2

The Project Environment

Projects exist and operate in environments that may have an influence on them. These influences can have a favorable or unfavorable impact on the project. Two major categories of influences are enterprise environmental factors (EEFs) and organizational process assets (OPAs).

EEFs originate from the environment outside of the project, and often outside of the enterprise. EEFs may have an impact at the organizational, portfolio, program, or project level.

OPAs are internal to the organization. These may arise from the organization itself, a portfolio, a program, another project, or a combination of these. Figure 2-1 shows the breakdown of project influences into EEFs and OPAs.

Figure 2-1. Project Influences

In addition to EEFs and OPAs, governance plays a significant role in the life cycle of the project (see Section 2.3).

2.1 ENTERPRISE ENVIRONMENTAL FACTORS

Enterprise environmental factors (EEFs) refer to conditions, not under the control of the project team, that influence, constrain, or direct the project. These conditions can be internal and/or external to the organization. EEFs are considered as inputs to many project management processes, specifically for most planning processes. These factors may enhance or constrain project management options. In addition, these factors may have a positive or negative influence on the outcome.

EEFs vary widely in type or nature. These factors need to be considered if the project is to be effective. EEFs include but are not limited to the factors described in Sections 2.1.1 and 2.1.2.

2.1.1 EEFS INTERNAL TO THE ORGANIZATION

The following are examples of EEFs that are internal to the organization:

▶Organizational culture, structure, and governance. Examples include vision, mission, values, beliefs, cultural norms, leadership style, hierarchy and authority relationships, organizational style, ethics, code of conduct, policies, and procedures.

▶Geographic distribution of facilities and resources. Examples include factory locations and virtual teams.

▶Infrastructure. Examples include existing facilities, equipment, organizational telecommunications channels, information technology hardware, availability, and capacity.

▶Information technology software. Examples include scheduling software tools, configuration management systems, web interfaces to other online automated systems, and work authorization systems.

▶Resource availability. Examples include contracting and purchasing constraints, approved providers and subcontractors, and collaboration agreements.

▶Employee capability. Examples include existing human resources expertise, skills, competencies, and specialized knowledge.

2.1.2 EEFS EXTERNAL TO THE ORGANIZATION

The following are examples of EEFs that are external to the organization:

▶Marketplace conditions. Examples include competitors, market share brand recognition, and trademarks.

▶Social and cultural influences and issues. Examples include political climate, codes of conduct, ethics, and perceptions.

▶Legal restrictions. Examples include country or local laws and regulations related to security, data protection, business conduct, employment, and procurement.

▶Commercial databases. Examples include benchmarking results, standardized cost estimating data, industry risk study information, and risk databases.

▶Academic research. Examples include industry studies, publications, and benchmarking results.

▶Government or industry standards. Examples include regulatory agency regulations and standards related to products, production, environment, quality, and workmanship.

▶Financial considerations. Examples include currency exchange rates, interest rates, inflation rates, tariffs, and geographic location.

▶Physical environmental elements. Examples include working conditions, weather, and constraints.

2.2 ORGANIZATIONAL PROCESS ASSETS

Organizational process assets (OPAs) are the plans, processes, documents, templates, and knowledge repositories specific to and used by the performing organization. These assets influence the management of the project.

OPAs include any artifact, practice, or knowledge from any or all of the performing organizations involved in the project, which can be used to execute or govern the project. The OPAs also include the organization's lessons learned from previous projects and historical information. OPAs may include completed schedules, risk data, and earned value data. OPAs are inputs to many project management processes. Since OPAs are internal to the organization, the project team members may be able to update and add to the organizational process assets as necessary throughout the project. They may be grouped into two categories:

▶Plans, processes, and documents. Generally, these assets are not updated as part of the project work and are usually established by the project management office (PMO) or another function outside of the project. These assets can be updated only by following the appropriate organizational policies. Some organizations encourage the team to tailor templates, life cycles, and checklists for the project. In these cases, the project team should tailor those assets according to the needs of the project.

▶Organizational knowledge repositories. These assets are updated throughout the project with project information. For example, information on financial performance, lessons learned, performance metrics and issues, and defects are continually updated throughout the project.

2.2.1 PLANS, PROCESSES, AND DOCUMENTS

The organization's plans, processes, and documents for conducting project work include but are not limited to:

▶Initiating and Planning:.

Guidelines and criteria for tailoring the organization's set of standard processes and procedures to satisfy the specific needs of the project;

Product and project life cycles, and methods and procedures (e.g., project management methods, estimation metrics, process audits, improvement targets, checklists, and standardized process definitions for use in the organization);

Templates (e.g., project management plans, project documents, project registers, report formats, contract templates, risk categories, risk statement templates, probability and impact definitions, probability and impact matrices, and stakeholder register templates); and

Preapproved supplier lists and various types of contractual agreements (e.g., fixed-price, cost-reimbursable, and time and materials [T&M] contracts).

▶Executing, Monitoring, and Controlling:.

Change control procedures, including the steps by which performing organization standards, plans, or any project documents will be modified and how any changes will be approved and validated;

Traceability matrices;

Issue and defect management processes (e.g., defining issue and defect controls, identifying and resolving issues and defects, and tracking action items);

Resource availability control and assignment management;

Organizational communication requirements (e.g., specific communication technology available, authorized communication media, record retention policies, videoconferencing, collaborative tools, and security requirements);

Processes for prioritizing, approving, and issuing work authorizations;

Templates (e.g., risk register, issue log, and change log);

Standardized guidelines, work instructions, proposal evaluation criteria, and performance measurement criteria; and

Product, service, or result verification and validation processes.

▶Closing. Project closure guidelines or requirements (e.g., final project audits, project evaluations, deliverable acceptance, contract closure, resource reassignment knowledge transfer to production and/or operations, and lessons learned).

2.2.2 ORGANIZATIONAL KNOWLEDGE REPOSITORIES

The organizational knowledge repositories for storing and retrieving information include but are not limited to:

▶Configuration management knowledge repositories containing the versions of software and hardware components and baselines of all performing organization standards, policies, procedures, and any project documents;

▶Financial data repositories containing information such as labor hours, incurred costs, budgets, and any project cost overruns;

▶Historical information and lessons learned knowledge repositories (e.g., project records and documents, all project closure information and documentation, information regarding both the results of previous project selection decisions and previous project performance information, and information from risk activities);

▶Issue and defect management data repositories containing issue and defect status, control information, issue and defect resolution, and action item results;

▶Data repositories for metrics used to collect and make available measurement data on processes and products; and

▶Project files from previous projects (e.g., scope, cost, schedule, and performance measurement baselines, project calendars, project schedule network diagrams, risk registers, risk reports, and stakeholder registers).

2.3 GOVERNANCE

Projects operate within the constraints imposed by the organization through their structure and governance framework. There are various types of governance including organizational governance; organizational project management (OPM) governance; and portfolio, program, and project governance.

2.3.1 ORGANIZATIONAL GOVERNANCE

Organizational governance is a structured way to provide direction and control through policies and procedures to meet strategic and operational goals. Organizational governance is typically conducted by a board of directors to ensure accountability, fairness, and transparency to its stakeholders. Organizational governance principles, decisions, and procedures may influence and impact the governance of portfolios, programs, and projects in the following ways:

▶Enforces legal, regulatory, standards, and compliance requirements;

▶Defines ethical, social, and environmental responsibilities; and

▶Specifies operational, legal, and risk policies.

2.3.2 PROJECT GOVERNANCE

Project governance is the framework, functions, and procedures that guide project management activities in order to create a unique product, service, or result to meet organizational, strategic, and operational goals. Governance at the project level includes:

▶Guiding and overseeing the management of project work;

▶Ensuring adherence to policies, standards, and guidelines;

▶Establishing governance roles, responsibilities, and authorities;

▶Decision making regarding risk escalations, changes, and resources (e.g., team, financial, physical, facilities);

▶Ensuring appropriate stakeholder engagement; and

▶Monitoring performance.

A project governance framework provides project stakeholders with structure, procedures, roles, responsibilities, accountabilities, and decision-making models for managing the project. Elements of a project governance framework include but are not limited to principles or procedures for:

▶Stage gate or phase reviews;

▶Identifying, escalating, and resolving risks and issues;

▶Defining roles, responsibilities, and authorities;

▶Process for project knowledge management and capturing lessons learned;

▶Decision making, problem solving, and escalating topics that are beyond the project manager's authority; and

▶Reviewing and approving changes to the project, and product changes that are beyond the authority of the project manager.

2.4 MANAGEMENT ELEMENTS

Management elements are the components that comprise the key functions or principles of general management in the organization. The general management elements are allocated within the organization according to its governance framework and the organizational structure type selected.

The key functions or principles of management include but are not limited to:

▶Division of work using specialized skills and availability to perform work;

▶Authority given to perform work;

▶Responsibility to perform work appropriately assigned based on such attributes as skill and experience;

▶Discipline of action (e.g., respect for authority, people, and rules);

▶Unity of command (e.g., only one person gives orders for any action or activity to an individual);

▶Unity of direction (e.g., one plan and one head for a group of activities with the same objective);

▶General goals of the organization take precedence over individual goals;

▶Paid fairly for work performed;

▶Optimal use of resources;

▶Clear communication channels;

▶Right materials to the right person for the right job at the right time;

▶Fair and equal treatment of people in the workplace;

▶Clear security of work positions;

▶Safety of people in the workplace;

▶Open contribution to planning and execution by each person; and

▶Optimal morale.

Performance of these management elements are assigned to selected individuals within the organization. These individuals may perform the noted functions within various organizational structures. For example, in a hierarchical structure, there are horizontal and vertical levels within the organization. These hierarchical levels range from the line management level through to the executive management level. The responsibility, accountability, and authority assigned to the hierarchical level indicate how the individual may perform the noted function within that organizational structure.

2.5 ORGANIZATIONAL STRUCTURES

Determination of the appropriate organizational structure type is a result of the study of trade-offs between two key variables. The variables are the organizational structure types available for use and how to optimize them for a given organization. There is not a one-size-fits-all structure for any given organization. The final structure for a given organization is unique due to the numerous variables to be considered.

2.5.1 ORGANIZATIONAL STRUCTURE TYPES

Organizational structures take many forms or types. Table 2-1 compares several types of organizational structures and their influence on projects.

Table 2-1. Influences of Organizational Structures on Projects

2.5.2 FACTORS IN ORGANIZATIONAL STRUCTURE SELECTION

Each organization considers numerous factors for establishing its organizational structure. Each factor may carry a different level of importance in the final analysis. The combination of the factor, its value, and relative importance provides the organization's decision makers with the right information for inclusion in the analysis.

Factors to consider in selecting an organizational structure include but are not limited to:

▶Degree of alignment with organizational objectives;

▶Efficiency of performance;

▶Specialization capabilities;

▶Span of control, efficiency, and effectiveness;

▶Clear path for escalation of decisions;

▶Clear line and scope of authority;

▶Delegation capabilities;

▶Accountability assignment;

▶Responsibility assignment;

▶Adaptability of design;

▶Simplicity of design;

▶Cost considerations;

▶Physical locations (e.g., colocated, regional, and virtual); and

▶Clear communication (e.g., policies, status of work, and organization's vision).

2.6 PROJECT MANAGEMENT OFFICE

A project management office (PMO) is an organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques. The responsibilities of a PMO can range from providing project management support functions to the direct management of one or more projects.

The project management office may have an organization-wide responsibility. It may play a role in supporting strategic alignment and delivering organizational value. The PMO integrates data and information from organizational strategic projects and evaluates how higher-level strategic objectives are being fulfilled. The PMO is the natural liaison between the organization's portfolios, programs, projects, and the organizational measurement systems (e.g., balanced scorecard).

The projects supported or administered by the PMO may not be related other than by being managed together. The specific form, function, and structure of a PMO are dependent upon the needs of the organization that it supports.

A PMO may have the authority to act as an integral stakeholder and a key decision maker throughout the life of each project in order to keep it aligned with the business objectives. The PMO may:

▶Make recommendations,

▶Lead knowledge transfer,

▶Terminate projects, and

▶Take other actions, as required.

A primary function of a PMO is to support project managers in a variety of ways, which may include but are not limited to:

▶Managing shared resources across all projects administered by the PMO;

▶Identifying and developing project management methodology, best practices, and standards;

▶Coaching, mentoring, training, and oversight;

▶Monitoring compliance with project management standards, policies, procedures, and templates by means of project audits;

▶Developing and managing project policies, procedures, templates, and other shared documentation (organizational process assets); and

▶Coordinating communication across projects.