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AP Van der Merwe

Association For Project Management, South Africa

This paper examines the difficulty of integrating project management into the functional organisational. Aspects of organisational structure is discussed and marring the bureaucracy to the project is explained in a most innovative way by using examples from an actual case where this has been done successfully. Control over work being done in a seemingly chaotic manner without functional guidance, enters the element of time in a parallel existence as the employee must fight to survive in an environment where his time is divided between line function and the project. This paper shows where and how to overcome these difficulties by practical example of successfully implemented solutions.

In a book entitled "The goal" the author E.M. Goldrat states on page 40, that the goal on an organisation is to make money. Even though the social issues of "making money" have been debated in literature from at least 500 B.C.

‘For just as poets love their own works, and fathers their own children, in the same way those who have created a fortune value their money, not merely for its uses, like other persons, but because it is their own production. This makes them moreover disagreeable companions, because they will praise nothing but riches."

(Plato (c. 427–347 BC), Greek philosopher. Socrates, in The Republic, bk. 1, p330.)

Environmental and ethical issues today would question whether the only reason for the existence of a business is "to make money".

The fact is that if a business does not "make money" it ceases to do business rather rapidly. In Understanding Organisations the author Charles Handy states:

"I came to the study of people in organisations expecting certainty and absolute knowledge in the behavioural sciences. I anticipated that I would find laws governing the behaviour of people and of organisations as sure and as immutable as the laws of the physical sciences. I was disappointed."

Handy was trying to find an efficient organisation. Efficiency one could explain in terms of "making money". Instead he found "the weighty investigation of trivia" and "patchy efficiency".

Organisational theorists have long been searching for organisational efficiency but have never quite been able to grasp the fundamentals, until quite recently that is, when Tom Peters implied in his book Liberation Management that project management was the holy grail of organisational efficiency.

That it might well be, but it leaves more questions than answers as to organisational structure and control which project driven organisations seem to do away with. The major question is, how does one convert from a functional organisation to a project organisation? How is the organisation controlled? And, how are projects categorised in terms of effectiveness and efficiency?

Many more such questions spring to mind which seem to have no answers as there are very few authors and almost no researchers on the subject of the organisation as a collective of projects.

CJ Higson in his book Business Finance begins to provide answers when he explains that an organisation can be seen as a collective of projects where the success or failure of projects would influence shareholders to invest or withdraw capital in the organisation.

The relationship between an organisation, its capital account and projects as an engineering discipline is a well studied and relatively well understood area of commerce.

The influence of project management on the supply account and as a business process is another story altogether. There is almost no research being done, very little knowledge available and the subject is poorly understood.

An analysis of several companies’ annual reports showed me that expenditure on the capital account was at most 30% of total expenditure and reflected only large capital projects. Supply account expenditure made up 70% of total company expenditure.

This meant that potentially more money was being spent on small and medium projects than on large projects yet little research was being done on the management of a large number of small projects which do not spend only capital.

If projects are ascribed four stages to their life cycle, capital expenditure (if any) takes place only in the construction stage. The other three stages (proposal, design and close-out) are covered predominately by supply account expenditure.

Business process projects spend only supply account money and are therefore potentially more numerous and spend far more money than all capital projects combined.

Investigation showed that only the large capital projects were being managed along formal project management lines and only the capital portion of the work was controlled.

The present knowledge base of project management relies on large capital construction projects which represent only 10% of the projects (research done by Prof. JR Turner) while business process projects represent a larger number of projects, spending more money and consuming most of an organisations resources have almost no knowledge base available in project management, nor in pure management disciplines.

Project managers can therefore be equated to Alexander the Great who in 500 BC wept because there were no more worlds to conquer, while half the world as we know it had not yet been discovered

Construction projects as an engineering discipline make use of project teams, and are organised, controlled and led by a project manager who is responsible for the time, cost and quality of each project. In this instance projects are managed singularly and the organisation manages many single projects rather than multiple projects.

My own research in multi-project management as a management discipline concentrates on the supply account portion of an organisation with a social science perspective. The reason for this is: firstly, it is a largely unresearched area; secondly, there is almost no knowledge available in this area; thirdly, management theory does not recognise the Project Management Body Of Knowledge (PMBOK) as a source of solutions.

Recent analysis of an engineering concern employing 150 people showed that they had 400 unknown current management projects while 10 construction projects were being managed.

Having had twenty years of experience in the construction industry, culminating in the management of two thousand simultaneously occurring projects per annum, I have realised that multi-project management requires a new perspective on the management of projects and that multi-project management theory could prove to be the ideal point of culmination for all management theory.

What little knowledge there is (International Journal of Project Management) points to three critical areas where it is generally agreed solutions need to be found. These are: Organisational structure, Control and Prioritising of projects.

What you are about to see is my explanation of how to solve the problems in organisational structure and multi-project control. (Prioritising Multi-projects was dealt with in my Masters Dissertation.)

As far as I know these are the only successfully implemented working solutions at present

Question:

"Can an organisation with fifty employees manage one hundred projects?"

Answer:

"Yes."

How ? by employing one hundred project managers ?

Obviously not. If not ,then it is safe to assume that all the employees in this organisation are to some degree involved in the management of projects

What about the normal organisational functions?

Who is running the organisation ?

Most importantly, is there overall control of the projects ?

If an organisation manages many individual projects, each with its own dedicated project manager, there will inevitably be little or no overall control of the projects.

Further, project management will overrun the organisation and take-over every function in the organisation. This is not a good situation although some would disagree.

The organisation still has its functional needs.

The question now becomes:

"How is the functional organisation married to the multi-project organisation?"

This is a problem not easily solved if you consider that at the 12th. INTERNET International Expert Seminar, Eric Gabriel (President) said in his closing address:

Figure 1

 

"Multi-project control has been a topic in our Congresses and Seminars for many years. I don’t think we have ever really solved the severe problem of integration of multi-projects into traditional functional hierarchical organisations." (Gabriel, E A Management by projects: the new management)

In order to develop a solution to this problem one must first investigate the relationship that exists between the organisation, the individual and the projects.

Let us consider the functional organisation (FIG 1) and the position each individual occupies within the organisation. (Haimann, Scott & Connor Management.)

To find the relationship each individual has within each project, we need to re-draw the organisational diagram on its side so that each individual employed can have his name in the heading of a column as in FIG 2.

Figure 2

Now we can add the individual projects and show the involvement of the individual people with the projects, while retaining the functional hierarchy as in FIG 3.

The picture now displays the relationship between the Organisation, the project and the individual. The make-up of the project team can be seen in the rows, and the extent of project involvement can be seen in the columns.(FIG 3)

The organisation can be expanded on the horizontal plane while projects can be added on the vertical plane.

To manage the projects in such a way so as to gain overall control of the projects, use is made of the sponsor, champion and manager concept as described in Prof. Turner’s book Project-based Management (p53).

Figure 3

The sponsor is the owner of the product which the project is to produce. As such he is also the person whose budget is to finance the project.

The champion fulfils the duties of both technical expert and project leader for the project. He represents the sponsor on the project team and defends the sponsors cause, hence the name "champion". The champion is selected from the department which will best serve the sponsor’s interest, or is the person who originates the project.

The manager brings to the project team project management procedural expertise. Further, he guides the team by fulfilling the role of facilitator, educator and consultant. The position of the manager on the project team is not permanent, as the team is capable of managing the work while the manager assists other teams.

Figure 4

No other method of project management would allow the manager to have the personal time available to move freely amongst hundreds of simultaneously occurring projects giving praise where it is needed, assistance where things are going wrong and staying out of the way of the people who are doing their work.

This is achieved by using the model presented in Fig. 3 to show the project organisation by indicating the position of the sponsor, champion, team members and project manager as in (FIG 4)

This graphic shows that the sponsor, champion and team members can come from anywhere in the organisation (Management does not have the exclusive right to good ideas, contrary to popular belief!). The multi-project manager on the other hand comes from only one position.

From fig. 4 an exciting discovery is made;

Individual projects are managed in the rows by the champion.

Multiple projects are managed in the columns by the manager.

The functional organisation can exist on the horizontal plane while the project organisation exists on the vertical plane.

 

Figure 5

Projects can now be managed in procedural groups, using Champions to manage individual projects through project teams who agree to perform the work of a stage of the life cycle (WBS) as reflected by a responsibility chart.

Project managers are now procedural experts who facilitate, educate and consult the project team towards achieving the goal of the stage in an effective and efficient manner. Use is made of a "people time control matrix" (see Project control Fig. 20) to identify those projects and team members who are achieving better than expected results.

Figure 6

As projects are organised in a novel way to undertake a unique scope of work, the team members find themselves in an ideal position to generate solutions to problems encountered in their "unique" work.

The project manager learns from these in order to find solutions that can be applied to those projects and team members not progressing as expected.

 

Practical Example One

As Main Transmission Systems Projects Manager I was tasked to manage 2000 projects per year for three years on a 4 billion Rand annual budget.

The projects were scattered across 50 000² km in 12 decentralised geographical regions throughout Southern Africa. Projects ranged from about 20 million Rand to about 200 000 Rand each.

While compiling a list of the projects I noticed that the project titles fell into procedural groups such as security, fire protection, facilities etc. On reviewing these procedural groups I found that security and fire protection constituted 80% of the expenditure. The capital value of security projects was double the total maintenance expenditure.

A matrix (figure 7) was constructed showing the procedural groups in the rows and the geographical regions with their staff in the columns, using one project manager and twelve champions (one for each region)

Figure 7

The champion was facilitated by the project manager to find a sponsor and a local team to produce the product of the project. If no sponsor was found, centralised sponsorship was found. Conversely if a team was not compiled, outside contractors were used.

Monthly reports based on weekly team reports were sent to the project manager and sponsor reports were compiled quarterly, based on the project reports.

Control was executed as per the Multi-project control matrix as discussed in part two.

 

In closing, some observations were made from the use of procedural groups.

Firstly, when all the projects were viewed as a collective the titles of the projects revealed the underlying processes that existed in the organisation.

Processes only exist if there is continual incremental improvement. (If this is not true then processes would self-destruct) The projects that are identified by the employees of an organisation are these very incremental improvements to existing processes. Often we found that the projects revealed processes which management did not even know existed. It has never ceased to amaze me when management attend a strategy objective setting meeting and return announcing new procedures, when the existing ones are unknown.

Secondly, the functional organisation, project procedural organisation, project team organisation, work breakdown structure, time and cost make up the six sides of a cube.

Relationships between individual people, projects and time make up the three dimensions of the cube.

If cuts are made in all three dimensions along the lines formed by each individual person, project and unit of time measurement, thousands of smaller cubes are formed with the six sides revealing the extent to which the individual person or project influences the organisation around him.

The assembled cube can be related to a filter into which resources are poured and out of which flow the products produced by that organisation.

Management, external to this cube, analyse it to locate ineffective and inefficient passages of flow, and then go in to repair them.

Finally, I am often asked how one can convert a functional organisation into a project driven organisation. Using figure 7 the conversion can now be accommodated as follows: (FIG 8)

Figure 8

Modern commercial project management was developed around a planning tool called the Critical Path Method (CPM). (Kerzner H, Project Management, p601)

A project is seen to have a starting point in time and a pre-planned completion point and so does each activity within it. (International Journal of Project Management, 1988, p173.)

CPM uses the duration of the activities and their relationships with one another to calculate the shortest duration between the start and end of the project; hence the critical path.

It is believed that the activities making up this path should consume the largest slice of management attention in order for the project to reach its end state at the pre-planned end date.

Project management was therefore seen to manage the work that made up the project, and the Project Manager was in charge of the project.

Graphically displayed, a CPM project network would appear as follows: (FIG 9)

Figure 9

In 1975, Cleland and King discovered that the overall project duration progressed through stages of a life cycle. (Project Management Handbook, Cleland DI/King WR, (Ed) p191)

Today it is accepted that projects generally have four stages. Although these stages are known by different names (depending on which book you read) they comprise a proposal stage, a design stage, a construction stage and a closing stage.

My own research has revealed that three of these stages are fixed and only the design stage is expanded to comprise several stages in order to contain risk. Overlaying the life cycle concept on to CPM project network (FIG 10) reveals an interesting point. (FIG 11)

Figure 10

The absence of a clear transition from one stage to the next is a major problem as the relationship between activities will allow design to start before feasibility is completed, or construction to start before design is completed.

This is the main reason why projects overspend their resources.

Life cycles break projects down into logical blocks (FIG 12) or into smaller projects, each with its own distinct start and end. This allows design to be fully completed before construction can start. (Turner JR, The Handbook of Project-Based Management, p22)

Figure 11

 

Figure 12

Other advantages are that specialist project teams can be used to manage specific stages, each with its own budget, keeping internal costs separate from external costs. This allows for smaller teams to be used while increasing accountability.

The project manager is now in the ideal position to manage multiple projects as he manages a team which manages the work. He is therefore able to move among more projects than he would have been able to under traditional CPM conditions.

Project networks are still used for each stage but the major method of control now becomes the Work Breakdown Structure (WBS). (Turner JR, The Handbook of Project-Based Management, p25)

Figures 12 to 15 graphically demonstrate how a CPM network is converted into a WBS

Figure 13

 

Figure 14

Each stage of the life cycle now contains a work breakdown describing the procedure to be followed by the project team in order to progress from one stage to the next.

Review and approval by the project sponsor can now take place at the end of each stage which represents a precise logical break in the work being done on the project.

A project manager is therefore not responsible for the entire project but rather for the stage he manages. (If he manages all the stages then he would be responsible for the whole project.)

This is achieved by allowing the champion (who best knows what is required of the project) to lead the team who is doing the work of the project across all the stages. The manager manages the people who manage the work.

Figure 15

 

Figure 16

This arrangement reveals further advantages of WBS over CPM.

Only the details of the present stage are managed

Only the end date of the present stage is fixed

Projects can be dormant between stages

No long range detailed networks are used, thus reducing misleading information

The project team is assembled by the champion (who is assisted by the manager)from people who have the required skills and enthusiasm to bring the current stage to a successful conclusion.

These team members may also serve on other project teams and have their normal day’s work to contend with, which brings project control into the mix.

Figure 17

Figure 18

The problem is partially solved by the use of responsibility charts according to which team members individually commit themselves by agreeing to perform certain tasks by pre-arranged dates.

Project control can be equated with people control and this is the only point where CPM with a dedicated project leader and team has an advantage over WBS.

On the other hand, facing the problem forces one to find a solution for "people time" as a resource constraint. It is a little considered fact that there are only 124 000 working minutes in one year. Individual "people time" is a finite resource constraint that cuts across all boundaries of the organisation whether it manages projects or not.

The solution comes about, I believe, in finding a method to help the individual manage his own time within the context of the organisation and the project teams on which he serves.

Figure 19

In order to find this solution one must first understand how the organisation, projects and individuals co-exist. (FIG 18)

The illustration (FIG 18) displays the relationship between the organisation, the project and the individual. The make-up of the project teams can be seen in the rows and the extent of project involvement can be seen in the columns.

Even at this elementary stage management analysis (FIG 18) will reveal that marketing is not part of projects while J Rock is the only person in operations working on projects.

If the time each person spends achieving the activity he has agreed to is entered in the corresponding position, some progress will have been made towards finding a solution for "people time". (FIG 19)

Management analysis of the "People time" matrix at this simplified level makes interesting reading.

For example:

60% of personnel are involved in projects

59 man hours are spent working on them

J Rock is over-committed

V Blood is not achieving his objectives

Project Three is consuming excessive resources

Project One may not be achieving its completion date

If time consumed by individuals working on the project is properly managed, then cost, quality and the duration of the project will be managed by inference.

This is a bold statement and one that few experienced project managers would be willing to try in practice, but it is none the less true. Think about it for a moment.

The amount of time an individual spends in performing a task is directly related to the quality of the work being done and to the cost of performing the task. (Positive or negative influence)

Use of responsibility charts therefore has the advantage that the "People Cost" can be managed along with the "People time" by entering the cost for completing a task in the same matrix used to manage time.

By adding the responsibility chart for the current stage to the matrix, a direct relation can be made to the task, the person, the time, and the cost.

The multi-project manager enters a new dimension within the organisation in order to cope with the volume of work. The champion manages the team on an individual project basis while the manager manages procedurally. That is, he manages only the procedure used in the execution of the work of the project.

During 1995 I was asked to develop processes, procedures and systems for the Electrification Project as part of the Reconstruction and Development Program (RDP) of the Government of National Unity under the leadership of Nelson Mandela.

The project aimed to connect 3 million houses to the electricity grid in 5 years. It had been in progress for three years and had only connected 600 000 houses to the grid. The object was to lift the current effort to 300 000 a year and then to 500 000 a year while bringing the connection cost down from R 5 000.00 to R 1 500.00 per house.

The project was using ESKOM to build the distribution lines to squatter camps and to design the reticulation and order the equipment. Private contractors were being developed out of the local community to install the equipment according to the reticulation design.

There was no centralised project team or control and each Distribution Group (there were five) were given capital and a connection target and were told to get on with it, over and above their existing work.

Using work breakdown structures, responsibility charts and people time matrixes I developed the notion of a production line for the projects where the stages of the life cycle are use as the stages in the production line.

Each Distribution Group assembled teams to perform the work from begining to end of the stage within the designated procedural groups of schools, clinic, rural and urban squatter camps.

A Procedure Manual for Project Management was implemented to incorporate these ideas and immediately delivered benefits.

It was identified that the Network design office was continually redesigning the reticulation (up to four times) as the duration from first request to final (first) design was 18 months. Meanwhile some squatter camps had doubled in size and population and some had disappeared.

Secondly, projects were only fixed in terms of cost at the start of the construction stage. The proposal and design stages were off the record.

Thirdly, as the construction stage was performed by contractors, discrepancies existed between the reported connections, the target number of connections and the actual connections.

With only partial implementation of the measures described in this article 1995 ended with the target of 300 000 connections being exceeded and the cost per connection being reduced to R 2 900.00 per connection.

The use of time as a control measure in multi-project management reveals two interesting concepts .

Time, being a finite resource constraint, has two separate users of it; firstly, the individual person who has time available spends it on activities which makeup a project and on individual tasks within the organisation.

Secondly, money being a relatively finite resource is owned by the organisation who spends it on people and projects within the organisation.

The first concept led me to develop a test for the use of time by using the "people time" matrix. The test is to balance the required time composed of the sum of all project duration with the total man hours available. Some thought provoking results have been gained from this test; for example, how does an organisation with 28 000 employees think that it is going to manage 500 000 projects per year? (That’s 125.44 man hours per project)

The test has led to a formula being developed by myself to find the number of project managers required for a multi-project based on available time.

One starts by calculating the sum of all projects’ duration in hours then divide by the number of projects to find the average duration of a project. One then divides the available time in a year by the average duration to find the number of times a project can be repeated in a year. The number of projects is divided by the repeat time to find the number of simultaneously occurring projects. Next a sample is taken of the simultaneously occurring projects, lets say 40%, to find the required time to be spent on the projects.

A sample of available time is taken lets say 70%, to represent the available time that a project manager has to spend on the projects.

The required time is then divided by the available time resulting in the number of project managers required.

A formula can now be extrapolated:

sD ^. Px ^. aD = Pmn

aT^{2 .} Py

Where:

sD = Sum of all project duration’s in hours.

Px = Sample size of total number of projects (0.1 to 0.5)

aD = Average duration of total project in hours

aT = Number of working hours in a year (40 X 52)

Py = Time projects managers are to spend working on projects as

a sample of total time (0.7 to 1.0)

PMn = Number of project managers required.

If Px and Py are equal to 1 then the number of project managers will be equal to the number of projects.

Ad is equal to Sd divided by the total number of projects.

Recently I have been asked to include the geographical dispersion of projects in to the formula. If 0.01 is added to Px for every 10 000² Km which the projects cover a good correlation is found. Project value can be treated in the same way but it is usually reflected in the projects duration of similar projects (Project Program) and is therefore not essential to obtain good correlation.

The second concept of money being a relatively finite resource is owned by the organisation, and the individual person vies for money as do the projects which comprise the organisation, raises the question of company valuation.

A new method must be found to value a multi-project driven organisation as its value will be largely dependent on its success at managing projects. As yet I have not spent any time in developing the concept, so it is open to anyone to try and solve it.

One observation that can be made from this exercise is that organisational structure and control are inextricably linked.

Time as a resource constraint impacts in three dimensions namely the available time and the use of time by the individual person as well as by the individual project.

Adding a new dimension to the organisation reveals a cube rather than a matrix with each facet of the cube revealing the extent to which available time is used by the individual person, project as well as the organisation.

Work breakdown structures (control) using responsibility charts to manage the work of a stage to a completion point before the next stage is undertaken are positioned parallel to the time axis in a cubic organisation.

Project champions (technical experts) are used to manage individual project teams to complete the work of the stage leaving the project manager (project procedural expert) to learn from multi-teams and/or projects progressing better than expected, so that guidance can be given to teams and/or projects in difficulty.

To achieve this, use is made of a time control matrix to analyse actual achievement against forcasted achievement and the work load formula. From this analysis individual people and projects are identified from whom one can learn or whom one can help.

This method of managing multi-projects was successfully used to manage 2000 projects per year for three years achieving 99.5% accuracy on time and a capital budget of 5 billion Rand using one project manager and twelve champions.

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