Chapter 7

Project Organization and Contract

Administration

Lectured:
by
Bersisa Kacho (PhD)

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Contents
 Forms of Project Organizations
 Team Building (Human
Resource)
 Conflict management
 Contract Administration

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Learning Objectives
After completing this chapter, you should be able
to:
◦ Identify the forms of project organization
◦ describe the process of effective team building,
use of human resource for successful project
implementation, and
◦ identify the sources of conflict and design
conflict management tools.
◦ apply tools and techniques in contract
administration
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Forms of Project Organization

 Functional Organization
 Projectized Organization
 Matrix Organization

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Functional structure:
• Is a structure where authority rests with the
functional heads;
 Staff members are divided in to functional

groups (e.g. financial, planning, public

relations, engineering, etc.) according to their
specialized knowledge.

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 The main advantage of this organizational
structure is that each functional group has
complete control over its segment of the project,
enforcing in this way the application of standards
across projects.
• The disadvantages of the functional organization
are that of speed, flexibility and communication
when attempting cross functional projects.
• the responsibility of managing the project is
shared among the functional managers (head of
the departments) and this may cause lack of
ultimate responsibility for project management.

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Projectized Organization
 Projectized organization focuses on projects/or
products.
 Project Managers are given both the authority, and
the responsibility, to manage all aspects of the
project.
 The main advantages of the projectized organization
are speed and flexibility of decisions.
 disadvantages of the projectized structure are
◦ the high resource costs since the organization often
has to hire extra staff with certain expertise in order
to implement different projects simultaneously.
◦ Lack of flexibility in allocating of human resource and
increases the burdens of the administrative overhead.

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Matrix Organizations
 Matrix organization is a blend of functional and
project organizations.
 In matrix organization, project team members report
to both a functional manager and a project manager.
 Since team members report to multiple managers, a
clear communications plan is essential
 The main advantage of the matrix organization is It
also facilitates the flexibility for effective human
resource allocation to different projects.
 The main disadvantage of the matrix structure is the
potential for conflict between the Project Manager
and the functional manager regarding the resource
assignment,

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Teamwork in projects
 Projects are managed by people working
together as a team.
In a team,
 People depend on each other;
 Combine to achieve something
together

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Team Building
 The process of working with a team to clarify its task
and how team members can work together to achieve it.
 A strategy that can help groups to develop into a real

team is “team building”

Key actions in Team Building
 Setting and maintaining the teams objectives and
standards
 Involving the team as a whole in the achievement of
objectives
 Communicating efficiently with the team
 Consulting the team – members before taking any
decisions

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Nature of project team
 The project team is usually a new, temporary
group without previous experience of
working together.
 Complex projects require complex teams

with a set of work rules and norms.

 High degree of learning and interdependency

requires well functioning and cohesive teams.

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Team building processes
 Initial project team assembly
◦ introductions
◦ goal explained
◦ rough network proposed
 Some issues debated
◦ who else should be on the team?
◦ without concern for budget restrictions, what would each
member contribute?
 The group would construct an idealized network
◦ This would be done with the participation of team members,
giving them an opportunity to know each other’s views.
◦ Involvement of people right from the goal setting stage
nurtures commitment & continuity

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 Iterate towards a realistic plan negotiations
with each other and the project team
 Here the practical constraints and limitations

would be brought up by the members from

their own areas of expertise and experience
 This is the participative process
 Continue the process of negotiation until a

feasible solution is found (operationally viable

and within the budget)
 This network becomes the initial project plan

with which project execution begins.

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Aspects of Team Development
 When people from different departments are
assembled for a project they form a temporary
social system
 Each person brings him/her own set of customs,

beliefs and perceptions to the project.

Operating culture
 Group “mind”

 Common set of objectives and motives

 Explicit Vs implicit contract

 The initial project plan is the explicit contract for

the team. Working towards building that network

helps to develop the implicit contracts

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Group attributes
 Members perceive themselves as in a group and they
know who is in the group and who is not.
 There is at least one objective that all the members

agree upon, although each individual member may

have a multitude of other objectives.
Group Performance
 Studies indicate that heterogonous groups tend to be

more productive than homogenous groups.

 A team is a heterogeneous group with

complementary rather than competing skills in the

members.
 It is a temporary alliance created for a specific

purpose or objective.

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Key factors to successful performance of a team –
S.C.O.R.E

Strategy
Clear Roles and Responsibility
Open Communication
Rapid Response
Effective Leadership

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Strategy:
 Shared purpose

 Clearly articulated values and ground rules

 Understanding of risks and opportunities facing

the team
 Clear categorization of the overall responsibilities

of the team
Clear Roles and Responsibilities:
Clear definition of roles and responsibilities
Responsibility shared by all members
Specific objectives to measure individual results

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 Open communication:
Respect for individual differences
Open communication environment among
team members
 Rapid response:
Rapid response to the team’s problems
Effective management to change in the
internal and external environment
• Effective Leadership:
Team leader who is able to help members
achieve the objective and build the team
Team leader who can couch and develop
individuals

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“Coming together is a
beginning; Keeping together
is a progress; and Working
together is a success”

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Stages in team building:
 Forming-Provide clear direction to establish the
team’s purpose, setting goals, etc.,
 Storming –Provide strong, hands-on leadership to
keep people talking and task-focused
 Norming–Codes of behavior becomes established and
an identifiable group culture emerges. People begin to
enjoy each other’s company and appreciate each
other’s contributions.
 Performing – Teams that reach this stage achieve
results easily and enjoyably. People work together well
and can improve systems, solve problems and provide
excellent customer service.
 Adjourning – Temporary project team reaches this
stage; celebrate their team’s achievements.
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Leadership style
 PM is more of the mgt of the team than the
management of the tasks.
 The team goes through various stages in its

development and maturity

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Task relevant maturity levels
M1 Less maturity level
M4 Maximum maturity level

M1= group can not accomplish the task

without direct supervision
M4= group has matured to accomplish the
task with a minimum supervision

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Leadership style
 S1 :Structuring:
◦ Organize and direct the work of others
◦ make each person accountable
◦ demonstrate
 S2 : Coaching:
◦ tutoring
◦ Joint effort
◦ Role model
 S3 : Encouraging:
◦ greater responsibility with doer
◦ recognize and praise good work
 S4 : Delegating:
◦ assign task responsibilities and let others carry it out
◦ motivate by giving control and respect
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Task relevant maturity level Vs
leadership style.
M1 S1 [ less matured
employees need structuring]
. .
M4 S4 [ more matured staff
need delegation]

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Conflict Management
 Conflict is the contest between people with
opposing needs, ideas, beliefs, values, or goals.
 It occurs within all organizations. It is an
important element of an organization’s
development.
 conflict can have both positive and negative
outcomes.
◦ Conflict is positive when it causes a broadening of ideas,
stimulates innovation and creativity, and leads to
improved results of a project. Here it serve as a means
to build organizational capacity.
◦ Conflict can be negative when it leads to tension,
frustration, confusion, and less quality and productivity
of a project.

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In general, all potential conflict fits one of
three categories:
◦ Goal-oriented conflicts are associated with end
results, performance specifications and criteria,
priorities, and objectives.
◦ Administrative conflicts refer to the management
structure and philosophy and are mainly based on
definition of roles and reporting relationships and on
responsibilities and authority for tasks, functions, and
decisions.
◦ Interpersonal conflicts result from differences in work
ethics, styles, egos, and personalities of the
participants.

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 Sources of Conflict and their Definitions
Sources of Conflict Definitions

Conflict over Project Priorities View of project participants differ over sequence
of activities and tasks.
Conflict over Administration Managerial and administrative oriented conflicts
Procedures over how the project will be managed
Conflict over Technical Disagreements over technical issues,
Opinions and Performance performance specifications, technical trade-offs.
Trade- offs
Conflict over Human Power Conflicts concerning staffing of project team
Resources with personnel from other areas.
Conflict over Cost Conflict over cost estimates from support areas
regarding work breakdown structures.
Conflict over Schedules Disagreements about the timing, sequencing,
and scheduling of project-related tasks.
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Personality Conflict Disagreements on interpersonal issues.
 Effective conflict management involves:
◦ analyzing a conflict,
◦ understanding the dynamics between the parties in
conflict, and
◦ determining the appropriate method of conflict
resolution.
 In the absence of confidence and skill in
conflict management, most public officials
resort to the use of power, manipulation and
control.

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 Conflict Management Style
Style Description Effect
Avoiding Retreats from an actual or potential Does not solve the
conflict situation problem
Smoothing Emphasizes areas of agreement rather Provides only short-
than areas of difference term solution
Compromising Searches for and bargains for solutions Provides definitive
that bring some degree of satisfaction resolution
to all parties
Forcing Pushes one’s viewpoint at the expense Hard feelings may
of others; offers only win-lose come back in other
situations forms
Collaborating Incorporates multiple viewpoints and Provides long-term
insights from differing perspectives; resolution
leads to consensus and commitment
Problem Treats conflict as a problem to be Provides ultimate
Solving solved by examining alternatives; resolution
requires give-and take attitude and
open dialogue
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Contract Administration
 A contract is an agreement enforceable by law, and
is made between two or more parties.
 Contracting is the process of establishing a relation

between the owner and the contractors to execute

a project work
Contents of a contract
 Name and address of both parties,

 Subject of the agreement,

 Deadlines for the different stages of fulfillment of

the agreement,
 Financial aspects and other necessary conditions

such as violation of contract etc.

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Approaches to contracting:
 Contracting total responsibility for one contractor
 Dividing the project and contracting it to suitable suppliers

and contractors.
 Accomplish a portion of the work yourself and contract out

the balance to one or more agencies.

A contracting schedule contains:
 The work code
 Work packages; volume of main activities and budget

estimate
 Starting and finishing dates and
 The names of people who prepared the bid documents and

awarded the contract.

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Contracting procedures:
Governments and different institiutions have
their own procedures with clear objectives
to acheive:
 To elicit competitive bids
 To provide equal opportunity and equal treatment
to all eligible tenderers
 To be efficient by accepting the tender at the
lowest cost

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Steps in contracting :
1. Work packaging and scheduling
 Specialized Activity Packages like construction, civil
engineering works, painting etc.
 Unit packages like administration building, by - product
plant, steel melting shop etc.
 The starting and finishing time of each individual package
2. Preparation of Tender Documents
 Instruction to tenderers
 Model Form of tender
 Drawings and specifications
 Schedule of Rates
 General conditions of contract
 Special conditions of contract
 Specimen of Bank guarantee

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3. Tender Invitation
 Sending inquiry letters for short lists or
 Advertising openly
4. Tender submission
 Tender, with all necessary documents, is
submitted in sealed envelops on or before the last
date for submission
5. Tender Opening
 Tenders should be opened in the presence of
tenderers or their authorized representatives
unless required
6. Evaluation and recommendation
 Costs, quality, quantity and other technical
specification

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 Determination of Contractor's
Qualifications
World Bank's criteria :
Factors Points
Organization and Planning 10
 Management Structure
 General Implementation programme
 Plans for subcontracting
 History of Default
Personnel 15
 Experience/ qualification of key personnel
 Adequacy of specialized staffing
Major plant and equipment 15
 Adequacy
 Age/condition
 Source of availability
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Experience 30
 Technical references
 Value of completed contracts of similar type
 Average percent of work under subcontractor
Financial Condition 30
 Bank reference
 Average annual turnover
 Working capital
 Quick Ratio
 Value of contracts completed in last 5 years

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Ethiopian criteria for Qualification:
Criteria of pre-qualification Points
Experience of the consultant 5-10
Technical proposal 20-50
Experience and qualification of experts 30-60
Skill for transferring knowledge 0-10
Participation of Ethiopians 0-10
Total point 100%
Source: Federal Government Procurement Directives, Ministry of FE,
2005, p. 28/53.
NB:
•Any consultant who scored below 70% is excluded from the
competition.
•Technical evaluation will have 80% and financial evaluation
will carry 20%
8. Award of contract
 Negotation
9. Signing of Agreement with detailed
contract conditions.
 

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