Designing Effective Project Organisations

Revision as of 09:38, 22 June 2017

This article will present and discuss the following chapters:

This article will first present the most relevant terms and definitions within the chapters. Afterwards some of the models and theories will be analysed and discussed, in addition literature studies will also be carried out to support the article. Lastly, some recommendations or reflections upon the topics will be conducted.

When designing effective project organisations a lot of different factors and actors have to be considered, for instance the responsibilities and management options of the client. How to organise through the life cycle of a project, determination of the organisational breakdown structure and creating optimal and efficient project teams.

The implementation of the project management concept

Figure 1: The implementation of the project management concept.^[1]

Winch has presented three different actors within construction management; The client, the project manager and the resource-bases. The resource bases provide skills required to execute different task within the project. Paul Gaddis has characterised the project manager as the 'manager in the middle', in this context it is between the client and the resource bases. The purpose of the project manager is to act as an interface between the client's desires and the capabilities of the resource bases. In addition the project manager has the responsibility to coordinate during the project life cycle in order to fulfil the client's desires and goals. Across different industries an extensive review of research regarding the application of the project management concept has identified a range of applications, which is presented in figure 1. The distinction between the applications depend on whether the manager of the resource-bases have more control or the project manager has more control. When resource-base managers are in complete control, or the project manager has a liaison role, then it is defined as a functional organisation. Finally, when the project manager is in complete control, including the authority to hire staff directly, then it is defined as a cell organisation. Therefore, according to the concept the more control the project manager has, the organisation will go from functional to a cell organisation.

Figure 2: Different responsibilities that the project and resource-base managers have.^[1]

The responsibilities of the client

The client assembles a coalition of firms to execute the project mission, and the contractual documents between the firms define the project organisation structure. However the client possess important responsibilities towards leading the project coalition, the responsibilities are:

• Promoter – defining the need for the project and ensuring that it meets that need;
• Financier – obtaining the capital required to finance the project;
• Decision-maker – making those decisions required to push the project through the life cycle;
• Recruiter – mobilising the most appropriate and capable firms to realise the project. This is a legal obligation under European health and safety legislation.

It is difficult to fulfil all the responsibilities and usually not all the clients have the proper organisational capabilities. The need for these organisational capabilities has led to a development of firms who provide project management services. These firms are often called 'project managers', but in practice, they do not manage and provide co-ordination between resource bases, instead they help the client fulfil its responsibilities towards the project coalition.

Organising the project through the life cycle

Henry Mintzberg has characterised project management as 'adminstrative adhocracies', therefore he suggest that it is an adhocracy with bureaucratic tendencies. Furthermore, project organisation is not constant through the project life cycle but dynamic. In the early stages of the life cycle the levels of uncertainty are very high, whereas the levels of uncertainty reduce towards zero as the project nears its completion. Another aspect is that project organisation grows in size through the life cycle. In the beginning, the work is usually done by a few highly skilled people, when the project moves on site a lot of less skilled people come into play. On the biggest projects, thousands of people are working concurrently both on site and off site with the design and providing resources to execute the project. The changes in size and level of uncertainty that the project organisation needs to adjust to lead to important changes within the organisation, Winch describes the changes as:^[1]

According to Winch a basic tenet of designing effective organisations is: "that organisations facing high levels of uncertainty need to be relatively adhocratic in organisation and cannot be large, while organisations facing lower levels of uncertainty can be both relatively bureaucratic and large.^[1]

The strong owner framework

This section will present some of the most relevant definitions and points from Winch and Leiringer's paper regarding owner project capabilities for infrastructure development. First the paper defines the 'strong owner' and the 'owner project capabilities'. Secondly, a framework has been developed from reviews of "existing literature complemented by pilot empirical research which provides the basis for a research agenda on the role of the owner of the infrastructure assets in achieving high performance on transportation infrastructure projects". Finally, the paper suggest that the generated framework is applicable to other major projects and programmes.^[2]

In the paper some case studies has identified the importance of a 'strong owner' as a dimension of project success. However, Winch and Leiringer state that the case studies only discuss the legal and contractual matters, and therefore the owner can be described as a mere contract-giver and have no relation regarding stakeholder management, institutional context and project strategy. Winch and Leiringer defines the success as: "in terms of the achievement of the expected benefits of the investment project for the owner rather than the broader set of criteria encompassing other stakeholder interests (Cooke-Davies, 2002; DeWit, 1988)."

Project and commercial capabilities

Winch and Leiringer differentiate between dynamic and operational capabilities. Operational capabilities are the ability of the organisation to utilise its resource bases to provide effectively and efficiently goods and services to its customers. Dynamic capabilities, are the ability "of an organisation to purposefully create, extend, or modify the resource base”. Winch and Leiringer state that, when a purchasing firm has a dynamic capability it may only be an operational capability for a supplying firm. Therefore, most of the project-based firms have operational capabilities, whereas the purchasing owner organisation almost always will have dynamic capabilities because they extend the resource-base of the organisation.

Owner project capabilities

Winch and Leiringer's starting point is based on "three domains"^[3] viewpoint regarding project organising. "The domains approach starts from the premise that project organising is fundamentally about the creation of new value (Winch, 2010) in the form of assets that can be exploited for beneficial use."^[2]. The three domains are: the supplier domain, the domain of the temporary project or programme organisation and the owner domain of the investor organisation, this article will only present the owner aspects.

The project organising domains model has identified three areas where the owner might need capabilities, and these are:

• Strategic capabilities - The owner himself needs to have these in order to successfully implement the investment projects, it involves missions defition, capital raising stakeholder management, etc.
• Commercial capabilities - These capabilities are used to administer the interface between the owner organisation and the project-based firm, it involves contractual and relational matters.
• Governance capabilities - These capabilities are used to manage the interface between the owner organisation and the temporary project organisation, it involves project coordination and asset integration.

Figure 3: Owner project capabilties.^[2]

Figure 3 shows an outline of the required owner project capabilities.

Strategic capabilities

Defining the project mission is an important thing to do, basically it answers the question why is the project being done? Winch and Leiringer state that if the owner cannot articulate the project mission clearly then the stakeholders can end up free riding on the project. Raising the capital is another vital owner capability, owners who cannot raise the capital will not have any projects. In addition if the investment cannot be sustained the project will default. Managing stakeholders is another essential aspect within project management, by managing the stakeholders you prevent the stakeholders to free ride during the project.

Commercial capabilities

Winch and Leiringer state that packaging capabilities have received little research attention, however they state that it is the first step in developing an owner contracting strategy through Work Breakdown Structure (WBS). Winch and Leiringer elaborate the packaging capabilties in accordance to contracting strategy terms:

Contracting capabilities is about identifying, selecting, and motivating potential suppliers, furthermore it is crucial that the owner has a good understanding of the supply market.

Relational capabilities, contracts define the formal relationship between the owner and the suppliers. An effective owner is able to select and use an appropriate mix of formal and informal (trust-based relations) relations with their supply chain.

Governance capabilities

Assurance capabilities answer the questions "who, when, what", who should make the decisions during the project lifecycle and on what grounds. Winch and Leiringer state that as the project moves from the design phase into the execution phase an active owner role remains vital. They suggest the three "lines of defence" as an assurance: 1) Perform effective project controls within the owner project team; 2) execute internal assurance independent of project team provided by the programme management office; and 3) internal audit.

Project coordination capabilities, it involve general coordination through the project life cycle but also project controls regarding collection and comparing schedule and budget plans on the executed processes with the original plan. The data can then be used to check up on the project progress and conduct forecasting schedules. The foundation for control is the schedule and budget conducted in project execution planning (PEP). "A study of the UK construction engineering sector (Merrow et al., 2009) showed that performance of projects in execution significantly improves when the owner team implements its own PEP process and manages its own project controls, independently of the contractors, so that the owner team can independently validate estimates provided by the contractor. More generally strong, fully staffed owner teams are vital to successful project execution (Hui et al., 2008; Merrow, 2011)."^[2]

Annotated bibliography

1. Peter Fewings, "Construction Project Management", Taylor & Francis 2005. ISBN 0-203-00698-4 Master e-book ISBN.

The book focuses on project management in construction, and has several chapters dedicated to teamwork and project management, but especially chapter 7 is very useful for this topic, and is therefore highly recommended. Here different teamwork concepts are presented, and different studies are presented and commented on.

2. Stephen Emmitt and Christopher Gorse, "Communication in Construction Teams", Taylor & Francis 2007. ISBN10: 0–415–36619–4 (hbk).

This book focuses primarily on the communication and the importance of effective communication in a construction team. It states that without good communication finishing a construction process is almost impossible, and that focus on the important of good communication has been far too low and far too little research has been made on this topic. Therefore, this book make research of how the communication plays a role in teamworking.

3. Værdibyg, "Etablering af Samarbejde", Værdiskabende Byggeproces 2012.^[4]

This handbook is about establishment of collaboration and has been prepared by a collaboration between various participants in the building industry of Denmark (e.g. Dansk Byggeri, Foreningen for Rådgivende Ingeniører, Danske Arkitekt Virksomheder etc.). The handbook focuses on the phase shift from project work to execution, and different tools to obtain a good relationship and collaboration is described.

4. Værdibyg, "Samarbejde og Kommunikation i Renoveringsprojekter", Værdiskabende Byggeproces 2015.^[5]

This handbook is like the above reference about tools to achieve a good teamwork. It is developed by the same participants; the only difference is that this guidance focuses on the challenges in renovating projects.

References

1. ↑ ^{1.0 1.1 1.2 1.3} Winch, Graham M., 2010, "Managing Construction Projects, 2nd edition"
2. ↑ ^{2.0 2.1 2.2 2.3} Winch Graham, Roine Leiringer, 2016, "Owner project capabilities for infrastructure development: A review and development of the “strong owner” concept"
3. ↑ Winch Graham, 2014, "Three domains of project organising. Int. J. Proj. Manag."
4. ↑ Værdibyg (2012), "Etablering af Samarbejde", Online Handbook of Establishment of Collaboration. Retrieved 19.06.2017, Available Online
5. ↑ Værdibyg (2015), "Samarbejde og Kommunikation i Renoveringsprojekter", Online Handbook of Collaboration and Communication in Renovating Projects. Retrieved 19.06.2017, Available Online