Chapter 2. The organizational environment: In good company

If you want something done right…better hope you’re in the right kind of organization. All projects are about teamwork—but how your team works depends a lot on the type of organization you’re in. In this chapter, you’ll learn about the different types of organizations around—and which type you should look for the next time you need a new job.

A day in Kate’s life

Kate wants a new job

Now that she’s working on getting her PMP certification, Kate’s learning a whole load of new skills. And she’s even started to look for a new job—one where she does more than write down what other people say all day…

Kate is a project expediter right now.

Kate may have the job title of “project manager,” but even though that’s what’s printed on her business cards, that’s not really her job. Kate’s job is to document what’s happening on a project, but she doesn’t have the authority to make decisions on it. She may work on projects, but she’s certainly not managing anything.

Brain Power

What would you look for in your perfect job? Does your wish list look anything like Kate’s?

Exercise

Kate spilled a hot cup of Starbuzz half-caf nonfat latte on her job-hunting checklist. Can you match the notes she scribbled at the bottom of the page to what’s covered up by coffee stains?

Answers in “ Exercise Solution”

Brain Power

What would you look for in your perfect job? Does your wish list look anything like Kate’s?

Organization Magnets

In a functional organization, which is what Kate works in, project managers don’t have the authority to make major decisions on projects. Projectized organizations, on the other hand, give all of the authority to the PM.

Can you work out which description goes with which organization type?

There are different types of organizational structures

Kate’s got a few options when looking at the kinds of organizations she can work for. First up are organic organizations, where people have varied roles that might make project management a part-time role depending on what’s needed at the time. Then there are functional organizations, which are set up to give authority to functional managers. Multidivisional organizations might operate each division almost like its own company, with each one having its own governance framework and management roles. Project-oriented organizations give authority to the PM, and matrix organizations share responsibility and authority between the functional managers and project managers.

The project manager has the most authority and power in a project-oriented organization.

A few more types of organizations

There a few additional structures that build on some of the other organizational structures. These three organization types add new dimensions to the basic functional, matrix, and project-oriented structures we just discussed.

PMOs can be supportive, controlling or directive

When an organization sets up a PMO, it can operate in a few different ways. A PMO can be supportive, helping teams standardize their project approaches by using the same document templates and practices for estimating and reporting on their progress. Some PMOs are controlling, confirming that teams are following all of the processes they’ve defined through audits, interviews, and observation of project documents and practices. Still others are directive, actually managing each project by assigning a PMO member to each one.

Exercise

Here are a couple of scenarios where a PMO is taking action on a project. Tell us whether the PMO approach is supportive, controlling, or directive.

Scenario #1: As each project kicks off, members of the team sit down with a PMO member to talk about the approach they’ll take to do the work. The PMO member gives them some copies of good examples of project schedules and scope documents and then walks them through some blank templates so they’ll know how to fill them out when they’ve completed their planning activities.

Supportive

Controlling

Directive

Scenario #2: As each project kicks off, a member of the PMO is assigned to lead the project and make sure that the team approaches their work in the way the PMO would want. The PMO member makes sure that the correct templates are used and that the PMO is consulted as decision points arise throughout the project.

Supportive

Controlling

Directive

Answers in “ Exercise”

there are no Dumb Questions

Q: I’m still not clear on the difference between a project coordinator and a project expediter.

A: They’re actually pretty similar. A project expediter is somebody who keeps track of status but has no decision-making authority on a project at all. A project coordinator is someone who does pretty much the same thing, but does get to make some of the minor decisions on the project without having to run them by the functional manager. Coordinators usually report to somebody who is pretty high up in the organization, while expediters are more like assistants to the functional manager. Both of them usually exist in weak matrix or functional organizations.

Q: What’s the difference between the way teams are run in a functional organization and a projectized one?

A: Think of a major bookkeeping project being run by the admin department. Usually the head of admin is the one who is ultimately responsible for what happens to the project. If a project manager is called in to help out, she’s just there to keep things straight for the admin department manager. The team is made up of people who already report to the admin manager, so nobody questions his authority. That’s an example of a functional organization.

Contrast that with the way the bookkeeping project would be run if a consulting company that specialized in bookkeeping were contracted to do it. The company would assemble a team of bookkeepers and assign a project manager to lead them. When the project was over, the team would dissolve, and the team members would go join other teams working for other project managers. That’s how a projectized organization works. The team is organized around a project and not around a job function.

Q: Can I be an effective PM in a functional organization?

A: Since project managers don’t have much authority in a functional organization, it’s hard to have as much impact in a functional organization as you would in a matrix or projectized one.

Of course, you can be good at your job in any kind of organization. But, for your company to really get the most out of having project managers on staff, it really pays for it to look into changing the way it balances power. The project managers who are accountable for project success or failure should also have the chance to influence the team, budget, and schedule for those projects.

Q: Does the PMP exam favor any kind of organization?

A: When you’re taking the PMP exam, if you see a question that mentions a PM, then you should assume that the question is asking about a matrix organization if it doesn’t say up front which kind of organization is being described. Functional organizations are usually painted in a negative light because they tend to give less authority to project managers.

Bullet Points: Aiming for the Exam

• Functional managers have all the power in a functional organization. Project managers have the power in a projectized organization.

• If a question on the exam doesn’t state an organization type, assume it’s referring to a matrix organization. That means the PM is responsible for making budgets, assigning tasks to resources, and resolving conflicts.

• Project coordinators and expediters don’t exist in a projectized organization.

• A project expediter keeps track of project status only. A project coordinator has some authority, and usually reports to someone higher up in the company. Neither role has as much power or authority as a real project manager, even though expediters or coordinators may have “Project Manager” printed on their business cards.

Exercise

Here are a few excerpts from some of Kate’s job interviews. Can you figure out what kind of organization each interviewer is representing?

Interviewer #1: We’re looking for someone who can work with our development manager to deliver our products on time. We have a good programming team; they just need a little encouragement to meet their deadlines. You’ll be expected to keep really good status meeting notes. If you run into any trouble with the team, just kick it back to the dev manager, and she’ll address the problem.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #2: We need someone who can manage the whole effort, start to finish. You’ll need to work with the client to establish goals, choose the team, estimate time and cost, manage and track all of your decisions, and make sure you keep everybody in the loop on what’s going on. We expect the project to last six months.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #3: We have a project coming up that’s needed by our customer service team. The project is a real technical challenge for us, so we’ve assembled a team of top-notch programmers to come up with a good solution. We need a project manager to work with the programming manager on this one. You would be responsible for the schedule, the budget, and managing the deliverables. The programming manager would have the personnel responsibilities.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #4: Most of the work you’ll be doing is contract work. You’ll put together three different teams of software engineers, and you’ll need to make sure that they build everything our customer needs. And don’t forget: you’ve got to stay within budget, and it’s got to be done on time! It’s a big job, and it’s your neck on the line if things go wrong. Can you handle that?

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Exercise Solution

Here are a few excerpts from some of Kate’s job interviews. Can you figure out what kind of organization each interviewer is representing?

Interviewer #1: We’re looking for someone who can work with our development manager to deliver our products on time. We have a good programming team; they just need a little encouragement to meet their deadlines. You’ll be expected to keep really good status meeting notes. If you run into any trouble with the team, just kick it back to the dev manager, and she’ll address the problem.

Note

This is just like the job Kate wants to leave. Just gathering status sounds pretty boring.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #2: We need someone who can manage the whole effort, start to finish. You’ll need to work with the client to establish goals, choose the team, estimate time and cost, manage and track all of your decisions, and make sure you keep everybody in the loop on what’s going on. We expect the project to last six months.

Note

Project management role isn’t a formal role in this organization.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #3: We have a project coming up that’s needed by our customer service team. The project is a real technical challenge for us, so we’ve assembled a team of top-notch programmers to come up with a good solution. We need a project manager to work with the programming manager on this one. You would be responsible for the schedule, the budget, and managing the deliverables. The programming manager would have the personnel responsibilities.

Note

Authority is shared between the PM and the functional manager.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Interviewer #4: Most of the work you’ll be doing is contract work. You’ll put together three different teams of software engineers, and you’ll need to make sure that they build everything our customer needs. And don’t forget: you’ve got to stay within budget, and it’s got to be done on time! It’s a big job, and it’s your neck on the line if things go wrong. Can you handle that?

Note

Most contractors are projectized: the PM builds the team and makes sure the work gets done.

Organic	Functional	Multi-divisional	Matrix
Projectized	Virtual	Hybrid	PMO

Kate takes a new job

Kate: Hi, Ben. I’m excited to be here. It’s such a relief to be hired as a project manager, and not just a project expediter anymore.

Ben: We’re excited, too, since you’ll be taking care of our main software development project. It’s in maintenance mode right now.

Kate: Sounds great. How do we handle that here?

Ben: Well, we’re constantly getting business reports from the field, and when people think of new ideas, we just add them to the project.

Kate: Umm…so how do you know when you’re done? Who exactly adds them to the project? How do we know if we’ve taken on more work than we can handle?

Ben: We’re never really done and pretty much everyone on the team can add work to the project. We try to release new versions as often as possible. If we run into problems with how much we’ve taken on, we just talk to the CEO and he irons it out for us.

Kate’s working in an organic organization

It seems like there’s no formal definition of the project she’ll be taking on. The team doesn’t seem to have a clear definition of the project manager’s role either.

Back to Kate’s maintenance nightmare

Let’s figure out how things are working in Kate’s new organization, and start to think about how we can improve things.

Brain Power

What would you do to fix this problem?

Managing project constraints

When Kate thinks about solutions, she’s going to have to deal with the project’s constraints. Every project, regardless of what is being produced or who is doing the work, is affected by the constraints of time, scope, cost, quality, resources, and risk. These constraints have a special relationship with one another, because doing something to deal with one of the constraints always has an effect on the others.

Any time your project changes, you’ll need to know how that change affects all of the constraints.

For Kate’s project to succeed, she needs to think about the project constraints. If she doesn’t manage these six constraints at the same time, she’ll find that her project is either late, over budget, or unacceptable to her customers.

Exercise

Can you figure out the constraint that’s causing the biggest headache for the project manager in each of these scenarios?

The project was running late, so the project manager decided to release it on time even though it was missing some of its features.

Constraint affected:

......................................

The team wanted to add more testers to find defects, but the project manager overruled them.

Constraint affected:

......................................

A construction project manager assumed that the weather would cooperate with the plans to complete the job, but thunderstorms have derailed the project.

Constraint affected:

......................................

The company didn’t have enough money to invest in the project, so they had to draft people from other departments to work part-time to get the job done.

Constraint affected:

......................................

About halfway through the project, the PM realized that the money was running out faster than expected. She went through the schedule to try to find ways to move up the deadline.

Constraint affected:

......................................

The project manager didn’t take software license fees into account, which caused the budget to balloon out of control.

Constraint affected:

......................................

Exercise Solution

Can you figure out the constraint that’s causing the biggest headache for the project manager in each of these scenarios?

The project was running late, so the project manager decided to release it on time even though it was missing some of its features.

Constraint affected:

The team wanted to add more testers to find defects, but the project manager overruled them.

Constraint affected:

A construction project manager assumed that the weather would cooperate with the plans to complete the job, but thunderstorms have derailed the project.

Constraint affected:

The company didn’t have enough money to invest in the project, so they had to draft people from other departments to work part-time to get the job done.

Constraint affected:

About halfway through the project, the PM realized that the money was running out faster than expected. She went through the schedule to try to find ways to move up the deadline.

Constraint affected:

The project manager didn’t take software license fees into account, which caused the budget to balloon out of control.

Constraint affected:

These are the answers we thought fit best!

Did you get different answers? That’s okay! For this exercise, a good case can be made for almost any of the constraints. Don’t worry about which answer is “right” for now—it’s more important to get some practice thinking about projects in terms of constraints. And when you get to the actual exam questions, there will always be a clear, correct, BEST answer.

there are no Dumb Questions

Q: I’ve heard project constraints referred to as the “triple constraint.” But there are six of them here. What gives?

A: Some project managers focus on cost, scope, and time as the main constraints of a project. But just thinking about those three constraints doesn’t give a clear picture of all of the constraints you need to account for when planning a project. The important thing here is to understand that cost, time, scope, quality, risk, and resources are all related to each other. You need to pay attention to all of them and if you manage your project in favor of one of them, it will affect the others.

Q: I’ve heard of an old saying: “Faster, cheaper, better—pick two,” but doesn’t that mean that there are only two constraints that you can manage at any given time?

A: No, that’s an old (and somewhat cynical) project management saying. When a project manager says it to a customer or stakeholder, what he is saying is that there’s no way to reduce cost, shorten the schedule, and increase quality all at the same time. At least one of those things absolutely has to give…but the saying is a little disingenuous! We already know that all six of the constraints are related to each other, and there’s almost never an easy, obvious trade-off where you can sacrifice one to improve the others.

Q: What if I know that a change will impact just scope, but not schedule or cost or any of the other constraints? Can I go ahead and make it?

A: Whenever you are making a change that affects the project constraints, you need to be sure that the change is acceptable to your stakeholders. They’re the people who will be impacted by your project. The term applies to your team, your customer, your sponsor, and anybody else who is affected by the change.

A lot of project management is about evaluating what a change is going to do to your project constraints, and using that impact analysis to help stakeholders make choices about what to do when changes come up. Sometimes a change that affects the quality of your product is completely unacceptable to your stakeholders, and they would rather delay the project than sacrifice the product’s quality.

Q: In my organization, we have some projects that sound like they’re functional and some that are fully projectized. Where does that kind of organization fit in?

A: Sometimes a company that mostly runs its projects in a functional way will create a special team that gives the project manager more authority. When a company manages using many different types of organizational structure, it’s called a composite organization.

Q: Wait, this is a little confusing. What’s the difference between a composite organization and a hybrid one?

A: A composite organization is made up of multiple organizational structures. A hybrid organization takes practices from multiple types of lifecycles and creates its own approach to doing work. An example of a composite organization might be one where the organization is mostly functional but creates a project team where the project manager has authority in order to accomplish a temporary result. A hybrid organization, on the other hand, is one where the teams might be using predictive processes where they identify scope and deadlines up front for projects, but then put incremental delivery goals into the process so that they can get fast feedback from customers on unfinished products. Think of hybrid organizations as using a mix of traditional and agile development techniques and composite organizations as a mix of functional and cross-functional project teams.

A hybrid organization uses a mix of traditional and agile development practices.

Exercise

Here are a couple of scenarios where a PMO is taking action on a project. Tell us whether the PMO approach is supportive, controlling, or directive.

Scenario #1: As each project kicks off, members of the team sit down with a PMO member to talk about the approach they’ll take to do the work. The PMO member gives them some copies of good examples of project schedules and scope documents and then walks them through some blank templates so they’ll know how to fill them out when they’ve completed their planning activities.

Note

The PMO is there to give the team help if they need it, but they aren’t telling them exactly what to do.

Supportive

Controlling

Directive

Scenario #2: As each project kicks off, a member of the PMO is assigned to lead the project and make sure that the team approaches their work in the way the PMO would want. The PMO member makes sure that the correct templates are used and that the PMO is consulted as decision points arise throughout the project.

Note

The PMO is actually running the project here and not just giving the team guidance.

Supportive

Controlling

Directive

Brain Power

Can you think of examples of problems where a controlling PMO would help an organization get better at delivering products?

Don’t reinvent the wheel

Your organization is constantly learning from each project. As teams learn new lessons, they are recorded our in your organizational process assets so they can be shared and help future teams to avoid mistakes that have been made in the past. If all of the project teams are thinking about the best way to work and keeping track of the practices that help them deliver products better and the ones that don’t, they can help future teams to keep improving the process new projects will use.

You can’t manage your project in a vacuum

Even the best project managers can’t control everything that affects their projects. The way your company is set up, the way people are managed, the processes your team needs to follow to do their jobs...they all can have a big impact on how you manage your project. On the exam, all of those things are called enterprise environmental factors.

Projects will often face external enterprise environmental factors, like compliance with government regulations. This is especially common for projects in regulated industries like banking and health care.

Kate’s project needs to follow company processes

Kate: This will really come in handy. There’s an organization chart that describes all of the teams and people that will rely on our project. Wow. There’s also a whole process for escalating issues that come up.

Ben: I wanted to make sure we didn’t reinvent the wheel when we drew up the plans for our development project.

Kate: This will make my life a lot easier. One question, though: I don’t see any guidelines for project acceptance. How do we know if a project is a success?

Ben: Usually our sales team takes the new features out in the field and they let us know what the response is. If our customers like what we’ve done, the project is a success. If not, well...you get the picture.

Kate: Umm…that sounds a little hard to manage.

Kate’s project needs clear acceptance criteria

It’s a lot harder for a project to be successful if the team doesn’t have a clear goal in mind. Kate’s project needs to follow all of the company governance guidelines, but she also needs to write down the goal her team is shooting for. That way, it will be clear that the project has met its goals when it completes. Most projects aim to finish within the constraints we talked about earlier (time, cost, resources, quality, risk, and scope). It helps to write down concrete goals for those constraints as acceptance criteria up front. That way, there are no surprises when the project ends.

Kate makes some changes…

1. She divides maintenance into releases, each with a well-defined start and finish.

   

2. She follows the company’s project governance guidelines and works with stakeholders to set scope goals that each release must meet.

   

3. She manages the budget for each release and keeps the costs contained.

   

…and her project is a success!

Now the company knows when its products will be done, how much they will cost, and that the products will satisfy its customers…

…and that earns Kate and Ben big bonuses!

Exercise Solution

Kate spilled a hot cup of Starbuzz half-caf nonfat latte on her job-hunting checklist. Can you match the notes she scribbled at the bottom of the page to what’s covered up by coffee stains?

Organization Magnets Solutions

In a functional organization, which is what Kate works in, project managers don’t have the authority to make major decisions on projects. Projectized organizations give all of the authority to the PM.

Can you work out which description goes with which organization type?

Exam Questions

1. Which of the following is NOT a Project Constraint?

   1. Quality

   2. Scale

   3. Time

   4. Cost

2. A project manager is running a data center installation project. He finds that his stakeholder is angry that he’s run over his budget because the staff turned out to be more expensive than planned. The stakeholder’s unhappy that when the project is over, the servers won’t have as much drive space as he needs. Which of the following constraints was not affected by this problem?

   1. Quality

   2. Resource

   3. Time

   4. Cost

3. Which of the following is NOT an example of operational work?

   1. Building a purchase order system for accounts payable

   2. Submitting weekly purchase orders through a purchase order system

   3. Deploying weekly antivirus software updates

   4. Yearly staff performance evaluations

4. You’re managing a project to build a new accounting system. One of the accountants in another department really likes the current system and is refusing to be trained on the new one. What is the BEST way to handle this situation?

   1. Refuse to work with him because he’s being difficult

   2. Appeal to the accountant’s manager and ask to have him required to take training

   3. Get a special dispensation so that the accountant doesn’t have to go to the training

   4. Work with him to understand his concerns and do what you can to help alleviate them without compromising your project

5. Which of the following is used for identifying people who are impacted by the project?

   1. Resource list

   2. Stakeholder register

   3. Enterprise environmental factors

   4. Project plan

6. Your manager asks you where to find a list of projects that should be managed together. What is the BEST place to find this information?

   1. Project plan

   2. Project charter

   3. Portfolio charter

   4. Program charter

7. You want to know specifically which business goal a group of projects and programs is going to accomplish. Which is the BEST place to look for this information?

   1. Project plan

   2. Project charter

   3. Portfolio charter

   4. Program charter

8. A project coordinator is having trouble securing programmers for her project. Every time she asks her boss to give a resource to the project he says that they are too busy to help out with her project. Which type of organization is she working in?

   1. Functional

   2. Weak matrix

   3. Strong matrix

   4. Projectized

9. A project manager is having trouble getting customer feedback on her project. Even though she knows the product won’t be complete for several months, the company guidelines say she should release an early version and get feedback from end users. Which type of organization is she working for?

   1. Functional

   2. Virtual

   3. Hybrid

   4. Projectized

10. The project manager for a construction project discovers that a new water line is being created in the neighborhood where he’s managing a project. Government regulations require that a series of forms for city environmental changes need to be filled out before his team can continue work on the project. This is an example of:

    1. A portfolio

    2. A program

    3. An enterprise environmental factor

    4. A project

Exam Answers

1. Answer: B

   Scale is not a project constraint. The constraints are scope, time, cost, quality, resource, and risk.

2. Answer: C

   There is no mention of the project being late or missing its deadlines in the example. The project was over budget, which affects the project’s cost. The project won’t meet the stakeholder’s requirements, which is a quality problem. And the staff was more expensive than planned, which is another cost problem.

3. Answer: A

   Building a purchase order system for accounts payable is a project. It’s a temporary effort that has a unique result.

4. Answer: D

   When a stakeholder is negatively impacted by your project, you need to manage his expectations and help him to buy into your project.

5. Answer: B

   The stakeholder register is where you identify all of the people who are impacted by your project.

6. Answer: D

   A program is a group of projects that should be managed together because of interdependencies. A program charter fits the description in this question.

   Note

   Usually there’s some benefit to the company by managing them together.

7. Answer: C

   A portfolio charter will give the business goal that a group of projects and programs will accomplish as part of a portfolio.

8. Answer: A

   Since the project manager has to ask permission from the functional manager and can’t overrule him, she’s working in a functional organization.

9. Answer: C

   The project manager in this scenario is working for a hybrid organization. She used predictive methods to understand that her project won’t be completed for several months and is about to use adaptive methods to get early feedback on the unfinished product.

10. Answer: C

    Since the project manager is filling out the forms because of a government regulation, this is a good example of an enterprise environmental factor—specifically, an external enterprise environmental factor.