An Analysis of Organizational Structure

For this post, I analyzed a regional consulting firm that has been having some growing pains. This analysis allowed me to see that the structure of the organization was significantly contributing to their problems, and would have to be changed if they hoped to improve their PM processes and operational efficiency.

The graphic allows us to see that while each member of the firm's set (functional areas) is integrated, overall communication throughout the organization is lacking. The concentration of authority and customer contact across the two major hubs (lead technician and business consultant) also presents problems in terms of resource allocation - first, by potentially overextending each hub as business grows (creating bottlenecks); and second, by creating separate factions that may not operate in a unified fashion.

This structure does not facilitate collaboration among the various groups: because of the “stovepipe” reporting structure, and the independent mindset among the functional areas (i.e. marketing operates one way with consulting clients, while the helpdesk uses their own procedures with services clients). With the functional departments empowered to manage and complete isolated projects within their “stovepipe,” there are relatively few issues for small clients with specific needs (which is why this was not a serious issue in the past). However, as the client base shifts, the efforts of more than one department will be required to develop and implement comprehensive programs – efforts that cannot be effectively managed with the existing structure.

From a PM standpoint, as this shift occurs, the functional webs converging on the two main hubs limit overall cooperation throughout the organization and with other key stakeholders. With communication and decision-making authority lying outside of the project structure, because there is no true project manager, the project team and functional managers are removed from the needs analysis, and no one maintains accountability for aggregate team and project performance. When looking specifically at the project planning process and scope definition, this structure would limit the authority and decision-making capability of a project manager. It also serves to erect barriers to teamwork, and results in disparate objectives among “competing” functional areas.

This need for better internal communication, and the division of business and technical personnel, coupled with the lack of a single project manager for large projects, makes it harder to garner scope agreement and create an all-inclusive project plan internally; even before solutions are presented to clients. With no internal consensus on what the scope or plan of action will be, it is impossible to approach the customer as a unified organization with full-spectrum expertise.

Since the firm has moved towards larger and more complex projects, their lack of sophistication and failure to create scope definitions and management plans based on key stakeholder consensus has been very difficult to overcome. As we can see, their organizational structure contributes significantly to this problem.

The "Theory" of Project Management

Generally speaking, a theory is a set of related ideas, principles and techniques that apply to a particular subject. Theories are typically used to explain a set of observations, and can provide us with an expectation of what should happen, barring unforeseen circumstances. However, the underlying theory of project management is somewhat implicit in nature. In other words, projects don't play themselves out systematically like mathematics or logic. What works in Project A will not necessarily succeed in Project B. The transitive property of mathematics is rarely observed in projects.

For that reason, some discussion of the conceptualizations behind the theory is warranted before discussing the fundamental considerations. The benefits of using a theory, in the context of conducting a project, are that the practical actions derived from the proper implementation of the theory can help us achieve our goals. I would start by establishing three levels of goals for any project: first, there is the general goal of getting the intended deliverable completed; second, there are technical (or internal) goals, such as cost minimization and adhering to a schedule, that means the project has been done right; and third, there are customer satisfaction (or external) goals, such as quality and functional utility, that means the right project was done right. By applying project management theory, we can (hopefully) dramatically improve the likelihood of reaching the third, and ultimate, goal.

To begin, project management is about managing work. Turner (1993), claims that work can be managed by decomposing total work into activities and tasks – that’s the basic concept. As the PMBOK Guide shows, these activities and tasks are the unit of analysis in the core processes of project management, such as scope management, time management, and cost management. Morris (1994) supports this description by outlining a project management approach based on four steps: first, what needs to be done; second, who is going to do what; third, when actions are to be performed; and fourth, how much is required to be spent in total, how much has been spent so far, and how much still has to be spent. Central to this sequence is the Work Breakdown Structure (WBS), which is a key deliverable of the project planning process, and is crucial to scope management and project control.

The PMBOK Guide provides us with a second concept in project management, by laying the groundwork for planning progression. Ten core processes, including scope planning, scope definition, activity definition, resource planning, activity sequencing, estimating, and project plan development, have been identified to guide the planning process. The outputs from these processes are the project plans, which form the inputs to the execution processes. The implication here is that if you effectively complete these steps, you’ll have the necessary inputs for successful execution, which will lead to a successful project.

These two primary concepts – the project as a series of tasks and activities, and the core planning methodologies as guiding principles – can help us understand a general theory of project management, which is thus: by undertaking a series of sequential, yet interrelated, tasks to define, plan, prepare and execute a project, you will be able to effectively achieve technical success and customer acceptance.

Although this theory sounds relatively simple, we often find that organizations have trouble putting the concepts into practice. Some of the key reasons are a combination of limited resources, lack of understanding, and the perception that there are no immediate financial benefits to justify the time spent on project management (i.e. it’s a cost-center). More specifically, young organizations view formal project management as overly bureaucratic, and as a hindrance to getting business done. Yet, these organizations are the ones who can most benefit from the application of theories that improve structure and accountability – which are direct results of the two key concepts discussed above.

Additionally, the theory of project management helps organizations gain efficiencies through standardization and streamlining. An organization that understands their own business, by analyzing and consistently following the core processes, can lower costs and enhance service levels. These core processes can be documented, allowing the organization to work on ways to improve the work-flow and customer experience at each stage. This feedback loop creates a virtuous cycle: documenting the steps to produce a deliverable will lead to more consistent application of the processes, which leads to more standardization, then to continuous improvement, and then back to documenting the improved steps.

Furthermore, by increasing consistency, deviation rates will decrease and you will find improvements in predictability – lending credence to the theory suggested above that by breaking a project down into tasks and following the core planning methodologies, we can create a plausible expectation of the outcome. This application of project theory also provides more accurate measures of project progress, which enhances our ability to meet project goals.
By ignoring the fundamentals of project management theory, especially during the planning stages, we find that customer requirements are poorly defined, and the process of clarifying and changing requirements leads to disruption. This is one of the key reasons that projects fail – incomplete or inaccurate scope definition. The constant disruptions cause actual progress to drift from the plan, which becomes too burdensome to regularly update (adding to the perception that project management is overly bureaucratic).

Without an updated plan to work from, informal management becomes prevalent. This causes work to be rushed, which in turn causes tasks to be commenced without all inputs or prerequisites, leading to low efficiency, task interruption, and increased variability (degrading our ability to predict an outcome – hence the importance of the theory). Likewise, controlling by means of a performance baseline that is no longer based on actual status becomes ineffective, or simply counterproductive, and results in the customer needs not being met. When we fail to meet customer needs, it’s impossible for us to achieve project success.

Managing Expectations

Selecting and beginning a project is always complicated - no matter how well you plan, something will (probably) go wrong. Sometimes, and I'm guilty of this myself, it's easy to get caught up in how great things will be at the end of the project, or once things get up and running. Managing expectations, especially preparing for the worst in the beginning (for me during the transition period) is important.

To start with, I've learned to help keep expectations realistic, it's important to have a thorough conceptualization process that uses tools like decision-making trees to help the customer understand that costs associated with feasibility and requirements studies aren’t necessarily part of the project scope and budget. This work needs to be done before the project to determine what a realistic scope will be, and if it’s even possible to solve the problem while creating value. This should be done in a separate selection process - and I know it sounds intuitive, but I'm surprised by how many examples I've seen where this up-front work somehow gets thrown into the planning stage of the project.

The customer also has to understand that there may be times were a no-go decision is made with “sunk” costs that can’t be recouped. These types of expenses need to be budgeted at the business-level, so that they don’t impair project performance. This basic form of expectations management helps ensure the project team isn’t overloading the initial stages of the project at the expense of execution, and helps the customer focus on the real business need and appropriate solution before the projects are initiated – so we know the deliverable will be acceptable.

Finally, and this is from personal experience, sometimes the transition from where they are to where they'll be (i.e. what you're going to accomplish with the project) is going to have some rough patches. As I mentioned previously, it's easy to get caught up talking about how great things will be when you're done. But to launch into a project without discussing the potential problems (which could be part of a formal risk management plan) is setting the expectation for your client that nothing will go wrong. So when it does, they are completely unprepared and the relationship can quickly turn adversarial.

By managing your stakeholders up-front, and focusing on potential problems and risks, you create realistic expectations and prepare them for the worst. If the project still makes sense, even if some things go wrong, then it's probably something worth doing. Now that you've sort of "under-promised," and the client is not expecting miracles or nothing but blue skies, you've set a solid foundation for the project to progress. By communicating and remaining practical from the start, you also build a rapport with the clients that will be invaluable in the future should problems occur. You'll have their confidence, because they'll know you're working with them, and that they can trust you.

A New Constraint

Going through project management courses, I've become intimately (if not sickeningly) familiar with the so-called "triple constraint" of time (AKA schedule), cost, and performance (AKA quality or scope). The basic idea here is that there is a balance, and a trade-off, between these three factors that is necessary to successfully complete any project. I even remember telling my old clients (back when I was doing some consulting work) that they could choose any two (i.e. time and scope; scope and cost) but their choices would influence the third, which was under my control (i.e. if they wanted to dictate time and scope, then I got to tell them the cost; if they wanted to control cost and scope, they had to work on my schedule). This concept is so ingrained into the project management mentality that I assumed there wasn't much left to discuss about project constraints. So imagine my surprise, fellow thinker, when I learned of a bright, shiny, new (to me at least) fourth constraint - customer acceptance!

Customer acceptance is a constraint that can change the way we view our role as a project manager. It forces us to think outside of technical success and shift to more of an outward focus on customer requirements. In this manner, it also increases the importance of communication and understanding during the conceptualization and planning phases - what good is a project that comes in on-time, on-budget, and meets the design criteria if the customer isn't satisfied?

In a way, this new constraint reminds me of a topic in quality management. Quality is a term that really has two definitions: one is the objective view of how well the product conforms to design standards; however, the more important measure of quality is the subjective measure of how happy the client is with the final product. In projects, the triple constraint is basically the technical criteria. But it's this fourth constraint that adds a subjective perspective and says that a project isn't truly successful unless the client says it is.

The idea of a fourth constraint lends itself to another topic from quality management - Quality Function Deployment. QFD uses the "Voice of Customer" (VOC) to thoroughly and accurately define the requirements of a product. Once identified, those requirements are translated into design requirements, which are then translated into engineering requirements. This flow-down ensures that the "how's" from one level become the "what's" at the next level and sight of the original customer "what's" is never lost.

So the fourth constraint is vitally important to any project team, and serves as a bridge between the technical and the subjective measures of project success. And it's about time that someone has defined this link and clearly articulated the importance of the customer in an existing model. I know that I'm sometimes guilty of focusing too much on the internal aspects of a project. Changing the mindset of a PM to look at all four constraints should have a substantial positive impact on performance.