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This report aims to provide a critical analysis of Project Management Structure when implemented incorrectly. A high level review was undertaken using the Alliance One Credit Union Ltd as the subject, with general observations of project management theory and practices focusing on multiple project steps. The report concludes that an effective project management structure is critical to project success. Whether it is a functional, divisional / dedicated or a matrix structure you have to determine which structure fits your skills, preferences and balances the needs of the project with the needs of the organisation.
Table of contents
Alliance One Credit Union (formerly NACOS Credit Union) operated from 1970 up to 2013 when it merged with Beyond Bank Australia. Alliance One Credit Union was the only South Australian Credit Union with its head office located in a regional area. Alliance One Credit Union offered a true alternative to the big four offering full service branches in Whyalla, Port Lincoln, Clare and Roxby Down’s and agencies throughout the Eyre Peninsula.
In 2012, the Board of Directors concerned with the remnants of the global financial crisis still affecting the business, coupled with declining regional industry (especially the resources sector) decided that a review of performance and organisational strategy was needed to ensure and plan for future sustainability. As a small player in the financial services sector ($233M in assets), Alliance One Credit Union did not have the economies of scale large organisations enjoyed that enabled them to trade through difficult times.
The Board of Directors embarked on a Strategic Planning exercise, setting six broad key objectives for business sustainability being, value to members, brand, employees, technology, presence and corporate. Operational targets in terms of financial KPI’s and financial ratios were set, with the Board of Directors tasking the Chief Executive Officer with determining the appropriate project structure, providing leadership and implementation.
(Moustafaev, 2010) state’s that ‘people at the top of company hierarchies need to understand that managing projects is a tough process.’ Without real requirements or project scope definition, it is difficult for individuals or groups of people to be able to detail the various interdependencies to ensure success. (Moustafaev, 2010), further states that without a clearly defined project scope, time, budget and resourcing have the tendency to change rapidly as operational and other factors redirect these resources to other initiatives.
The Chief Executives approach was for the executive management team to prepare a draft project plan. Along with five other colleagues, I was responsible for Information Technology and Infrastructure. We were provided with a power point summary of the six objectives, target KPI’s and a project end date but little else.
The Chief Executive was a highly skilled financial manager, but had virtually no project management experience. In my view, the Board of Directors as the primary stakeholder failed to really understand the desired outcomes of the project apart from a broad perspective on performance and business improvement. They were unable to clearly communicate the ‘why’ as the central point for the initial planning phase. Coupled with a lack of experience and scope, their failure placed the project in jeopardy from the start
Prioritising at both a strategic and operational level can be fundamental to a projects success or failure. (Nieto-Rodriguez, 2016)Prioritising around strategic goals ensures that there is clear alignment removing any ambiguity when operational teams are faced with project decisions. (Nieto-Rodriguez, 2016)
Rather than meeting with the executive management team and setting project priorities so that everyone was aware of their roles and responsibilities, the Chief Executive provided a few page summary of the strategic plan and expected the team to develop the plan based on this. Without direction or clear communication from key stakeholders, the prospect of drafting the plan and subsequent priorities left everyone overwhelmed. The Chief Executive showed little interest in this project, and it was not until sometime later when the project stalled that it was realised that failure was his preferred option as it led to personal gain.
A Work Breakdown Structure is used for breaking down a project into easily manageable components. (Kistner, 2016) . With the WBS complicated tasks can be subdivided into smaller tasks until they can no longer be further subdivided. It is generally considered easier to estimate how long smaller tasks would take and the cost to perform them. (Lewis, 2006)
Executive Management met over a 48 hour period to determine the WBS structure. From the six broad objectives initially decided upon by the Board of Directors, executive management determined 158 subtasks. But, the problem here was executive management were unsure if the WBS tasks were unrealistic, lacked focus and if assigned resources were adequate to accomplish the goals and objectives outlined in the strategic plan, (which were virtually non-existent). The WBS is a crucial tool for project managers and it provided a visual understanding of the scale of the potential work required but without clear direction, It seemed like a plan for a plans sake.
Success in project management requires the project manager to operate at many levels and deal effectively with a range of internal and external stakeholders. Project management leadership requires the capacity to guide individuals and teams to success. Project Managers often expect to achieve a great deal, but need to realise they can achieve little without the efforts of others, particularly the project team. (McManus, 2005)
‘A project team can be defined as a number of people who work closely together to achieve shared common goals. Through interaction and collaboration the team strives to enhance its creativity, innovation, problem solving, decision making, support and work performance.’ (Burke, Rory, & Barron, 2014) .
From a leadership perspective, the Chief Executive failed to establish an appropriate governance structure or sufficient oversight to manage this project. He did not take the project seriously and was more interested in pursuing personal objectives unrelated to the project. There was a lack of clear roles and responsibilities and coupled with a lack of resources, executive management were expected to perform their normal day to day operational activities alongside meeting project milestones. The Chief Executives failure to address poor team dynamics resulted in the team becoming disengaged.
Many project failures can be attributed to the selection of the wrong man as a project manager (Avots, 1969) and there is no question that this contributed greatly to the failure of this particular project. It later came to light that the two initial options considered by the board of directors were Business Improvement or Merger. Business Improvement was the preferred option as the board of directors believed that implementing this option would give the organisation the outcomes it needed to remain independent and regionally based.
However, the Chief Executive’s self-interest created a situation where he was able to use his position to increase remuneration, compensation and termination payments. (Jensen & Meckling, 1976) By poorly structuring and managing this project, he was able to ‘engineer’ Merger as the only alternative to maintaining a regional presence and local jobs. As part of his employment contract, he stood to earn, three times his annual salary if the organisation merged. With other termination payments, long service leave and accrued annual leave, this equated to approximately $1.45M.
According to (Lewis, 2006), almost every study finds that the primary cause of project failures is poor project management structure. From the very beginning, this project was doomed to fail. There were multiple structural issues including a lack of clear vision as to the ‘why’, personal agendas, a lack of clear roles and responsibilities, a lack of formality in defining the scope and vague or open ended requirements.
The Project Management Institute’s “Body of Knowledge” defines a project as a temporary endeavour undertaken to create a unique product or service. Project Management is the application of techniques, skills knowledge and tools necessary to develop and successfully deliver the project plan so the project will meet or exceed stakeholder needs and expectations.
An effective project management structure is critical to project success. Whether it is a functional, divisional / dedicated or a matrix structure you have to determine which structure fits your skills, preferences and balances the needs of the project with the needs of the organisation. An organisation or project team that is structured gives support to the work that’s being done. It goes without saying that non-structured project management teams lack direction and direction drives successful projects. Understanding the pros and cons of each project structure gives you an opportunity to work out where best to spend your time and influence to get the most out of your team and help your project complete successfully.
- Avots, I. (1969). Why Does Project Management Fail? California Management Review, vol. 12, no. 1, 77-82.
- Burke, Rory, & Barron, S. (2014). Project Management Leadership : Building Creative Teams. John Wiley & Sons, Incorporated, ProQuest Ebook Central, https://ebookcentral-proquest-com.aib.idm.oclc.org/lib/aibus/detail.action?docID=1635366.
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3, 305-360.
- Kistner, K. (2016). A Quick Study. (cover story). Quality Progress, vol. 49, no. 7, pp. 16–20, viewed 19 November 2018, <http://search.ebscohost.com.aib.idm.oclc.org/login.aspx?direct=true&db=plh&AN=116601452&site=ehost-live>.
- Lewis, J. P. (2006). Fundamentals of Project Management. AMACOM, ProQuest Ebook Central, https://ebookcentral-proquest-com.aib.idm.oclc.org/lib/aibus/detail.action?docID=3001873.
- McManus, J. (2005). Leadership : Project and Human Capital Management. Elsevier Science & Technology, ProQuest Ebook Central, https://ebookcentral-proquest-com.aib.idm.oclc.org/lib/aibus/detail.action?docID=288946.
- Moustafaev, J. (2010). Delivering Exceptional Project Results : A Practical Guide to Project Selection, Scoping, Estimation and Management. J. Ross Publishing. ProQuest Ebook Central, https://ebookcentral-proquest-com.aib.idm.oclc.org/lib/aibus/detail.action?docID=3319443.
- Nieto-Rodriguez, A. (2016, December 13). How to Prioritize Your Company’s Projects. Retrieved November 19, 2018, from Harvard Business Review: https://hbr.org/2016/12/how-to-prioritize-your-companys-projects
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