UNIVERSITY OF NAIROBI.

DEPARTMENT OF EXTRA-MURAL STUDIES

UNIT: LDP 604

TOPIC: THE ROLE OF STRATEGIC ISSUES IN PROJECT MANAGEMENT

LECTURER: DR. BWIBO ADIERI

GROUP ONE MEMBERS:

BEATRICE NDANU MUEMA : L50/57642/2017

AKINYI VIVIANNE CHRISTINE : L50/89786/2016

EUNICE WAMAITHA WAGACHA : L50/5759/2017

CAROLYN K. MBURUGU : L50/5659/2017

WANGECHI ESTHER NDUTA : L50/5620/2017

JOEL N NASIEKU : L50/5678/2017

DAVIS LANGAT : L50/5642/2017

IRENE MASITSA MULUNDA : L50/5697/2017

AN ASSIGNMENT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF DEGREE OF MASTERS OF ART IN
PROJECT PLANNING AND MANAGEMENT.

MARCH 2017

TABLE OF CONTENTS

ABSTRACT.................................................................................................................. iii
INTRODUCTION........................................................................................................... 1
1.0 STRATEGIC ISSUES............................................................................................ 1
2.0 PROJECT MANAGEMENT...................................................................................... 2
2.1.2 External and Internal Factors Analysis...........................................................4
3.0 STRATEGIC ISSUES IN PROJECT MANAGEMENT..................................................7
3.1 Environmental Factors....................................................................................... 8
3.2 Technology....................................................................................................... 9
3.3. Politics and political uncertainty; Corporate Governance and Corporate Propaganda........9
3.4. Human Resource Management............................................................................... 12
3.5. Organizational Structure....................................................................................... 14
Conclusion................................................................................................................ 20

ii
REFERENCES............................................................................................................ 21

ABSTRACT

Strategic issues in Project Management are the issues that greatly have an influence in either the
success or failure of a project. Review of Strategic issues in Project management enables for the
project team to come up with better, more realistic goals and objectives of the project. They
inform decision making in project implementation.

Much of the government, non-government and private organization projects have failed over the
past many years due to improper management of strategic issues for example; environmental
forces that affected Kenya National Highways Authority (KeNHA) whose intention was to
construct a 4-km section of the road through the park. It was stopped from constructing a section
of the Southern by-pass inside Nairobi National Park.

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Others emerge a success due to anticipation of such issues resulting to proper planning ofthe
project management roles and strategic project management techniques that could have been
adopted to have delivered the project with a success. An example is innovations in technology
that has brought success to companies such as Safaricom M-Pesa.

This term paper analyses strategic issues, brings forth a description of project management. It
analyses the internal and external factorsthat inform on a projects outcomes, competitive
advantage and gives a detailed description of strategic issues that have resulted into success or
failure of projects like Technology, Politics and political uncertainty; Corporate Governance and
Corporate Propaganda, Human resource management, organizational structure and environment.
Lastly it brings a conclusion on the role of strategic issues in project management.

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 INTRODUCTION

1.0 STRATEGIC ISSUES

Strategic issues involve those internal and external conditions that exert pressure on the project
such as its financing, design, engineering, construction and operation (Cleland, 1999). The
concept of strategic issues has emerged as a way to identify and manage key factors and forces
that can significantly affect an organizations future tactics. The importance of strategic issues
has therefore appeared in the literature primarily in the context of the strategic management of an
organization (Cleland, 1989).

These are internal and external forces, or contentions that have a significant impact on the
outcome of a project. They are major factors that can affect organizations strategies.

A strategic issue can be defined as the fundamental policy questions or critical challenges that
affect an organizations mandate mission and values, product or service level and mix clients ,
users or payers or cost financing or organization or management. It is also viewed as a way to
identify and manage factors and forces that can significantly affect an organizations future
strategies and tactics.

In the management of a project, there are likely to be issues or contentions that can have a
significant impact on what purposes the project fulfills and how the project should be managed.
Often project success or failure rides on these issues and how they have been adequately
considered during the planning for and execution of projects. The notion of strategic issues in the
management of projects is another area of consideration that broadens the role of the project
manager and his or her team members.

Then, the sooner strategic issues are identified, the sooner the project team will make decisions
regarding how to deal with them (Cleland & Ireland, 2002).

These are internal and external forces, or contentions that have a significant impact on the
outcome of a project. They are major factors that can affect organizations strategies.

1
A strategic issue can be defined as the fundamental policy questions or critical challenges that
affect an organizations mandate mission and values, product or service level and mix clients ,
users or payers or cost financing or organization or management. It is also viewed as a way to
identify and manage factors and forces that can significantly affect an organizations future
strategies and tactics.

Strategic issues include productivity, competitiveness, selling results and or profitability. At

times strategic issues are not anticipated. In order to comprehensively deal with a projects
strategic issues, three key aspects of strategic issue management are vital;

a) The need to identify the key strategic issues facing the project
b) An impact assessment of the key strategic issues and the possible consequences.
c) The techniques of managing the issues and coming up with mitigating measure.
Strategic issues are input in strategic planning that allows for identification and
management of factors and forces that can significantly affect an organizations future
strategies and tactics. As Sun Tzu in Art of War put it Strategy without tactics is the
slowest route to victory.

Tactics without strategy is noise before the defeat. Paraphrased, strategy (a plan) without
tactics (implementation units) is the slowest route to victory. Meaning its a trial and error
occurrence without clear cut tasks to achieve a visualized and well thought anticipated
end.

Tactics (that is implementation), without strategy (that is conceived plan) is noise before
defeat. This is why a blue print that is conceived by the executive anticipating strategic
issues is necessary. It is not however, the only means of handling strategic issues as some
strategic issues are dynamic and management therefore must be handled creatively.

A strategic plan is a guideline that directs execution of duties and acts as a basis of informing on
operations of a project. In recent years, strategic planning has been seen to be intertwined with
project management. Contemporary project management has acknowledged that success or
failure of projects rides on anticipation, identification, analysis and inclusion of strategic issues
in the planning and execution of projects. Therefore there is a dire need to be aware of strategic
issues facing a project, an approach for the assessment of the strategic issues, and a technique for
the management of strategic issues.

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2.0 PROJECT MANAGEMENT

Project management is the planning, organizing, directing and controlling of company resources
for a relatively short term objective that has been established to complete specific goals and
objectives (H.Kezner 2009). Furthermore project management utilizes the systems approach to
management by having functional personnel (vertical hierarchy) assigned to a specific project
(horizontal hierarchy). says that Project management includes planning, organizing, directing
and controlling activities in addition to motivating what usually is the most expensive resource
on the project-people (Harvey (1999).

The purpose of project management is to foresee or predict as many of the dangers and problems
as possible and to plan, organize and control activities so that the projects are completed as
successfully as possible in spite of all the risksLock (2003).

Project management is an application of knowledge, skills, tools, and techniques to project

activities to meet the project requirements John Wiley and Sons Inc. PMBOK Guide 4 th Edition
2009) Rory Burke.

Project management includes the planning, organizing, monitoring and controlling of all aspects
of the project in a continuous process to achieve its objective. (ISO 10006:1997(E)

2.1 Project management is carried out in a cycle and achieves the following:

Identifying desirable projects for the stakeholders/clients. Through project management, projects
are established which addresses the most felt need of the stakeholders especially the
beneficiaries. The most felt need forms the goal of the project. Identification phase of project
management cycle encompasses this.

Establishing an appropriate strategy for project execution. Based on the established objectives, a
framework (strategy) is put in place that will enable their attainment. Formulation or design
phase carries this.

Attainment of outputs as per the established goal through the outlined strategies. The execution
of a given strategy demands carrying out some activities. Thus project management helps to plan
what should be done, by whom, when, where, and by use of what resources. This is undertaken
during the implementation phase of the project management cycle.

3
Keeping track of the project execution process through periodic review that is monitoring and at
the end an evaluation is done to check if everything conforms to monitoring and evaluation
framework established under formulation phase

Helping to reveal if the project has produced any meaningful impact to the beneficiaries as well
as any new knowledge based or on learning experiences as a result of the completed project.

2.1.2 External and Internal Factors Analysis

Strategic planning is the duty of top or executive level management and encompasses coming up
with mission vision and values, core values (MVV). Building on this, the vison carriers of a
project then performs external analysis (PESTEL) and internal analysis which leads to a specific
SWOT awareness;that is, the strengths and weaknesses as well as emerging opportunitiesand
worrisome threats that are likely to influence projects outcome.

When undertaking SWOT analysis most organizations will check on the balanced score card and
for those without a score card the financial information will assist. Value chain analysis is used.
Mostly, the value chain analysis checks on sequence of processes necessary to deliver products,
services, and support activities such as research and development, human resource management,
and technology development.

The value chain analysis helps a firm identify those activities that it intends to perform
differently or better than competitors to establish a sustainable competitive advantage.

Kaplan and Norton summarize external analysis in the following PESTEL framework.

4
Political Analysis Economic Analysis
Risk of military invasion Type of economic system
Legal framework for Government intervention in free market
contract enforcement Exchange rates and stability of host county
Intellectual property currency
Comparative advantage of host country
protection Efficiency of financial markets
Trade regulations and Infrastructure quality
tariffs Labour costs
Favored trading partners Skill level of workforce
Business cycle stage
Social Analysis Economic Growth rate
Discretionary income
Demographics Unemployment rate
Class structure Inflation rates
Education Interest rates
Culture (gender roles) etc. Technological Analysis
Entrepreneurial spirit
Attitudes ( health, Recent technological development
Technologys impact on product offering
environmental Impact on cost structure
consciousness, nutrition, Impact on value chain structure
leisure interests Rate of technological diffusion

Environmental Analysis
Greenhouse gas emissions
Solid waste produced
Liquid waste discharged
Energy consumption
Recyclability
Clean water consumption
Overall environmental
footprint
Legal Analysis
Anti- trust laws
Taxation-Tax rates and tax incentives
Wage legislation- Minimum wage and
overtime
Work week
Mandatory employee benefits
Industry safety regulations
Product labelling requirements

Internal environment analyses on the other hand involves key processes evaluation namely
human capital, operations, innovations, technological deployment which identifies strategic

5
issues that must be addressed. It is checking on how best we compete; the capabilities and
performance of a firm undertaking a project.

2.12.31 Matrix summary of SWOT analysis

Helpful for achieving Harmful for achieving the

organization's vison organization's vision
Internal Attributes Strengths Weaknesses
External Attributes Opportunities Threats

A SWOT analysis ideally helps an organizations executive team to understand key issues that
the organization must address when formulating its strategy. Strengths can be used to pursue
opportunities and to avoid threats and project managers sensitive to internal weaknesses and
external threats that need to be overcome by strategy.

Strategic issues therefore inform on a projects outcomes, competitive advantage that is what the
project will do differently as compared to other similar projects, i.e. The value and lastly it
informs on the scope of work that is put in a GANNT chart that basically breaks down tasks and
schedules them.

3.0 STRATEGIC ISSUES IN PROJECT MANAGEMENT

A strategic project management action is applied to minimize or avoid completely the disastrous
results. Strategic project management is defined as the project perspective, direction, and
guidelines on what to do and how to do it, to achieve the highest competitive advantage and the
best project results as it equips the project team members with powerful tools to deliver the
project with a success.

Strategic Project Management (SPM) has been defined by Callahan & Brooks (2004) as the use
of the appropriate project management knowledge, skills, tools and techniques in the context of
the companies goals and objectives so that the project deliverables will contribute to company
value in a way that can be measured (Callahan & Brooks, 2004, p. 23).

6
3.1 Environmental Factors

These are identifiable elements in the physical and regulatory environment that affects the
survival, operations, and growth of a project. The geographical location of a project, ground
conditions and weather patterns are the most common examples of physical influences. They are
unpredictable and as such management actions have not been able to prevent their occurrence.

3.1.1Environmental Regulation

These are laws that have been constituted by relevant institutions which are established by an Act
or Decree and are also recognized and ratified by the government.

For a project to be undertaken it has to meet the specified standards, failure to which it can be
cancelled. Pollution and Degradation of environment have impacted on many projects.

On 30th May 2013, the Kenya National Highways Authority (KeNHA) was stopped from
constructing a section of the Southern by-pass inside Nairobi National Park. This followed an
appeal by the East African Wild Life Society, Africa Network for Animal Welfare (ANAW) and
environmentalist Dr. Paula Kahumbu, who took the National Environment Management
Authority (NEMA) and KeNHA to the National Environment Tribunal (NET) over the intention
to construct a 4-km section of the road through the park, citing a breach of the NEMA
Environmental Impact Assessment.

3.1.2 Weather patterns and Natural Disasters

These are adverse events resulting from Natural processes of the Earth. Examples include
Floods, earthquakes and volcanic eruptions.

They have adversely affected the duration, cost and at times total destruction of a project.

Perennial floods in Budalangi, Western Kenya has resulted in total destruction of Infrastructure
projects and loss of lives.

The Galana-Kulalu Irrigation project has been also affected by drought which has reduced its
production and increasing the project cost.

7
3.2 Technology

Technology

Technology is the application of scientific knowledge for practical purposes, especially in

industry.

Technology is also defined as a manner of accomplishing a task especially using technical

processes, methods or knowledge (Merriam-Webster)

Recent advancements in technology have played a revitalizing role in project management, in

that it has provided the right project management tools that help in project success. These tools
create smoother operations in performance of tasks as well as increase the efficiency of the
project teams.

The role played by these tools and features in the project management performance in the
following;

Data Storage and backup: Technological developments that enable storage of data on the cloud
or on a hard drive make it possible to securely backup all data even when computers crash or
encounter problems. Gone are the days when filing cabinets were an important tool in an
organization.

Accessibility and communication: Nowadays, project team members do not necessarily have to
be on the same location to be considered accessible. Technology has improved accessibility and
promoted instant communication. For example, the use of video conferencing as opposed to
physical meetings.

Helps teams to keep up with deadlines: Use of technology and software enables project teams to
easily complete their tasks, compared to use of manual processes.

Budget tracking: Project management software is used in keeping track of project expenses. This
has simplified budgeting challenges such as complicated formulas in multiple varieties of
expenses.

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Time Tracking: Modern project management programs have features that make it easy for project
team members to calculate or track the time spent on each project task.

Competitive Advantage: Application of modern technology can be used by an organization to

gain a competitive advantage in the industry. For example, Safaricoms M-pesa money transfer
platform has elevated Safaricom above her peers in the money transfer industry both locally and
internationally. Another example is the Brazilian Sugar Milling industry. In Brazil, advanced
technology is used, whereby sucrose is extracted at the farm using specialized equipment and
transported in liquid form to the processing plants. This greatly reduces the cost and time of
transportation. The result of this is low cost of production, hence highly competitive price of
sugar in the world market. On the other hand, Kenyan Sugar millers manually harvest sugarcane
and transport it in its raw form using trailers to the milling plants. This increases the time and
cost of production, hence high price of sugar. As a result, Kenyan Millers are ever complaining
of cheap sugar imports from countries like Brazil. Technology also influences human resource
management decisions, since the technology adopted will influence the number of staff required
as well as their caliber.

Application of modern technology can be used by an organization to gain a competitive

advantage in the industry. For example, Safaricoms M-pesa money transfer platform has
elevated Safaricom above her peers in the money transfer industry both locally and
internationally. Another example is the Brazilian Sugar Milling industry. In Brazil, advanced
technology is used, whereby sucrose is extracted at the farm using specialized equipment and
transported in liquid form to the processing plants. This greatly reduces the cost and time of
transportation.

The result of this is low cost of production, hence highly competitive price of sugar in the world
market. On the other hand, Kenyan Sugar millers manually harvest sugarcane and transport it in
its raw form using trailers to the milling plants. This increases the time and cost of production,
hence high price of sugar. As a result, Kenyan Millers are ever complaining of cheap sugar
imports from countries like Brazil. Technology also influences human resource management
decisions, since the technology adopted will influence the number of staff required as well as
their caliber.

9
3.3. Politics and political uncertainty; Corporate Governance andCorporate Propaganda

One of the most powerful but frequently overlooked influencers of successful project
management concerns the roles played by knowledgeable personnel in using power and political
behavior to promote successful implementation. Most of us tend to regard political activity with
a sort of repugnance, finding the conduct of politics to be both personally distasteful and
organizationally damaging.
Common experience will demonstrate to both practitioners and neutral observers that for all our
often-expressed personal disdain for the exercise of politics, we readily acknowledge that this
process is often one of the prime moving forces within any organization, for better or worse.
Political behavior, sometimes defined as any process by which individuals and groups seek,
acquire, and maintain power, is pervasive in modern corporations.

The field of project management is one that is particularly fraught with political processes for
several unique reasons. First, because project managers in many companies do not have a stable
base of power(either high status or over-riding authority), they must learn to cultivate other
methods of influence in order to secure the resources from other departments necessary to attain
project success. Second and closely related to the First reason, these projects often exist outside
of the traditional line (functional) structure, relegating project managers to the role of
supernumerary. Almost all resources (financial, human, informational, etc.) must be negotiated
and bargained.

Finally many project managers are not given the authority to conduct formal performance
evaluations on their project team subordinates, denying them an important base of hierarchical
power. Without the authority to reward or punish, they are placed in the position of having to
influence subordinate behavior into engaging in appropriate behaviors. Consequently, they must
learn important `human' skills such as bargaining and influence, conflict management, and
negotiation. Senior and successful project managers have long known the importance of
maintaining strong political ties throughout their organizations as a method for achieving project
success. Indeed, it is the rare successful project managers who are not conversant in and
knowledgeable of the importance of politics for effectively performing their jobs.

10
That point illustrates an important underlying aspect of the characteristics of political behavior: it
can either be the project manager, friend or most remorseless foe. In other words, whatever
decision one comes to regarding the use of politics in the quest for project success, it can-not be
ignored. This statement does not have to make the reader uncomfortable. No one would argue
that project managers must become immersed in the brutal, self-serving side of corporate
political life. Successful project managers are usually those who intuitively understand that their
job consists of more than simply being technically and managerially competent.

In our research and consulting experience, most companies spend thousands of hours to plan and
implement a multimillion or even multibillion shillings investment, developing intricate plans
and schedules, forming a cohesive team, and maintaining realistic specification and time targets,
all to have the project derailed by political processes. This is a pity, particularly in that the end
result is often foreseeable early in the development of the project: usually as the result of a
project manager's refusal to acknowledge and cultivate political ties, both internal to the
organization and externally with the clients. At some point, almost every project manager has
faced the difficulties involved in managing a project in the face of corporate politics. 11, 18

In additions, the politics of a country contribute to success, stalling or failure of projects

Government is the governing body of a nation, state, or community. Politics are the activities
associated with the governance of a country or other area, especially the debate or conflict
among individuals or parties having or hoping to achieve power. Politics and uncertainty can
affect the end result of a project for instance, at the time of its construction, the locals of
Muranga were promised that they would benefit from Ndakaini water project. This did not
happen and that has left a lot of bitterness from Muranga leaders. This matter was first raised in
Parliament in 1995 by then Kigumo MP KiroreMwaura and later by Juja MP Stephen Ndichu, all
demanding that Muranga and Thika residents should get a fraction of the money that Nairobi
gets from the sale of Ndakainiwater .

It was recently put forward by Muranga Senator KembiGitura that water is a shared resource
and both Nairobi and Muranga should find a formula for sharing the revenue. The support of
members of Parliament towards is contrary to revenue allocation initial plan which raises
questions on maintenance of the dam as an overseen issue. It also brings to question whether

11
these revenue piece of cake being sought for will actually trickle down to Thika and Muranga
residents.

The Itare Dam project 57 meter high and 100,000 cubic meters capacity whose waters are
expected to feed more than 80,000 residents of Kuresoi, Molo, Njoro, Rongai, Nakuru town and
neighboring Kericho with clean water, has allegedly major environmental issues even before its
end. Major political figures and opposition have politicized the Itare project due to claims that it
would turn four regionsinto a desert and adversely affect the volumes of water in rivers
traversingNarok,Bomet, Kericho, Kisii, Nyamira, Kisumu and Homabay counties in five years
after implementation. Pressing environmental concerns ,court cases, unforeseen resistance and
controversies from the Kipsigis Council of elders, Ogiek Community, the Luo Council of elders,
the Kuria Council of elders and the Abagusii Cultural and Development Council are issues that
the contractor and project manager must handle innovatively if at all the project is to see the light
of day.

It also begs inquiry into how the feasibility studies were done and if participatory approach was
embraced during mapping. Moreover, this is a flagship project is engrained in vision 2030. How
were these factors not anticipated?

3.4. Human Resource Management

Human resource management is the process to develop human resource plan, acquiring staff,
orient, assign, measure the performance and release of the staff at end of project. Human
resource is governed by policies and procedure of the organization, this contributes to the success
or failure of the project.

Developing of human resource plan involves documenting, identifying of the project roles and
responsibility in project organizational charts and staffing management plan. The staffing plan
should be able to expand as the project life progresses. This shows how staff will be added to the
project. The staff plan dictates acquiring of qualified project team members, good hiring
procedures and incentives in order to reduce the turn over during the project life.

Acquiring the project team, staff may be acquired from two sources: from employee
organizations or by contracting with an external service provider. Employees are acquired from
either the business/client organization or from the project delivery organization. External

12
resources may be acquired from an integrator as a single, integrated team, or from smaller
service providers as individual resources. Different models of employee acquisition can be used
through competency centers, line organization or partnerships.

Developing project team also enhance the performance of the project. This is whereby human
resource help staff to work together and effectively. Team work contributes to success or failure
of the project. Training enhances on how people work as a team and help people to understand
themselves. When new resources join the project there should be project orientation to give
information on Background, current status, expectations and introduction to the existing staff.

Human resource can be managed by levelling resources to avoid over allocation. This benefit the
project by reducing the conflict and requires less management. Also helps the project managers
to use just in time policies and reduces conflict between project personnel and the accounts
department.

Management of staff is key to the success of the project. The day to day management is done by
the project managers. This reduces turnover and timely completion of the project. Proper
transition is also important in case of replacement or transition to the new project.

An example of human resource policies that would bring the project to success is when firm
recruiting process is through advertisements and network of contacts hence there is no biasness.
Where Employee morale is very high, so turnover is low and neither recruitment nor release is
done often thus proper management of finances and time. Training is external therefore enhanced
skills and motivation. The high morale is attributed to the relaxed working environment thus
people are able to work together as a team. The nature of the work is not demanding, the teams
take time to socialize together, for instance by playing golf. However, managers have a
significant support role to embers of staff during their line of duty and hence they need to
counsel the staff to respond to that stress. When a new job is received, a project manager is
appointed, based on expertise and availability. That manager then appoints support staff from
among the other permanent employees, and technical staff from the network of peripheral
workers. The peripheral staff are included in the social activities, helping to bind them to the
company and help managers to create a project team.

13
The Rural Electrification Authority was established under Section 66 of the Energy Act, 2006
(No 12 of 2006) as a body corporate. The Authority was created in order to accelerate the pace of
rural electrification in the country, a function which was previously undertaken by the Ministry
of Energy. This change increased the boosting of electrification by 60%. REA has also managed
to electrify 95% of the primary schools by June 2016.

The REA have achieved this through empowering and motivating the staff in order to serve the
people of Kenya as a team.Treat other people with utmost respect, courtesy and fairness in their
service delivery are part of their embraced values. REA shared its vision with the employees on
energy solutions for better lives and made it part of their core values that staff shall be driven by
the passion of ensuring that every Kenyan gets electricity. To reduce turnover REA Board of
directors committed to provide a conducive working environment to the staff in order to ensure
efficient service delivery to customers.

3.5. Organizational Structure

Organisations enablesOrganisations enable a group of people working together with divided

tasks and responsibilities, to coordinate their activities harmoniously in order to achieve a
common goal. In todays competitive world, the crossing of many boundaries functional,
geographic, organisational is becoming a way of life. The corporate world is undergoing a
silent revolution in organisational changes. Emerging organisations have many forms. These
include grouping of activities by functions, products, processes, location, countries, or a
combination of these.(UddeshKohi l K KChitkara, 2008).

An organization structure is a pattern or configuration given to a collective body of people

working together towards achievement of a common goal. It specifies interrelationship and
interconnectivity of various components and in this structure. It also enumerates the duties, roles
and responsibilities of the authorities holding various positions.

Grouping of activities, termed as departmentation, can be performed by functions, products,

processes or location. The personnel are divided into line and staff. The former directly
contribute to performing work, whereas the staff are personnel who perform service functions
and render specialist advice to the project manager.

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In the past decade or so, a new kind of organization structure has appeared in growing numbers
the project organization, a.k.a. enterprise project management (Dinsmore, 1998; Levine, 1998;
Williams, 1997), also known as managing organizations by projects, the project-oriented
firm; and other names. Such organizations have been described as applying project
management practices and tools across an enterprise (Levine, 1998). The source of these
organisations is probably in the software industry that has long made a practice of developing
major software application programs by decomposing them into a series of comparatively small
software projects. Once the projects are completed, they are integrated into the whole
application system.

There are advantages and disadvantages of using functional elements of the parent organization
as the administrative home for a project, assuming that one has chosen an appropriate function.
The major advantages are:

1. There is maximum flexibility in the use of staff. If the proper functional division has
been chosen as the projects home, the division will be the primary administrative base
for individuals with technical expertise in the relevant to the project. Experts can be
temporarily assigned to the project, make the required contributions, and immediately be
reassigned to their normal work.
2. Individual experts can be utilized by many different by many different projects. With the
broad base of technical personnel available in the functional divisions, people can be
switched back and forth between the different projects with relative ease.
3. Specialists in the division can be grouped to share knowledge and experience. Therefore
the project team has access to whatever technical knowledge resides in the functional
group. This depth of knowledge is potential source of creative, synergistic solutions to
technical problems.
4. The functional division also serves as a base of technological continuity when individuals
choose to leave the project, and even the parent firm.
5. Finally, and not the least important, the functional division contains the normal path of
advancement for individuals whose expertise is in the functional area. The project may
be a source of glory for those who participate in its successful completion, but the
functional field is their professional home and the focus of their professional growth and
advancement.

15
 Just as there are advantages to housing the project in a functional area, there are also
disadvantages:

1. A primary disadvantage of this arrangement is that the client is not the focus of
activity and concern. The functional unit has its own work to do, which usually takes
precedence over the work of the project, and hence over the interests of the client.
2. The functional division tends to be oriented toward the activities particular to its
function. It is not usually problem oriented in the sense that a project should be
successful.
3. Occasionally in functionally organised projects, no individual is given full
responsibility for the project. This failure to pinpoint responsibility usually means
that the project management is made accountable for some parts of the project, but
another person is made accountable for one or more other parts. Little imagination is
required to forecast the lack of coordination has that results.
4. The same reasons that lead to lack of coordinated effort tend to make response to
client needs slow and arduous. There are often several layers of management
between the project and the client.
5. There is a tendency to sub optimize the project. Project issues that are directly within
the interest area of the functional home may be dealt with carefully, but those outside
normal interest areas may be given short shrift, if not totally ignored.
6. The motivation of people assigned to the project tends to be weak. The project is not
in the mainstream of activity and interest, and some project team members may view
service on the project as a professional detour.
7. Such organizational arrangement does not facilitate a holistic approach to the project.
Complex technical projects such as the development of a jet aircraft or an emergency
room in a hospital simply cannot be well designed unless they are designed as a
totality. No matter how good the intentions, no functional division can avoid
focusing on its unique areas of interest. Cross divisional communication and sharing
of knowledge is slow and difficult at best.

A traditional corporate organization integrates various components of the organization by

assigning tasks to individuals; defining lines of authority and responsibility, accountability and
reporting relationship. The basic principles of designing classical corporate organisations are as
follows:

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Unity of Objective: An organisation structure is sound when it facilitates the accomplishment of
objectives. Therefore, the organisation as a whole and every part of it must be geared to the
basic objectives of the enterprise.

Specialisation of Division of Work: The activities of every member of the organisation should
be confined, as far as possible, to the performance of a specialised limited set of functions.

Span of Control: Every manager should have a limited number of subordinates reporting to him
directly. Generally, the span should be narrow for complex work and wide for simple and
routine work. However, the span should be neither too wide nor too narrow.

Scalar Principle: There should be a clear chain of authority running from the top to the bottom
of the organisation. Every subordinate should know who his superior is and who his
subordinates are.

Functional definition: The duties or functions, authority and responsibility of every position
should be clearly defined so as to avoid duplication of work and overlapping of functions.

Exception principle: Only exceptional matters, which are beyond the authority of persons at the
lower level, should be referred to higher levels. Routine matters should be dealt with by
executives at lower levels. This is also known as the authority level principle.

Unity of Command: Each subordinate should have only one superior whose command he has to
obey. This is necessary to ensure discipline and to fix responsibility for results.

Centralisation: A proper balance should be maintained between centralisation and

decentralisation. Each function in the organisation should be developed to the point at which the
value received is at least equal to costs.

Efficiency: The organisation structure should be sufficiently adaptable so as to accommodate

technical and other changes in the environment. Therefore, complicated procedures, red tape and
complexity control should be avoided. At the same time, the organisation structure should be
reasonably stable so as to withstand changes.

Flexibility: The organisation structure should be sufficiently adaptable so as to accommodate

technical and other changes in the environment. Therefore, complicated procedures, red tape and

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complexity of control should be avoided. At the same time, the organisation structure should be
reasonably stable so as to withstand changes.

Continuity: Proper arrangement should be made for the training and development of executives.
Rapid turnover of personnel should be avoided.

Parity of authority and responsibility: In every position, the authority and responsibility
should be matched. Adequate authority should be delegated at all levels and wherever authority
is delegated the person should be held responsible for enforcing it.

Co-ordination: The organisation structure should facilitate unity of effort or co-ordination

among different individuals and groups. Channels of communication should be open and clear.

Facilitation of Leadership: The organisation structure should be advised that that there is
sufficient opportunity for the management to provide effective leadership.

The performing organisational structures specify a pattern of interrelationships of the various

components or the under groups of the organisation. The organisation chart shows a graphical
representation of the organisational structure. Grouping of activities in the structure can be done
by functions, products, processes, location or a combination of these, as appropriate. The
organisation manual lays down the charter of position, roles, responsibilities, functions, duties
and authority of each member of the organisation.

The personnel in an organisation are generally categorised into line, staff and advisors. The line
personnel are those who directly contribute to performing work that produces deliverables; the
staff are personnel who support the work indirectly and advisors are the specialists who advice
the management on issues such as legal, financial, environmental and political matters.

The project organisation will need to be tailored to the requirements. Undoubtedly, the principle
of organisational theories has universal application, but they need to be modified to suit the
situation. The emphasis on performing organisation varies somewhat from traditional
organisations and demands the following:

1. Decentralisation of power and authority to the project manager.

2. Equal emphasis on the human and professional skills of the project managers team and
the supervisory staff.

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 3. Good integration of the task-oriented teams, through a well-conceived communication
channel, enabling good interaction both vertically and horizontally.

For example; Project Management Responsibility Centres organisation

Construction Responsibility Service Management and

Centres Responsibility Administration
Building foundation Centres Responsibility Centres
Pre-cast concrete Administration & Personal
centre
Building Finishes production Factory Management
Ready-mix concrete Materials management
Centre
Plant & machinery
Precast Erection production plant
Steel Fabrication management
Centre
Finance management
Public Building Shop
Quarrying Cost management
Centre Engineering service
Pavement Establishment
Plant & Machinery management
Construction Centre Contract management
Landscaping Centre Maintenance unit. Planning and Monitoring
Cell.

Organizational theory is rich in the research of strategic management with specific interest in
analysis, objective setting and the effect of organizational structure. But strategies do not fail
when they are being analyzed or when the objectives are being set. They fail during
implementation and, more particularly, due to the lack of proper project management. Equally,
there are many publications on business processes, without any regard to the natural scientific
explanation of process theory.

Even though business process re-engineering is discussed in project management circles it

remains a mystery as to how this interrelates with organizational theory. Abundant literature is
available on the effect that the implementation of strategy has on organizational structure, but
void on the interrelation of business processes and the role of project management in relation to
strategy and structure. Particularly, on the integration and effect that strategy, structure, processes

19
and projects have on one another. Of note is the fact that project management literature
concentrates exclusively on the projectand there is little research done on managementas it
applies to the general management of an organization. This research analyzed management and
project managementin an attempt to find the application and integration of strategy, structure,
processes and projects in order to facilitate the development of a business.

Conclusion

In summary, we note that strategic issues are internal and external push factors of significance in
the success or failure of a project that must be handled effectively in innovative project
management. The real time illustrations on technology, political interference, human resource
management and organizational structure management factors show that these issues can arise
any time during the life cycle of a project and must be handled well when planning, especially
strategic planning of a project for smooth running and accomplished projects.

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