Choosing an organisational structure And TQM implementing procedure

Strategic Context of Project Management

A Case study by:Ali Al-Dimshawy

05 April 2009



Table of contents

Summary. 3

Answer of Question 01: 4

Choosing an organisational structure: 4

(1-A) The project cost influence: 4

(1-B) The project schedule influence: 4

(1-C) The project duration influence: 5

(1-D) The technology requirements influence: 5

(1-E) The geographical locations influence: 5

(1-F) The required working relationships with the client influence: 6

Conclusion: 6

Answer of Question 02: 7

(2-A) TQM implementing procedure at GPCC: 7

(2-B) TQM implementing barriers at GPCC: 7

(2-B-1) GPCC Organisational Culture: 7

(2-B-2) GPCC Organisational Structure: 8

(2-B-3) Disregarding the internal customers: 8

References: 9

Bibliography: 10

Summary

Question 01:

An organisation structure is the Bible of individuals’ roles and relationships, when designing a structure of an organisation the focus shall be placed on its compatibility with the intended work, the kills of resources and the integrity amongst team work,

Some parameters have different ranges of influence on the organisational structure (i.e. project cost, the project schedule, the project duration, the technology requirements, the geographical locations and the required working relationships with the client), the thesis is discussing how deep and different each of those parameters effects the design of organisational structure.

Question 02:

In May 2004 Neil Johnston the English PM with Gulf Precast Concrete Company the cladding subcontractor at The Dubai Mall project - a part of Burj Dubai the $20 Billion project- proposed a TQM plan and submitted it to GPCC’s CEO.

The procedure of TQM implementation did not flow smoothly; it confronted some internal barriers like organisation culture, organisational structure and others.

This thesis is going to dig the story trying to highlight the followed procedure comparing to Vasilieos 12 step proposal and barriers confronted TQM implementation within such a large scale construction project.

Answer of Question 01:

Choosing an organisational structure:

Organization Chart is ‘The framework of task and authority relationships in a company’ (McGraw, 2009: 08)

Mainly there are two formats to choose among for an organisational structure; the functional structure which ‘is one on which the tasks, people, and technologies necessary to do the work of the business are divided into separate “Functional” groups’ (McGraw-Hill, 2009:07), the hierarchical which is also called the product or project structure and considered as the typical format of small projects as it is similar to the functional one except functional division is replaced by product lines divisions. However both structures have something in common that is all departments leaders are connected directly to a project manager who plays the bridge between the project and the organisation. One hybrid of these two formats is always possible and called the matrix structure which allows managers to work in two organizational dimensions, producing high standards of management and control.

(1-A) The project cost influence:

According to Galbraith, 1973 ‘The other factor favouring a functional form is the degree to which the expensive equipment in manufacturing …’ (Galbraith, 1971:39)

As the functional structure provides a stand alone financial department which has a better opportunity to manage particular budgeting and cost control in each functional zone, so as long as it is all about cost influence the functional structure will be the best for an organisation. Once other factors like the projects sizes, complexity and/or geographical location are involved, considering a matrix structure is a must.

(1-B) The project schedule influence:

When scheduling is the cornerstone of a project, picking the product structure would be the first option as it keeps the focus tracking a product through its design, manufacturing and marketing phases. Whilst functional structure focuses more on discipline rather than program oriented as it zooms in individual performance of resources within a department more than looking at the production procedure as a whole.

(1-C) The project duration influence:

When talking about time saving and control, the preferable structure would be the projectized as it supplies rapid reactions and time making through the relatively shorter decision making track which ends in the PM hands instead of explicit need of coordination amongst functional managers which leads to ad hoc time predicting.

One of the functional charts disadvantages is the weakness of project authority because of it doesn’t provide sufficient horizontal communication.

(1-D) The technology requirements influence:

When the need of new or complicated technologies rises in a project and when these new technologies are too complicated to be controlled by the PM, a specialist shall be invited to join the team and may be to lead a team of technicians with sufficient authorities of decision making. Such a team cannot be contained in a projectized structure where the full authority and power is in PM’s hands then efficient use of specialists is not provided. Here the Functional Chart announces readiness for giving help.

This was argued by Galbraith, 1971 ‘The use of new technologies requires expertise in technical specialities…to make effective use of expertise the Functional form of organisation is superior’ (Galbraith, 1971:39)

(1-E) The geographical locations influence:

Almost two cases for the geographical locations exist, the first is the project is fully located in one location where other factors but geographical may impact the choice of a structure as explained above.

The other case is when project/s is distributed over more than one country or region where over all control is still needed, in this case the superior structure is the Matrix which combines the traditional functional structure with horizontal lines reflecting the interface between heads of departments and managers of areas.

However a specific Matrix called Geographical Matrix Chart was designed and developed by international companies to cover their needs of management their overseas jobs.

(1-F) The required working relationships with the client influence:

The relationship needed with the client varies between being a single point contact relationship to having the focus totally on him; this depends on the nature of the product and the clearness of client inquiries and specifications and many other factors. Projectized structures will best serve in the case of the single point customer contact and a PM in that case will be this point of contact that helps keeping the client feeling better towards work procedure as it keeps him updated along project duration.

Vasileios, 2009 counted among the disadvantages of functional structure: ‘The client is not the focus of activity and concern’ as this structure looks at activities through their functions only.

However I have been working as a project coordinator for an organization which used a matrix structure including a coordination department to contact the client with the organization. This structure from my point of view worked very well in this regard and filled in the gap between the different parties.

Conclusion:

It is still remaining to say that a fixed tip of advice regarding picking an organisational structure does not exist as each project has its unique circumstances so that the best term which may describe choosing a structure for an organization is to design it as per project needs, especially if speaking about medium and large scale projects where none of the two pure simple structures (functional and projectized) can help and a matrix structure shall be adopted.

Anyway a structure may be modified or even superimposed if needed to, so that a highly flexible vision shall attend during the project execution duration.

Answer of Question 02:

(2-A) TQM implementing procedure at GPCC:

‘TQM is a tool for continuous improvement that both improves quality and reduces cost’ (Hamilton & Preston, 1993:04)

Between January 2003 and June 2005 I was working as a sr. architect with GPCC at The Dubai Mall construction project where the company suffered lack of having a uniform quality system then. On May 2004 Neil Johnston the PM suggested to start implementing TQM system. Once the idea was announced, argument amongst project team about its implementation, benefits and obstacles rose up. Neil submitted his plan to the CEO and other internal departments’ managers. His report included assignments of tasks proposal, expected barriers analysis and the over all benefits, However after lot of meetings, calls and correspondence the CEO approved the idea and the following roles were agreed:

CEO was to ‘outline the Vision Statement, Mission Statement, & Guiding Principles [and to] create [and head] a steering committee’. (Vasilieos, 1996:10)

HR department was to arrange educational courses for the upper management in order to get them as aware as possible of the process procedure. It took the HR six months to accomplish the job with 40% efficiency as some of the employees were not interested to join an educational course.

PM was to manage the in field progress and to hire a Total Quality engineer who would ‘focus on the Owner/Customer (External) & Surveys’ (Vasilieos, 1996:10)

TQM committee was to ‘Implement Process Improvements’ (Vasilieos, 1996:10)

The project team was to ‘Use the Tools of TQM [and finally to] Know the Benefits of TQM’

Looking at Vasilieos lecture slides we would see that three out of the twelve ‘Steps in implementing TQM’ (Vasilieos, 1996:10) were not included in the above mentioned roles assignment; ‘Consider the Employees as an Internal Owners/customers [and] Provide a Quality Training Program [and] Establish Quality Improvement Teams’ (Vasilieos, 1996:10)

Why those steps were not taken? Why were not all the taken steps performed with 100% efficiency? The answer of these two questions may cover the barriers of TQM implementation process.

According to (Hau, 2000: 85-86, 88) the barriers include the following ‘Inability to Change Organizational Culture [and] Incompatible Organizational Structure and Isolated Individuals and Departments [and] Paying Inadequate Attention to Internal … Customers [and] Inadequate Use of Empowerment and Teamwork’.

(2-B) TQM implementing barriers at GPCC:

(2-B-1) GPCC Organisational Culture:

In our project I would say that GPCC had all over UAE reputation of being the company of managers; it was over managed as the stronger one fought, the bigger his opportunity to manage a department was. In such an organisational culture managers did not find the necessity of learning new techniques. They were managers because they were politically strong, in other words they were neither motivated nor strictly enforced to share the new TQM implementation process.

(2-B-2) GPCC Organisational Structure:

Because it was almost a Passive-Aggressive organisation with fully plugged channels between managers and other employees, communications means were to stay poor and non sufficient to carry the message to and from most of the project team members.

Individuals further to departments were isolated and out of the game.

(2-B-3) Disregarding the internal customers:

Ignoring providing motivators to those isolated individuals, the GPCC upper management insisted on disregarding one of the pillars of TQM which assumes that every one’s a customer either internal or external and the main job is to guarantee your customers satisfaction.

Simple motivation here could be done by sharing the concept and importance of TQM but poor communication which was a result of organisation culture caused poor education within the project fence.

(Padhi, 2002: 01) illustrated figure 01 and explained that ‘To be successful implementing TQM, an organization must concentrate on the eight key elements…’

Figure (01)

In our real life GPCC case study we found defects in integrity, teamwork, recognition and above all of those lack of communication which Padhi considered the body and the soul of TQM.

The moral here is that GPCC could not reach 100% TQM further to client’s complete satisfaction yet the talented Neil Johnston could hardly get the approval on the work constructed in site and at the end GPCC hardly survived the project.

Although the medicine of this entire headache was just here, If GPCC only paid attention to these figured eight elements it could overcome the barriers to proper TQM implementation.

The process needed more involvement of all concerned individuals by assigning clear role to each resource, clarifying the benefits of TQM to the resources, motivating them by using considerable incentives and supplying them with proper communication means and work environment.

This does not mean that the TQM had failed to meet its benefits but it means that GPCC failed to implement it properly.

References:

1. The McGraw-Hill Companies, Inc (2009). ‘The Structure and Culture of a Business Organization - The framework of task and authority relationships in a company -chapter 8’. McGraw-Hill Companies 2005

2. The McGraw-Hill Companies, Inc (2009). ‘Organizational Structure- chapter11’. McGraw-Hill Companies 2005

3. Jay R. Galbraith (February 1971). ‘Matrix Organisation Designs How To Combine Functional And Project Forms’. USA .Buisiness Horizon 2001

4. Bruce E. Hamilton &Preston G. Smith CMC (1993). ‘Implementing TQM on a shoestring’. Journal of management consulting, Volume 07, no-4 fall 1993

5. Paliktzoglou, V.)1996). ‘Total Quality Management: A Continuous Improvement Process ’. PM 104 Strategic Context of Project Managemnt Switzerland: Robert Kennedy Collage.2009

6. Frederick Hau (June 1,2001) · ‘The Brighter Company’ · http://www.rechargermag.com/articles/32700/ [Accessed on 31 march 2009].

7. Nayantara Padhi (30 December 2002). ‘The Eight Elements of TQM’. iSixSigma.com. http://www.isixsigma.com/library/content/c021230a.asp [Accessed 31 march 2009]

Bibliography:

1. Paliktzoglou, V.)2009) PM 104 Strategic Context of Project Management Lecture Slides’. Switzerland: Robert Kennedy Collage.2009

2. Paliktzoglou, V.)2009) PM 103 Project Planning and Control Lecture Slides’. Switzerland: Robert Kennedy Collage.2009

3. Hugh MacMillan, Mahen Tampoe (2001) ‘Strategic Management: Process, Content, and ImplementationLondon: Oxford Press

4. The McGraw-Hill Companies, Inc (2007). ‘Chapter Eight The Structure and Culture of a Business Organization’. McGraw-Hill Companies 2007

5. The McGraw-Hill Companies, Inc (2009). ‘Chapter 11 Organizational Structure’. McGraw-Hill Companies 2009.

6. Organization and Teamwork Prentice Hall 2007 ‘Excellence in Business’. e3.

7. Jay R. GALLBRAITH (February 1971) ‘Matrix Organisation Design how to combine Functional and project forms’. Business Horizons.

8. Maurice Hardaker & Bryan K. Ward, (2003) ‘Getting Things Done, How to Make a Team Work’. Harvard Business Review November-December 1987. USA: EBSCO Publishing

9. The McGraw-Hill Companies, Inc (2005) ‘Contemporary Management Chapter 10b External and internal organization structures’. McGraw-Hill Companies 2005

10. C.J.Middleton,(2000) ‘ How to Set Up a Project Organisation’ .HBR March-April 1967

11. Duncan, Robert. (1979) ‘What Is the Right Organization Structure? Decision Tree Analysis Provides the Answer’. USA: Organizational Dynamics.

12. Galioto, et al. (2006).’The Matrix Reloaded The Multi-Axis Organization as Key to Competitive Advantage’. USA: Booz Allen Hamilton Inc.

13. Tinnirello, Paul C. ‘(2004) ‘New Directions in Project Management’. USA: Auerbach Publications

14. Mechanic, David. "Removing Barriers to Care Among Persons with Psychiatric Symptoms." Health Affairs, 23.6: (2004).Retrieved February 13, 2005:
Mentally Ill Patients

15. "Total Quality management Glossary" Retrieved From http://quality.org/TQM-MSI/TQM-glossary.html Accessed on 21 December, 2004
Total Quality Management

16. Damodar Y. Golhar, Deshpande, Satish P. Ahire & Sanjay L. "Supervisors role in TQM and non-TQM firms"
Total Quality Management

17. Bauerschmidt, Alan, Daniel Sullivan, & Kate Gillespie (1985). "Common Factors Underlying Barriers to Export: Studies in the U.S. Paper Industry," Journal of International Business Studies (Fall), 111-123
Tariffs and Non-Tariff Barriers (NTF)

18. http://campus.college.ch/forum/posts/22898?page=1-11. RKC class forum. [accessed on 31 March 2009]

19. http://blog.softwareprojects.org/self-organization-esther-derby-1069.html. [accessed on 31 March 2009]

20. http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html. [accessed on 31 March 2009]

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22. Weihrich, H. and Koontz, H. 1993. ‘Management: A Global Perspective’. 10th edition. New York: McGraw-Hill

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