CASOS DE ESTUDIO.

DIRECCIÓN DE
PROYECTOS. SESIÓN 1.

Isabel Ortiz Marcos PhD PMP

ETSII UPM
CASE STUDY 11

MegaTech Inc.

MegaTech Inc., designs and manufactures automotive components. For years, the company
enjoyed a stable marketplace, a small but loyal group of customers, and a relatively predictable
environment. Though slowly, annual sales continued to grow until recently hitting $300 million.
MegaTech products were popular because they required little major updating or yearly
redesign. The stability of its market, coupled with the consistency of its product, allowed
MegaTech to forecast annual demand accurately, to rely on production runs with long lead
times, and to concentrate on internal efficiency.

Then, with the advent of the North American Free Trade Agreement (NAFTA) and other
international trade agreements, MegaTech found itself competing with auto parts suppliers
headquartered in countries around the world. The company was thrust into an unfamiliar
position: it had to become customer-focused and quicker to market with innovative products.
Facing these tremendous commercial challenges, top management at MegaTech decided to
recreate the company as a project-based organization.

The transition, though not smooth, has nonetheless paid big dividends. Top managers
determined, for instance, that product updates had to be much more frequent. Achieving this
goal meant yearly redesigns and new technologies, which, in turn, meant making innovative
changes in the firm´s operations. In order to make these adjustments, special project teams
were formed around each of the company´s product lines and given a mandate to maintain
market competitiveness.

At the same time, however, MegaTech wanted to maintain its internal operating efficiencies.
Thus all project teams were given strict cost and schedule guidelines for new product
introductions. Finally, the company created a sophisticated research and development team,
which is responsible for locating likely new avenues for technological change 5 to 10 years down
the road. Today, MegaTech operates project teams not only for managing current product lines
but also for seeking longer-term payoffs through applied research.

MegaTech has found the move to project management challenging. For one thing, employees
are still rethinking the ways in which they allocate their time and resources. In addition, the
firm´s success rate with new projects is still less than management had hoped. Nevertheless, top
managers feel that, on balance, the shift to project management has given the company the
operating advantage that it needed to maintain its lead over rivals in its globally competitive
industry. “Project Management”, admits one MegaTech executive, “is certainly not a magic pill
for success, but it has stated us thinking about how we operate. As a result, we are doing smarter
things in a faster way around here”.

QUESTIONS

1. What is it about project management that offers MegaTech a competitive advantage in

its industry?
2. What elements of the marketplace in which MegaTech operates led the firm to believe
that project management would improve it operations?

1
Source: Project management. Achieving competitive advantage. Fourth edition. Jeffrey k. Pinto. Ed. Pearson.
CASE STUDY 22

MOHAWK NATIONAL BANK

“You are really going to have your work cut out for you, Randy”, remarked Pat Coleman, vice
president for operations. “It´s not going to be easy establishing a project management
organizational structure on top of our traditional structure. We´re going to have to absorb the
lumps and bruises and literally “force” the system to work”.

BACKGROUND

Between 1978 and 1988, Mohawk National matured into one of Maine´s largest full-service
banks, employing a full-time staff of some 1.200 employees. Of the 1.200 employees,
approximately 700 were located in the main offices in down-town Augusta.

Mohawk matured along with other banks in the establishment of computerized information
processing and decision-making. Mohawk leased the most up-to-date computer equipment in
order to satisfy customer demands. By 1984, almost all departments were utilizing the
computer.

By 1985, the bureaucracy of the traditional management structure was creating severe
administrative problems. Mohawk´s management had established many complex projects to be
pursued, each one requiring the involvement of several departments. Each department
manager was setting his or her own priorities for the work that had to be performed. The
traditional organization was too weak structurally to handle problems that required integration
across multiple departments. Work from department to department could not be tracked
because there was no project manager who could act as focal point for the integration of work.

UNDERSTANDING THE CHANGEOVER PROBLEM

It was a difficult decision for Mohawk National to consider a new organizational structure, such
as a matrix. Randy Gardner, director of personnel, commented on the decision:

Banks, in general, thrive on traditionalism and regimentation. When a person accepts a

position in our bank, he or she understands the strict rules, policies and procedures that
have been established during the last 30 years.

We know that it´s not going to be easy. We´ve tried to anticipate the problems that
we´re going to have. I´ve spent a great deal of time with our vice president of operations
and two consultants trying to predict the actions of our employees.

The first major problem we see is with our department managers. In most traditional
organizations, the biggest functional department emerges as the strongest. In a matrix
organization, or almost any other project form for that matter, there is a shift in the
balance of power. Some managers become more important in their new roles and
others not so important. We think our department managers are good workers and that
they will be able to adapt.

Our biggest concern is with the functional employees. Many of our functional people
have been with us between twenty and thirty years. They´re seasoned veterans. You
must know that they´re going to resist change. These people will fight us all the way.

2
Source: Project Management. Case studies. Harold Kerzner, PhD. Ed. Wiley.
 They won´t accept the new system until they see it works. That´ll be our biggest
challenge: to convince the functional team members that the system will work.

Pat Coleman, the vice president for operations, commented on the problems that he would be
facing with the new structure:

Under the new structure, all project managers will be reporting to me. To be truthful,
I´m a little scared. This changeover is like a project in itself. As with any project, the
beginning is the most important phase. If the project starts out on the right track, people
might give it a chance. But if we have trouble, people will be quick to revert back to the
old system. Our people hate change. We cannot wait one and a half to two years for
people to get familiar with the new system. We have to hit them all at once and then go
all out to convince them of the possibilities that can be achieved.

This presents a problem in that the first group of project managers must be highly
capable individuals with the ability to motivate the functional team members. I´m still
not sure whether we should promote from within or hire from the outside. Hiring from
the outside may cause severe problems in that our employees like to work with people
they know and trust. Outside people may not know our people. If they make a mistake
and aggravate our people, the system will be doomed to failure.

Promoting from within is the only logical way to go, as long as we can find qualified
personnel. I would prefer to take the qualified individuals and give them a lateral
promotion to a project management position. These people would be on trial for about
six months. If they perform well, they will be promoted and permanently assigned to
project management. If they can´t perform or have trouble enduring the pressure,
they´ll be returned to their former functional positions. I sure hope we don´t have any
inter- or intramatrix power struggles.

Implementation of the new organizational form will require good communications

channels. We must provide all of our people with complete and timely information. I
plan on holding weekly meetings with all of the project and functional managers. Good
communications channels must be established between all resource managers. These
team meetings will give people a chance to see each other´s mistakes. They should be
able to resolve their own problems and conflicts. I´ll be there if they need me. I do
anticipate several conflicts because our functional managers are not going to be happy
in the role of a support group for a project manager. That´s the balance of power
problem I mentioned previously.

I have asked Randy Gardner to identify from within our ranks the four most likely
individuals who would make good project managers and drive the projects to success. I
expect Randy´s report to be quite positive. His report will be available next week.

Two weeks later, Randy Gardner presented his report to Pat Coleman and made the following
observations:

I have interviewed the four most competent employees who would be suitable for
project management. The following results were found:

Andrew Medina, department manager for cost accounting, stated that he would refuse
a promotion to project management. He has been in cost accounting for twenty years
and does not want to make a change into a new career field.
 Larry Foster, special assistant to the vice president of commercial loans, stated that he
enjoyed the people he was working with and was afraid that a new job in project
management would cause him to lose his contacts with upper level management. Larry
considers his present position more powerful than any project management position.

Chuck Folson, personal loan officer stated that in the fifteen years he´s been with
Mohawk National, he has built up strong interpersonal ties with many members of the
bank. He enjoys being an active member of the informal organization and does not
believe in the applications of project management for our bank.

Jane Pauley, assistant credit manager, stated that she would like the position, but would
need time to study up on project management. She feels a little unsure about herself.
She´s worried about the cost of failure.

Now Pat Coleman had a problem. Should he look for other bank employees who might be
suitable to staff the project management functions or should he look externally to other
industries for consultants and experienced project managers?.

QUESTIONS

1. What are some of the major reasons why employees do not want to become project
managers?
2. Should the first group of project managers be laterally assigned?
3. Should the need for project management first be identified from within the
organization?
4. Can project management be forced upon an organization?
5. Does the bank appear to understand project management?
6. Should you start out with permanent or temporary project management positions?
7. Should the first group of project managers be found from within the organization?
8. Will people be inclined to support the matrix if they see that the project managers are
promoted from within?
9. Suppose that the bank goes to a matrix, but without the support of top management.
Will the system fail?
10. How do you feel about in-house workshops to soften the impact of project
management?