GPM First
Chapter 3 of Project Management for Supplier Organizations (978-1-4724-1109-9) by Adrian Taggart

The Clash of Cultures Within a Matrix

Chapter 3

In contrasting Functional and Task Force Organizations it is straightforward to point out the harder, structural aspects which differentiate between them, and hence the different types of work they are best suited to, as we have done in the previous chapter. However, to fully appreciate the differences between these two types it is necessary to look a little deeper and specifically at softer behavioural aspects, and hence the type of people who are attracted to each.

The reality is that these different types of organization operate in different environments, respond to different types of challenges and represent different paradigms. They pose very different attractions and detractions to potential members. Accordingly, we can expect each will attract like-minded people.

The effect of this over time is that very different sets of attitudes, instincts and behaviour emerge within the two organizations that are not revealed simply by reference to an organizational chart. These softer aspects are encompassed within the expression ‘culture’ and the two organizations nurture profoundly different cultures.

An understanding of these different cultures not only assists in the understanding of Task Force and Functional Organizations, but of the Matrix also. This is the case because the Matrix represents not only a hybrid of structures, but a hybrid of cultures too.

Task-Orientated Culture

Philosophy

What is the purpose of a group defined within a Task Force Organization?

It can only be to complete the task.

Once this is achieved there is no reason for the group to exist. The ethos can therefore be summarized as ‘deliver and disband’ and this is entirely consistent with the temporary and transient aspects of projects.

To satisfy this ultimate purpose, the commercial imperative becomes one of effectiveness. By this, the focus is on doing what is necessary to make this one endeavour successful, and negate that which would threaten this outcome. In such an ‘all or nothing’ scenario, mitigation of risks that threaten the overall endeavour tends to be of more concern than achieving localized efficiencies.

As stated in Chapter 1, all projects ultimately deliver some kind of change and so it is not surprising that a willingness to embrace change and innovation is often associated with cultural aspects of groups delivering such work. Indeed, since they exist only for the duration of the project, there is no loyalty to a past way of working nor commitment to a future way of working. This leaves them free to innovate and embrace whatever is necessary to deliver the task at hand.

In these respects, the efforts of the group are very much aligned to the specific requirements of the customer, and the team delivering the task often enjoy a very strong rapport. On the positive side, this perception of a ‘customer- focused team’ provides great comfort to the ultimate owner of the product in question. This can however have some drawbacks. In extremis it can be perceived that some team members can ‘go native’ and become more loyal to the customer’s interests rather than their employer (the product can sometimes offer better long-term prospects to technical experts than the organization creating it).

Nature of the Work

Although projects are one-off endeavours they are long-cycle activities. Whereas each washing machine took less than a day to create, the Olympic stadium will take years. The former is a short cycle, the latter a long cycle.

In the first instance, the production line starts again each day with new products and what happened yesterday has little relevance. In the second example, the work of each day builds on that created previously and will support that which will be done tomorrow. This imposes a huge obligation for forward thinking and planning and an ability to defer satisfaction of completion. Discipline, dedication and patience are the order of the day.

Also, with the best will in the world, after all this dedicated and patient preparation, sometimes the task is not successful. As stated earlier, projects are very risky endeavours. It is difficult to overestimate just how sickening it can be to devote months or years of work to an endeavour that ultimately fails. A willingness to buy into this gamble is a fundamental trait of the culture.

The risk of failure is often directly attributable to the uniqueness of project work and in particular the uncertainty that this generates and how it inhibits a rule-based approach to management.

To many, the challenge of doing something new and making decisions uninhibited by rules is exhilarating. To others it is the stuff of nightmares, especially without the support and advice of ‘old hands’ further along the learning curve (pure task-orientated cultures do not retain them).

Stability of Demand

The demand for resources within a project is unstable.

Those engaged in this work must respond in terms of the design of the organization (to facilitate the ‘revolving door’ discussed earlier), the techniques adopted, and also in the culture of the individuals.

The expression ‘feast or famine’ is often used to describe the workload within a task-orientated culture whereby, often, the demand is seemingly either too much or too little but never just right. There must be an acceptance of the need to ‘pull out all the stops’ at times (including sacrifice of weekends and evenings), but also recognition that there are times when there will be very little to do. (It is a difficult task to explain to someone steeped in a function- orientated culture that it is acceptable for personnel in a task-orientated culture to spend protracted periods of time ‘at work’ but ‘on the bench’ and allowed to simply read the newspaper or otherwise amuse themselves. Such inefficiency is anathema to them.)

Similarly, those who embrace task-orientated cultures accept the lack of job security. Many workers within these are ‘contractors’ whose careers consist of a sequence of short-term assignments. In many ways these people are the epitome of task-cultured individuals. Not only are they happy to undergo an interview in the morning with the prospect of being appointed and working at a desk in the afternoon, but will do so with minimal termination notice.

Good ‘contractors’ are prized for their ability to quickly assimilate to new scenarios, working patterns and peer groups whereby they can swiftly settle into productive activity and start adding value almost immediately.

This requires the new incumbent to be technically competent since, whereas a Functional Organization will consider investing in training of recruits, a Task Force Organization will not. Why should they when they can simply buy in a fully trained incumbent for the brief period, albeit at a slightly higher rate?

Incentivization

The absence of any job security or long-term commitment beyond the current task is reflected in the reward and incentive schemes typically involved. Parties (individuals or sub-groups) are typically engaged on a contract basis that lasts only for the duration of the task. Reimbursement methods are usually simple and revolve around a rate, often a generous rate, based on a ‘piecerate basis’ and perhaps even accompanied by a completion bonus. Employees are encouraged to work hard and fast but they are not encouraged to hang around afterwards.

Career Prospects

Task Force Organizations offer very little in terms of promotions and a clear career progression, certainly in comparison to a functional structure.

This is largely due to their chaotic and unstable nature but it is also related to the lesser focus on specialist knowledge. Whilst specialist knowledge is valued, within a project team there is often little tolerance of prima donna behaviour. Members who do what is needed to get the job done, regardless of what their formal job description is, are generally highly valued. Many readers will be familiar with the expression ‘a jack of all trades and a master of none’. Whilst there are obvious limits to this approach, especially when addressing complex and potentially dangerous projects, it does convey the flexibility, adaptability and ‘can-do’ attitude that is valued with project workers.

Function-Orientated Culture

Philosophy

What is the purpose of a group defined within a Functional Organization?

The equivalent question for a Task Force Organization was straightforward but it is not so clear-cut for a Functional Organization.

Functional Organizations are associated with the delivery of routine operations, i.e. short-cycle procedures repeated for numerous and identical products. Our washing machine factory is a typical example, but what is the purpose of the factory? It is not simply ‘to make washing machines’ since, if it became more profitable to manufacture televisions, it is likely that the owner would choose to do that instead (the Shell oil company started in business importing sea shells). Ultimately, manufacturing organizations are concerned with the making of money, but it is not just short-term profit. Such organizations also invest in training and preventative maintenance, all of which have a negative impact on short-term profit, but critically will increase the likelihood of making profit in the future. The overarching requirement of these organizations is not only to make a profit in the short term but to sustain the ability to do that into the future. Accordingly, the imperative becomes ‘survival of the organization’.

Organizations will ultimately sacrifice a favoured product to ensure the survival of an organization. This is a characteristic of almost all successful commercial organizations, they are prepared to adapt to survive but the key thing is that survival is more important than loyalty to any product. In this sense we can see that they are diametrically opposed to a task-orientated culture and their ‘deliver and disband’ ethos.

There is a huge irony here because although there is a need to adapt over the long term to ensure survival, the function-orientated culture is characterized by its resistance to change in the short term.

Although the washing machine production line could be changed to one manufacturing televisions, in practice this will represent a major and hugely expensive change. Production lines, by their very nature, are designed to create just one type of product and once the investment has been made, there will be a huge commitment to sustaining it and any change will be strongly resisted.

Nature of the Work

The workers on the production line will do the same work as yesterday and will do the same tomorrow; another day, another washing machine.

The short-cycle repetitive, low risk, rule-based environment stands in stark contrast to that of a task-orientated culture. This stability and consistency often enables the ‘de-skilling’ of positions; incumbents need not understand, they need to just follow the instructions.

To many, the comfort and security this offers is very appealing, for others it is an horrendous prospect.

Stability of Demand

Aggregation of many short-cycle repetitions creates a very stable and predictable resource demand. For instance the demand for washing machine packers is the same today as it was yesterday as it will be next week.

In these circumstances it is possible to create a resource pool that fits very closely to the demand, with very little surplus. One consequence of this is that working hours and rotas are very stable. A second is that minimal surplus renders the operation very efficient in its use of resources. This is in contrast with the project environment where resource utilization is often surprisingly inefficient.

It is important that it is so since, in the stable and mature market for washing machines, cost of production is a major point of competition and there is much focus on efficiency. Efficiency is often more of an immediate concern than the risk of a washing machine not performing. In a project environment the reverse is true and the risk of overall failure is usually more of an immediate concern than any local efficiency.

Incentivization

In keeping with the survival aims of the organization, share ownership schemes, pension schemes, loyalty bonuses and health schemes are all commonplace and each encourages employees to commit to the organization into the long term.

Further, Functional Organizations provide excellent environments for learning and training opportunities which can be a major attraction to potential recruits (graduate training schemes, for instance).

Career Prospects

The stability and permanence of Functional Organizations provide an opportunity for an established career path. Working your way up the organization hierarchy is a realistic aim.

This can be a long-term gamble, especially in smaller organizations, since opportunities may not come along very often and promotion may be into ‘dead men’s shoes’. However the path upwards is clear.

In organizations that celebrate stability, promotion can be as much a recognition of long service as recognition of managerial potential. Further, in a true Functional Organization, such linear promotion ensures that the manager and team share a functional expertise. For this reason, one’s manager used to (and probably still can) do your job. This is often in contrast to a Task Force structure where the chances of a manager and subordinate sharing a function is far less likely.

Also, in an organization that resists change, those members who think beyond the confines of the Functional group, for instance by promoting new ways of working, are often thought of as mavericks and not necessarily favoured by their peers. There is an enormous irony here since these cross-functional instincts are the very qualities needed by those who reach the uppermost reaches of the Functional structure, yet those who exhibit them lower down are often ‘weeded out’ of the organization by their own promotion policies.

Summary of Contrasts between Polemic Cultures

These contrasts between the two cultures are summarized in Table 3.1.

 
Table 3.1 Contrast of task-orientated and function-orientated cultures

 

Function-orientated culture

Task-orientated culture

Notes

Philosophy

Purpose

Survival of the organization

Deliver and disband

The organizations, and hence cultures, are fundamentally different

Commercial imperative

Efficiency (cost reduction)

Effectiveness (reduce risk of failure)

In a project environment cost of failure, and the risk thereof, generally eclipses any short-term efficiencies

Attitude to change

Very averse

Raison d’etre, natural habitat, procedures in place to manage this

Very significant!

Customer focus/responsiveness

Medium/poor

Good

The ‘big picture’perspective of the customer is more obvious to those in a Task Force structure

Nature of work

Type of work most suited to

Routine operations

Projects

 

Risk of’getting it wrong’ (in terms of the product)

Low

High

Consequence of a project’s ‘uniqueness’

How check acceptability of product

Compare to previous examples. Established tests. Reliance on systems (checking)

Reliance on individuals’ perceptions of what it should look like (thinking)

When making a unique product there is no ‘norm’to compare it to. Far greater reliance on diligence of staff

Authority referred to on technical matters

Supervisor

Peer group

In a functional organization the supervisor is an experienced specialist in the function in question

Position on learning curve

End

Beginning

This is associated with the high degree of uncertainty associated with project work

Attitude to rules/procedures

Gospel

Advisory

There are limits to the ‘procedurizing’ of project-related work

Purpose of rules/procedures/ techniques

Exert control. Substitution for expertise or wisdom of operative. Avoid operator having to think

Tool to be selected and used by craftsman at their own discretion

Those working on unique products must be afforded a high degree of discretion

Organization

Production cycle

Short and repeated

Long and a one-off

Projects can last many years. Routine operations typically last a matter of hours

Stability of structure

Stable/dependable

Transient/variable, constant state of flux/shifting sand/organized chaos

A direct consequence of the repetition of non-project work

Basis of departmentalization

Function (verb)

Task (noun)

This is consistent with the classic Matrix structure

Number engaged

Constant

Variable

Consistent with the ‘revolving door’ aspect of Task Force Organizations

Responsiveness

Slow

Fast

The presence of rule-based governance is one feature that inhibits the response time of Functional Organizations

Activity levels

Constant

Always changing/’feast and famine’

It is normal for staff engaged in projects to alternate from being overworked, to under-worked

Personnel

Favoured attributes in employees

Steady, reliable, conformity, does as told

Adaptable, high energy, ideas source/originality, imagination

Different organizations attract very different people

Incentives

Health schemes, pensions (encourage long service)

Completion bonus (encouraged to leave)

A direct consequence of the ‘Purpose ‘ addressed above

Job security

High

Low (‘building pharaoh’s tomb’)

A direct consequence of the ‘Purpose ‘addressed above

Terms of engagement

Salaried

Contractors

Consistent with the permanence of the two types of organization

Organization’s features attractive to employees

Dependable Defined hours/effort Stable environment Career structure Training/plan/develop for future

Exciting Challenging New and varied demands Breadth of involvement Creativity

Different people are attracted to different types of organizations

A Clash of Cultures

Both of these cultures are represented in the Matrix, and inevitably they will clash.

  • Consider a well-established functional manager, probably older, a true expert in how the functional techniques have been deployed over the last 20 years. How will he respond to some project coordinator, probably younger, perhaps not long out of college, insisting that these previous practices upon which his reputation and authority are based are not compatible with the new product as specified by the customer?

  • Consider an eager project co-ordinator wanting some individuals to work late, on overtime rates, to achieve a critical delivery milestone. How will they respond when, despite there being money in the project budget, the functional manager refuses on the basis that it will set a dangerous precedent for others in the department also wanting overtime?

  • Consider a ‘contractor’ being employed on a short-term ‘no-notice’ basis to assist on a specific project. How will the permanent workers feel when they learn that, despite their years of dedication to the company, their salary is equivalent to a lower daily rate than the new arrival?

  • Consider a functional manager faced with a looming underutilization of their resource and asking for a new order to be released for manufacture. How will they respond if the project coordinator for the new order refuses permission on the basis that the client has not conveyed approval of the design?

 

In each of these situations, the instincts of those individuals steeped in a function- orientated culture will take them in the opposite direction to the instincts of those steeped in a task-orientated culture. In each instance submitting fully to one or the other will cause significant problems.

Making the Matrix Work

How are these problems to be overcome? A number of approaches are suggested.

Recognition of the Inherent Flaws

A precursor to an effective operation within a Matrix is to recognize that it is flawed.

The unitary chain of command associated with both the Functional and Task Force Organization is compromised. Despite everyone’s best efforts there will still be inconsistencies, failures and contradictions within the system authority structure and incumbents must learn a degree of tolerance.

Within bureaucracies, especially functional bureaucracies, you may not like where you stand but at least you do know where you stand. By contrast, within a Matrix, life maybe exciting and varied but you are never really sure where you stand and where your obligations end.

Respect Different Cultures

In the same way that harmony is achieved in a multi-cultural society only if each respects the culture of others, within a Matrix, harmony is reliant upon an acceptance and respect of other cultures.

Project managers must have a respect for the production manager’s need for early notice and minimizing of any changes or disruptions.

Production mangers must have a respect for the project manager’s need to respond to the particular wishes of a client, even if it disrupts existing manufacturing arrangements.

Avoid Total Reliance on Formal Authority

Chapter 2 described how the pattern of hierarchical structures is based upon the devolution of formal authority. However, as also mentioned, formal authority is not the sole method of influencing people within an organization.

Other factors can be brought into play and we can exert influence over others by using our personality, our charisma, our powers of persuasion.

Figure 3.1 offers a description of the Matrix that includes this aspect. In this, formal authority flows downwards, as indicated by the ‘Authority Vector’.

 
Figure 3.1 Exerting influence within a Matrix structure

graphics/fig3_1.jpg

Source: Adapted from Wearne (1993).

The organization is represented by the two-dimensional matrix, and its position along the ‘Organizational Continuum’ is indicated by the value of the angle theta. If theta is 0° then all of the formal authority flows through the functional managers and the result is a pure Functional Organization. If, however theta is 90° then all of the formal authority flows through the task (project) managers, and the result is a pure Task Force Organization. If theta is anywhere between these two extremes, then the result is a Matrix structure.

The influencing by dint of charisma and persuasion is recognized in a ‘Collaboration Vector’ lying at right angles to the ‘Authority Vector’, and flowing left to right for project managers and right to left for functional managers. It crosses the lines of formal authority and is consistent with the Type B communication discussed in Chapter 2.

The influence to be secured from collaboration complements that derived from formal authority and successful Matrix Organizations contain managers that are proficient in the use of such soft skills. Further, they are populated by workers who are receptive to such approaches, and will not simply rely on formal authority associated with a linear chain of command.

Readers are encouraged to consider the importance of the soft skills required of project managers in Matrix Organizations, in the light of this. Projects are ultimately delivered by people, and if project managers cannot influence people they simply will not be successful.

As we shall discuss in Part 4, the value of very many of the project management skills are best appreciated by the degree to which they facilitate collaboration. This is particularly the case with the planning techniques discussed.

Match Responsibility and Authority

There is no point in holding someone responsible for that over which they have no authority. I cannot be held responsible for the weather tomorrow if I do not have the authority to influence it.

This much is obvious yet very many Weak Matrix Organizations hold the project co-ordinator solely responsible for the performance of the project, even though they are offered minimal authority over it. Similarly, authority without responsibility is destructive within an organization.

Whatever type of Matrix is selected (i.e. whatever angle of theta) there must be a consistency whereby responsibility for success or failure is apportioned in the same measure as authority.

Notes

[1] Usually, the product is the unique element of a project but this is not always the case. For instance a project may be initiated to create a standard product but to do so using a different manufacturing technique, or by using alternative equipment, or in a different location. In each of these cases the challenge is to do something which has not been attempted before and as such the word ‘unique’ is applicable and hence the use of the word ‘project’ justified.

[2] The troubled facility created for the 1976 Olympic Games in Montreal, the chaotic preparation of the stadia for the FIFA World Cup in Brazil in 2014 and the reconstruction of Wembley Stadium in 2007 are notable examples in this respect.

[3] Many readers will be employed by organizations that deliver successive projects and the completion of one project does not lead to termination of employment. These types of organizations are referred to as ‘matrix’ organizations and have special characteristics, some of which they share with organizations engaged in non-project work. They will be addressed in some detail in Chapter 2 but for the purposes of this chapter it is appropriate to consider what may be referred to as a ‘pure project’, like our stadium project, a characteristic of which is its temporary management structures.

[4] In practice, the involvement of individual project team members is even more volatile than the life of the overall project team. Most likely, an individual will be a member of a sub-team which will only exist until the fragment of the project for which the sub-team is responsible, is complete. For this reason the make-up of the overall project team is always changing.

[5] This may stretch the historical knowledge of some of our younger readers but suffice to say that after vinyl records, the favoured medium for storing music was a spool of magnetic tape contained within a plastic case; the cassette tape.

[6] The various levels of project success and the interplay between products and benefits is addressed in detail in Chapter 16.

[7] There are instances where organizations may choose to move in the opposite direction, and for good reason, but this book does seek to address their concerns.

[8] Ultimately, all expenditure is for the engagement of people since all material comes out of the ground (either mined or harvested) and at this point is free of charge.

[9] For the mathematically minded it is the integral of the earlier curve (area under the curve) and its gradient, or steepness is equal to the value of the previous curve, at any individual point in time.

[10] The name derives from ‘S’ being an abbreviation for ‘Summation’, since these curves are most properly referred to as ‘Summation Curves’. This explains why, very often, real ‘S-curves’ do not look much like an ‘S’. The important features are, firstly, that it is always ascending (the cumulative expenditure never reduces) and, secondly, the gradient, on a large scale, is shallow-steep-shallow, even though locally, on a finer scale, there may be some variation in gradient.

[11] The decision made at the gates involves the marginal benefit and marginal cost. Actual expenditure to date is ignored on the basis that it is a ‘sunk cost’ and cannot be recovered in any case. This is a reason why, especially at the later Decision Gates, a project may be continued with, even though the total benefits may be exceeded by the total costs.

[12] Further detailed analysis and comparison of strategic and tactical control is offered in Chapter 16.

[13] There is again an analogy to our own lives. Shakespeare once famously wrote about the ‘Seven Ages of Man’ and yet Hinduism talks about the four stages of man. Each is describing the same life; the same journey from cradle to grave, and yet they choose to decompose it in different ways, each to reflect their own understanding and their own emphasis.

[14] Readers may wish to note that in some countries, most notably the United States, the mandate document that bears the authorizing signatures is a ‘Project Charter’. This is a standalone and separate document that will refer to a Business Case.

[15] Some care is required here because there are some obligations of the SO that may not be explicitly stated in the contract. For instance, in any case, the SO is obliged to provide goods of ‘merchantable quality’ and this will confer ‘implied terms’ on the SO.

[16] The analysis is more straightforward if we assume the contract is of ‘Firm Price’ type (see Chapter 13).

[17] Some OO manage major assets and infrastructure (rail, water and telecommunication networks) and are constantly commissioning projects to create or refurbish assets. For them, projects are an ongoing feature, but they are the exception. For most OO their involvement in projects is sporadic.

[18] Like the lifecycle offered in Chapter 5, the lifecycle offered here is a model. To be useful, models need to be simple, however their principal weakness is always their simplicity. The nature of procurement is such that there are a great many combinations and permutations of payment terms, contract types, and the like that can result in variation in the exact Decision Gates and phases that apply. The model is offered as a generic model to assist in the understanding of what appertains to most SO, most of the time. Real examples may, and will, vary.

[19] Some legal obligations of the SO do live on beyond this point, for instance its obligations for latent defects.

[20] It should be noted, however, that this is not always the case. Acme Pool Services is selected on the basis that, unlike the Owner Organization (OO), it is experienced in the construction of pools. It has skills, equipment, knowledge, expertise and contacts that enable it to manage the building of the pool far better than the OO, such that it may well be able to do the work for a considerably cheaper sum and some of this saving may be passed onto the OO in which case the second scenario is both easier and cheaper for the OO.

[21] There are variants that do not contain such an agreement but are less attractive to the OO.

[22] The exact sharing of risk is determined by the wording and quantifications within each specific contract. The arrangement within a continuum offers an approximate guide only.

[23] Ideally such negotiations should be embraced as early as possible and not wait for the final phase but practicalities often result in them being held to the end.

[24] For example some EU legislation imposes constraints on publicly funded projects.

[25] Discrete probability distributions for time or cost of a project are rarely symmetrical. It is almost always the case that it is more likely to cost more, or last longer, than the ‘most likely’ figure, than less, i.e. the mean is very likely to be greater than the mode. This results in a distorted distribution curve with a longer tail to the right of the mode. It is for this reason that the single estimate derived by the three-point estimating technique is usually greater than the mean and a more representative figure of the overall distribution.

[26] Or other entity such as Work Package.

[27] The use of Product Breakdown Structures and Work Breakdown Structures (WBS) will be addressed comprehensively in Chapter 14.

[28] There is an opportunity to withdraw an offer by the offerer, before the expiry of any validity period, but it is limited and different legal systems have different approaches. It is, for instance, an area of inconsistency between English and Scottish law.

[29] For an OO the ‘why’ is addressed within the Business Case and the ‘Project Background’ section of their PMP is informed by this.

[30] This ‘locking’ of the estimate is sometimes referred to as ‘baselining’.

[31] It is the case for project control as it is for planning. ‘Scope creep’ (doing something that was not intended) impacts upon duration and cost and, without a scope baseline, ‘scope creep’ cannot be recognized and hence project cost and duration cannot be controlled.

[32] For projects with very large physical deliverables, such as machinery, many practitioners choose to draw up a PBS (Product Breakdown Structure) that decomposes the deliverable into discrete parts, as a prelude to creating the WBS.

[33] A Work Breakdown Structure Dictionary is a textual document that supports the WBS by containing additional information about individual Work Packages.

[34] ‘Cost’ is a complex entity and care is required here. Chapter 17 refers.

[35] Such ‘house standards’ will be key elements of the project management method adopted by the SO.

[36] Although presented in the context of management of resource, since time and cost are inextricably linked, they can be thought of as time or cost management techniques, depending upon the context.

[37] To many, this four-part cycle is known as the ‘Deming Cycle’ or the ‘Deming Wheel’ on the understanding that it was originated by W. Edwards Deming. However, in his book Out of the Crisis, Deming (1982) himself attributed the original design to W.A. Shewhart.

Others, such as Ronald D. Moen and Clifford L. Norman (2010) differentiate between ‘Deming’s Wheel’ and the PDCA cycle, attributing the latter to a reworking of Deming’s work by a group of Japanese executives after receiving a presentation by Deming in the 1950s.

[38] This can be considered as an example of the ‘Hawthorne Effect’ (Buchanan and Huczynski, 2004).

[39] As discussed in Chapter 7, through the life of a contract the SO has progressively less influence over the gate decisions than the OO. For example, once the contract is signed the opportunity for the SO to terminate the contract is negligible.

[40] For convenience we will consider a Firm Price contract.

[41] If the estimated cost within the baselines of the PMP is less than that within the pre-contract sales estimate it is inconceivable that SO management would not insist on the former being adopted as the target cost.

[42] Although it is easy to refer to just cost, the real goal of the SO is profit and so there is a pressing need to manage and control revenue, both in terms of expediting payments to which the SO is already entitled, and also maximising the amount of entitlement. The latter will involve the SO’s PM acting as a marketer and salesperson seeking out new opportunities within the context of the existing OO and project. Such activity is akin to the ‘farmer’ aspect of selling as opposed to the more conventional ‘hunter’ aspect, as addressed in Chapter 13.

[43] To some extent this is because this strategic level of control is not as easy to exert within an SO because, once a contract is signed, the SO has no option to withdraw.

[44] It is said that project managers spend upwards of 90 per cent of their time simply communicating with others (Heldman, 2009).

[45] Care is required here since some projects will have their own contractual requirements that may not be adequately serviced by the existing facility.

[46] This also helps to manage the risks associated with the unexpected departure of key project staff.

[47] Some practitioners also include the processes and documents required to manage change as being part of the Configuration Management System (CMS).

[48] For instance, to avoid potential for any contradictions such suites should, ideally, ensure that a requirement (such as a dimension) is only stated once, in one document, which is then referenced by the others.

[49] Or alternatively with a CMS imposed by a SO higher in the supply chain.

[50] Some recipients will receive a ‘Controlled Copy’ in which case they will automatically receive any subsequent updated versions. Recipients of ‘Uncontrolled Copies’ do not atomically receive updated versions.

[51] Further enhancement can be adopted when using a spreadsheet’s logic to colour the cells to indicate status (for instance: Green - Work Package has started/finished before its planned date Amber - Work Package has started/finished but after the planned date; Red - Work Package has not started/finished and it is after the planned date).

[52] The size (and hence number) of the smallest fragment into which the project is decomposed.

[53] Implicit within all these discussions of costs incurred by a SO, and their use in the strategic and tactical control of projects, is the assumption that costs can be attributed to each individual bespoke product. Those SO who currently only produce standard products and are looking to embrace the supply of bespoke products may find this requirement surprisingly onerous. This is because, currently, many will operate a cost collection system that uses only functional departments as cost centres and lack the facility to record costs against individual products. Converting such a system can represent a significant amount of work and may, for instance, include the need for employees to create timesheets. Cultural resistance can be expected as well as significant technical difficulties and additional complexity.

[54] Many SO choose to have a ‘Cost Management Plan’, as a subsidiary management plan within the PMP that contains such definitions and conventions.

[55] The precise point of commencement of the warranty period is defined within the contract in question.

[56] In some instances such access is an element within the original supply contract. It can be a useful negotiating token for the OO.

Reference

5 

Wearne, S., 1993. Principles of Engineering Organization, 2nd edn. London: Thomas Telford.

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