Unit 2 Notes:

Management structure (classic): vision, objectives, strategies, goals, and initiatives.

Organizational structure:

- Functional organizations:

Strengths: development of in-depth knowledge and intellectual capital. Standard career paths,
developed within standard functional structures.
 Weaknesses: cross-functional cooperation is difficult, lack of customer focus, projects take longer
to complete, may be sub-optimized.
- Project organizations:

Strengths: assigns authority solely to PM, leads to improved communication, promotes

effect/fast comms, encourages rapid response to market conditions
Weaknesses: setup/maintenance of teams can be cumbersome, potential for team members to
develop project loyalty rather then organizational loyalty. Difficult to maintain intellectual
capital.
- Matrix organizations:

Useful when resources are scarce, need to emphasize two or more outputs, the environment of
the organization is complex and dynamic.
Strengths: suited for dynamic environments, dual importance of proj management and
functional efficiency, promotes coordination, maximizes scarce resources.
Weaknesses: dual hierarchies = 2 bosses, requires significant time negotiating sharing of critical
resources, can be frustrating for workers.

Stakeholders: Individuals or groups who have an active stake in the project and can potentially impact it's
development.

Internal vs external:
Stakeholder management:

Organizational culture: the solution to external and internal problems that has worked consistently for a
group and that is therefore taught to new members.

Ways to kill creativity: pretend to know more then everyone around you, get employees to fill
timesheets, run daily checks on work, ensure highly qualified people do mundane tasks, put barriers
between departments, don’t speak personally to employees, call lots of meetings, place the biggest
emphasis on budget.

Factors that affect development of culture: technology, environment, location, reward systems, rules and
procedures, key organizational members, critical incidents.
How does culture affect projects? Department interaction, employee commitment to goals, project
planning, performance evaluation.

Lecture Summary:

Selection model – simple scoring and profile:

X3 or x5 could be best depending on the firms tolerance of risk.

Selection model: NPV (Net Present Value:

NPV – example:

The exponent 0 at the end of that equation represents years – so tick that up for each year.

Selection method: Internal Rate of Return (IRR):

Financial Models: payback period, BCR (Benefit/Cost Ratio), Opportunity Cost, Discount Factor:

It is important to understand that you cannot compare two projects being modeled using different
financial models to come to a decision regarding the project viability.
Public–private partnership (P3) describes a government service or private business venture which is
funded and operated through a partnership of government and one or more private sector companies.
These schemes are sometimes referred to as a P3.

Typically, a private-sector consortium forms a special company called a "special purpose vehicle" (SPV) to
develop, build, maintain and operate the asset for the contracted period. In cases where the government
has invested in the project, it is typically (but not always) allotted an equity share in the SPV.

Chapter 2 -