Davis (as well as other project office
personnel) reported directly to the project manager and indirectly to functional management.
Could this situation be reversed, with the project office personnel reporting indirectly to the
project manager and directly to functional management?
4–33 Most organizations have “star” people who are usually identified as those individuals who
are the key to success. How does a project manager identify these people? Can they be in the
project office, or must they be functional employees or managers?
4–34 Considering your own industry, what job-related or employee-related factors would you
wish to know before selecting someone to be a project manager or a project engineer on an
effort valued at:
a. $30,000?
b. $300,000?
c. $3,000,000?
d. $30,000,000?
4–35 One of the major controversies in project management occurs over whether the project manager needs a command of technology in order to be effective. Consider the following situation:
You are the project manager on a research and development project. Marketing informs
you that they have found a customer for your product and that you must make major modifications to satisfy the customer’s requirements. The engineering functional managers tell you that
these modifications are impossible. Can a project manager without a command of technology
make a viable decision as to whether to risk additional funds and support marketing, or should
he believe the functional managers, and tell marketing that the modifications are impossible?
How can a project manager, either with or without a command of technology, tell whether the
functional managers are giving him an optimistic or a pessimistic opinion?
4–36 As a functional employee, you demonstrate that you have exceptionally good writing
skills. You are then promoted to the position of special staff assistant to the division manager
and told that you are to assume full responsibility for all proposal work that must flow through
your division. How do you feel about this? Is it a promotion? Where can you go from here?
4–37 Government policymakers content that only high-ranking individuals (high GS grades)
can be project managers because a good project manager needs sufficient “clout” to make the
project go. In government, the project manager is generally the highest grade on the project
team. How can problems of pay grade be overcome? Is the government’s policy effective?
4–38 A major utility company is worried about the project manager’s upgrading functional
employees. On an eight-month project that employs four hundred full-time project employees,
the department managers have set up “check” people whose responsibility is to see that functional employees do not have unauthorized (i.e., not approved by the functional manager) work
assignments above their current grade level. Can this system work? What if the work is at a
position below their grade level?
4–39 A major utility company begins each computer project with a feasibility study in which a
cost-benefit analysis is performed. The project managers, all of whom report to a project management division, perform the feasibility study themselves without any functional support. The
functional personnel argue that the feasibility study is inaccurate because the functional
“experts” are not involved. The project managers, on the other hand, stipulate that they never
have sufficient time or money to involve the functional personnel. Can this situation be resolved?

190 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM
4–40 How would you go about training individuals within your company or industry to be
good project managers? What assumptions are you making?
4–41 Should project teams be allowed to evolve by themselves?
4–42 At what point or phase in the life cycle of a project should a project manager be
appointed?
4–43 Top management generally has two schools of thought concerning project management.
One school states that the project manager should be used as a means for coordinating activities that cut across several functional departments. The second school states that the project
management position should be used as a means of creating future general managers. Which
school of thought is correct?
4–44 Some executives feel that personnel working in a project office should be cross-trained
in several assistant project management functions. What do you think about this?
4–45 A company has a policy that employees wishing to be project managers must first spend
one to one-and-a-half years in the functional employee side of the house so that they can get to
know the employees and company policy. What do you think about this?
4–46 Your project has grown to a point where there now exist openings for three full-time
assistant project managers. Unfortunately, there are no experienced assistant project managers
available. You are told by upper-level management that you will fill these three positions by
promotions from within. Where in the organization should you look? During an interview, what
questions should you ask potential candidates? Is it possible that you could find candidates who
are qualified to be promoted vertically but not horizontally?
4–47 A functional employee has demonstrated the necessary attributes of a potentially successful project manager. Top management can:
Promote the individual in salary and grade and transfer him into project management.
Laterally transfer the employee into project management without any salary or grade
increase. If, after three to six months, the employee demonstrates that he can perform,
he will receive an appropriate salary and grade increase.
Give the employee either a grade increase without any salary increase, or a small
salary increase without any grade increase, under the stipulation that additional
awards will be given at the end of the observation period, assuming that the employee
can handle the position.
If you were in top management, which method would you prefer? If you dislike the above three
choices, develop your own alternative. What are the advantages and disadvantages of each
choice? For each choice, discuss the ramifications if the employee cannot handle the project
management position.

Management Functions
191

Related Case Studies
(from Kerzner/
Project
Management Case Studies,
3rd Edition)
Related Workbook Exercises (from
Kerzner/
Project Management
Workbook and PMP
®/CAPM® Exam
Study Guide,
10th Edition)
PMBOK® Guide, 4th
Edition, Reference
Section for the PMP
®
Certification Exam
• Wynn Computer
Equipment (WCE)
• The Trophy Project*
• The Communication Problem
• Meetings, Meetings, and Meetings
• The Empowerment Problem
• Project Management Psychology
• Multiple Choice Exam
• Crossword Puzzle on Human
Resource Management
• Crossword Puzzle on
Communications Management
• Human Resource
Management
• Communications
Management

5.0 INTRODUCTION
As we have stated, the project manager measures his success by how well
he can negotiate with both upper-level and functional management for the
resources necessary to achieve the project objective. Moreover, the project
manager may have a great deal of delegated authority but very little
*Case Study also appears at end of chapter.
PMBOK® Guide, 4th Edition
1.6 Project Management Skills
1.4.4 Role of the PMO
5
power. Hence, the managerial skills he requires for successful performance may be drastically different
from those of his functional management counterparts.
The difficult aspect of the project management environment is that individuals at the project–functional
interface must report to two bosses. Functional managers and project managers, by virtue of their different
authority levels and responsibilities, treat their people in different fashions depending on their “management
school” philosophies. There are generally five management schools, as described below:
The classical/traditional school: Management is the process of getting things done (i.e., achieving
objectives) by working both with and through people operating in organized groups. Emphasis is
placed on the end-item or objective, with little regard for the people involved.
The empirical school: Managerial capabilities can be developed by studying the experiences of
other managers, whether or not the situations are similar.
The behavioral school: Two classrooms are considered within this school. First, we have the human
relations classroom in which we emphasize the interpersonal relationship between individuals and
their work. The second classroom includes the social system of the individual. Management is considered to be a system of cultural relationships involving social change.
The decision theory school: Management is a rational approach to decision making using a
system of mathematical models and processes, such as operations research and management
science.
The management systems school: Management is the development of a systems model, characterized by input, processing, and output, and directly identifies the flow of resources (money, equipment, facilities, personnel, information, and material) necessary to obtain some objective by either
maximizing or minimizing some objective function. The management systems school also includes
contingency theory, which stresses that each situation is unique and must be optimized separately
within the constraints of the system.
In a project environment, functional managers are generally practitioners of the first three schools of
management, whereas project managers utilize the last two. This imposes hardships on both the project managers and functional representatives. The project manager must motivate functional representatives toward
project dedication on the horizontal line using management systems theory and quantitative tools, often with
little regard for the employee. After all, the employee might be assigned for a very short-term effort, whereas
the end-item is the most important objective. The functional manager, however, expresses more concern for the
individual needs of the employee using the traditional or behavioral schools of management.
Modern practitioners still tend to identify management responsibilities and skills in terms of the principles and functions developed in the early management schools, namely:
Planning
Organizing
Staffing
Controlling
Directing
Although these management functions have generally been applied to traditional management structures, they have recently been redefined for temporary management positions. Their fundamental meanings
remain the same, but the applications are different.
192 MANAGEMENT FUNCTIONS
5.1 CONTROLLING
Controlling is a three-step process of measuring progress toward an objective, evaluating
what remains to be done, and taking the necessary corrective action to achieve or exceed
the objectives. These three steps—measuring, evaluating, and correcting—are defined as
follows:
Measuring: determining through formal and informal reports the degree to which
progress toward objectives is being made.
Evaluating: determining cause of and possible ways to act on significant deviations from planned performance.
Correcting: taking control action to correct an unfavorable trend or to take advantage of an unusually favorable trend.
The project manager is responsible for ensuring the accomplishment of group and
organizational goals and objectives. To effect this, he must have a thorough knowledge of
standards and cost control policies and procedures so that a comparison is possible
between operating results and preestablished standards. The project manager must then
take the necessary corrective actions. Later chapters provide a more in-depth analysis of
control, especially the cost control function.
In Chapter 1, we stated that project managers must understand organizational behavior in order to be effective and must have strong interpersonal skills. This is especially
important during the controlling function. Line managers may have the luxury of time to
build up relationships with each of their workers. But for a project manager time is a constraint, and it is not always easy to predict how well or how poorly an individual will interact with a group, especially if the project manager has never worked with this employee
previously. Understanding the physiological and social behavior of how people perform in
a group cannot happen overnight.
5.2 DIRECTING
Directing is the implementing and carrying out (through others) of those approved plans
that are necessary to achieve or exceed objectives. Directing involves such steps as:
Staffing: seeing that a qualified person is selected for each position.
Training: teaching individuals and groups how to fulfill their duties and responsibilities.
Supervising: giving others day-to-day instruction, guidance, and discipline as
required so that they can fulfill their duties and responsibilities.
Delegating: assigning work, responsibility, and authority so others can make maximum utilization of their abilities.
Motivating: encouraging others to perform by fulfilling or appealing to their
needs.
Directing 193
Counseling: holding private discussions with another about how he might do better work, solve a personal problem, or realize his ambitions.
Coordinating: seeing that activities are carried out in relation to their importance
and with a minimum of conflict.
Directing subordinates is not an easy task because of both the short time duration of
the project and the fact that employees might still be assigned to a functional manager
while temporarily assigned to your effort. The luxury of getting to “know” one’s subordinates may not be possible in a project environment.
Project managers must be decisive and move forward rapidly whenever directives are
necessary. It is better to decide an issue and be 10 percent wrong than it is to wait for the last
10 percent of a problem’s input and cause a schedule delay and improper use of resources.
Directives are most effective when the KISS (keep it simple, stupid) rule is applied. Directives
should be written with one simple and clear objective so that subordinates can work effectively
and get things done right the first time. Orders must be issued in a manner that expects immediate compliance. Whether people will obey an order depends mainly on the amount of
respect they have for you. Therefore, never issue an order that you cannot enforce. Oral orders
and directives should be disguised as suggestions or requests. The requestor should ask the
receiver to repeat the oral orders so that there is no misunderstanding.
Project managers must understand human behavior in order to motivate people toward successful accomplishment of project objectives.
Douglas McGregor advocated that most workers can be categorized
according to two theories.
1 The first, often referred to as Theory X,
assumes that the average worker is inherently lazy and requires supervision. Theory X further assumes that:
The average worker dislikes work and avoids work whenever possible.
To induce adequate effort, the supervisor must threaten punishment and exercise
careful supervision.
The average worker avoids increased responsibility and seeks to be directed.
The manager who accepts Theory X normally exercises authoritarian-type control
over workers and allows little participation during decision-making. Theory X employees
generally favor lack of responsibility, especially in decision-making.
According to Theory Y, employees are willing to get the job done without constant
supervision. Theory Y further assumes that:
The average worker wants to be active and finds the physical and mental effort
on the job satisfying.
Greatest results come from willing participation, which will tend to produce selfdirection toward goals without coercion and control.
The average worker seeks opportunity for personal improvement and self-respect.
194 MANAGEMENT FUNCTIONS
1. Douglas McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), pp. 33–34.
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.4 Manage the Team

The manager who accepts Theory Y normally advocates participation and a
management–employee relationship. However, in working with professionals, especially
engineers, special care must be exercised because these individuals often pride themselves
on their ability to find a better way to achieve the end result regardless of cost. If this happens, project managers must become authoritarian leaders and treat Theory Y employees
as though they are Theory X.
William Ouchi has identified a Theory Z that emphasizes the Japanese cultural values
and the behavior of the Japanese workers.
2 According to Theory Z, there exist significant
differences between the Japanese and American cultures and how the workers are treated.
The Japanese focus on lifetime employment whereas the Americans look at short-term
employment. The Japanese focus on collective decision-making such as in quality circles
whereas Americans focus on individual decision-making. The Japanese emphasize informal administrative control whereas the Americans lean toward a more formal control.
Japanese companies place workers on nonspecialized career paths with slow evaluation
and promotion whereas Americans prefer specialized career path opportunities with rapid
evaluation and promotion. Finally, Japanese managers have more of an interest in the personal life of their workers than do American managers.
Many psychologists have established the existence of a prioritized
hierarchy of needs that motivate individuals toward satisfactory performance. Maslow was the first to identify these needs.
3 Maslow’s hierarchy
of needs is shown in Figure 5–1. The first level is that of the basic or physiological needs, namely, food, water, clothing, shelter, sleep, and sexual
satisfaction. Simply speaking, human primal desire to satisfy these basic needs motivates
him to do a good job.
After an employee has fulfilled his physiological needs, he turns to the next lower
need, safety. Safety needs include economic security and protection from harm, disease,
and violence. Safety can also include security. It is important that project managers realize this because these managers may find that as a project nears termination, functional
employees are more interested in finding a new role for themselves than in giving their best
to the current situation.
The next level contains the social needs, including love, belonging, togetherness,
approval, and group membership. At this level, the informal organization plays a dominant
role. Many people refuse promotions to project management (as project managers, project
office personnel, or functional representatives) because they fear that they will lose their
“membership” in the informal organization. This problem can occur even on shortduration projects. In a project environment, project managers generally do not belong to
any informal organization and, therefore, tend to look outside the organization to fulfill this
need. Project managers consider authority and funding to be very important in gaining project support. Functional personnel, however, prefer friendship and work assignments. In
other words, the project manager can use the project itself as a means of helping fulfill the
third level for the line employees (i.e., team spirit).
Directing 195
2. W. G. Ouchi and A. M. Jaeger, “Type Z Organization: Stability in the Midst of Mobility,” Academy of
Management Review,
April 1978, pp. 305–314.
3. Abraham Maslow,
Motivation and Personality (New York: Harper and Brothers, 1954).
PMBOK® Guide, 4th Edition
Chapter 9 Human Resources
Management
9.3.2 Develop the Team

The two lowest needs are esteem and self-actualization. The esteem need includes selfesteem (self-respect), reputation, the esteem of others, recognition, and self-confidence.
Highly technical professionals are often not happy unless esteem needs are fulfilled. For
example, many engineers strive to publish and invent as a means of satisfying these needs.
These individuals often refuse promotions to project management because they believe that
they cannot satisfy esteem needs in this position. Being called a project manager does not
carry as much importance as being considered an expert in one’s field by one’s peers. The lowest need is self-actualization and includes doing what one can do best, desiring to utilize one’s
potential, full realization of one’s potential, constant self-development, and a desire to be truly
creative. Many good project managers find this level to be the most important and consider
each new project as a challenge by which they can achieve self-actualization.
Frederick Herzberg and his associates conducted motivational research studies.
4
Herzberg concluded that Maslow’s lower three levels (physiological, safety, and social
needs) were hygiene factors that were either satisfied or dissatisfied. The only real motivational factors were the self-esteem and self-actualization needs. Herzberg believed that
the physiological needs were hygiene factors and were extremely short-term needs. Selfesteem and self-actualization were more long-term needs and could be increased through
job rotation, which includes job enrichment.
Another motivational technique can be related to the concept of expectancy theory
(also referred to as the immature–mature organization), which was developed by the
behaviorist Chris Argyris. Expectancy theory says that when the needs of the organization
and the needs of the individual are congruent, both parties benefit and motivation
increases. When there is incongruence between the needs of the individual and the needs
of the organization, the individual will experience:
Frustration
Psychological failure
Short-term perspectives
Conflict
196 MANAGEMENT FUNCTIONS
4. F. Herzberg, B. Mausner, and B. B. Snyderman, The Motivation to Work (New York: John Wiley & Sons,
1959).
SELF-ACTUALIZATION
SELF-ESTEEM
SOCIAL/BELONGING

SAFETY
PHYSIOLOGICAL

FIGURE 5–1. Maslow’s hierarchy of needs.
Project managers must motivate temporarily assigned individuals by appealing to their
desires to fulfill the lowest two levels, but not by making promises that cannot be met. Project
managers must motivate by providing:
A feeling of pride or satisfaction for one’s ego
Security of opportunity
Security of approval
Security of advancement, if possible
Security of promotion, if possible
Security of recognition
A means for doing a better job, not a means to keep a job
Understanding professional needs is an important factor in helping people realize their
true potential. Such needs include:
Interesting and challenging work
Professionally stimulating work environment
Professional growth
Overall leadership (ability to lead)
Tangible rewards
Technical expertise (within the team)
Management assistance in problem-solving
Clearly defined objectives
Proper management control
Job security
Senior management support
Good interpersonal relations
Proper planning
Clear role definition
Open communications
A minimum of changes
Motivating employees so that they feel secure on the job is not easy, especially since
a project has a finite lifetime. Specific methods for producing security in a project environment include:
Letting people know why they are where they are
Making individuals feel that they belong where they are
Placing individuals in positions for which they are properly trained
Letting employees know how their efforts fit into the big picture
Since project managers cannot motivate by promising material gains, they must
appeal to each person’s pride. The guidelines for proper motivation are:
Adopt a positive attitude
Do not criticize management
Directing 197
Do not make promises that cannot be kept
Circulate customer reports
Give each person the attention he requires
There are several ways of motivating project personnel. Some effective ways include:
Giving assignments that provide challenges
Clearly defining performance expectations
Giving proper criticism as well as credit
Giving honest appraisals
Providing a good working atmosphere
Developing a team attitude
Providing a proper direction (even if Theory Y)
5.3 PROJECT AUTHORITY
Project management structures create a web of relationships that can
cause chaos in the delegation of authority and the internal authority structure. Four questions must be considered in describing project authority:
What is project authority?
What is power, and how is it achieved?
How much project authority should be granted to the project manager?
Who settles project authority interface problems?
One form of the project manager’s authority can be defined as the legal or rightful
power to command, act, or direct the activities of others. Authority can be delegated from
one’s superiors. Power, on the other hand, is granted to an individual by his subordinates
and is a measure of their respect for him. A manager’s authority is a combination of
his power and influence such that subordinates, peers, and associates willingly accept his
judgment.
In the traditional structure, the power spectrum is realized through the hierarchy,
whereas in the project structure, power comes from credibility, expertise, or being a sound
decision-maker.
Authority is the key to the project management process. The project manager must
manage across functional and organizational lines by bringing together activities
required to accomplish the objectives of a specific project. Project authority provides the
way of thinking required to unify all organizational activities toward accomplishment of
the project regardless of where they are located. The project manager who fails to build
and maintain his alliances will soon find opposition or indifference to his project
requirements.
The amount of authority granted to the project manager varies according to project
size, management philosophy, and management interpretation of potential conflicts with
198 MANAGEMENT FUNCTIONS
PMBOK® Guide, 4th Edition
9.1.3 Human Resource Planning
functional managers. There do exist, however, certain fundamental elements over which
the project manager must have authority in order to maintain effective control. According
to Steiner and Ryan
5:
The project manager should have broad authority over all elements of the project. His
authority should be sufficient to permit him to engage all necessary managerial and technical actions required to complete the project successfully. He should have appropriate
authority in design and in making technical decisions in development. He should be able
to control funds, schedule and quality of product. If subcontractors are used, he should
have maximum authority in their selection.
Generally speaking, a project manager should have more authority than his responsibility calls for, the exact amount of authority usually depending on the amount of risk that
the project manager must take. The greater the risk, the greater the amount of authority.
A good project manager knows where his authority ends and does not hold an employee
responsible for duties that he (the project manager) does not have the authority to enforce.
Some projects are directed by project managers who have only monitoring authority.
These project managers are referred to as influence project managers.
Failure to establish authority relationships can result in:
Poor communication channels
Misleading information
Antagonism, especially from the informal organization
Poor working relationships with superiors, subordinates, peers, and associates
Surprises for the customer
The following are the most common sources of power and authority problems in a
project environment:
Poorly documented or no formal authority
Power and authority perceived incorrectly
Dual accountability of personnel
Two bosses (who often disagree)
The project organization encouraging individualism
Subordinate relations stronger than peer or superior relationships
Shifting of personnel loyalties from vertical to horizontal lines
Group decision-making based on the strongest group
Ability to influence or administer rewards and punishment
Sharing resources among several projects
The project manager does not have unilateral authority in the project effort. He frequently negotiates with the functional manager. The project manager has the authority to
Project Authority 199
5. Reprinted from George A. Steiner and William G. Ryan, Industrial Project Management (1968), p. 24.
Copyright © 1968 by the Trustees of Columbia University in the City of New York. Reprinted with permission
of The Free Press, a division of Simon and Schuster.

determine the “when” and “what” of the project activities, whereas the functional manager has the authority to determine “how the support will be given.” The project manager
accomplishes his objectives by working with personnel who are largely professional. For
professional personnel, project leadership must include explaining the rationale of the
effort as well as the more obvious functions of planning, organizing, directing, and
controlling.
Certain ground rules exist for authority control through negotiations:
Negotiations should take place at the lowest level of interaction.
Definition of the problem must be the first priority:
The issue
The impact
The alternative
The recommendations
Higher-level authority should be used if, and only if, agreement cannot be reached.
The critical stage of any project is planning. This includes more than just planning the
activities to be accomplished; it also includes the planning and establishment of the authority relationships that must exist for the duration of the project. Because the project management environment is an ever-changing one, each project establishes its own policies
and procedures, a situation that can ultimately result in a variety of authority relationships.
It is therefore possible for functional personnel to have different responsibilities on different projects, even if the tasks are the same.
During the planning phase the project team develops a responsibility assignment
matrix (RAM) that contains such elements as:
General management responsibility
Operations management responsibility
Specialized responsibility
Who must be consulted
Who may be consulted
Who must be notified
Who must approve
The responsibility matrix is often referred to as a linear responsibility chart (LRC) or
responsibility assignment matrix (RAM). Linear responsibility charts identify the participants,
and to what degree an activity will be performed or a decision will be made. The LRC
attempts to clarify the authority relationships that can exist when functional units share common work. As described by Cleland and King
6:
The need for a device to clarify the authority relationships is evident from the relative unity
of the traditional pyramidal chart, which (1) is merely a simple portrayal of the overall
200 MANAGEMENT FUNCTIONS
6. From David I. Cleland and William Richard King, Systems Analysis and Project Management (New York:
McGraw-Hill), p. 271.

functional and authority models and (2) must be combined with detailed position descriptions and organizational manuals to delineate authority relationships and work performance
duties.
Figure 5–2 shows a typical linear responsibility chart. The rows, which indicate the activities, responsibilities, or functions required, can be all of the tasks in the work breakdown
structure. The columns identify either positions, titles, or the people themselves. If the
chart will be given to an outside customer, then only the titles should appear, or the customer will call the employees directly without going through the project manager. The
symbols indicate the degrees of authority or responsibility existing between the rows and
columns.
Another example of an LRC is shown in Figure 5–3. In this case, the LRC is used to
describe how internal and external communications should take place. This type of
chart can be used to eliminate communications conflicts. Consider a customer who is
unhappy about having all of his information filtered through the project manager and
requests that his line people be permitted to talk to your line people on a one-on-one basis.
Project Authority 201
LEGEND
GENERAL MANAGEMENT RESPONSIBILITY
SPECIALIZED RESPONSIBILITY
MUST BE CONSULTED
MAY BE CONSULTED
MUST BE NOTIFIED
MUST APPROVE
PROJECT MANAGER
PROJECT OFFICE
TEAM MEMBER
DEPARTMENT
MANAGER
PROJECT SPONSOR

RAW MATERIAL PROCUREMENT
PREPARE BILL OF MATERIALS
CONTACT VENDORS
VISIT VENDORS
PREPARE PURCHASE ORDERS
AUTHORIZE EXPENDITURES
PLACE PURCHASE ORDERS
INSPECT RAW MATERIALS
QUALITY CONTROL TESTING
UPDATE INVENTORY FILE
PREPARE INVENTORY REPORT
WITHDRAW MATERIALS

FIGURE 5–2. Linear responsibility chart (responsibility assignment matrix).
PMBOK® Guide, 4th Edition
9.1.2 Human Resource Planning
Tools and Techniques

You may have no choice but to permit this, but you should make sure that the customer
understands that:
Functional employees cannot make commitments for additional work or
resources.
Functional employees give their own opinion and not that of the company.
Company policy comes through the project office.
Figures 5–4 and 5–5 are examples of modified LRCs. Figure 5–4 is used to show the
distribution of data items, and Figure 5–5 identifies the skills distribution in the project
office.
The responsibility matrix attempts to answer such questions as: “Who has signature
authority?” “Who must be notified?” “Who can make the decision?” The questions can
only be answered by clear definitions of authority, responsibility, and accountability:
Authority is the right of an individual to make the necessary decisions required to
achieve his objectives or responsibilities.
Responsibility is the assignment for completion of a specific event or activity.
Accountability is the acceptance of success or failure.
202 MANAGEMENT FUNCTIONS

LEGEND
DAILY
WEEKLY
MONTHLY
AS NEEDED
INFORMAL
NEVER

 

REPORTED TO INTERNAL PROJECT
MANAGER
EXTERNAL (CUSTOMER) • • PROJECT
MANAGER
PROJECT
MANAGER
PROJECT
OFFICE
TEAM
MEMBER
DEPARTMENT
MEMBERS
FUNCTIONAL
EMPLOYEES
DIVISION
MANAGERS
EXECUTIVE
MANAGEMENT
PROJECT
OFFICE
TEAM
MEMBER
DEPARTMENT
MEMBERS
FUNCTIONAL
EMPLOYEES
DIVISION
MANAGER
EXECUTIVE
MANAGEMENT
PROJECT
OFFICE
TEAM
MEMBER
DEPARTMENT
MEMBERS
FUNCTIONAL
EMPLOYEES
DIVISION
MANAGER
EXECUTIVE
MANAGEMENT
INITIATED FROM

CAN VARY FROM TASK TO TASK AND CAN BE WRITTEN OR ORAL
DOES NOT INCLUDE REGULARLY SCHEDULED INTERCHANGE MEETINGS

••
FIGURE 5–3. Communications responsibility matrix.*
The linear responsibility chart, although a valuable tool for management, does have
a weakness in that it does not describe how people interact within the program. The LRC
must be considered with the organization for a full understanding of how interactions
between individuals and organizations take place. As described by Karger and Murdick, the
LRC has merit
7:
Obviously the chart has weaknesses, of which one of the larger ones is that it is a mechanical aid. Just because it says that something is a fact does not make it true. It is very difficult
to discover, except generally, exactly what occurs in a company—and with whom. The chart
tries to express in specific terms relationships that cannot always be delineated so clearly;
moreover, the degree to which it can be done depends on the specific situation. This is the
difference between the formal and informal organizations mentioned. Despite this, the Linear
Responsibility Chart is one of the best devices for organization analysis known to the
authors.
Linear responsibility charts can result from customer-imposed requirements above and
beyond normal operations. For example, the customer may require as part of its quality
control that a specific engineer supervise and approve all testing of a certain item or that
another individual approve all data released to the customer over and above program office
CUSTOMER AND
CONTRACTOR’S
PERSONNEL

PROJECT MA
PROJECT O
TEAM MEM
LINE MANA
DATA ITEM
DISTRIBUTION MATRIX
REPORT DESCRIPTION DATA ITEM
MONTHLY COST SUMMARIES
MILESTONE REPORTS
MANPOWER CURVES
INVENTORY UTILIZATION
PRESSURE TEST REPORT
HUMIDITY TESTS
HOTLINE REPORTS
SCHEDULING SUMMARIES
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1
2
3
4
5
6
7
8

NAGER
FFICE
BER
GER
EXECUTIVE MANAGEMENT
FIGURE 5–4. Data distribution matrix.
Project Authority 203
7. D. W. Karger and R. G. Murdick, Managing Engineering and Research (New York: Industrial Press, 1963),
p. 89.

FUNCTIONAL PROJECT TEAM
AREAS OF
EXPERTISE
ABLE, J. BAKER, P. COOK, D. DIRK, L. EASLEY, P. FRANKLIN, W. GREEN, C. HENRY, L. IMHOFF, R. JULES, C. KLEIN, W. LEDGER, D. MAYER, O. NEWTON, A. OLIVER, G. PRATT, L.
ADMINISTRATIVE MANAGEMENT a a a a a a
COST CONTROL b b b b b b b b b
ECONOMIC ANALYSIS c c c c c c
ENERGY SYSTEMS d d d d d d d d
ENVIRONMENTAL IMPACT ASSESSMENT e e e e e e
INDUSTRIAL ENGINEERING f f f
INSTRUMENTATION g g g g g
PIPING AND DESIGN LAYOUT h h h h h h
PLANNING AND SCHEDULING i i i i i i i
PROJECT MANAGEMENT j j j j j
PROJECT REPORTING k k k k k k k k
QUALITY CONTROL l l l l l l
SITE EVALUATION m m m m m
SPECIFICATION PREPARATION n n n n n n
SYSTEM DESIGN o o o o o o o o

FIGURE 5–5. Personal skills matrix.
204
approval. Such customer requirements necessitate LRCs and can cause disruptions and
conflicts within an organization.
Several key factors affect the delegation of authority and responsibility, both from
upper-level management to project management and from project management to functional management. These key factors include:
The maturity of the project management function
The size, nature, and business base of the company
The size and nature of the project
The life cycle of the project
The capabilities of management at all levels
Once agreement has been reached as to the project manager’s authority and responsibility, the results must be documented to clearly delineate his role in regard to:
His focal position
Conflict between the project manager and functional managers
Influence to cut across functional and organizational lines
Participation in major management and technical decisions
Collaboration in staffing the project
Control over allocation and expenditure of funds
Selection of subcontractors
Rights in resolving conflicts
Voice in maintaining integrity of the project team
Establishment of project plans
Providing a cost-effective information system for control
Providing leadership in preparing operational requirements
Maintaining prime customer liaison and contact
Promoting technological and managerial improvements
Establishment of project organization for the duration
Cutting red tape
Perhaps the best way to document the project manager’s authority is through the project
charter, which is one of the three methods, shown in Figure 5–6, by which project managers attain authority. Documenting the project manager’s authority is necessary because:
All interfacing must be kept as simple as possible.
The project manager must have the authority to “force” functional managers to
depart from existing standards and possibly incur risk.
The project manager must gain authority over those elements of a program that are
not under his control. This is normally achieved by earning the respect of the individuals concerned.
The project manager should not attempt to fully describe the exact authority and
responsibilities of his project office personnel or team members. Instead, he
should encourage problem-solving rather than role definition.
Project Authority 205
5.4 INTERPERSONAL INFLUENCES
There exist a variety of relationships (although they are not always clearly
definable) between power and authority. These relationships are usually
measured by “relative” decision power as a function of the authority structure, and are strongly dependent on the project organizational form.
Consider the following statements made by project managers:
“I’ve had good working relations with department X. They like me and I like them.
I can usually push through anything ahead of schedule.”
“I know it’s contrary to department policy, but the test must be conducted according to these criteria or else the results will be meaningless” (remark made to a team
member by a research scientist who was temporarily promoted to project management for an advanced state-of-the-art effort).
Project managers are generally known for having a lot of delegated authority but very
little formal power. They must, therefore, get jobs done through the use of interpersonal
influences. There are five such interpersonal influences:
Legitimate power: the ability to gain support because project personnel perceive
the project manager as being officially empowered to issue orders.
Reward power: the ability to gain support because project personnel perceive the
project manager as capable of directly or indirectly dispensing valued organizational rewards (i.e., salary, promotion, bonus, future work assignments).
Penalty power: the ability to gain support because the project personnel perceive
the project manager as capable of directly or indirectly dispensing penalties that
they wish to avoid. Penalty power usually derives from the same source as reward
power, with one being a necessary condition for the other.
206 MANAGEMENT FUNCTIONS
DE JURE
OR LEGAL
AUTHORITY
DE FACTO
OR IMPLIED
AUTHORITY
PROJECT
CHARTER
AUTHORITY
FIGURE 5–6. Types of project authority.
PMBOK® Guide, 4th Edition
9.1.2 Human Resource Planning
Tools and Techniques

Expert power: the ability to gain support because personnel perceive the project
manager as possessing special knowledge or expertise (that functional personnel
consider as important).
Referent power: the ability to gain support because project personnel feel personally attracted to the project manager or his project.
Expert and referent power are examples of personal power that comes from the personal qualities or characteristics to which team members are attracted. Legitimate, reward,
Interpersonal Influences 207
80 70 60 50 40 30 20 10 10 20 30 40 50 60 70 80
MOST IMPORTANT
FACTORS OF SUPPORT
LEAST IMPORTANT
FACTORS OF SUPPORT
PERCENTAGE OF
REPLIES WHO RANKED
POWERBASE AS
ONE OF THREE . . .
EXPERTISE
AUTHORITY
WORK CHALLENGE
FRIENDSHIP
FUTURE WORK ASSIGNMENTS
PROMOTION
FUND ALLOCATION
SALARY
PENALTY
SUPPORT FROM ASSIGNED PROJECT PERSONNEL
SUPPORT FROM SUBORDINATES
FIGURE 5–7. Significance of factors of support to project management. Source: Seminar in Project
Management Workbook,
© 1979 by Hans J. Thamhain. Reproduced by permission.
and penalty power are often referred to as examples of position power, which is directly
related to one’s position within the organization. Line managers generally possess a great
amount of position power. But in a project environment, position power may be difficult
to achieve. According to Magenau and Pinto
8:
Within the arena of project management, the whole issue of position power becomes more
problematic. Project managers in many organizations operate outside the standard functional hierarchy. While that position allows them a certain freedom of action without direct
oversight, it has some important concomitant disadvantages, particularly as they pertain to
positional power. First, because cross-functional relationships between the project manager and other functional departments can be ill-defined, project managers discover rather
quickly that they have little or no legitimate power to simply force their decisions through
the organizational system. Functional departments usually do not have to recognize the
rights of the project managers to interfere with functional responsibilities; consequently,
novice project managers hoping to rely on positional power to implement their projects are
quickly disabused.
As a second problem with the use of positional power, in many organizations, project
managers have minimal authority to reward team members who, because they are temporary subordinates, maintain direct ties and loyalties to their functional departments. In fact,
project managers may not even have the opportunity to complete a performance evaluation
on these temporary team members. Likewise, for similar reasons, project managers may
have minimal authority to punish inappropriate behavior. Therefore, they may discover
that they have the ability to neither offer the carrot nor threaten the stick. As a result, in
addition to positional power, it is often necessary that effective project managers seek to
develop their personal power bases.
The following six situations are examples of referent power (the first two are also
reward power):
The employee might be able to get personal favors from the project manager.
The employee feels that the project manager is a winner and the rewards will be
passed down to the employee.
The employee and the project manager have strong ties, such as the same foursome for golf.
The employee likes the project manager’s manner of treating people.
The employee wants identification with a specific product or product line.
The employee has personal problems and believes that he can get empathy or
understanding from the project manager.
Figure 5–7 shows how project managers perceive their influence style.
Like relative power, interpersonal influences can be identified with various project
organizational forms as to their relative value. This is shown in Figure 5–8.
208 MANAGEMENT FUNCTIONS
8. John M. Magenau, and Jeffrey K. Pinto, “Power, Influence, and Negotiation in Project Management,”
Peter W. G. Morris and Jeffrey Pinto, eds.,
Project Organization and Project Management Competencies (Wiley,
2007), p. 91. Reprinted by permission of John Wiley.

For any temporary management structure to be effective, there must exist a rational
balance of power between functional and project management. Unfortunately, a balance of
equal power is often impossible to obtain because each project is inherently different from
others, and the project managers possess different leadership abilities.
Achievement of this balance is a never-ending challenge for management. If time and
cost constraints on a project cannot be met, the project influence in decision-making
increases, as can be seen in Figure 5–8. If the technology or performance constraints need
reappraisal, then the functional influence in decision-making will dominate.
Regardless of how much authority and power a project manager develops over the
course of the project, the ultimate factor in his ability to get the job done is usually his leadership style. Developing bonds of trust, friendship, and respect with the functional workers
can promote success.
5.5 BARRIERS TO PROJECT TEAM DEVELOPMENT
Most people within project-driven and non–project-driven organizations
have differing views of project management. Table 5–1 compares the project and functional viewpoints of project management. These differing
views can create severe barriers to successful project management operations.
The understanding of barriers to project team building can help in developing an environment conducive to effective teamwork. The following barriers are typical for many
project environments.
Barriers to Project Team Development 209
PMBOK® Guide, 4th Edition
9.3 Develop Project Team
RELATIVE
INFLUENCE
A.
B.
C.
1 2 3
FUNCTIONAL ORGANIZATION MATRIX ORGANIZATION PRODUCT ORGANIZATION
FUNCTIONAL AUTHORITY STRUCTURE DUAL
AUTHORITY
PRODUCT AUTHORITY STRUCTURE
PRODUCT TASK
FORCES
FUNCTIONAL TASK
FORCES
PRODUCT TEAMS
PRODUCT
MANAGERS
FUNCTIONAL
MANAGERS
PRODUCT
DEPARTMENTS
FUNCTIONAL
DEPARTMENTS
FUNCTIONAL
REPORTING SYSTEM
DUAL INFORMATION AND
REPORTING SYSTEM
PRODUCT
REPORTING SYSTEM
FUNCTIONAL TEAMS
FUNCTIONAL INFLUENCE IN DECISION MAKING
PRODUCT INFLUENCE IN DECISION MAKING
FIGURE 5–8. The range of alternatives. Source: Jay R. Galbraith, “Matrix Organization Designs.”
Reprinted with permission from
Business Horizons, February 1971, p. 37. Copyright © 1971 by the
Board of Trustees at Indiana University.

210 MANAGEMENT FUNCTIONS
TABLE 5–1. COMPARISON OF THE FUNCTIONAL AND THE PROJECT VIEWPOINTS
Phenomena Project Viewpoint Functional Viewpoint

Line–staff organizational
dichotomy
Vestiges of the hierarchical model
remain: the line functions are placed
in a support position. A web of
authority and responsibility exists.
Line functions have direct
responsibility for
accomplishing the objectives;
line commands, and staff
advises.

 

Scalar principle Elements of the vertical chain exist,
but prime emphasis is placed on
horizontal and diagonal work flow.
Important business is conducted as
the legitimacy of the task requires.
The chain of authority
relationships is from superior
to subordinate throughout the
organization. Central, crucial,
and important business is
conducted up and down the
vertical hierarchy.

 

Superior–subordinate
relationship
Peer-to-peer, manager-to-technical
expert, associate-to-associate, etc.,
relationships are used to conduct
much of the salient business.
This is the most important
relationship; if kept healthy,
success will follow. All
important business is
conducted through a
pyramiding structure of
superiors and subordinates

 

Organizational objectives Management of a project becomes
a joint venture of many relatively
independent organizations. Thus,
the objective becomes multilateral.
Organizational objectives are
sought by the parent unit (an
assembly of suborganizations)
working within its
environment. The objective is
unilateral.

 

Unity of direction The project manager manages across
functional and organizational
lines to accomplish a common
interorganizational objective.
The general manager acts as the
one head for a group of
activities having the same
plan.

 

Parity of authority and
responsibility
Considerable opportunity exists for
the project manager’s responsibility
to exceed his authority. Support
people are often responsible to other
managers (functional) for pay,
performance reports, promotions, etc.
Consistent with functional
management; the integrity of
the superior–subordinate
relationship is maintained
through functional authority
and advisory staff services.

 

Time duration The project (and hence the organization)
is finite in duration.
Tends to perpetuate itself to
provide continuing facilitative
support.

Source: David I. Cleland, “Project Management,” in David I. Cleland and William R. King, eds., Systems Organizations,
Analysis, Management: A Book of Readings
(New York: McGraw-Hill, Inc., 1969), pp. 281–290. © 1969 by McGraw-Hill Inc.
Reprinted with permission of the publisher.

Differing outlooks, priorities, and interests. A major barrier exists when team members
have professional objectives and interests that are different from the project objectives.
These problems are compounded when the team relies on support organizations that have
different interests and priorities.
Role conflicts. Team development efforts are thwarted when role conflicts exist among
the team members, such as ambiguity over who does what within the project team and in
external support groups.
Project objectives/outcomes not clear. Unclear project objectives frequently lead to
conflict, ambiguities, and power struggles. It becomes difficult, if not impossible, to define
roles and responsibilities clearly.
Dynamic project environments. Many projects operate in a continual state of change.
For example, senior management may keep changing the project scope, objectives, and
resource base. In other situations, regulatory changes or client demands can drastically
affect the internal operations of a project team.
Competition over team leadership. Project leaders frequently indicated that this barrier most likely occurs in the early phases of a project or if the project runs into severe
problems. Obviously, such cases of leadership challenge can result in barriers to team
building. Frequently, these challenges are covert challenges to the project leader’s ability.
Lack of team definition and structure. Many senior managers complain that teamwork
is severely impaired because it lacks clearly defined task responsibilities and reporting
structures. We find this situation is most prevalent in dynamic, organizationally unstructured work environments such as computer systems and R&D projects. A common pattern
is that a support department is charged with a task but no one leader is clearly delegated
the responsibility. As a consequence, some personnel are working on the project but are
not entirely clear on the extent of their responsibilities. In other cases, problems result
when a project is supported by several departments without interdisciplinary coordination.
Team personnel selection. This barrier develops when personnel feel unfairly treated or
threatened during the staffing of a project. In some cases, project personnel are assigned to a
team by functional managers, and the project manager has little or no input into the selection
process. This can impede team development efforts, especially when the project leader is
given available personnel versus the best, hand-picked team members. The assignment of
“available personnel” can result in several problems (e.g., low motivation levels, discontent,
and uncommitted team members). We’ve found, as a rule, that the more power the project
leader has over the selection of his team members, and the more negotiated agreement there
is over the assigned task, the more likely it is that team-building efforts will be fruitful.
Credibility of project leader. Team-building efforts are hampered when the project
leader suffers from poor credibility within the team or from other managers. In such cases,
team members are often reluctant to make a commitment to the project or the leader.
Credibility problems may come from poor managerial skills, poor technical judgments, or
lack of experience relevant to the project.
Lack of team member commitment. Lack of commitment can have several sources. For
example, the team members having professional interests elsewhere, the feeling of insecurity
that is associated with projects, the unclear nature of the rewards that may be forthcoming
upon successful completion, and intense interpersonal conflicts within the team can all lead
to lack of commitment.
Barriers to Project Team Development 211
Lack of team member commitment may result from suspicious attitudes existing
between the project leader and a functional support manager, or between two team members from two warring functional departments. Finally, low commitment levels are likely
to occur when a “star” on a team “demands” too much effort from other team members or
too much attention from the team leader. One team leader put it this way: “A lot of teams
have their prima donnas and you learn to live and function with them. They can be critical
to overall success. But some stars can be so demanding on everyone that they’ll kill the
team’s motivation.”
Communication problems. Not surprisingly, poor communication is a major enemy to
effective team development. Poor communication exists on four major levels: problems of
communication among team members, between the project leader and the team members,
between the project team and top management, and between the project leaders and the
client. Often the problem is caused by team members simply not keeping others informed
on key project developments. Yet the “whys” of poor communication patterns are far more
difficult to determine. The problem can result from low motivation levels, poor morale, or
carelessness. It was also discovered that poor communication patterns between the team
and support groups result in severe team-building problems, as does poor communication
with the client. Poor communication practices often lead to unclear objectives and poor
project control, coordination, and work flow.
Lack of senior management support. Project leaders often indicate that senior management support and commitment is unclear and subject to waxing and waning over the
project life cycle. This behavior can result in an uneasy feeling among team members and
lead to low levels of enthusiasm and project commitment. Two other common problems
are that senior management often does not help set the right environment for the project
team at the outset, nor do they give the team timely feedback on their performance and
activities during the life of the project.
Project managers who are successfully performing their role not only recognize these
barriers but also know when in the project life cycle they are most likely to occur. Moreover,
these managers take preventive actions and usually foster a work environment that is conducive to effective teamwork. The effective team builder is usually a social architect who
understands the interaction of organizational and behavior variables and can foster a climate
of active participation and minimal conflict. This requires carefully developed skills in leadership, administration, organization, and technical expertise on the project. However,
besides the delicately balanced management skills, the project manager’s sensitivity to the
basic issues underlying each barrier can help to increase success in developing an effective
project team. Specific suggestions for team building are advanced in Table 5–2.
5.6 SUGGESTIONS FOR HANDLING THE NEWLY
FORMED TEAM
A major problem faced by many project leaders is managing the anxiety that usually develops when a new team is formed. The anxiety experienced by team members is normal and
predictable, but is a barrier to getting the team quickly focused on the task.
212 MANAGEMENT FUNCTIONS
Suggestions for Handling the Newly Formed Team 213
TABLE 5–2. BARRIERS TO EFFECTIVE TEAM BUILDING AND SUGGESTED HANDLING
APPROACHES
Suggestions for Effectively Managing Barriers
Barrier (How to Minimize or Eliminate Barriers)

Differing outlooks, priorities,
interests, and judgments of
team members
Make effort early in the project life cycle to discover these conflicting
differences. Fully explain the scope of the project and the rewards that
may be forthcoming on successful project completion. Sell “team” concept
and explain responsibilities. Try to blend individual interests with the
overall project objectives.

Role conflicts As early in a project as feasible, ask team members where they see
themselves fitting into the project. Determine how the overall project can
best be divided into subsystems and subtasks (e.g., the work breakdown
structure). Assign/negotiate roles. Conduct regular status review meetings
to keep team informed on progress and watch for unanticipated role
conflicts over the project’s life.

Project objectives/outcomes
not clear
Assure that all parties understand the overall and interdisciplinary project
objectives. Clear and frequent communication with senior management

and the client becomes critically important. Status review meetings can be
used for feedback. Finally, a proper team name can help to reinforce the
project objectives.

Dynamic project
environments
The major challenge is to stabilize external influences. First, key project
personnel must work out an agreement on the principal project direction

and “sell” this direction to the total team. Also educate senior management
and the customer on the detrimental consequences of unwarranted change.
It is critically important to forecast the “environment” within which the
project will be developed. Develop contingency plans.

Competition over team
leadership
Senior management must help establish the project manager’s leadership
role. On the other hand, the project manager needs to fulfill the
leadership expectations of team members. Clear role and responsibility
definition often minimizes competition over leadership.

 

Lack of team definition and
structure
Project leaders need to sell the team concept to senior management as well as
to their team members. Regular meetings with the team will reinforce the

team notion as will clearly defined tasks, roles, and responsibilities. Also,
visibility in memos and other forms of written media as well as senior
management and client participation can unify the team.
Project personnel selection Attempt to negotiate the project assignments with potential team members.
Clearly discuss with potential team members the importance of the project,
their role in it, what rewards might result on completion, and the general
“rules of the road” of project management. Finally, if team members
remain uninterested in the project, then replacement should be
considered.
Credibility of project leader Credibility of the project leader among team members is crucial. It grows
with the image of a sound decision-maker in both general management
and relevant technical expertise. Credibility can be enhanced by the
project leader’s relationship to other key managers who support the team’s
efforts.
(
continues)
214 MANAGEMENT FUNCTIONS
TABLE 5–2. BARRIERS TO EFFECTIVE TEAM BUILDING AND SUGGESTED HANDLING
APPROACHES (Continued)
Suggestions for Effectively Managing Barriers
Barrier (How to Minimize or Eliminate Barriers)
Lack of team member Try to determine lack of team member commitment early in the life of the
commitment project and attempt to change possible negative views toward the project.
Often, insecurity is a major reason for the lack of commitment; try to
determine why insecurity exists, then work on reducing the team
members’ fears. Conflicts with other team members may be another
reason for lack of commitment. It is important for the project leader to
intervene and mediate the conflict quickly. Finally, if a team member’s
professional interests lie elsewhere, the project leader should examine
ways to satisfy part of the team member’s interests or consider
replacement.
Communication problems The project leader should devote considerable time communicating with
individual team members about their needs and concerns. In addition,
the leader should provide a vehicle for timely sessions to encourage
communications among the individual team contributors. Tools for
enhancing communications are status meetings, reviews, schedules,
reporting system, and colocation. Similarly, the project leader should
establish regular and thorough communications with the client and senior
management. Emphasis is placed on written and oral communications with
key issues and agreements in writing.
Lack of senior management Senior management support is an absolute necessity for dealing effectively
support with interface groups and proper resource commitment. Therefore, a
major goal for project leaders is to maintain the continued interest and
commitment of senior management in their projects. We suggest that
senior management become an integral part of project reviews. Equally
important, it is critical for senior management to provide the proper
environment for the project to function effectively. Here the project
leader needs to tell management at the onset of the program what
resources are needed. The project manager’s relationship with senior
management and ability to develop senior management support is
critically affected by his own credibility and the visibility and priority of
his project.
This anxiety may come from several sources. For example, if the team members have
never worked with the project leader, they may be concerned about his leadership style.
Some team members may be concerned about the nature of the project and whether it will
match their professional interests and capabilities, or help or hinder their career aspirations.
Further, team members can be highly anxious about life-style/work-style disruptions.
As one project manager remarked, “Moving a team member’s desk from one side of the
room to the other can sometimes be just about as traumatic as moving someone from
Chicago to Manila.”
Another common concern among newly formed teams is whether there will be an
equitable distribution of the workload among team members and whether each member is
capable of pulling his own weight. In some newly formed teams, members not only must
do their own work, but also must train other team members. Within reason this is bearable,
but when it becomes excessive, anxiety increases.

Certain steps taken early in the life of a team can minimize the above problems. First,
we recommend that the project leader talk with each team member one-to-one about the
following:
1. What the objectives are for the project.
2. Who will be involved and why.
3. The importance of the project to the overall organization or work unit.
4. Why the team member was selected and assigned to the project. What role he will
perform.
5. What rewards might be forthcoming if the project is successfully completed.
6. What problems and constraints are likely to be encountered.
7. The rules of the road that will be followed in managing the project (e.g., regular
status review meetings).
8. What suggestions the team member has for achieving success.
9. What the professional interests of the team member are.
10. What challenge the project will present to individual members and the entire team.
11. Why the team concept is so important to project management success and how it
should work.
Dealing with these anxieties and helping team members feel that they are an integral
part of the team can yield rich dividends. First, as noted in Figure 5–9, team members are
more likely to openly share their ideas and approaches. Second, it is more likely that the
team will be able to develop effective decision-making processes. Third, the team is likely
Suggestions for Handling the Newly Formed Team 215
Effective
Development
of Team
Membership
Leads to
Leads to
Leads to

Trust Relationships
Among Team Members and
Higher Quality Information
Exchanges Within the Team

 

More Effective
Team Decision-Making

More Effective Project Control Systems
High Project Performance and
Feedback Mechanism
on Team Member Performance
FIGURE 5–9. Team-building outcomes.
to develop more effective project control procedures, including those traditionally used to
monitor project performance (PERT/CPM, networking, work breakdown structures, etc.)
and those in which team members give feedback to each other regarding performance.
5.7 TEAM BUILDING AS AN ONGOING PROCESS
While proper attention to team building is critical during early phases of a project, it is a
never-ending process. The project manager is continually monitoring team functioning and
performance to see what corrective action may be needed to prevent or correct various team
problems. Several barometers (summarized in Table 5–3) provide good clues of potential
team dysfunctioning. First, noticeable changes in performance levels for the team and/or for
individual team members should always be investigated. Such changes can be symptomatic
of more serious problems (e.g., conflict, lack of work integration, communication problems,
and unclear objectives). Second, the project leader and team members must be aware of the
changing energy levels of team members. These changes, too, may signal more serious
problems or that the team is tired and stressed. Sometimes changing the work pace or taking time off can reenergize team members. Third, verbal and nonverbal clues from team
members may be a source of information on team functioning. It is important to hear the
needs and concerns of team members (verbal clues) and to observe how they act in carrying out their responsibilities (nonverbal clues). Finally, detrimental behavior of one team
member toward another can be a signal that a problem within the team warrants attention.
We highly recommend that project leaders hold regular meetings to evaluate overall
team performance and deal with team functioning problems. The focus of these meetings
can be directed toward “what we are doing well as a team” and “what areas need our team’s
attention.” This approach often brings positive surprises in that the total team is informed
216 MANAGEMENT FUNCTIONS
TABLE 5–3. EFFECTIVENESS–INEFFECTIVENESS INDICATORS
The Ineffective Team’s Likely
The Effective Team’s Likely Characteristics Characteristics
High performance and task efficiency Low performance
Innovative/creative behavior Low commitment to project objectives
Commitment Unclear project objectives and fluid commitment
Professional objectives of team members levels from key participants
coincident with project requirements
Unproductive gamesmanship, manipulation of
Team members highly interdependent, others, hidden feelings, conflict avoidance at all
interface effectively costs
Capacity for conflict resolution, but conflict Confusion, conflict, inefficiency
encouraged when it can lead to beneficial
Subtle sabotage, fear, disinterest, or foot-dragging
results
Cliques, collusion, isolation of members
Effective communication Lethargy/unresponsiveness
High trust levels
Results orientation
Interest in membership
High energy levels and enthusiasm
High morale
Change orientation
of progress in diverse project areas (e.g., a breakthrough in technology development, a
subsystem schedule met ahead of the original target, or a positive change in the client’s
behavior toward the project). After the positive issues have been discussed the review session should focus on actual or potential problem areas. The meeting leader should ask each
team member for his observations and then open the discussion to ascertain how significant the problems really are. Assumptions should, of course, be separated from the facts
of each situation. Next, assignments should be agreed on for best handling these problems.
Finally, a plan for problem follow-up should be developed. The process should result in
better overall performance and promote a feeling of team participation and high morale.
5.8 DYSFUNCTIONS OF A TEAM
In a pure line organization, line managers may have the luxury of “time” to build up relationships with their subordinates and provide slow guidance on how the employees should
function on teams. But in a project environment, time is a constraint, and the project manager must act or react quickly to get the desired teamwork.
Understanding the dysfunctions of a team, and being able to correct the problems
quickly, is essential in a project environment. Patrick Lencioni has authored a best-selling
text describing the five most common dysfunctions of a team. In his text, he describes the
five dysfunctions as
9:
Absence of trust
Fear of conflict
Lack of commitment
Avoidance of accountability
Inattention to results
In his text, he identifies the differences between the teams that have these dysfunctions and
those that do not possess them:
Members of a team with an absence of trust…
Conceal their weakness and mistakes from one another
Hesitate to ask for help or provide constructive feedback
Hesitate to offer help outside their own area of responsibility
Jump to conclusions about intentions and aptitudes of others without attempting to
clarify them
Failing to recognize and tap into another’s skills and experiences
Waste time and energy managing their behaviors for effect
Hold grudges
Dread meetings and find reasons to avoid spending time together
Dysfunctions of a Team 217
9. P. Lencioni, The Five Dysfunctions of a Team (New York: Jossey-Bass, 2002), pp. 197–218. Reprinted by
permission of John Wiley.

Members of trusting teams…
Admit weaknesses and mistakes
Ask for help
Accept questions and input about their areas of responsibility
Give one another the benefit of the doubt before arriving at a negative conclusion
Take risks in offering feedback and assistance
Appreciate and tap into one another’s skills and experiences
Focus time and energy on important issues, not politics
Offer and accept apologies without hesitation
Look forward to meetings and their opportunities to work as a group
Teams that fear conflict…
Have boring meetings
Create environments where back-channel politics and personal attacks thrive
Ignore controversial topics that are critical to team success
Fail to tap into all the opinions and perspectives of team members
Waste time and energy with posturing and interpersonal risk management
Teams that engage in conflict…
Have lively, interesting meetings
Extract and exploit the ideas of all team members
Solve real problems quickly
Minimize politics
Put critical topics on the table for discussion
A team that fails to commit…
Creates ambiguity among the team about direction and priorities
Watches windows and opportunities closly due to excessive analysis and unnecessary delay
Breeds lack of confidence and fear of failure
Revisits discussions and decisions again and again
Encourages second-guessing among team members
A team that commits…
Creates clarity around direction and priorities
Aligns the entire team around common objectives
Develops an ability to learn from mistakes
Takes advantage of opportunities before competitors do
Moves forward without hesitation
Changes direction without hesitation or guilt
A team that avoids accountability…
Creates resentment among team members who have different standards or
performance
Encourages mediocrity
Misses deadlines and key deliverables
Places an undue burden on the team leader as the sole source of discipline
218 MANAGEMENT FUNCTIONS
A team that holds one another accountable…
Ensures that poor performers feel pressure to improve
Identifies potential problems quickly by questioning one another’s approaches
without hesitation
Establishes respect among team members who are held to the same high standards
Avoids excessive bureaucracy around performance management and corrective
action
A team that is not focused on results…
Stagnates/fails to grow
Rarely defeats competitors
Loses achievement-oriented employees
Encourages team members to focus on their own careers and individual goals
Is easily distracted
A team that focuses on collective results…
Retains achievement-oriented employees
Minimizes individualistic behavior
Enjoys success and suffers failure acutely
Benefits from individuals who subjugate their own goals/interests for the good of
the team
Avoids distractions
Another item that can lead to dysfunctional behavior among team members is when the
project manager and team do not have the same shared values. According to Kouzes and
Posner
10:
Shared values are the foundations for building productive and genuine working relationships.
Although credible leaders honor the diversity of their many constituencies, they also stress
their common values. Leaders build on agreement. They don’t try to get everyone to be in
accord on everything — this goal is unrealistic, perhaps even impossible. Moreover, to achieve
it would negate the very advantages of diversity. But to take a first step, and then a second,
and then a third, people must have some common core of understanding. After all, if there’s
no agreement about values, then what exactly is the leader — and everyone else — going to
model? If disagreements over fundamental values continue, the result is intense conflict, false
expectations, and diminished capacity.
Kouzes and Posner also show, through their own research, that shared values can make a
difference:
They foster strong feelings of personal effectiveness
They promote high levels of company loyalty
Dysfunctions of a Team 219
10. James M. Kouzes and Barry Z. Posner, The Leadership Challenge, 4th ed. (New York: Jossey-Bass,
2007), pp. 60, 62.

They facilitate consensus about key organizational goals and stakeholders
They encourage ethical behavior
They promote strong norms about working hard and caring
They reduce levels of job stress and tension
They foster pride in the company
They facilitate understanding about job expectations
They foster teamwork and esprit de corps
5.9 LEADERSHIP IN A PROJECT ENVIRONMENT
Leadership can be defined as a style of behavior designed to integrate both the organizational requirements and one’s personal interests into the pursuit of some objective. All
managers have some sort of leadership responsibility. If time permits, successful leadership techniques and practices can be developed.
Leadership is composed of several complex elements, the three most common being:
The person leading
The people being led
The situation (i.e., the project environment)
Project managers are often selected or not selected because of their leadership styles.
The most common reason for not selecting an individual is his inability to balance the technical and managerial project functions. Wilemon and Cicero have defined four characteristics of this type of situation
11:
The greater the project manager’s technical expertise, the higher his propensity to
overinvolve himself in the technical details of the project.
The greater the project manager’s difficulty in delegating technical task responsibilities, the more likely it is that he will overinvolve himself in the technical details
of the project (depending on his ability to do so).
The greater the project manager’s interest in the technical details of the project, the
more likely it is that he will defend the project manager’s role as one of a technical specialist.
The lower the project manager’s technical expertise, the more likely it is that he
will overstress the nontechnical project functions (administrative functions).
220 MANAGEMENT FUNCTIONS
11. D. L. Wilemon and John P. Cicero, “The Project Manager: Anomalies and Ambiguities,” Academy of
Management Journal,
Vol. 13, pp. 269–282, 1970.
Life-Cycle Leadership 221
There have been several surveys to determine what leadership techniques are best. The
following are the results of a survey by Richard Hodgetts
12:
Human relations–oriented leadership techniques
The project manager must make all the team members feel that their efforts
are important and have a direct effect on the outcome of the program.”
“The project manager must educate the team concerning what is to be done and
how important its role is.”
“Provide credit to project participants.”
“Project members must be given recognition and prestige of appointment.”
“Make the team members feel and believe that they play a vital part in the success (or failure) of the team.”
“By working extremely closely with my team I believe that one can win a project loyalty while to a large extent minimizing the frequency of authority-gap
problems.”
“I believe that a great motivation can be created just by knowing the people in
a personal sense. I know many of the line people better than their own supervisor does. In addition, I try to make them understand that they are an indispensable part of the team.”
I would consider the most important technique in overcoming the authoritygap to be understanding as much as possible the needs of the individuals with
whom you are dealing and over whom you have no direct authority.”
Formal authority–oriented leadership techniques
“Point out how great the loss will be if cooperation is not forthcoming.”
“Put all authority in functional statements.”
“Apply pressure beginning with a tactful approach and minimum application
warranted by the situation and then increasing it.”
“Threaten to precipitate high-level intervention and do it if necessary.”
“Convince the members that what is good for the company is good for them.”
“Place authority on full-time assigned people in the operating division to get
the necessity work done.”
“Maintain control over expenditures.”
“Utilize implicit threat of going to general management for resolution.”
“It is most important that the team members recognize that the project manager
has the charter to direct the project.”
5.10 LIFE-CYCLE LEADERSHIP
In the opinion of the author, Hersey and Blanchard developed the best
model for analyzing leadership in a project management environment.
Over the years the model has been expanded by Paul Hersey and is shown
PMBOK® Guide, 4th Edition
9.3 Develop Project Team
12. Richard M. Hodgetts, “Leadership Techniques in Project Organizations,” Academy of Management Journal,
Vol. 11, pp. 211–219, 1968.

222 MANAGEMENT FUNCTIONS
in Figure 5–10 as the Situational Leadership® Model. The model contends that there are
four basic leadership styles and that to use them most effectively entails matching the most
appropriate leadership style to the readiness of the follower. Readiness is defined as jobrelated experience, willingness to accept job responsibility, and desire to achieve. It’s about
not only
doing a good job but also wanting to do a good job. Most importantly though is
the concept that this is a situational model. This is critical because it means that the same
person can be more ready to perform one task than they are to do another and that the style
a leader uses will have to change accordingly to be the most effective and successful at
influencing the desired behaviors in that person.
Referring to Figure 5–10, suppose that a subordinate was not performing a certain task
and showed through his or her behavior every indication of not wanting to (R1). According
to the model, the leadership style that has the highest probability of successfully and effectively getting that person to perform is one that involves high amounts of structured task
behavior that could be generally described as directive in nature (S1). This would entail
telling a subordinate who, what, when, where, and how to go about performing the particular task. It would also be appropriate in this style to acknowledge steps taken in the right
direction as far as performance is concerned, but this type of relationship behavior must
match the magnitude of the steps being taken or the subordinate may be left with the false
impression that his or her current level of performance is in fact acceptable. Some have

High
Relationship
and Low Task
S3
PARTICIPATING
S2
High Task
and High
Relationship
SELLING
Low
Relationship
and Low Task
S4
DELEGAT
ING
S1
High Task
and Low
Relationship
TELLING

Situational Leadership®
®
LEADER BEHAVIORS
(HIGH)
(LOW)
(LOW) TASK BEHAVIOR
DIRECTIVE BEHAVIOR (HIGH)
SUPPORTIVE BEHAVIOR
RELATIONSHIP BEHAVIOR
(HIGH)
© Copyright 2006 Reprinted with permission of the Center for
Leadership Studies, Inc., Escondido, CA 92025. All rights reserved.
FOLLOWER READINESS (LOW)

R4 R3 R2 R1
ABLE AND
WILLING AND
CONFIDENT
ABLE BUT
UNWILLING
OR INSECURE
UNABLE BUT
WILLING
OR CONFIDENT
UNABLE AND
UNWILLING
OR INSECURE

FIGURE 5–10. Expanded Situational Leadership Model. Adapted from Paul Hersey, Situational
Selling
(Escondido, CA: Center for Leadership Studies, 1985), p. 35. Reproduced by permission of
the Center for Leadership Studies.
®
Life-Cycle Leadership 223
gone so far as to equate this “telling” leadership style with the purely task-orientated
behavior of an autocratic approach where the leader’s main concern is the accomplishment
of objective, often with very little concern for the employees or their feelings. An autocratic leader by his or her nature is very forceful and relies heavily on his or her own abilities and judgment often at the expense of other people’s opinions. Note, however, in
Figure 5–10 that the bell curve in the model does not go all the way to zero, indicating
some relationship behavior present in this style that increases appropriately as the level of
performance does.
As shown in Figure 5–10, suppose that an employee was beginning to perform the task
in question but wasn’t yet doing so at a sustained and acceptable level even though he or
she really seemed to want to do a good job (R2). The leadership style with the highest probability of successfully and effectively influencing the desired behavior from this employee
rests in quadrant S2. This employee needs everything from the leader. The employee needs
structure to keep him or her on track and support not only to build the foundations of trust
that help him or her continue to develop but also to give the big picture of how personal
actions contribute to the success of the team. This is where the leader shares the “why”
behind the behaviors in which he or she is asking the subordinate to engage.
At some point, one would hope that subordinates would begin performing the task in
question at a sustained and acceptable level (R3). When this takes place, the follower is no
longer in need of being told who, what, when, where and how to do the task but rather
seeks autonomy and freedom as a reward for their good performance. They desire more of
a collegial relationship with their superior that reflects the fact that they have arrived, but
they will also be insecure about completely letting go of the involvement from the leader
that made them feel so secure in the past. For a leader, the appropriate style for this readiness level would be S3. It would entail engaging in relationship behavior that gets followes
to admit from their own mouths that they are indeed performing at a sustained and
acceptable level and that they don’t really need the leader to be so intricately involved in
the process. For some this step occurs quickly, for others, they never make the leap. They
must learn to have confidence in themselves and their abilities, and the leader’s job at this
point is to help with that process through the use of relationship behaviors that avoid making those followers feel more insecure. This means that the followers must trust the leader,
and they can earn that trust by doing things like taking calculated risks that not only allow
the followers small wins but also allows them to learn from their mistakes without being
beaten up for them. It’s a fine line the leader walks. They must be supportive without
being an enabler.
Some leaders are blessed with followers who not only perform at a high and sustained
level but are totally and rightfully confident about their ability to do so (R4). In such an
instance, the appropriate leadership style rests in quadrant S4. It involves leadership behaviors such as monitoring and observing, which are characterized by low amounts of task and
relationship-oriented behaviors. The leader is kept informed of both the good and bad in a
timely manner from a person at this readiness level but is not the decision-maker.
Responsibility lies with the subordinate who takes ownership of their actions and expects
the leader to spend his or her energy obtaining resources for them and protecting or shielding them from other influences in the organization that could impede their performance.

224 MANAGEMENT FUNCTIONS
Let’s see where some common leadership style descriptors fall within the model.
Democratic or Participative Leadership: This leadership style encourages
workers to communicate with one another and get involved with decision-making
either by himself or herself or with assistance of the project manager. A great deal
of authority is delegated to the team members, and they are encouraged to take an
active role in the management of the project. The leadership style is often found
in quadrant S3 with some spill over as the manager becomes less involved in the
process into quadrant S4.
Laissez-Faire Leadership: With the leadership style, the project manger turns
things over to the workers. This can feel like abandonment to the subordinates if
they are not both performing at a high level and willing to do so. The project manager may make an occasional appearance with this style just to see how things are
going, but for the main part there is no active involvement by the project manager.
This leadership style is found in quadrant S4.
Autocratic Leadership: With this leadership style, the project manager focuses
very heavily upon the task, with little concern for the workers. With autocratic
ORGANIZATIONAL CLI
MATE AND POLICIES
SUPERIOR’S
EXPECTATIONS
AND BEHAVIOR
PERSONALITY, PAST
EXPERIENCES, AND
EXPECTATIONS
ORGANIZATIONAL
CLIMATE AND
POLICIES
SUBORDINATES’
CHARACTERISTICS,
EXPECTATIONS,
AND BEHAVIOR
TASK
REQUIREMENTS
LEADER’S
EFFECTIVENESS
PEERS’
EXPECTATIONS
AND BEHAVIOR
FIGURE 5–11. Personality and situational factors that influence effective leadership. Source: James
A. F. Stoner,
Management, 2nd ed. (Englewood Cliffs, New Jersey: Prentice-Hall Inc., 1982). Used
by permission.

Organizational Impact 225
leadership, all authority is in the hands of the project manager and the project manager has the final say in any and all decisions. This leadership style is found in
quadrant S1.
This type of situational approach to leadership is extremely important to project managers
because it implies that effective leadership must be both dynamic and flexible rather than
static and rigid (see Figure 5–11). Effective leaders recognize that when it comes to human
behavior, there is no one best way that fits all circumstances. They need both task and relationship behavior to be able to be their most effective. Thankfully, it doesn’t have to be a
perfect match to work. Sometimes close is good enough, and sometimes a project manager’s
followers are willing to let them demonstrate a less than appropriate style because that manager has taken the time to earn their trust or perhaps even warned them of the necessity of
going there when a crisis occurs. Just be wary of “living” in this mode because it may be
the leader causing the crisis and the only fire needing to be put out could end up being the
leader.
In pure project management, the situation is even more complex. It is not enough to
have a different leadership style for each team member. Remember that any one person is
more ready to do some tasks than others. For example, they may be really good at training
others but detest and avoid report writing. That person’s leader will have to use a different
style depending on which task they are asking their follower to perform. To illustrate this
graphically, the quadrants in Figure 5–10 should be three-dimensional, with the third axis
being the life cycle phase of the project. In other words, the leadership is dependent not
only on the situation, but also on the life-cycle phase of the project.
5.11 ORGANIZATIONAL IMPACT
In most companies, whether or not project-oriented, the impact of management emphasis
on the organization is well known. In the project environment there also exists a definite
impact due to leadership emphasis. The leadership emphasis is best seen by employee
contributions, organizational order, employee performance, and the project manager’s
performance:
Contributions from People
A good project manager encourages active cooperation and responsible participation. The result is that both good and bad information is contributed freely.
A poor project manager maintains an atmosphere of passive resistance with
only responsive participation. This results in information being withheld.
Organizational Order
A good project manager develops policy and encourages acceptance. A low
price is paid for contributions.
A poor project manager goes beyond policies and attempts to develop procedures and measurements. A high price is normally paid for contributions.
226 MANAGEMENT FUNCTIONS
Employee Performance
A good project manager keeps people informed and satisfied (if possible) by
aligning motives with objectives. Positive thinking and cooperation are encouraged. A good project manager is willing to give more responsibility to those
willing to accept it.
A poor project manager keeps people uninformed, frustrated, defensive, and
negative. Motives are aligned with incentives rather than objectives. The poor
project manager develops a “stay out of trouble” atmosphere.
Performance of the Project Manager
A good project manager assumes that employee misunderstandings can and
will occur, and therefore blames himself. A good project manager constantly
attempts to improve and be more communicative. He relies heavily on moral
persuasion.
A poor project manager assumes that employees are unwilling to cooperate and
therefore blames subordinates. The poor project manager demands more
through authoritarian attitudes and relies heavily on material incentives.
Management emphasis also impacts the organization. The following four
categories show this management emphasis resulting for both good and poor project
management:
Management Problem-Solving
A good project manager performs his own problem-solving at the level for
which he is responsible through delegation of problem-solving responsibilities.
A poor project manager will do subordinate problem-solving in known areas.
For areas that he does not know, he requires that his approval be given prior to
idea implementation.
Organizational Order
A good project manager develops, maintains, and uses a single integrated management system in which authority and responsibility are delegated to the subordinates. In addition, he knows that occasional slippages and overruns will occur,
and simply tries to minimize their effect.
A poor project manager delegates as little authority and responsibility as possible, and runs the risk of continual slippages and overruns. A poor project
manager maintains two management information systems: one informal
system for himself and one formal (eyewash) system simply to impress his
superiors.
Performance of People
A good project manager finds that subordinates willingly accept responsibility,
are decisive in attitude toward the project, and are satisfied.
A poor project manager finds that his subordinates are reluctant to accept
responsibility, are indecisive in their actions, and seem frustrated.

Employee–Manager Problems 227
Performance of the Project Manager
A good project manager assumes that his key people can “run the show.” He
exhibits confidence in those individuals working in areas in which he has no
expertise, and exhibits patience with people working in areas where he has a
familiarity. A good project manager is never too busy to help his people solve
personal or professional problems.
A poor project manager considers himself indispensable, is overcautious with
work performed in unfamiliar areas, and becomes overly interested in work he
knows. A poor project manager is always tied up in meetings.
5.12 EMPLOYEE–MANAGER PROBLEMS
The two major problem areas in the project environment are the “who has what authority
and responsibility” question, and the resulting conflicts associated with the individual at the
project–functional interface. Almost all project problems in some way or another involve
these two major areas. Other problem areas found in the project environment include:
The pyramidal structure
Superior–subordinate relationships
Departmentalization
Scalar chain of command
Organizational chain of command
Power and authority
Planning goals and objectives
Decision-making
Reward and punishment
Span of control
The two most common employee problems involve the assignment and resulting evaluation processes. Personnel assignments were discussed in Chapter 4. In summary:
People should be assigned to tasks commensurate with their skills.
Whenever possible, the same person should be assigned to related tasks.
The most critical tasks should be assigned to the most responsible people.
The evaluation process in a project environment is difficult for an employee at the
functional–project interface, especially if hostilities develop between the functional and
project managers. In this situation, the interfacing employee almost always suffers owing
to a poor rating by either the project manager or his supervisor. Unless the employee
continually keeps his superior abreast of his performance and achievements, the supervisor must rely solely on the input (often flawed) received from project office personnel.

228 MANAGEMENT FUNCTIONS
Three additional questions must be answered with regard to employee evaluation:
Of what value are job descriptions?
How do we maintain wage and salary grades?
Who provides training and development, especially under conditions where variable manloading can exist?
If each project is, in fact, different from all others, then it becomes an almost impossible task to develop accurate job descriptions. In many cases, wage and salary grades are
functions of a unit manning document that specifies the number, type, and grade of all
employees required on a given project. Although this might be a necessity in order to control costs, it also is difficult to achieve because variable manloading changes project
priorities. Variable manloading creates several difficulties for project managers, especially
if new employees are included. Project managers like to have seasoned veterans assigned
to their activities because there generally does not exist sufficient time for proper and close
supervision of the training and development of new employees. Functional managers,
however, contend that the training has to be accomplished on someone’s project, and
sooner or later all project managers must come to this realization.
On the manager level, the two most common problems involve personal values and
conflicts. Personal values are often attributed to the “changing of the guard.” New managers have a different sense of values from that of the older, more experienced managers.
Miner identifies some of these personal values attributed to new managers
13:
Less trust, especially of people in positions of authority.
Increased feelings of being controlled by external forces and events, and thus
belief that they cannot control their own destinies. This is a kind of change that
makes for less initiation of one’s own activities and a greater likelihood of
responding in terms of external pressures. There is a sense of powerlessness,
although not necessarily a decreased desire for power.
Less authoritarian and more negative attitudes toward persons holding positions of
power.
More independence, often to the point of rebelliousness and defiance.
More freedom, less control in expressing feelings, impulses, and emotions.
Greater inclination to live in the present and to let the future take care of itself.
More self-indulgence.
Moral values that are relative to the situation, less absolute, and less tied to formal
religion.
A strong and increasing identification with their peer and age groups, with the
youth culture.
13. John B. Miner, “The OD-Management Development Conflict.” Reprinted with permission from Business
Horizons,
December 1973, p. 32. Copyright © 1973 by the Board of Trustees at Indiana University.
Employee–Manager Problems 229
Greater social concern and greater desire to help the less fortunate.
More negative attitude toward business, the management role in particular. A professional position is clearly preferred to managing.
A desire to contribute less to an employing organization and to receive more from
the organization.
Previously, we defined one of the attributes of a project manager as liking risks.
Unfortunately, the amount of risk that today’s managers are willing to accept varies not
only with their personal values but also with the impact of current economic conditions
and top management philosophies. If top management views a specific project as vital for
the growth of the company, then the project manager may be directed to assume virtually
no risks during the execution of the project. In this case the project manager may attempt
to pass all responsibility to higher or lower management claiming that “his hands are tied.”
Wilemon and Cicero identify problems with risk identification
14:
The project manager’s anxiety over project risk varies in relation to his willingness
to accept final responsibility for the technical success of his project. Some project
managers may be willing to accept full responsibility for the success or failure of
their projects. Others, by contrast, may be more willing to share responsibility and
risk with their superiors.
The greater the length of stay in project management, the greater the tendency for
project managers to remain in administrative positions within an organization.
The degree of anxiety over professional obsolescence varies with the length of
time the project manager spends in project management positions.
The amount of risk that managers will accept also varies with age and experience.
Older, more experienced managers tend to take few risks, whereas the younger, more
aggressive managers may adopt a risk-lover policy in hopes of achieving a name for
themselves.
Conflicts exist at the project–functional interface regardless of how hard we attempt
to structure the work. According to Cleland and King, this interface can be defined by the
following relationships
15:
Project Manager
What is to be done?
When will the task be done?
Why will the task be done?
How much money is available to do the task?
How well has the total project been done?
14. D. L. Wilemon and John P. Cicero, “The Project Manager: Anomalies and Ambiguities,” Academy of
Management Journal,
Vol. 13, 1970, pp. 269–282.
15. From David I. Cleland and William Richard King,
Systems Analysis and Project Management (New York:
McGraw-Hill), p. 237.

Functional Manager
Who will do the task?
Where will the task be done?
How will the task be done?
How well has the functional input been integrated into the project?
The result of these differing views is inevitable conflict between the functional and
project manager, as described by William Killian
16:
The conflicts revolve about items such as project priority, manpower costs, and the assignment of functional personnel to the project manager. Each project manager will, of course,
want the best functional operators assigned to his project. In addition to these problems,
the accountability for profit and loss is much more difficult in a matrix organization than
in a project organization. Project managers have a tendency to blame overruns on functional managers, stating that the cost of the function was excessive. Whereas functional
managers have a tendency to blame excessive costs on project managers with the argument
that there were too many changes, more work required than defined initially, and other
such arguments.
Major conflicts can also arise during problem resolution sessions because the time
constraints imposed on the project often prevent both parties from taking a logical
approach. One of the major causes of prolonged problem-solving is a lack of pertinent
information. The following information should be reported by the project manager
17:
The problem
The cause
The expected impact on schedule, budget, profit, or other pertinent area
The action taken or recommended and the results expected of that action
What top management can do to help
5.13 MANAGEMENT PITFALLS
The project environment offers numerous opportunities for project managers and team
members to get into trouble. Common types of management pitfalls are:
Lack of self-control (knowing oneself)
Activity traps
Managing versus doing
People versus task skills
230 MANAGEMENT FUNCTIONS
16. William P. Killian, “Project Management—Future Organizational Concepts,” Marquette Business Review,
Vol. 2, 1971, pp. 90–107.
17. Russell D. Archibald,
Managing High-Technology Programs and Projects (New York: Wiley, 1976), p. 230.
Management Pitfalls 231
Ineffective communications
Time management
Management bottlenecks
Knowing oneself, especially one’s capabilities, strengths, and weaknesses, is the first
step toward successful project management. Too often, managers will assume that they are
jacks-of-all-trades, will “bite off more than they can chew,” and then find that insufficient
time exists for training additional personnel.
The following lines illustrate self-concept:
Four Men
It chanced upon a winter’s night
Safe sheltered from the weather.
The board was spread for only one,
Yet four men dined together.
There sat the man I meant to be
In glory, spurred and booted.
And close beside him, to the right
The man I am reputed.
The man I think myself to be
His seat was occupying
Hard by the man I really am
To hold his own was trying.
And all beneath one roof we met
Yet none called his fellow brother
No sign of recognition passed
They knew not one another.
Author unknown
Activity traps result when the means become the end, rather than the means to achieve
the end. The most common activity traps are team meetings, customer–technical interchange meetings, and the development of special schedules and charts that cannot be used
for customer reporting but are used to inform upper-level management of project status.
Sign-off documents are another activity trap and managers must evaluate whether all this
paperwork is worth the effort.
We previously defined a characteristic of poor leadership as the inability to obtain a
balance between management functions and technical functions. This can easily develop
into an activity trap where the individual becomes a doer rather than a manager.
Unfortunately, there often exists a very fine line between managing and doing. As an
example, consider a project manager who was asked by one of his technical people to
make a telephone call to assist him in solving a problem. Simply making the phone call is
doing work that should be done by the project team members or even the functional manager. However, if the person being called requires that someone in absolute authority be
included in the conversation, then this can be considered managing instead of doing.
There are several other cases where one must become a doer in order to be an effective
manager and command the loyalty and respect of subordinates. Assume a special situation where you must schedule subordinates to work overtime on holidays or weekends.

By showing up at the plant during these times, just to make a brief appearance, you can create a better working atmosphere and understanding with the subordinates.
Another major pitfall is the decision to utilize either people skills or task skills. Is it
better to utilize subordinates with whom you can obtain a good working relationship or to
employ highly skilled people simply to get the job done? Obviously, the project manager
would like nothing better than to have the best of both worlds, but this is not always possible. Consider the following situations:
There is a task that will take three weeks to complete. John has worked for you
before, but not on such a task as this. John, however, understands how to work with
you. Paul is very competent but likes to work alone. He can get the job done within
constraints. Should you employ people or task skills? (Would your answer change
if the task were three months instead of three weeks?)
There exist three tasks, each one requiring two months of work. Richard has the
necessary people skills to handle all three tasks, but he will not be able to do so as
efficiently as a technical specialist. The alternate choice is to utilize three technical specialists.
Based on the amount of information given, the author prefers task skills so as not to hinder the time or performance constraints on the project. Generally speaking, for long-duration
projects that require constant communications with the customer, it might be better to have
permanently assigned employees who can perform a variety of tasks. Customers dislike
seeing a steady stream of new faces.
It is often said that a good project manager must be willing to work sixty to eighty
hours a week to get the job done. This might be true if he is continually fighting fires or if
budgeting constraints prevent employing additional staff. The major reason, however, is
the result of ineffective time management. Prime examples might include the continuous
flow of paperwork, unnecessary meetings, unnecessary phone calls, and acting as a tour
guide for visitors.
To be effective, the project manager must establish time management rules and
then ask himself four questions:
What am I doing that I don’t have to be doing at all?
What am I doing that can be done better by someone else?
What am I doing that could be done sufficiently well by someone else?
Am I establishing the right priorities for my activities?
Rules for time management
Conduct a time analysis (time log)
Plan solid blocks for important things
Classify your activities
Establish priorities
Establish opportunity cost on activities
Train your system (boss, subordinate, peers)
Practice delegation
Practice calculated neglect
Practice management by exception
Focus on opportunities—not on problems
232 MANAGEMENT FUNCTIONS
5.14 COMMUNICATIONS
Effective project communications ensure that we get the right information
to the right person at the right time and in a cost-effective manner. Proper
communication is vital to the success of a project. Typical definitions of
effective communication include:
An exchange of information
An act or instance of transmitting information
A verbal or written message
A technique for expressing ideas effectively
A process by which meanings are exchanged between individuals through a common system of symbols
The communications environment can be regarded as a network of channels. Most
channels are two-way channels. The number of two-way channels,
N, can be calculated
from the formula
N X(X
 2
1)

In this formula, X represents the number of people communicating with each other. For example, if four people are communicating (i.e., X 4), then there are six two-way channels.
When a breakdown in communications occurs, disaster follows, as Figure 5–12
demonstrates.
Communications 233
PMBOK® Guide, 4th Edition
Chapter 10 Project
Communications Management
AS PROPOSED BY THE
PROJECT SPONSOR
AS SPECIFIED IN THE
PROJECT REQUEST
AS DESIGNED BY THE
ENGINEER
AS PRODUCED BY
MANUFACTURING
AS INSTALLED AT THE
USER’S SITE
WHAT THE USER WANTED
FIGURE 5–12. A breakdown in communications. (Source unknown)
234 MANAGEMENT FUNCTIONS
Figures 5–13 and 5–14 show typical communications patterns. Some people consider
Figure 5–13 “politically incorrect” because project managers should not be identified as
talking “down” to people. Most project managers communicate laterally, whereas line
managers communicate vertically downward to subordinates. Figure 5–15 shows the complete communication model. The screens or barriers are from one’s perception, personality,
attitudes, emotions, and prejudices.
Perception barriers occur because individuals can view the same
message in different ways. Factors influencing perception include
the individual’s level of education and region of experience.
Perception problems can be minimized by using words that have
precise meaning.
Personality and interests, such as the likes and dislikes of individuals, affect communications. People tend to listen carefully to topics of interest but turn a deaf ear
to unfamiliar or boring topics.
Attitudes, emotions, and prejudices warp our sense of interpretation. Individuals
who are fearful or have strong love or hate emotions will tend to protect themselves by distorting the communication process. Strong emotions rob individuals
of their ability to comprehend.
Typical barriers that affect the encoding process include:
Communication goals
Communication skills
LATERAL COMMUNICATION
TO FRIENDS,
SOCIAL GROUP AND
BOTH FORMAL AND
INFORMAL ORGANIZATIONS
LATERAL COMMUNICATION
TO PEERS, OTHER
FUNCTIONAL GROUPS
AND CUSTOMERS
UPWARD
COMMUNICATION
TO MANAGEMENT
DOWNWARD
COMMUNICATION
TO SUBORDINATES AND
PROJECT OFFICE
PERSONNEL

PROJECT
MANAGER

FIGURE 5–13. Communication channels. Source: D. I. Cleland and H. Kerzner, Engineering Team
Management
(Melbourne, Florida: Krieger, 1986), p. 39.
PMBOK® Guide, 4th Edition
Figure 10–8 Basic Communication
Model
PMBOK® Guide, 4th Edition
10.2 Communications Planning
Frame of reference
Sender credibility
Needs
Personality and interests
Interpersonal sensitivity
Communications 235
SOURCE ENCODER MESSAGE DECODER

RECEIVER

FEEDBACK
PERCEPTION
PERSONALITY SCREEN
SCREEN
REGION OF
EXPERIENCE FOR
SOURCE
REGION OF
EXPERIENCE FOR
RECEIVER
PERCEPTION SCREEN PERSONALITY SCREEN
FIGURE 5–15. Total communication process. Source: D. I. Cleland and H. Kerzner, Engineering
Team Management
(Melbourne, Florida: Krieger, 1986), p. 46.

PROJECT MANAGER OR
CONTRACTS OFFICER
FORMAL

 

PROJECT MANAGER OR
CONTRACTS OFFICER

 

PROJECT SPONSOR OR
EXECUTIVE
INFORMAL

 

PROJECT SPONSOR OR
EXECUTIVE

 

EMPLOYEES INFORMAL

 

EMPLOYEES

CUSTOMER CONTRACTOR
FIGURE 5–14. Customer communications. Source: D. I. Cleland and H. Kerzner, Engineering Team
Management
(Melbourne, Florida: Krieger, 1986), p. 64.
PMBOK® Guide, 4th Edition
10.2 Communications Planning
PMBOK® Guide, 4th Edition
Figure 10–8 Basic Communication
Model
PMBOK® Guide, 4th Edition
10.3 Information Distribution
10.4.2 Communications Skills

236 MANAGEMENT FUNCTIONS
Attitude, emotion, and self-interest
Position and status
Assumptions (about receivers)
Existing relationships with receivers
Typical barriers that affect the decoding process include:
Evaluative tendency
Preconceived ideas
Communication skills
Frame of reference
Needs
Personality and interest
Attitudes, emotion, and self-interest
Position and status
Assumptions about sender
Existing relationship with sender
Lack of responsive feedback
Selective listening
The receiving of information can be affected by the way the information is received. The
most common ways include:
Hearing activity
Reading skills
Visual activity
Tactile sensitivity
Olfactory sensitivity
Extrasensory perception
The communications environment is controlled by both the internal and external
forces, which can act either individually or collectively. These forces can either assist or
restrict the attainment of project objectives.
Typical internal factors include:
Power games
Withholding information
Management by memo
Reactive emotional behavior
Mixed messages
Indirect communications
Stereotyping
Transmitting partial information
Blocking or selective perception
Typical external factors include:
The business environment
The political environment
The economic climate
Regulatory agencies
The technical state-of-the-art
The communications environment is also affected by:
Logistics/geographic separation
Personal contact requirements
Group meetings
Telephone
Correspondence (frequency and quantity)
Electronic mail
Noise tends to distort or destroy the information within the message. Noise results from
our own personality screens, which dictate the way we present the message, and perception
screens, which may cause us to “perceive” what we thought was said. Noise therefore can
cause ambiguity:
Ambiguity causes us to hear what we want to hear.
Ambiguity causes us to hear what the group wants.
Ambiguity causes us to relate to past experiences without being discriminatory.
In a project environment, a project manager may very well spend 90 percent or more
of his or her time communicating. Typical functional applications include:
Providing project direction
Decision-making
Authorizing work
Directing activities
Negotiating
Reporting (including briefings)
Attending meetings
Overall project management
Marketing and selling
Public relations
Records management
Minutes
Memos/letters/newsletters
Reports
Specifications
Contract documents
Communications 237
238 MANAGEMENT FUNCTIONS
Project managers are required to provide briefings for both internal
and external customers. Visual aids can greatly enhance a presentation.
Their advantages include:
Enlivening a presentation, which helps to capture and hold the interest of an audience.
Adding a visual dimension to an auditory one, which permits an audience to perceive
a message through two separate senses, thereby strengthening the learning process.
Spelling out unfamiliar words by presenting pictures, diagrams, or objects, and by
portraying relations graphically, which helps in introducing material that is difficult or new.
Remaining in view much longer than oral statements can hang in the air, which can
serve the same purpose as repetition in acquainting an audience with the unfamiliar and bringing back listeners who stray from the presentation.
Meetings can be classified according to their frequency of occurrence:
The daily meeting where people work together on the same project with a common objective and reach decisions informally by general agreement.
The weekly or monthly meeting where members work on different but parallel
projects and where there is a certain competitive element and greater likelihood
that the chairman will make the final decision himself or herself.
The irregular, occasional, or special-project meeting, composed of people whose
normal work does not bring them into contact and whose work has little or no relationship to that of the others. They are united only by the project the meeting exists
to promote and motivated by the desire that the project succeed. Though actual
voting is uncommon, every member effectively has a veto.
There are three types of written media used in organizations:
Individually oriented media: These include letters, memos, and
reports.
Legally oriented media: These include contracts, agreements,
proposals, policies, directives, guidelines, and procedures.
Organizationally oriented media: These include manuals, forms,
and brochures.
Because of the time spent in a communications mode, the project manager may very
well have as his or her responsibility the process of
communications management.
Communications management is the formal or informal process of conducting or supervising the exchange of information either upward, downward, laterally or diagonally.
There appears to be a direct correlation between the project manager’s ability to manage
the communications process and project performance.
The communications process is more than simply conveying a message; it is also a
source for control. Proper communications let the employees in on the act because
PMBOK® Guide, 4th Edition
10.3.3 Information Distribution
10.3.3 Outputs
PMBOK® Guide, 4th Edition
10.3.3 Information Distribution
employees need to know and understand. Communication must convey both information
and motivation. The problem, therefore, is how to communicate. Below are six simple
steps:
Think through what you wish to accomplish.
Determine the way you will communicate.
Appeal to the interest of those affected.
Give playback on ways others communicate to you.
Get playback on what you communicate.
Test effectiveness through reliance on others to carry out your instructions.
Knowing how to communicate does not guarantee that a clear message will be generated.
There are techniques that can be used to improve communications. These techniques include:
Obtaining feedback, possibly in more than one form
Establishing multiple communications channels
Using face-to-face communications if possible
Determining how sensitive the receiver is to your communications
Being aware of symbolic meaning such as expressions on people’s faces
Communicating at the proper time
Reinforcing words with actions
Using a simple language
Using redundancy (i.e., saying it two different ways) whenever possible
With every effort to communicate there are always barriers. The barriers include:
Receiver hearing what he wants to hear. This results from people doing the same
job so long that they no longer listen.
Sender and receiver having different perceptions. This is vitally important in interpreting contractual requirements, statements of work, and proposal information
requests.
Receiver evaluating the source before accepting the communications.
Receiver ignoring conflicting information and doing as he pleases.
Words meaning different things to different people.
Communicators ignoring nonverbal cues.
Receiver being emotionally upset.
The scalar chain of command can also become a barrier with regard to in-house communications. The project manager must have the authority to go to the general manager or
counterpart to communicate effectively. Otherwise, filters can develop and distort the final
message.
Communications 239
240 MANAGEMENT FUNCTIONS
Three important conclusions can be drawn about communications techniques and
barriers:
Don’t ssume that the message you sent will be received in the
form you sent it.
The swiftest and most effective communications take place
among people with common points of view. The manager who
fosters good relationships with his associates will have little difficulty in communicating with them.
Communications must be established early in the project.
In a project environment, communications are often filtered. There are several reasons
for the filtering of upward communications:
Unpleasantness for the sender
Receiver cannot obtain information from any other source
To embarrass a superior
Lack of mobility or status for the sender
Insecurity
Mistrust
Communication is also listening. Good project managers must be willing to listen to their
employees, both professionally and personally. The advantages of listening properly are that:
Subordinates know you are sincerely interested
You obtain feedback
Employee acceptance is fostered.
The successful manager must be willing to listen to an individual’s story from beginning to end, without interruptions, and to see the problem through the eyes of the subordinate. Finally, before making a decision, the manager should ask the subordinate for his
solutions to the problem.
Project managers should ask themselves four questions:
Do I make it easy for employees to talk to me?
Am I sympathetic to their problems?
Do I attempt to improve human relations?
Do I make an extra effort to remember names and faces?
The project manager’s communication skills and personality screen
often dictates the communication style. Typical communication styles
include:
Authoritarian: gives expectations and specific guidance
Promotional: cultivates team spirit
Facilitating: gives guidance as required, noninterfering
PMBOK® Guide, 4th Edition
Chapter 10 Communications
Skills
PMBOK® Guide, 4th Edition
Chapter 10 Communications
Skills

TABLE 5–4. COMMUNICATIONS POLICY
Program Manager Functional Manager Relationship
The program manager utilizes existing Communications up, down, and laterally
authorized communications media to the are essential elements to the success
maximum extent rather than create new ones. of programs in a multiprogram
organization, and to the morale and
motivation of supporting functional
organizations. In principle,
communication from the program
manager should be channeled through
the program team member to
functional managers.
Approves program plans, subdivided work Assures his organization’s compliance with Program definition must be within the
description, and/or work authorizations, and all such program direction received. scope of the contract as expressed in
schedules defining specific program the program plan and work
requirements. breakdown structure.
Signs correspondence that provides program Assures his organization’s compliance with In the program manager’s absence, the
direction to functional organizations. Signs all such program direction received. signature authority is transferred
correspondence addressed to the customer that Functional manager provides the upward to his reporting superior
pertains to the program except that which has program manager with copies of all unless an acting program manager
been expressly assigned by the general “Program” correspondence released by has been designated. Signature
manager, the function organizations, or higher his organization that may affect authority for correspondence will be
management in accordance with division program performance. Ensures that the consistent with established division
policy. program manager is aware of policy.
correspondence with unusual content,
on an exception basis, through the
cognizant program team member or
directly if such action is warranted by
the gravity of the situation.
Reports program results and accomplishments to Participates in program reviews, being Status reporting is the responsibility
the customer and to the general manager, aware of and prepared in matters of functional specialists.
keeping them informed of significant problems related to his functional specialty. The program manager utilizes the
and events. Keeps his line or staff management and specialist organizations. The
cognizant program team member specialists retain their own channels
informed of significant problems and to the general manager but must keep
events relating to any program in which the program manager informed.
his personnel are involved.
241
Conciliatory: friendly and agreeable, builds compatible team
Judicial: uses sound judgment
Ethical: honest, fair, by the book
Secretive: not open or outgoing (to project detriment)
Disruptive: breaks apart unity of group, agitator
Intimidating: “tough guy,” can lower morale
Combative: eager to fight or be disagreeable
Team meetings are often used to exchange valuable and necessary
information. The following are general guides for conducting more effective meetings:
Start on time. If you wait for people, you reward tardy behavior.
Develop agenda “objectives.” Generate a list and proceed; avoid getting hung up
on the order of topics.
Conduct one piece of business at a time.
Allow each member to contribute in his own way. Support, challenge, and counter;
view differences as helpful; dig for reasons or views.
Silence does not always mean agreement. Seek opinions: “What’s your opinion on
this, Peggy?”
Be ready to confront the verbal member: “Okay, we’ve heard from Mike on this
matter; now how about some other views?”
Test for readiness to make a decision.
Make the decision.
Test for commitment to the decision.
Assign roles and responsibilities (only after decision-making).
Agree on follow-up or accountability dates.
Indicate the next step for this group.
Set the time and place for the next meeting.
End on time.
Ask yourself if the meeting was necessary.
Many times, company policies and procedures can be established for the development
of communications channels. Table 5–4 illustrates such communications guidelines.
5.15 PROJECT REVIEW MEETINGS
Project review meetings are necessary to show that progress is being made on a project.
There are three types of review meetings:
Project team review meetings
Executive management review meetings
Customer project review meetings
242 MANAGEMENT FUNCTIONS
PMBOK® Guide, 4th Edition
Chapter 10
10.3 Performance Reporting

Most projects have weekly, bimonthly, or monthly meetings in order to keep the
project manager and his team informed about the project’s status. These meetings are flexible and should be called only if they will benefit the team.
Executive management has the right to require monthly status review meetings.
However, if the project manager believes that other meeting dates are better (because they
occur at a point where progress can be identified), then he should request them.
Customer review meetings are often the most critical and most inflexibly scheduled.
Project managers must allow time to prepare handouts and literature well in advance of the
meeting.
5.16 PROJECT MANAGEMENT BOTTLENECKS
Poor communications can easily produce communications bottlenecks. The most common bottleneck occurs when all communications between the customer and the parent
organization must flow through the project office. Requiring that all information pass
through the project office may be necessary but slows reaction times. Regardless of the
qualifications of the project office members, the client always fears that the information
he receives will be “filtered” prior to disclosure.
Customers not only like firsthand information, but also prefer that their technical specialists be able to communicate directly with the parent organization’s technical specialists. Many project managers dislike this arrangement, for they fear that the technical
specialists may say or do something contrary to project strategy or thinking. These fears
can be allayed by telling the customer that this situation will be permitted if, and only if,
the customer realizes that the remarks made by the technical specialists do not, in any way,
shape, or form, reflect the position of the project office or company.
For long-duration projects the customer may require that the contractor have an established customer representative office in the contractor’s facilities. The idea behind this is
Project Management Bottlenecks 243

INTERNAL FLOW OF
INFORMATION
CUSTOMER PROGRAM OFFICE

STRATEGIC
POLICY
INFORMATION

CUSTOMER UPPER
LEVEL MANAGEMENT

INTERNAL FLOW OF
INFORMATION
CONTRACTOR PROGRAM OFFICE

CONTRACTOR UPPER
LEVEL MANAGEMENT

FIGURE 5–16. Information flow pattern from contractor program office.
244 MANAGEMENT FUNCTIONS
sound in that all information to the customer must flow through the customer’s project
office at the contractor’s facility. This creates a problem in that it attempts to sever direct
communications channels between the customer and contractor project managers. The
result is the establishment of a local project office to satisfy contractual requirements,
while actual communications go from customer to contractor as though the local project
office did not exist. This creates an antagonistic local customer project office.
Another bottleneck occurs when the customer’s project manager considers himself to
be in a higher position than the contractor’s project manager and, therefore, seeks some
higher authority with which to communicate. Project managers who seek status can often
jeopardize the success of the project by creating rigid communications channels.
Figure 5–16 identifies why communications bottlenecks such as these occur. There
almost always exist a minimum of two paths for communications flow to and from the customer, which can cause confusion.
5.17 COMMUNICATION TRAPS
Projects are run by communications. The work is defined by the communications tool known as the work breakdown structure. Actually, this is
the easy part of communications, where everything is well defined.
Unfortunately, project managers cannot document everything they wish to
say or relate to other people, regardless of the level in the company. The
worst possible situation occurs when an outside customer loses faith in the contractor.
When a situation of mistrust prevails, the logical sequence of events would be:
More documentation
More interchange meetings
Customer representation on your site
In each of these situations, the project manager becomes severely overloaded with work.
This situation can also occur in-house when a line manager begins to mistrust a
project manager, or vice versa. There may suddenly appear an exponential increase in the flow
of paperwork, and everyone is writing “protection” memos. Previously, everything was verbal.
Communication traps occur most frequently with customer–contractor relationships.
The following are examples of this:
Phase I of the program has just been completed successfully. The customer, however,
was displeased because he had to wait three weeks to a month after all tests were
completed before the data were presented. For Phase II, the customer is insisting that
his people be given the raw data at the same time your people receive it.
The customer is unhappy with the technical information that is being given by the
project manager. As a result, he wants his technical people to be able to communicate with your technical people on an individual basis without having to go
through the project office.
You are a subcontractor to a prime contractor. The prime contractor is a little nervous about what information you might present during a technical interchange
PMBOK® Guide, 4th Edition
Chapter 10 Communications
Management
10.2.2 Communications Planning

meeting where the customer will be represented, and therefore wants to review all
material before the meeting.
Functional employees are supposed to be experts. In front of the customer (or even
your top management) an employee makes a statement that you, the project manager, do not believe is completely true or accurate.
On Tuesday morning, the customer’s project manager calls your project manager
and asks him a question. On Tuesday afternoon, the customer’s project engineer
calls your project engineer and asks him the same question.
Communication traps can also occur between the project office and line managers.
Below are several examples:
The project manager holds too many or too few team meetings.
People refuse to make decisions, and ultimately the team meetings are flooded
with agenda items that are irrelevant.
Last month, Larry completed an assignment as an assistant project manager on an
activity where the project manager kept him continuously informed as to project
status. Now, Larry is working for a different project manager who tells him only
what he needs to know to get the job done.
In a project environment, the line manager is not part of any project team; otherwise
he would spend forty hours per week simply attending team meetings. Therefore, how
does the line manager learn of the true project status? Written memos will not do it. The
information must come firsthand from either the project manager or the assigned functional employee. Line managers would rather hear it from the project manager because line
employees have the tendency to censor bad news from the respective line manager. Line
managers must be provided true status by the project office.
Sometimes, project managers expect too much from their employees during problemsolving or brainstorming sessions, and communications become inhibited. There are several
possible causes for having unproductive team meetings:
Because of superior–subordinate relationships (i.e., pecking orders), creativity is
inhibited.
All seemingly crazy or unconventional ideas are ridiculed and eventually discarded. Contributors do not wish to contribute anything further.
Meetings are dominated by upper-level management personnel.
Many people are not given adequate notification of meeting time and subject matter.
5.18 PROVERBS AND LAWS
Below are twenty project management proverbs that show you what can go wrong18:
You cannot produce a baby in one month by impregnating nine women.
The same work under the same conditions will be estimated differently by ten different estimators or by one estimator at ten different times.
Proverbs and Laws 245
18. Source unknown.
246 MANAGEMENT FUNCTIONS
The most valuable and least used word in a project manager’s vocabulary is “NO.”
You can con a sucker into committing to an unreasonable deadline, but you can’t
bully him into meeting it.
The more ridiculous the deadline, the more it costs to try to meet it.
The more desperate the situation, the more optimistic the situatee.
Too few people on a project can’t solve the problems—too many create more problems than they solve.
You can freeze the user’s specs but he won’t stop expecting.
Frozen specs and the abominable snowman are alike: They are both myths, and
they both melt when sufficient heat is applied.
The conditions attached to a promise are forgotten, and the promise is remembered.
What you don’t know hurts you.
A user will tell you anything you ask about—nothing more.
Of several possible interpretations of a communication, the least convenient one is
the only correct one.
What is not on paper has not been said.
No major project is ever installed on time, within budget, with the same staff that
started it.
Projects progress quickly until they become 90 percent complete; then they remain
at 90 percent complete forever.
If project content is allowed to change freely, the rate of change will exceed the
rate of progress.
No major system is ever completely debugged; attempts to debug a system
inevitably introduce new bugs that are even harder to find.
Project teams detest progress reporting because it vividly demonstrates their lack
of progress.
Parkinson and Murphy are alive and well—in your project.
There are thousands of humorous laws covering all subjects, including economics,
general business, engineering, management, and politics. The list below shows some of
these laws that are applicable to project management:
Abbott’s Admonitions
1. If you have to ask, you’re not entitled to know.
2. If you don’t like the answer, you shouldn’t have asked the question.
Acheson’s Rule of the Bureaucracy: A memorandum is written not to inform the
reader but to protect the writer.
Anderson’s Law: I have yet to see any problem, however complicated, which,
when you looked at it in the right way, did not become still more complicated.
Benchley’s Law: Anyone can do any amount of work provided it isn’t the work
he or she is supposed to be doing at that moment.
Bok’s Law: If you think education is expensive—try ignorance.
Boling’s Postulate: If you’re feeling good, don’t worry. You’ll get over it.
Brook’s First Law: Adding manpower to a late software project makes it
later.

Brook’s Second Law: Whenever a system becomes completely defined, some
damn fool discovers something which either abolishes the system or expands it
beyond recognition.
Brown’s Law of Business Success: Our customer’s paperwork is profit. Our own
paperwork is loss.
Chisholm’s Second Law: When things are going well, something will go wrong.
Corollaries
1. When things just can’t get any worse, they will.
2. Anytime things appear to be going better, you have overlooked something.
Cohn’s Law: The more time you spend reporting what you are doing, the less
time you have to do anything. Stability is achieved when you spend all your time
doing nothing but reporting on the nothing you are doing.
Connolly’s Law of Cost Control: The price of any product produced for a government agency will be not less than the square of the initial firm fixed-price contract.
Cooke’s Law: In any decisive situation, the amount of relevant information available is inversely proportional to the importance of the decision.
Mr. Cooper’s Law: If you do not understand a particular word in a piece of technical writing, ignore it. The piece will make perfect sense without it.
Cornuelle’s Law: Authority tends to assign jobs to those least able to do them.
Courtois’s Rule: If people listened to themselves more often, they’d talk less.
First Law of Debate: Never argue with a fool. People might not know the
difference.
Donsen’s Law: The specialist learns more and more about less and less until, finally,
he or she knows everything about nothing; whereas the generalist learns less and less
about more and more until, finally, he knows nothing about everything.
Douglas’s Law of Practical Aeronautics: When the weight of the paperwork
equals the weight of the plane, the plane will fly.
Dude’s Law of Duality: Of two possible events, only the undesired one will occur.
Economists’ Laws
1. What men learn from history is that men do not learn from history.
2. If on an actuarial basis there is a 50–50 chance that something will go wrong,
it will actually go wrong nine times out of ten.
Old Engineer’s Law: The larger the project or job, the less time there is to do it.
Nonreciprocal Laws of Expectations
1. Negative expectations yield negative results.
2. Positive expectations yield negative results.
Fyffe’s Axiom: The problem-solving process will always break down at the point
at which it is possible to determine who caused the problem.
Golub’s Laws of Computerdom
1. Fuzzy project objectives are used to avoid the embarrassment of estimating the
corresponding costs.
2. A carelessly planned project takes three times longer to complete than
expected; a carefully planned project takes only twice as long.
3. The effort required to correct the course increases geometrically with time.
4. Project teams detest weekly progress reporting because it so vividly manifests
their lack of progress.
Proverbs and Laws 247
248 MANAGEMENT FUNCTIONS
Gresham’s Law: Trivial matters are handled promptly; important matters are
never resolved.
Hoare’s Law of Large Programs: Inside every large program is a small program
struggling to get out.
Issawi’s Law of Cynics: Cynics are right nine times out of ten; what undoes them
is their belief that they are right ten times out of ten.
Johnson’s First Law: When any mechanical contrivance fails, it will do so at the
most inconvenient possible time.
Malek’s Law: Any simple idea will be worded in the most complicated way.
Patton’s Law: A good plan today is better than a perfect plan tomorrow.
Peter’s Prognosis: Spend sufficient time in confirming the need and the need will
disappear.
Law of Political Erosion: Once the erosion of power begins, it has a momentum
all its own.
Pudder’s Law: Anything that begins well ends badly. Anything that begins badly
ends worse.
Putt’s Law: Technology is dominated by two types of people—those who understand what they do not manage and those who manage what they do not understand.
Truman’s Law: If you cannot convince them, confuse them.
Von Braun’s Law of Gravity: We can lick gravity, but sometimes the paperwork
is overwhelming.
5.19 HUMAN BEHAVIOR EDUCATION
If there is a weakness in some of the project management education programs, it lies in the
area of human behavior education. The potential problem is that there is an abundance of
courses on planning, scheduling, and cost control but not very many courses on behavioral
sciences that are directly applicable to a project management environment. All too often,
lectures on human behavior focus upon application of the theories and principles based
upon a superior (project manager) to subordinate (team member) relationship. This
approach fails because:
Team members can be at a higher pay grade than the project manager.
The project manager most often has little overall authority.
The project manager most often has little formal reward power.
Team members may be working on multiple projects at the same time.
Team members may receive conflicting instructions from the project managers
and their line manager.
Because of the project’s duration, the project manager may not have the time necessary to adequately know the people on the team on a personal basis.
The project manager may not have any authority to have people assigned to the
project team or removed.

Studying Tips for the PMI® Project Management Certification Exam 249
Topics that managers and executives believe should be covered in more depth in the
behavioral courses include:
Conflict management with all levels of personnel
Facilitation management
Counseling skills
Mentorship skills
Negotiation skills
Communication skills with all stakeholders
Presentation skills
The problem may emanate from the limited number of textbooks on human behavior
applications directly applicable to the project management environment. One of the best
books in the marketplace was written by Steven Flannes and Ginger Levin.
19 The book
stresses application of project management education by providing numerous examples
from the authors’ project management experience.
5.20 MANAGEMENT POLICIES AND PROCEDURES
Although project managers have the authority and responsibility to establish project policies and procedures, they must fall within the general guidelines established
by top management. Table 5–5 identifies sample top-management guidelines.
Guidelines can also be established for planning, scheduling, controlling, and communications.
5.21 STUDYING TIPS FOR THE PMI® PROJECT
MANAGEMENT CERTIFICATION EXAM
This section is applicable as a review of the principles to support the knowledge areas and
domain groups in the PMBOK
® Guide. This chapter addresses:
Human Resources Management
Communications Management
Closure
19. Steven W. Flannes and Ginger Levin, People Skills for Project Managers (Vienna, VA: Management
Concepts, 2001).

250
TABLE 5–5. PROJECT GUIDELINES
Program Manager Functional Manager Relationship
The program manager is responsible for overall The functional organization managers are The program manager determines what will
program direction, control, and coordination; responsible for supporting the program be done: he obtains, through the assigned
and is the principal contact with the program manager in the performance of the program team members, the assistance
management of the customer. contract(s) and in accordance with the and concurrence of the functional
To achieve the program objectives, the program terms of the contract(s) and are support organizations in determining the
manager utilizes the services of the functional accountable to their cognizant definitive requirements and objectives of
organizations in accordance with the prescribed managers for the total performance. the program.
division policies and procedures affecting the The functional organizations determine
functional organizations.
how the work will be done.
The program manager establishes program and technical The functional support organizations The program manager operates within
policy as defined by management policy. perform all work within their prescribed division policies and
The program manager is responsible for the functional areas for all programs procedures except where requirements of
progress being made as well as the effectiveness within the cost, schedule, quality, and a particular program necessitate
of the total program. specifications established by contract deviations or modifications as approved
Integrates research, development, production, for the program so as to assist the by the general manager. The functional
procurement, quality assurance, product program manager in achieving support organizations provide strong,
support, test, and financial and contractual the program objectives. aggressive support to the program
aspects. The functional support organization managers.
Approves detailed performance specifications, management seeks out or initiates The program manager relies on the
pertinent physical characteristics, and innovations, methods, improvements, or functional support program team
functional design criteria to meet the other means that will enable that members for carrying out specific
program’s development or operational function to better schedule program assignments.
requirements. commitments, reduce cost, improve Program managers and the functional
Ensures preparation of, and approves, overall quality, or otherwise render exemplary support program team members are
plan, budgets, and work statements essential performance as approved by the jointly responsible for ensuring that
to the integration of system elements. program manager. unresolved conflicts between
Directs the preparation and maintenance of a requirements levied on functional
time, cost, and performance schedule to organizations by different program
ensure the orderly progress of the program. managers are brought to the attention of
management.

Coordinates and approves subcontract work Program managers do not make decisions
statement, schedules, contract type, and that are the responsibility of the
price for major “buy” items. functional support organizations as
Coordinates and approves vendor evaluation defined in division policies and
and source selections in conjunction with procedures and/or as assigned by the
procurement representative to the program general manager.
team. Functional organization managers do not
Program decision authority rests with the request decisions of a program manager
program manager for all matters relating to his that are not within the program
assigned program, consistent with division manager’s delineated authority and
policy and the responsibilities assigned by the responsibility and that do not affect the
general manager. requirements of the program.
Functional organizations do not make
program decisions that are the
responsibility of the program manager.
Joint participation in problem solution is
essential to providing satisfactory
decisions that fulfill overall program and
company objectives, and is accomplished
by the program manager and the assigned
program team members.
In arriving at program decisions, the
program manager obtains the assistance
and concurrence of cognizant functional
support managers, through the cognizant
program team member, since they are
held accountable for their support of
each program and for overall division
functional performance.
251
Understanding the following principles is beneficial if the reader is using this text to
study for the PMP
® Certification Exam:
How the various management theories relate to project management
Various leadership styles
Different types of power
Different types of authority
Need to document authority
Contributions of Maslow, McGregor, Herzberg, and Ouchi
Importance of human resources management in project management
Need to clearly identify each team member’s role and responsibility
Various ways to motivate team members
That both the project manager and the team are expected to solve their own problems
That team development is an ongoing process throughout the project life cycle
Barriers to encoding and decoding
Need for communication feedback
Various communication styles
Types of meetings
In Appendix C, the following Dorale Products mini–case study is applicable:
Dorale Products (I) [Human Resources and Communications Management]
The following multiple-choice questions will be helpful in reviewing the principles of
this chapter:
1. Which of the following is not one of the sources of authority for a project manager?
A. Project charter
B. Job description for a project manager
C. Delegation from senior management
D. Delegation from subordinates
2. Which form of power do project managers that have a command of technology and are
leading R&D projects most frequently use?
A. Reward power
B. Legitimate power
C. Expert power
D. Referent power
3. If a project manager possesses penalty (or coercive) power, he or she most likely also
possesses:
A. Reward power
B. Legitimate power
C. Expert power
D. Referent power
4. A project manager with a history of success in meeting deliverables and in working with
team members would most likely possess a great deal of:
A. Reward power
B. Legitimate power
252 MANAGEMENT FUNCTIONS
C. Expert power
D. Referent power
5. Most project managers are motivated by which level of Maslow’s hierarchy of human
needs?
A. Safety
B. Socialization
C. Self-esteem
D. Self-actualization
6. You have been placed in charge of a project team. The majority of the team members have
less than two years of experience working on project teams and most of the people
have never worked with you previously. The leadership style you would most likely select
would be:
A. Telling
B. Selling
C. Participating
D. Delegating
7. You have been placed in charge of a new project team and are fortunate to have been
assigned the same people that worked for you on your last two projects. Both previous
proj-ects were very successful and the team performed as a high-performance team. The
leadership style you would most likely use on the new project would be:
A. Telling
B. Selling
C. Participating
D. Delegating
8. Five people are in attendance in a meeting and are communicating with one another. How
many two-way channels of communication are present?
A. 4
B. 5
C. 10
D. 20
9. A project manager provides a verbal set of instructions to two team members on how to
perform a specific test. Without agreeing or disagreeing with the project manager, the two
employees leave the project manager’s office. Later, the project manager discovers that the
tests were not conducted according to his instructions. The most probable cause of failure
would be:
A. Improper encoding
B. Improper decoding
C. Improper format for the message
D. Lack of feedback on instructions
10. A project manager that allows workers to be actively involved with the project manager in
making decisions would be using which leadership style.
A. Passive
B. Participative/democratic
C. Autocratic
D. Laissez-faire
11. A project manager that dictates all decisions and does not allow for any participation by
the workers would be using which leadership style.
Studying Tips for the PMI® Project Management Certification Exam 253
254 MANAGEMENT FUNCTIONS
A. Passive
B. Participative/democratic
C. Autocratic
D. Laissez-faire
12. A project manager that allows the team to make virtually all of the decisions without any
involvement by the project manager would be using which leadership style.
A. Passive
B. Participative/democratic
C. Autocratic
D. Laissez-faire
ANSWERS
1. D
2. C
3. A
4. D
5. D
6. A
7. D
8. C
9. D
10. B
11. C
12. D
PROBLEMS
5–1 A project manager finds that he does not have direct reward power over salaries, bonuses,
work assignments, or project funding for members of the project team with whom he interfaces.
Does this mean that he is totally deficient in reward power? Explain your answer.
5–2 For each of the remarks made below, what types of interpersonal influences could exist?
a. “I’ve had good working relations with department X. They like me and I like them.
I can usually push through anything ahead of schedule.”
b. A research scientist was temporarily promoted to project management for an
advanced state-of-the-art effort. He was overheard making the following remark to a
team member: “I know it’s contrary to department policy, but the test must be conducted according to these criteria or else the results will be meaningless.”
5–3 Do you agree or disagree that scientists and engineers are likely to be more creative if
they feel that they have sufficient freedom in their work? Can this condition backfire?

5–4 Should the amount of risk and uncertainty in the project have a direct bearing on how
much authority is granted to a project manager?
5–5 Some projects are directed by project managers who have only monitoring authority.
These individuals are referred to as influence project managers. What kind of projects would
be under their control? What organizational structure might be best for this?
5–6 As a project nears termination, the project manager may find that the functional people
are more interested in finding a new role for themselves than in giving their best to the current
situation. How does this relate to Maslow’s hierarchy of needs, and what should the project
manager do?
5–7 Richard M. Hodgetts (“Leadership Techniques in the Project Organization,” Academy of
Management Journal,
June 1968, pp. 211–219) conducted a survey on aerospace, chemical,
construction, and state government workers as to whether they would rate the following leadership techniques as very important, important, or not important:
Negotiation
Personality and/or persuasive ability
Competence
Reciprocal favors
How do you think each industry answered the questionnaires?
5–8 In a project environment, time is a constraint rather than a luxury, and this creates a
problem for the project manager who has previously never worked with certain team members. Some people contend that the project manager must create some sort of test to measure, early on, the ability of people to work together as a team.
Is such a test possible for people working in a project environment? Are there any project
organizational forms that would be conducive for such testing?
5–9 Project managers consider authority and funding as being very important in gaining support. Functional personnel, however, prefer friendship and work assignments. How can these
two outlooks be related to the theories of Maslow and McGregor?
5–10 On large projects, some people become experts at planning while others become
experts at implementation. Planners never seem to put on another hat and see the problems
of the people doing the implementation whereas the people responsible for implementation never seem to understand the problems of the planners. How can this problem be
resolved on a continuous basis?
5–11 What kind of working relationships would result if the project manager had more reward
power than the functional managers?
5–12 For each of the following remarks, state the possible situation and accompanying
assumptions that you would make.
a. “A good project manager should manage by focusing on keeping people happy.”
b. “A good project manager must be willing to manage tension.”
c. “The responsibility for the success or failure rests with upper-level management. This
is their baby.”
d. Remarks by functional employee: “What if I fail on this project? What can he (the
project manager) do to me?”
Problems 255
256 MANAGEMENT FUNCTIONS
5–13 Can each of the following situations lead to failure?
a. Lack of expert power
b. Lack of referent power
c. Lack of reward and punishment power
d. Not having sufficient authority
5–14 One of your people comes into your office and states that he has a technical problem and
would like your assistance by making a phone call.
a. Is this managing or doing?
b. Does your answer depend on who must be called? (That is, is it possible that authority relationships may have to be considered?)
5–15 On the LRC, can we structure the responsibility column to primary and secondary
responsibilities?
5–16 Discuss the meaning of each of the two poems listed below:
We shall have to evolve
Problem solvers galore
Since each problem they solve
Creates ten problems more.
Author unknown
Jack and Jill went up the hill
To fetch a pail of water
Jack fell down and broke his crown
And Jill came tumbling after.
Jack could have avoided this awful lump
By seeking alternative choices
Like installing some pipe and a great big pump
And handing Jill the invoices.
20
5–17 What is the correct way for a project manager to invite line managers to attend team
meetings?
5–18 Can a project manager sit and wait for things to happen, or should he cause things to
happen?
5–19 The company has just hired a fifty-four-year-old senior engineer who holds two masters
degrees in engineering disciplines. The engineer is quite competent and has worked well as a
loner for the past twenty years. This same engineer has just been assigned to the R&D phase
of your project. You, as project manager or project engineer, must make sure that this engineer
works as a team member with other functional employees, not as a loner. How do you propose
to accomplish this? If the individual persists in wanting to be a loner, should you fire him?
20. Stacer Holcomb, OSD (SA), as quoted in The C/E Newsletter, publication of the cost effectiveness section
of the Operations Research Society of America, Vol. 2, No. 1, January 1967.

5–20 Suppose the linear responsibility chart is constructed with the actual names of the
people involved, rather than just their titles. Should this chart be given to the customer?
5–21 How should a functional manager handle a situation where the project manager:
a. Continually cries wolf concerning some aspect of the project when, in fact, the problem either does not exist or is not as severe as the project manager makes it out to be?
b. Refuses to give up certain resources that are no longer needed on the project?
5–22 How do you handle a project manager or project engineer who continually tries to “bite
off more than he can chew?” If he were effective at doing this, at least temporarily, would your
answer change?
5–23 A functional manager says that he has fifteen people assigned to work on your project
next week (according to the project plan and schedule). Unfortunately, you have just learned
that the prototype is not available and that these fifteen people will have nothing to do. Now
what? Who is at fault?
5–24 Manpower requirements indicate that a specific functional pool will increase sharply
from eight to seventeen people over the next two weeks and then drop back to eight people.
Should you question this?
5–25 Below are several sources from which legal authority can be derived. State whether each
source provides the project manager with sufficient authority from which he can effectively
manage the project.
a. The project or organizational charter
b. The project manager’s position in the organization
c. The job description and specifications for project managers
d. Policy documents
e. The project manager’s “executive” rank
f. Dollar value of the contract
g. Control of funds
5–26 Is this managing or doing?21
MANAGING DOING

_________ ________ 1. Making a call with one of your people to assist him in
solving a technical problem.
2. Signing a check to approve a routine expenditure.
3. Conducting the initial screening interview of a job
applicant.
4. Giving one of your experienced people your solution
to a new problem without first asking for his
recommendation.
5. Giving your solution to a recurring problem that one
of your new people has just asked you about.
6. Conducting a meeting to explain to your people a new
procedure.
_________
_________
________
________
_________ ________
_________ ________
_________ ________

Problems 257
21. From Raymond O. Leon, Manage More by Doing Less (New York: McGraw-Hill), p. 4. Copyright © 1971
by McGraw-Hill, Inc., New York. Used with permission of McGraw-Hill Book Company.

258 MANAGEMENT FUNCTIONS

_________ ________ 7. Phoning a department to request help in solving a
problem that one of your people is trying to solve.
8. Filling out a form to give one of your people a pay
increase.
9. Explaining to one of your people why he is receiving a
merit pay increase.
10. Deciding whether to add a position.
11. Asking one of your people what he thinks about an
idea you have that will affect your people.
12. Transferring a desirable assignment from employee A
to employee B because employee A did not devote the
necessary effort.
13. Reviewing regular written reports to determine your
people’s progress toward their objectives.
14. Giving a regular progress report by phone to your
supervisor.
15. Giving a tour to an important visitor from outside of
your organization.
16. Drafting an improved layout of facilities.
17. Discussing with your key people the extent
to which they should use staff services during the next
year.
18. Deciding what your expense-budget request will be for
your area of responsibility.
19. Attending a professional or industrial meeting to learn
detailed technical developments.
20. Giving a talk on your work activities to a local
community group.
_________ ________
_________ ________
_________
_________
________
________
________ ________
________ ________
________ ________
________ ________
________
________
________
________
________ ________
________ ________
________ ________

5–27 Below are three broad statements describing the functions of management. For each
statement, are we referring to upper-level management, project management, or functional
management?
a. Acquire the best available assets and try to improve them.
b. Provide a good working environment for all personnel.
c. Make sure that all resources are applied effectively and efficiently such that all constraints are met, if possible.
5–28 Decide whether you agree or disagree that, in the management of people, the project
manager:
Must convert mistakes into learning experiences.
Acts as the lubricant that eases the friction (i.e., conflicts) between the functioning
parts.
5–29 Functional employees are supposed to be the experts. A functional employee makes a
statement that the project manager does not believe is completely true or accurate. Should the
project manager support the team member? If so, for how long? Does your answer depend on
to whom the remarks are being addressed, such as upper-level management or the customer?
At what point should a project manager stop supporting his team members?

5–30 Below are four statements: two statements describe a function, and two others describe
a purpose. Which statements refer to project management and which refer to functional
management?
Function
Reduce or eliminate uncertainty
Minimize and assess risk
Purpose
Create the environment (using transformations)
Perform decision-making in the transformed environment
5–31 Manager A is a department manager with thirty years of experience in the company. For
the last several years, he has worn two hats and acted as both project manager and functional
manager on a variety of projects. He is an expert in his field. The company has decided to incorporate formal project management and has established a project management department.
Manager B, a thirty-year-old employee with three years of experience with the company, has
been assigned as project manager. In order to staff his project, manager B has requested from
manager A that manager C (a personal friend of manager B) be assigned to the project as the
functional representative. Manager C is twenty-six years old and has been with the company
for two years. Manager A agrees to the request and informs manager C of his new assignment,
closing with the remarks, “This project is yours all the way. I don’t want to have anything to do
with it. I’ll be too busy with paperwork as the result of our new organizational structure. Just
send me a memo once in a while telling me what’s happening.”
During the project kickoff meeting it became obvious to both manager B and manager C
that the only person with the necessary expertise was manager A. Without the support of manager A, the time duration for project completion could be expected to double.
This situation is ideal for role playing. Put yourself in the place of managers A, B, and C
and discuss the reasons for your actions. How can this problem be overcome? How do you get
manager A to support the project? Who should inform upper-level management of this situation? When should upper-level management be informed? Would any of your answers change
if manager B and manager C were not close friends?
5–32 Is it possible for a product manager to have the same degree of tunnel vision that a
project manager has? If so, under what circumstances?
5–33 Your company has a policy that employees can participate in an educational tuition reimbursement program, provided that the degree obtained will benefit the company and that the
employee’s immediate superior gives his permission. As a project manager, you authorize George,
your assistant project manager who reports directly to you, to take courses leading to an MBAdegree.
Midway through your project, you find that overtime is required on Monday and
Wednesday evenings, the same two evenings that George has classes. George cannot change the
evenings that his classes are offered. You try without success to reschedule the overtime to early
mornings or other evenings. According to company policy, the project office must supervise all
overtime. Since the project office consists of only you and George, you must perform the overtime if George does not. How should you handle this situation? Would your answer change if
you thought that George might leave the company after receiving his degree?
5–34 Establishing good interface relationships between the project manager and functional
manager can take a great deal of time, especially during the conversion from a traditional to a
project organizational form. Below are five statements that represent the different stages in the
development of a good interface relationship. Place these statements in the proper order and
discuss the meaning of each one.
Problems 259
260 MANAGEMENT FUNCTIONS
a. The project manager and functional manager meet face-to-face and try to work out the
problem.
b. Both the project and functional managers deny that any problems exist between them.
c. The project and functional managers begin formally and informally to anticipate the
problems that can occur.
d. Both managers readily admit responsibility for several of the problems.
e. Each manager blames the other for the problem.
5–35 John is a functional support manager with fourteen highly competent individuals beneath
him. John’s main concern is performance. He has a tendency to leave scheduling and cost problems up to the project managers. During the past two months, John has intermittently received
phone calls and casual visits from upper-level management and senior executives asking him
about his department’s costs and schedules on a variety of projects. Although he can answer
almost all of the performance questions, he has experienced great difficulty in responding to
time and cost questions. John is a little apprehensive that if this situation continues, it may
affect his evaluation and merit pay increase. What are John’s alternatives?
5–36 Projects have a way of providing a “chance for glory” for many individuals. Unfortunately,
they quite often give the not-so-creative individual an opportunity to demonstrate his incompetence. Examples would include the designer who always feels that he has a better way of laying
out a blueprint, or the individual who intentionally closes a door when asked to open it, or vice
versa. How should a project manager handle this situation? Would your answer change if the individual were quite competent but always did the opposite just to show his individuality? Should
these individuals be required to have close supervision? If close supervision is required, should it
be the responsibility of the functional manager, the project office, or both?
5–37 Are there situations in which a project manager can wait for long-term changes instead
of an immediate response to actions?
5–38 Is it possible for functional employees to have performed a job so long or so often that
they no longer listen to the instructions given by the project or functional managers?
5–39 On Tuesday morning, the customer’s project manager calls the subcontractor’s project
manager and asks him a question. On Tuesday afternoon, the customer’s project engineer calls
the contractor’s project engineer and asks him the same question. How do you account for this?
Could this be “planned” by the customer?
5–40 Below are eight common methods that project and functional employees can use to provide communications:
a. Counseling sessions e. Project office memo
b. Telephone conversation f. Project office directive
c. Individual conversation g. Project team meeting
d. Formal letter h. Formal report
For each of the following actions, select one and only one means of communication from the
above list that you would utilize in accomplishing the action:
1. Defining the project organizational structure to functional managers
2. Defining the project organizational structure to team members
3. Defining the project organizational structure to executives
4. Explaining to a functional manager the reasons for conflict between his employee
and your assistant project managers
5. Requesting overtime because of schedule slippages
6. Reporting an employee’s violation of company policy

7. Reporting an employee’s violation of project policy
8. Trying to solve a functional employee’s grievance
9. Trying to solve a project office team member’s grievance
10. Directing employees to increase production
11. Directing employees to perform work in a manner that violates company policy
12. Explaining the new indirect project evaluation system to project team members
13. Asking for downstream functional commitment of resources
14. Reporting daily status to executives or the customer
15. Reporting weekly status to executives or the customer
16. Reporting monthly or quarterly status to executives or the customer
17. Explaining the reason for the cost overrun
18. Establishing project planning guidelines
19. Requesting a vice president to attend your team meeting
20. Informing functional managers of project status
21. Informing functional team members of project status
22. Asking a functional manager to perform work not originally budgeted for
23. Explaining customer grievances to your people
24. Informing employees of the results of customer interchange meetings
25. Requesting that a functional employee be removed from your project because of
incompetence
5–41 Last month, Larry completed an assignment as chief project engineering on project X.
It was a pleasing assignment. Larry, and all of the other project personnel, were continually kept
informed (by the project manager) concerning all project activities. Larry is now working for a
new project manager who tells his staff only what they have to know in order to get their job
done. What can Larry do about this situation? Can this be a good situation?
5–42 Phase I of a program has just been completed successfully. The customer, however, was
displeased because he always had to wait three weeks to a month after all tests were complete
before data were supplied by the contractor.
For Phase II of the program, the customer is requiring that advanced quality control procedures be adhered to. This permits the customer’s quality control people to observe all testing
and obtain all of the raw data at the same time the contractor does. Is there anything wrong with
this arrangement?
5–43 You are a subcontractor to company Z, who in turn is the prime contractor to company Q.
Before any design review or technical interchange meeting, company Z requires that they
review all material to be presented both in-house and with company Q prior to the meeting.
Why would a situation such as this occur? Is it beneficial?
5–44 Referring to Problem 5–43, during contract negotiations between company Q and company Z, you, as project manager for the subcontractor, are sitting in your office when the phone
rings. It is company Q requesting information to support its negotiation position. Should you
provide the information?
5–45 How does a project manager find out if the project team members from the functional
departments have the authority to make decisions?
5–46 One of your functional people has been assigned to perform a certain test and document
the results. For two weeks you “hound” this individual only to find out that he is continually
procrastinating on work in another program. You later find out from one of his co-workers that
he hates to write. What should you do?
Problems 261
5–47 During a crisis, you find that all of the functional managers as well as the team members
are writing letters and memos to you, whereas previously everything was verbal. How do you
account for this?
5–48 Below are several problems that commonly occur in project organizations. State, if possible, the effect that each problem could have on communications and time management:
a. People tend to resist exploration of new ideas.
b. People tend to mistrust each other in temporary management situations.
c. People tend to protect themselves.
d. Functional people tend to look at day-to-day activities rather than long-range efforts.
e. Both functional and project personnel often look for individual rather than group
recognition.
f. People tend to create win-or-lose positions.
5–49 How can executives obtain loyalty and commitments from horizontal and vertical personnel in a project organizational structure?
5–50 What is meant by polarization of communications? What are the most common causes?
5–51 Many project managers contend that project team meetings are flooded with agenda
items, many of which may be irrelevant. How do you account for this?
5–52 Paul O. Gaddis (“The Project Manager,” Harvard Business Review, May–June 1959,
p. 90, copyright © 1959 by the President and Fellows of Harvard College. All rights reserved)
has stated that:
In learning to manage a group of professional employees, the usual boss–subordinate relationship must be modified. Of special importance, the how—the details or methods of work performance by a professional employee—should be established by the employee. It follows that he
must be given the facts necessary to permit him to develop a rational understanding of the why
of tasks assigned to him.
How would you relate this information to the employee?
5–53 The customer has asked to have a customer representative office set up in the same building as the project office. As project manager, you put the customer’s office at the opposite end
of the building from where you are, and on a different floor. The customer states that he wants
his office next to yours. Should this be permitted, and, if so, under what conditions?
5–54 During an interchange meeting from the customer, one of the functional personnel makes
a presentation stating that he personally disagrees with the company’s solution to the particular problem under discussion and that the company is “all wet” in its approach. How do you, as
a project manager, handle this situation?
5–55 Do you agree or disagree with the statement that documenting results “forces” people to
learn?
5–56 Should a project manager encourage the flow of problems to him? If yes, should he be
selective in which ones to resolve?
5–57 Is it possible for a project manager to hold too few project review meetings?
5–58 If all projects are different, should there exist a uniform company policies and procedures
manual?
262 MANAGEMENT FUNCTIONS
5–59 Of the ten items below, which are considered as part of directing and which are
controlling?
a. Supervising
b. Communicating
c. Delegating
d. Evaluating
e. Measuring
f. Motivating
g. Coordinating
h. Staffing
i. Counseling
j. Correcting
5–60 Which of the following items is not considered to be one of the seven Ms of management?
a. Manpower
b. Money
c. Machines
d. Methods
e. Materials
f. Minutes
g. Mission
5–61 Match the following leadership styles (source unknown):
1. Management by inaction _____ a. Has an executive who manages with
2. Management by detail _____ flair, wisdom, and vision. He listens
3. Management by invisibility _____ to his people, prods them, and leads
4. Management by consensus _____ them.
5. Management by manipulation _____ b. Grows out of fear and anxiety.
6. Management by rejection _____ c. Can be fair or unfair, effective or inef-
7. Management by survival _____ fective, legitimate or illegitimate.
8. Management by depotism _____ Some people are manipulators of
9. Management by creativity _____ others for power. People are not

10. Management by leadership _____
_____
puppets.
d. Is the roughly negative style.
Executive always has ideas; devil’s
advocate. Well