Barriers in International Projects

TABLE OF CONTENT

Abstract (English Version)

Abstract (German Version)

Table of Content Ill

List of Figures V

List of Abbreviations and Acronyms

1 Introduction
1.1 Purpose
1.2 Research Question
1.3 Scientific Method
1.4 Structure

2 Fundamentals of Project Management
2.1 Definition of the term Project
2.1.1 Project goals
2.1.2 Projecttypes
2.2 Definition of the term Management
2.3 Definition of the term Project Management
2.4 Suitable Organizational Structures
2.4.1 Line Staff Organization
2.4.2 Pure Project organization
2.4.3 Matrix Project Organization

3 Project Phases
3.1 Defining the Project
3.2 Planning of the Project
3.2.1 Planning of Performance
3.2.2 Planning of Quality
3.2.3 Planning of Deadlines
3.2.4 Planning of Resources & Costs
3.2.5 Planning of Risk
3.3 Carrying out and Controlling of the Project
3.4 Ending of the Project โ

4 Project Teams
4.1 Fundamentals
4.2 Composition
4.2.1 The Role of the Project Manager
4.2.1.1 Selection criteria
4.2.1.2 Challenge - Time management
4.2.2 The Role of the Project Team Members

5 International Projects
5.1 Specific Characteristics
5.2 Potential barriers for International Project Teams
5.2.1 Economic barriers
5.2.2 Judicial & political barriers
5.2.3 Cultural barriers
5.2.3.1 Culture - a complex concept
5.2.3.2 The MBI Approach - a helpful measure
5.2.3.3 Intercultural competence
5.2.4 Communication barriers
5.2.4.1 Pros and Cons of communication channels
5.2.4.2 Communication problems
5.2.4.3 Conflict resolution
5.2.5 Particular barriers
5.2.5.1 Contractual agreements
5.2.5.2 Leadership style
5.2.5.3 Others
5.3 Recommended course of action

6 Practical Input
6.1 Waagner Biro Holding AG
6.1.1 General Information
6.1.2 Common barriers for PM at Waagner Biro
6.2 NXP Semiconductors
6.2.1 General Information
6.2.2 Common barriers for PM at NXP Semiconductors
6.3 Bombardier Transportation Austria GmbH & Co KG
6.3.1 General Information
6.3.2 Common barriers for PM at Bombardier Transportation
6.4 Next Level Consulting
6.4.1 General Information
6.4.2 Common barriers identified by a consultant at NEXT LEVEL
6.5 Major findings of Practical Input

7 Conclusion
7.1 Connection of theoretical and practical observations
7.2 Outlook

Bibliography

ABSTRACT (ENGLISH VERSION)

Ours is a challenging age for business. One of the reasons therefore is that the international customer increasingly demands efficiently integrated solutions for fairly complex problems. These expectations are further intensified by the enormous cost pressure and global competition companies are facing nowadays. By concentrating on the firm’s core competences and by the continuously increasing international division of work these challenging expectations seem to be successfully addressed. This is the reason why international project organisations and project teams have gained enormous importance over the last years.

Moreover, constantly innovated information and communication technology tools are contributing to a further facilitation of world wide collaboration. The management of locally dispersed or international project teams, however, is increasingly challenged by a fairly diverse spectrum of barriers. Collectively they display an enormous amount of complexity, consequently explaining the still considerably high failure rates of international project work.

On the basis of theoretical analysis as well as an empirical investigation of selected international projects jointly conducted with project managers in practice, the conclusion of this thesis suggests that projects are significantly troubled by barriers whose impact regularly is neglected; more specifically these are barriers are related to peculiar issues such as culture, communication and leadership. This conclusion points out that by adequate consideration and acknowledgment of the enormous impact of these “soft barriers” international project work has better chances to reach the predefined goals. This thesis will further provide useful suggestions and findings with regards to the management of international projects. These findings derived from the observations made are meant to support companies and project managers in future in striving to successfully reach the desired outcomes of international projects.

ABSTRACT (GERMAN VERSION)

Unser Zeitalter stellt sich als ein äußerst herausforderndes dar. Einer der Gründe dafür ist die veränderte Kundenerwartungshaltung. Diese Erwartungen beziehen sich zunehmend auf funktionierende, ganzheitliche Lösungen um komplexe Aufgabenstellungen erfolgreich meistern zu können. Weiters werden diese Forderungen von einem stetig größer werdenden Kostendruck und globalem Konkurrenzkampf begleitet. Um diesen Herausforderungen gerecht zu werden, müssen Firmen sich daher zunehmend auf ihre Kernkompetenzen konzentrieren bzw. reduzieren. Infolgedessen werden diese komplexen Aufgabestellungen zunehmend durch internationale Arbeitsteilung bewerkstelligt.

Dies stellt einen der Gründe dar, die den immer lauter werdenden Ruf nach effektivem internationalem Projekt Management rechtfertigen. Zusätzlich erleichtern die ständig verbesserten Informations- und Kommunikationstechnologien die weltweite Zusammenarbeit innerhalb Projekt­Teams. Jedoch ist das Management von internationalen Projekt-Teams durch eine Vielzahl von Barrieren herausgefordert bzw. erschwert. Insgesamt betrachtet tragen sie zu einer enorm hohen Komplexität bei, welche in der Folge die beträchtlich hohen Projektmisserfolge erklärt.

Basierend auf theoretischer Analyse sowie einer empirischen Untersuchung von ausgewählten internationalen Projekten mit Projekt Managern aus der Praxis, beweist die Schlussfolgerung dieser Arbeit, dass internationale Projekte häufig von Barrieren behindert werden, die für gewöhnlich unterschätzt bzw. deren Einfluss regelmäßig nicht betrachtet oder anerkannt wird. Diese Barrieren sind im Speziellen mit Kommunikationsproblemen, kulturellen Unterschieden und Führungskonflikten verbunden. Weiters zeigt die Arbeit auf, dass durch eine entsprechende Berücksichtigung dieser erwähnten Barrieren, die Erfolgschancen von internationalen Projekten deutlich erhöht werden. Diese Arbeit bietet auch Vorschläge und Schlussfolgerungen, die für Unternehmen und Projekt Manager in der Zukunft nützlich und wertvoll sein können, um internationale Projekt-Teams letztendlich zu einem erfolgreichen Abschluss zu führen.

LIST OF FIGURES

Figure 1: Magic Triangular

Figure 2: Example of a Line staff organization

Figure 3: Example of a pure product or projectized structure

Figure 4: Example of atypical matrix organization

Figure 5: Useful suggestions for a PSP checklist

Figure 6: structure of the quality planning process

Figure 7: Risk management process

Figure 9: Creating Value in Diverse Teams - The MBI Approach

Figure 10: Pros and Cons of several communication media

Figure 11: Situational Leadership Model

Figure 12: Implementation process for international projects

Figure 12: Barriers in international projects & possible solutions

LIST OF ABBREVIATIONS AND ACRONYMS

Abbildung in dieser Leseprobe nicht enthalten

1 INTRODUCTION

It is a commonly known fact that the economy is formed and influenced by constant change nowadays. Due to globalization and the consequential global competition, the undertaking of international projects is increasingly called for. Furthermore, by the formation of economic blocks such as the European Union, cross-border collaboration is even more facilitated. In today’s competitive environment, the growing cost pressure can be adequately addressed by the promotion of cross-border collaborative work.

In fact the steeply rising amount of project work across different sectors and industries represents one of the most significant organizational and managerial developments in the last ten years. Moreover, recent studies confirm that this development will continue in future. (Whittington R. (1999), pp. 853-600 quoted in Winter/Szczepankek (2008) pp. 95 ff.) In addition new information and communication technologies further promote the development of world-wide networking. As a consequence, it is possible to form international project teams without the need of having all the members present at one place. Hence, time and organizational boundaries are to a large extent eliminated; so-called geographically dispersed or international project teams are brought into existence.

Due to this trendy development, traditional project management techniques, however, are increasingly challenged and cannot keep up with the significantly rising need for flexibility. The harsh reality, confirmed by a joint-study carried out by GPM (German Association for Project Management) and the PA Consulting Group shows that each third project is not carried out successfully. (Engel/Menzer/Nienstedt (2006) p. 37) Moreover, recent surveys indicate that less than 40 percent of international efforts do in fact show a successful outcome. (Lientz/Rea (2003) p. XV¡¡) This finding underlines the obviously existing need to update and design traditional project management methods in a way to make them fit to the requirements and challenges posed to international projects. As a matter of fact, international projects are different; they are characterized by a tremendous amount of complexity. This is due to a diverse spectrum of factors, among them are for example cultural and communication barriers, and differing economic, political and legal environments which result in big contrasts with regards to labor cost expenses, and diverging levels of available infrastructure among others. Especially for locally dispersed teams, psychosocial factors, relating to the so-called “soft factors” such as communication, leadership, social competence, cooperation and emotional intelligence, are gaining ever increasing importance.

If the international project work is handled effectively, this results in a considerable competitive advantage for the organization. The reason why is that by successfully pooling together persons coming from different cultures, with fairly diverse backgrounds, enormous potential to provide innovative approaches to rather complex issues for example is created. In order to promote the successful completion of international projects in future, the author considered it absolutely essential and thrilling to devote her diploma thesis to the spectrum of challenging barriers and more specifically to dedicate considerable focus to the influence of “soft barriers” such as communication and cultural issues for example, as their importance is regularly overlooked.

In this thesis the author outlines the complexity of international project work, by identifying the major barriers they are exposed to. Moreover, by establishing a framework of barriers in theory, the author consequently will investigate and scrutinize jointly with project managers in practice based on already undertaken international projects, the most challenging barriers these projects have to master. Thus, based on the findings, this thesis shall provide support to companies and project managers in future seeking assistance in the successful accomplishment of international projects. Particular focus is given to barriers relating to psychosocial factors, such as cultural and communication divergences within international project teams. The reasoning behind is that large corporations generally already tend to dispose of the adequate means to successfully address challenges that economic, legal and political barriers might place. In other words, they basically seem to be equipped with the adequate structures, required business tools and awareness in order to address these obstacles properly. The fact however, that barriers related to psychosocial factors are to a large extent not taken into consideration and often are neglected, led to the author’s decision to especially focus on these peculiar types of barriers in the course of this diploma thesis, as already mentioned earlier.

1.1 Purpose

The purpose of this diploma thesis is to identify the diverse spectrum of barriers particularly troubling the successful accomplishment of international projects. By scrutinizing these barriers posed to international projects in theory, a clear framework is compiled. Consequently, with the help of this framework based on the theory, the author subsequently analyzes the barriers posed to international projects by means of investigating selected project jointly with project managers in practice. Particular focus is dedicated to barriers being regularly neglected; these are in particular the so-called “soft barriers”. It is to make clear to the reader that the complexity of international projects is intensified by additional challenges and requirements evolving due to the geographically dispersed setting of the project team. As a result of the considerably increasing amount of international project work, companies to a considerable extent find their traditional project management techniques significantly challenged.

Thanks to the nowadays great deal of innovative information and communication technologies available, cross-border collaboration is notably facilitated. However, the rising need for flexibility and the immense influence of psychosocial factors on the project’s outcome mark enormous barriers on the way to a successful project outcome.

Therefore this thesis intends to introduce the reader to this spectrum of influential barriers especially troubling the successful outcome of an international project and to show how project managers in practice deal with these problems. Further it shall give support to sensitize future project managers with regards to the particularly troublesome aspects of international project management and intends to provide useful suggestions for successfully mastering these barriers mentioned.

1.2 Research Question

As mentioned earlier, the sheer significance of international project work is ever increasing. Over the years, more and more companies began to acknowledge its enormous potential. Even though new information technologies are facilitating the work of international project teams, there is still immense need to update and adapt established, traditional project management procedures in order to fit increased complexity and the evolving need for flexibility. A brief look into reality confirms that international project work is considerably exposed to a high probability of failure.

The reason therefore is that locally dispersed or international project teams are subject to a great deal of influential factors that potentially constitute hindering barriers in the course of project completion. Besides traditional barriers of e.g. economic or legal nature obstacles of psychosocial nature (“soft barriers”) are increasingly troubling international projects. These factors are related to issues such as communication, leadership and the emotional intelligence of the team members for example. The fact that these factors are often neglected and their impact on the project’s outcome is regularly underestimated, called for further investigation and a profound analysis of practical cases.

The question whether there are decisive barriers and if so which kinds of barriers are troubling the success of international project teams led to the following research question:

Which spectrum of barriers is significantly impeding and challenging the successful operation of international project teams?

The reader will understand that even though international projects are subject to a fairly diverse set of barriers, considerably depending on the particular project at stake, some barriers are indeed of commonly fitting nature, as these obstacles seem to appear in every international undertaking.

1.3 Scientific Method

The scientific methods applied for the analysis and answer of the research question of this diploma thesis are both of hermeneutic and empirical nature. The hermeneutic approach intends to describe the theoretical background of project management in general. It is based on books published by reputable project managers in practice and respected experts in the field discussing the fundamentals of project managements, the project process and respective roles and responsibilities of the project manager in charge and the project team members and the particularities of international project work. Further literature includes current publishing such as research papers and articles derived from web pages of field-related institutions or magazines of considerable importance. The various types of literature were used to give the reader an idea and introduction to the theoretical background of international project management.

In order to attach additional value and underlining the empirical approach of this diploma thesis, an investigation of selected practical examples jointly with experienced project managers was carried out. The main reason and decisive driving force for the conduct of this investigation was to obtain practical input from experienced project managers in different business sectors and to learn from their experiences. The project managers were selected on the basis of their professional expertise in the respective areas. The findings of this investigation will be provided in the respective chapter of this thesis.

1.4 Structure

This thesis is structured accordingly to examine the main barriers posed to international projects. For that matter the thesis is divided into seven main chapters, starting with the Introduction, Chapter 1, which explains the content, the research question and the subsequent pages.

Chapter 2 will provide an introduction to the fundamentals of project management. This theory will basically include definitions and core concepts in the area of project management. In order to illustrate the process of a project in more detail, the particular sequence of a project’s process will be explained in Chapter 3. Chapter 4 will then deal with the composition of a project team in general and the respective roles of the project manager and project members in particular. Furthermore, essential selection criteria for the selection will be provided Chapter 5 will consequently point out the particular characteristics of international project work and a framework of potential barriers posed to international project teams will be provided.

Chapter 6 is meant to illustrate the practical input gathered by means of this jointly conducted investigation.

Finally, Chapter 7 will draw the conclusion to the research question addressing the spectrum of barriers that are significantly impeding and challenging the successful operation of international project teams. Furthermore, essential findings, derived from the investigation conducted, and suggestions for future international project work will be provided.

2 FUNDAMENTALS OF PROJECT MANAGEMENT

Before going into detail, the author intends to define the most important key concepts in order to remove any ambiguities that might be related to some of the terms involved. In particular, a definition and the specific characteristics of projects will be provided. Furthermore, the terms Management and Project Management will be explained and suitable organizational structures for undertaking projects are to be discussed.

2.1 Definition of the term Project

When analyzing the meaning of the term “project” more closely, one actually is overwhelmed by the amount of different definitions that are available and in use nowadays.

Generally, however, it is agreed that a project is characterized by a series of complex, interrelated activities and tasks that have a clearly defined objective, a defined start and end point and prevalently a limited budget. Finally it is also assumed that a project is earmarked by both, human and nonhuman resources that are combined in order to reach the predetermined goals. (Cleland/Kerzner (n.d.) p. 199 quoted in Cleland/King (1988) p. 481)

According to Maddaus there are several possibilities available to define the exact meaning of the term project. Therefore the author has carried out a literature analysis of the in his mind most essential publications. The result to which he came is a ranking of attributes essential for the definition of a project. Among these attributes defining the meaning of a project more closely are: (Maddaus (2000) p. 516)

1. time definition: clearly defined start and end point
2. unambiguous duty definition, responsibility, setting of a target
3. anti-cyclical course
4. financial barriers, limited resources
5. complexity
6. interdisciplinary character of the different activities
7. relatively new matter
8. project specific organization
9. involvement of persons, work groups, companies
10. insecurity and risk
11. potential changes

Interestingly as Maddaus found out, the first three attributes are used by more than two thirds of the definitions he looked at. However, with regards to attribute number two, Maddaus finds it also usable for non-project-like activities and not necessarily exclusively reserved for projects. As shall be seen, despite abundant definitions available, a project is most commonly characterized by the previously mentioned attributes.

2.1.1 Project goals

As the reason to perform a project, is simply justified by its final goal, the author now goes about defining the goals of a project in general.

According to Burghardt, (Burghardt (2000), p. 23) project goals, often referred to as the fundamental parameters of the project, basically are characterized by the following attributes: concrete, realistic, without ambiguities, comprehensible and quantifiable.

Generally, project goals can be summarized in three categories, those are performance/quality, cost and time. These are the essential parameters which have interrelated effects on one another. The overall target is to be successful in all of the mentioned categories. It can, however, be the case that one of those parameters is considered as more important than the others. This is usually dependent on the particular focus of the management activities. Due to the interrelations of these three parameters, they are often referred to as the “magic triangular”.

The target of this figure below is to illustrate that project management is meant to control and effectively manage a company’s resources, within time, cost and within performance. In other words, these parameters do in fact also represent the project’s main constraints. In addition, if the project is carried out for an outside customer and not only for fulfilling an internal purpose, a fourth constraint is added, namely the intent of achieving a satisfactory customer relationship. Nowadays, however, with regards to the definition of a project’s success, the aspect of completion should not be underestimated as well. The reason why is that the project should not only be completed on time, within cost estimates but also with the obtained customer’s acceptance, without disturbance of the main work flow and if possible without the need of having to change the corporate culture of the company. (Kerzner (2006) p. 7)

Figure 1: Magic Triangular

Abbildung in dieser Leseprobe nicht enthalten

Source: see Kerzner (2006) p. 5

2.1.2 Projecttypes

As many different definitions for the term “project” there are, as many different types of projects there are as well. According to Burghardt (Burghardt (2002), p.20), the classification of projects depends on the management function the project is involved. Consequently Burghardt lists, among others, the following project types:

- Research projects
- Development projects
- Sales projects
- Rationalization projects

Besides, projects can also be classified according to their employer structure, meaning into internal or external projects.

In the case of internal projects, the company itself has initiated the project usually with intentions such as research and development, or market penetration to give an example. Furthermore, also the introduction of a new software system, are often handled as some sort of internal projects. However, internal projects can also be triggered by the discovery of mis- or underperformances, or defects in the company by the management.

On the contrary, external projects are usually triggered by client solicitations. Typical external projects usually deal with special objects that are manufactured according to the client’s wishes. Examples are typically found in the electrical and mechanical industry.

2.2 Definition of the term Management

In fact for the term “management” there is a great deal of different definitions available. Nowadays pretty much everything seems to be “managed” in some way. Not surprisingly, the term management originates from Anglo America and is particularly in economics the most common term used for describing the job of running a business.

Utke for example refers to management, backing R.L. Martino’s definition (R.L. Martino (1964) p. 17 quoted in Litke (1993) p. 18), as a concrete identifiable process that consists of several phases such as planning, organizing, carrying out and control over the employment of persons in order to formulate and consequently attain the formulated goals. Generally speaking, managers are in charge of administering certain business matters assigned to them. By definition, managers dispose of assigned subordinates and seek to fulfill their tasks within the typical constraints of time and money. It is of utmost importance to differentiate between the term management and leadership, as management does not necessarily imply and include the leadership of persons. Due to the fact that many employees manage and lead at the same time, they may display a combination of behaviors. The particular distinction of these peculiar terms will also be dealt with in Chapter 5.

2.3 Definition of the term Project Management

By connecting the previously defined terms of “project” and “management”, the term “project management” is derived. But what exactly is associated with this term?

According to the expert Corsten, project management by definition is concerned with the planning, organizing and controlling of individual project activities in terms of time, cost and quality. (Corsten (2000) p. 6)

In the case of project planning, the goal is to first of all define the requirements, quantity and quality of the work and all the resources needed. Consequently project monitoring is focused on the progress of the work, and at this stage predefined and actual outcomes are compared in order to analyze the impact and make adjustments if needed. (Kerzner (2006) p.3)

In fact, this thesis intends to indicate the most essential barriers and challenges posed to international projects. Thus, it is of utmost importance to define to some extent what factors do contribute to a successful project in the end. Among those, simply spoken, as already indicated previously in the “magic triangular”, are the time criterion, meaning that the project is completed on time, the money criterion, meaning that the project is accomplished with its budgetary constraints, and the fact that the predetermined goals of the project are reached (effectiveness criterion), and finally it is essential that the project is accepted and satisfying the clients. (Client satisfaction criterion). (Cleland/King (1988) p. 481) Overall, one can see that by its basic definition, a successful project implementation involves the assessment of these four measures. Recent studies however, do suggests that the management style of projects still is too rigid, as they confirm that project management in general puts too much emphasis on these four dimensions mentioned above. Thus, the recently raised criticism concerning the fact that issues such as continuous improvement, customer-centric thinking and reflective learning are left behind, does in fact seem to be justified. (Crawford/Pollak/England (2006) p. 84 quoted in Perminova/Gustafsson/Wikström (2008) pp. 73-79)

The decisive reason why project management has become popular is that it constitutes an appropriate instrument for raising a company’s productivity and efficiency by constantly comparing the actual accomplishments to the predefined goals. The consequently earlier identification of problems and time limits allows for necessary corrective actions in good time. Furthermore project management seems to dispose of better estimating capabilities for planning than traditional management activities do.

However, looking at the flipside of the coin, project management also has its pitfalls and shortcomings, particularly due to the fact that all benefits can only be achieved when the following obstacles are mastered. Broadly speaking, the most common obstacles are the complexity of projects, the risks involved, the potential need for restructuring the whole organization in order to carry out the project, special requirements of clients, changes in technology and finally also the indispensable forward planning and pricing. (Kerzner, (2006) p. 3)

Even though project management has achieved enormous recognition for being the most effective way to ensure a successful outcome of large, complex tasks, it continuously demands great dedication of experienced project managers and talented team members. A satisfying outcome is never guaranteed, even if all the necessary ingredients are considered. The problem is that projects rarely do fail because of simple reasons but rather due to extremely complex, inextricably interrelated and often due to hardly visible issues as for example influential technological changes. Furthermore, as project management is meant to make better use of the already existing resources by having a horizontal and a vertical work flow, it is particularly important that smooth communication between the vertical and horizontal working units is maintained. Due to the fact that a lot of organizations are still set up in a very bureaucratic, formal way, hence vertically, this causes major communication problems which represent an enormous threat to the project’s success. Consequently, in order to promote a smooth work flow between the various work units, effective project management calls for suitable organizational structures.

This is the reason why the author elaborates the most significant organizational forms in relation to project management in the following.

2.4 Suitable Organizational Structures

Due to commonly known facts such as the increasing competitiveness of the market, and changes in technology for instance, organizations nowadays are required to respond rapidly. In order to do so, they have to be dynamic. Unfortunately many companies still do not acknowledge this urge for organizational change. As a matter of fact, organizational restructuring constitutes a big challenge, as the management has to consider the needs of the individuals within the company as well as the needs of the company itself.

The “good old” traditional management structure without any doubt still offers its advantages such as for example better technical, budgeting and cost control and a continuity in the functional disciplines due to established policies and procedures. Over time, however, as the environment began to change more rapidly, conflicts were increasingly arising; hence innovative organizational forms were looked for.

The fundamental forms of a project organization nowadays are summarized as the following. (Kerzner (2006) p. 98)

- Line staff organization
- Pure Project organization
- Matrix organization

2.4.1 Line Staff Organization

In the so-called line staff organization an additional line is added to the already existing hierarchy and reporting lines.

The intention of this organizational structure is to give control to those who are directed towards the completion of the project. There are two possible solutions available, in the first one; the project manager simply has information and advising allowances to the other departments of the company. So in fact project managers do not have any executive power. In this case, the project manager is rather mirroring the project devolution and proposes measures to take corrective actions if necessary. In the second solution, the project manager disposes of more authority; in this case he/she has the power to assign work to individuals in the functional organization. This solution, however, did not survive. Among others, one of the reasons was that additional conflicts arose due to the fact that the functional managers had to share their authority with the project managers.

Figure 2: Example of a Line staff organization

Abbildung in dieser Leseprobe nicht enthalten

Source: see Kerzner (2006) p. 99

2.4.2 Pure Project organization

In this case, a whole new organization is formed for carrying out the project. The lifetime of this organization is however limited in time. The project members are recruited from their respective departments and for the duration of the project they are under supervision of the project manager only. Furthermore, the project manager carries the responsibility for the outcome of the project and disposes of the whole decision-making authority. Here the group of the project stands on equal footing with all of the other departments in the organization. Only after finishing the project, the team members are sent back to their original workplaces in their respective departments. The major advantage of this structure is that the project manager has the complete line authority over the entire project and that strong communication channels can develop throughout the organization. Therefore long lead times are reduced. The major pitfalls of this organizational form are among others the lack of opportunities for technical interchange and the general tendency to keep the personnel on a project long after it is finished.

Figure 3: Example of a pure product or projectized structure

Abbildung in dieser Leseprobe nicht enthalten

Source: see Kerzner (2006) p. 100

2.4.3 Matrix Project Organization

This organizational form is characterized by a horizontal, project oriented organization which is superimposing the vertical hierarchy. Here the project manager carries the whole responsibility for the success of the project. This particular organizational form shows the specialty of having two dimensions of following directives, in the sense that the project members have to follow the directives of the project manager but are also under the control of their supervisor in the respective line or functional hierarchy. The idea is to create synergism through this shared responsibility between the project and the functional management. Clearly the advantages of such an organizational form are that the project manager maintains maximum project control, the possibility to ensure a rapid response to possible changes and the fact that policies and procedures can be set up independently for each project. Some pitfalls of the matrix organization are the dual reporting needs, the difficulty in monitoring and control for example, and the potential for continuous conflict and conflict resolution.

Figure 4: Example of a typical matrix organization

Abbildung in dieser Leseprobe nicht enthalten

Source: see Kerzner (2006) p.102

Steering Committee

Irrespective, of the particular organizational type chosen, a form to support the whole project team is to revert to the help of a steering committee.

Therefore in some cases, with the intent of supporting overloaded project managers, so-called steering committees are brought into existence. Basically their primary purpose is to provide support to the management and guidance of the project in case problems or particularly sensitive issues such as resolution of conflicts. These committees are usually composed of one or several persons originating from different departments. Its role and responsibilities in particular, however, largely depend on the intention of the steering committee’s creator who normally is the project manager itself. Consequently individual rules, guidelines and expectations of steering committees differ according to their original formation purpose.

3 PROJECT PHASES

First of all, it is important to state that there is no generally applicable model for illustrating the life cycle of a project. This is due to the fact that the phases of such are most commonly dependent on its individual complexity and the particular type of project at stake.

According to Patzak/Rattay (Patzak/Rattay (2004) p. 25) projects can however, be divided into the following phases:

- Project definition (Starting phase)
- Project planning
- Carrying out and Control of the project
- Ending of the project

3.1 Defining the Project

As the name of this phase already indicates, the target is to define the project more closely. At this point not only the ability to carry out the project but also the cost calculation issues are to be examined. Furthermore also first time frames are to be established. According to Burghardt (Burghardt (2002) p. 14) a thorough contract examination and a “catalogue of requirements” should be developed by the project employer and the project manager jointly. At this decisive stage, the decision whether to go for the project or to reject it is usually made.

According to Patzak/Rattay (Patzak/Rattay (2004) p. 86), it is recommendable to define the project in a comprehensive project definition statement. Flere also the project’s targets should be contained. Flowever, the measures required for reaching the goals described, do not have to be included yet. Even though it is very much common sense to go about defining a project’s goal, it is often noticed that that the formulation of the targets commonly inherits a constant source of errors which can later on only be partly erased. Furthermore, it is of relevance to formulate the goals as concretely as possible. This is often referred to as “operationalizing of targets”, meaning relating targets to a certain time and degree. The next step is to design a so-called target hierarchy, meaning to prioritize the targets of the project. Goals can be divided according to the project employer or the time horizon. According to the project employer, those goals may either be internal, goals agreed on between the project manager and the team mates, or external, goals between the company carrying out the project and the customer. In terms of time, one clearly distinguishes result targets, which are a basically a description of the result of the project end, from process targets, which are a description of the result in relation to the design of the project during its lifetime and benefit targets, meaning targets that bring about a certain benefit. Another important factor to keep in mind regarding the formulation of goals is to concentrate on realistic assessment by avoiding the formulation of non-project goals. Furthermore, there is a differentiation to be made between individual and project goals. It is of utmost importance that project goals do not suppress the individual goals of the team members and therefore a coordination process is called for aligning individual goals of the project team members to general project goals. In order to gain acceptance of the goals established, it is recommended that these objectives are complete, realizable, consistent, clear, accepted and up to date.

The next step is to define the main duties of the project and assess the dates when so-called mile stones are reached. Between the start of a project and the end of a project there should be several of those mile stones; reaching one of those, always constitutes a success. Therefore, milestone reviews ensure that even before the completion of the project, there is some kind of mean in place to assess the project’s ongoing performance.

Another vital part of the planning phase is to carry out rough cost assessments which are later can be substituted by a more detailed cost analysis.

Last but not least the organization of a so-called kick-off meeting represents an essential component of a project’s initial phase. This first official face to face meeting has the purpose to unify all project team members and the respective project manager in order to get acquainted with the individual project at stake. Of course, in international project management the organization of such a meeting is more difficult and more expensive, as the team members are situated in different, probably quite distant countries. However, it is assumed that these costs and organizational efforts do pay off. (Cronenbroeck (2004) p. 233) Generally the targets of a kick-off meeting are to inform all the project members about fundamental parameters such as project goals, budget, rules of documentation and communication media available. Additionally, it provides the team members with the opportunity of getting to know each other, for example with the help of an introduction round initiated by the team leader. Furthermore, roles and the respective duties for each individual team member are assigned, general rules for example in relation to the communication media used (e.g. rule to rather use direct conversation means such as the telephone if possible, than a-synchronous communication media) are established and trust- and identity-building measures enforced. With the help of this initial meeting, a general trust basis and team spirit is usually developed for the purpose of getting everybody on the same boat heading for the project’s mission. (Konradt/Hertel (2002) p. 75 ff.)

3.2 Planning of the Project

During this phase, the data gathered in the project definition phase is enhanced. Planning in project management is regarded as the mental anticipation of the future actions intended. (Patzak/Rattay (2004) p. 148) The planning phase indeed is the most fundamental one, as all the following phases are built on its elaborated plans and data. The thorough planning of projects does however not represent a sufficient criterion for project success, as project management has to deal with a great amount of uncertainty. The reason therefore is that the future is always uncertain and that human beings are simply not capable of controlling it. However, we are capable of considerably influencing it. (Foster (2001) p. 5 ff.) Not everything in a project will or can be handled as set out in the plan, there will always be deviations due to the fact that anticipations of the future potentially inherit certain insecurities. What is of immense importance for the planning process is a clear definition of targets and probable deviations. Plans in fact serve the project manager for providing an approximate picture of the whole project process. The more complex a project is, the higher the need for the development of a comprehensive plan. According to Patzak/Rattay, (Patzak/Rattay (2004) p. 148), planning is about defining a picture of the potential future. A comprehensive project plan comprises the planning of the performance (quantity and quality), planning of the dates and finally the planning of the resources, costs and risks. Moreover, the particular form of the project organization, the project information system, project marketing, the logistical system and quality management have to be taken into account as well.

In fact, the targets performance/quality, dates and resources/costs are always connected to some insecurity and uncertainty. Therefore it is essential to take them into account for of risk assessment and planning, for example in the planning of the technical risk, date risk and resources risk. By standardizing procedures and continuous reflective thinking for example, the already gained experiences (lessons learned!) are made available; hence provide the project team with greater preparedness enabling more flexible acting in respective situations. (Perminova/Gustafsson/Wikström (2008); p. 74)

3.2.1 Planning of Performance

Basically the focal point of the planning process is based on the actions necessary to be taken for a successful project completion. This planning process is particularly important as the planning of the dates, resources and costs can only be made once the planning of the whole performance process is finalized.

In fact projects constitute challenges caused by their complexity. This complexity is made up of a variety of components, the interrelations between those and their dynamics are subject to change.

Complexity typically is related to the object system, meaning the product, the process or the organization meaning e.g. the project team.

In the art of project management there are several instruments available in order to deal with that complexity in a proper way, for example it is advisable to rather be proactive than reactive.

In order to achieve pro-activity, a detailed structuring process is required. Consequently the whole complex unit is broken into smaller parts. This structuring however, inherits a big danger, more specifically by breaking down the project into smaller parts, the interrelations between the components can get lost. A measure against this risk is the use of project structure plans, which illustrate the relations among the various project components. Moreover, a project process plan which shows the procedural dependencies of all the individual activities is of considerable use as well.

It is essential to realize that project management is all about systematic thinking and even though there is a detailed view on the individual bits and pieces, the person in charge always has to keep the whole picture in mind!

In project management, there are many different measures available but the most commonly used ones are the following:

The object structure plan (OSP)

This plan basically illustrates all the individual parts, components and subsystems of the project according to their togetherness. This can be done in the form of lists or tree structures. In fact the OSP represents an essential basis for the project structure planning and has the goal to transmit a common view of the whole project.

The project structure plan (PSP)

In the PSP, the common duty of the project is divided in controllable part-duties, so-called work packages. This plan illustrates the project’s performance according to classification criteria such as phases, responsibilities, branches, functions and targets groups.

Furthermore, the PSP lays out a structure that in turn constitutes the basis for other management functions such as the planning of deadlines, costs and personnel for example.

For breaking down the whole project, either a top down or bottom up structure is used. In the case of a top down structure, the whole project is looked at and then classified and broken down into smaller bits and pieces. Whereas in the bottom up method, one first of all collects all the parts and duties that need to be carried out, then finds out the affiliations and relations and ultimately tries to build the project hierarchy from the bottom up to the top.

Generally speaking, a benefit of the PSP is that it not only provides a basis for the following steps, but also it also represents an appropriate information instrument for the management. In order to achieve a useful and comprehensive PSP, a checklist with several hints and suggestions is provided in the following figure.

Figure 5: Useful suggestions for a PSP checklist

Abbildung in dieser Leseprobe nicht enthalten

Source: heavily based on Pattzak/Rattay (2004) p. 163

3.2.2 Planning of Quality

In this planning process the project manager has to fail a decision regarding the classification and importance of certain quality criteria. As the Total Quality Management Philosophy, in short TQM, points out, customer satisfaction is the overall guarantor for long-term success. Hence, for this purpose, the participation of all members is required. There is a particular structure available which by following it ensures a successful quality planning process. This structure indicated in the figure below is also in line with the so-called Quality Function Deployment in short, QFD.

Figure 6: Structure of the quality planning process

Abbildung in dieser Leseprobe nicht enthalten

Source: see Pattzak/Rattay (2004) p. 167

This common method of Quality Function Deployment is a way to translate requirements related to quality posed by the market and/or the customers into the language of the company and therefore easing the realization of the product, as illustrated graphically. This translation of the client-oriented wishes into the company’s internal technical requirements, expressed by individual technical terms and expressions, is of crucial importance.

The goal is to reach customer satisfaction related to the quality of the product as well as the process.

The essential steps that have to be taken are:

- Definition of the quality goals
- Analysis of the quality of the individual parts of the project
- Definition of the quality examination method
- Agreement on the way and character of the documentation

Sometimes, companies dispose of so-called quality hand books, which lay down the general quality policy, procedures for guaranteeing quality and particular quality experiences made for example.

3.2.3 Planning of Deadlines

This planning phase is not only concerned with the respective deadlines but also with the planning of the whole process related to the factor of time.

The basics of this planning process consist of the part-duties, meaning activities, tasks, jobs, milestones and dependencies, in short simple elements that need to be carried out in order to allow the next step to be taken.

Nowadays a lot of software programs are available in order to guarantee a smooth planning process. One commonly used is Microsoft Project.

3.2.4 Planning of Resources & Costs

In order to carry out a project, resources are indispensable components. Therefore it is of utmost importance to classify and assess the significance of all the resources needed. The individual steps taken in the resource planning process are first of all a general research on the particular resources demanded, a presentation of the resource profiles and finally a thoroughly conducted analysis regarding the availability and potential under- or over coverings. Furthermore, as these resources are not for free, cost estimates and cost planning represent an integral part. In the case of analytical cost estimates, the project manager sums up all the project’s individual work unit and component costs which guide him/her in turn to the overall project costs. On the other hand, so-called global cost estimation methods define several estimate criteria, such as parameter or ratios and consequently can be used to assess the approximate overall project costs roughly. Furthermore, there are several project management software products available which help to ease this rather complex cost planning process. Here costs are typically split up into work unit costs, cost types, and distributions of costs according to the whole project lifetime (histograms) are made for example. (Pattzak/Rattay (2004) p. 206 ff.)

Even though there is a great deal of literature available on this topic, a detailed description of the several cost assessment methods would lead too far in the course of this diploma thesis.

3.2.5 Planning of Risk

For years, costs and the schedules projects were favored over risk analyses. This was due to the fact that project managers simply did not know about the particular risks involved in their transactions. Nowadays, risk however, being the probability and consequence that the desired goal of the project is not achieved, constitutes a very important component of the planning phase of a project.

In fact, risk often is confused with uncertainty. There is however, a clear distinction to be made between these terms, as they are not synonymous. They rather represent cause, being uncertainty, and consequences, being risk. According to the scholar Keynes, uncertainty is part of our economic life; if we do not know the rules of the game, then uncertainty occurs. He argued that risk shall be seen as less threatening as it opposed to uncertainty is assumed to be calculable. (Nowotny/Scott/Gibbons (2001) p. 32 ff. quoted in Perminova/Gustafsson/Wikström (2008) p. 75) In order to manage risks inherent in a project, there is a great deal of tools and methods available. With regards to the treatment and management of uncertainty, however, traditional project management practices seem to lack a common understanding of the concept. It is a given fact that there only is evolution, if you do have uncertainty.

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