Organizational life cycle implications for major projects

The technology needed to develop major new products has become increasingly more diverse and more complex during the last two and one-half decades. Increasing diversity results from the need to integrate a wider variety of professional and technical specialities into the new product design than was previously the case. The increasing complexity results in part from the rapid rate of knowledge growth in each major speciality, a growth which has in turn spawned a large number of more specialized professional sub-areas as individuals strive to remain current in ever narrowing fields. The increasing technical sophistication of major project-oriented efforts is widely recognized. What is not so well known however, is that this increasing diversity and complexity has caused extensive innovation in management systems, resulting in the application of project management techniques to most major advanced-technology nonrepetitive efforts.

An extensive review of the literature failed to reveal a comprehensive analysis of the organizational factors crucial to project management (1). This is not too surprising since the modern concept of a project cutting across corporate, industry, and government organizational boundaries to develop advanced technology products is not much more than two decades old. While a number of detailed topics such as selecting an appropriate project manager (2), developing an effective network-based management information system (3), and implementing an appropriate “project organization” (4) have recently been addressed, little has been done to develop a comprehensive understanding of how management initiative might be affected by any number of organizational variables across the life of a major project. The purpose of this article is to summarize the results of several independently conducted but mutually-supporting crosssectional studies of generally accepted organizational variables, conducted on over 20 major research and development (R&D) projects, and to analyze the impact of these variables over the life of such projects.

Organizational Variables Considered

The concept of advanced technology research and development projects has resulted from the need to develop ever larger and more complex military, space, and commercial systems, products whose production and marketing strategies fail to fit with the constraints of a purely functional organization structure. Special purpose project organizations are molded around the specific task or goal to be accomplished. Planning and controlling these projects is the essence of project management. A project organization exists only to solve some specified problem, generally one in which the “parent” or sponsoring organization has little or no prior experience. This description summarizes most current major R&D efforts, and explains the dependence of such efforts on the concept of project management.

In current major project efforts, the sponsor usually needs to develop some new product or system within critical predetermined (a) performance specifications, (b) time constraints, and (c) budget limitations. These, then define the project’s goal. Once the goal is satisfied, the project loses its purpose for existing and is dissolved. The project organization thus exhibits a predictable life cycle: it is frequently said to be “born” when the sponsoring organization accepts responsibility for the problem and decides to accomplish the goal through project management; it “grows” and expands through the planning and initial execution phases as larger increments of money, personnel, production facilities, managerial time and other such resources are devoted to the effort; it declines as the goal nears completion and resources that are no longer required are reassigned to other work efforts; and it “dies” when responsibility for the new product or system is turned over to the ongoing functional organization. The project organization itself exists primarily to focus the undivided attention of management and technical specialists on resolving the specified problem across the life span of that problem’s existence (5).

Life Cycle Phase. As a project proceeds through its life cycle it passes through an identifiable sequence of phases, distinguished from each other by the type of tasks characteristic of each phase and frequently by formal project continuation decision points (6). Different authors identify from three to six separate phases, and there is no agreement on terminology. Nevertheless, general agreement does exist to indicate that each project phase involves different management considerations and presents different operational problems (7). It thus appears reasonable to analyze the major organizational variables affecting project management in terms of their impact at different points in the project life cycle. The studies reported in this article all examined major R&D projects in terms of three phases distinguishable from each other by the type of tasks being performed and by clearly defined, formal project reviews resulting in authorization to proceed into the next phase. In several cases it is possible to logically divide the third phase into two separate phases based on the types of tasks being performed. This division of the life cycle and the terminology used in this article is presented in Figure 1.

Figure 1. Project Life Cycle and Typical Activities per Phase.

Organization Size. Size has been shown to have a strong effect on perceived organizational climate in several manufacturing organizations. Payne and Mansfield, using a modified Business Organization Climate Index, reported a relatively strong positive relationship between size and most climate scales (8). Particularly noteworthy were the reported strong relationships between size and readiness to innovate, task orientation, job challenge, and scientific and technical orientation. All of these are climate dimensions that could be expected in many project organizations. Size may also be related to climate and other behavioral variables indirectly through its influence on the nature of the organization. Increased size may dictate more links in the scalar chain, requiring greater formalization of communication and reporting systems. Increased size may also permit economies through greater functional specialization. As a consequence the larger project organization may tend to be more functionally oriented or mechanistic in nature.

Level of Bureaucracy. The level of bureaucracy may be defined as a continuum ranging from a mechanistic to an organistic organizational structure. A mechanistic structure refers to an organization with communication directed primarily downward, high formalization or rules and procedures, adherence to the chain-of-command, low intergroup cooperation, and infrequent task feedback. An organistic structure is characterized by high intergroup cooperation, frequent task feedback, open communication channels, low formalization of rules and procedures, and a lack of adherence to the chain-of-command. The latter characteristics describe the usual conception of a project organization. However, in large projects, managers such as those producing program control documentation or running project’s information system may work in an environment differing little from that of the mechanistic organization where authority generally matches responsibility. A pure project manager on the other hand, operating in an organistic environment, may have responsibilities that far outreach his formal authority to marshall and direct the needed resources (9). Major project organizations may thus display a mixture of organic and mechanistic characteristics which could vary over the life cycle and have a major influence on the effectiveness of managerial actions.

Organizational Climate. Organizational climate is a description of the organization as a whole (10). Litwin and Stringer defined organizational climate as "… a set of measurable properties of the work environment perceived directly or indirectly by the people who live and work in this environment and assumed to influence 34 their motivation and behavior” (11). These authors went on to suggest that both satisfaction and performance are affected by climate. Hellriegel and Slocum in their review of the literature cited several studies that clearly indicated a relationship between job satisfaction and organizational climate (12). However, the nature of the relationship between climate and performance is less clear. Although Likert (13) and Marrow, Bowers, and Seashore (14) found a more positive climate to be associated with higher productivity, Hellriegel and Slocum (12) cited both support and nonsupport for this finding and concluded there was no consistent relationship. The linkage, if any exists, may be indirect. Other variables may intervene between climate and performance. In addition to job satisfaction, already mentioned, intervening variables of particular interest are conflict sources, conflict intensity, and conflict resolution modes. Climate may “cause” individuals to perceive more or less satisfaction with their work and to consequently be motivated more or less to perform to their capability. With respect to conflict, differing sources and intensities of conflict may result from or influence the climate. The combination of climate and conflict sources may in essence dictate or at least constrain the appropriateness of conflict resolution techniques. Use of these techniques may in turn influence climate and satisfaction.

Conflict. The essence of project management is that it is interfunctional and is frequently in conflict with the normal organization structure, leading to a natural conflict system (15). The ability of the project manager to foster functional conflict, or to convert dysfunctional to functional conflict, can often determine his degree of success in achieving the project’s goals (9). Thus one of the project manager’s key functions is to maintain, in the face of conflicting objectives, a reasonable degree of harmony among the many organizational elements contributing to the project. Research conducted by Evan is important in confirming that differences in conflict do exist between the traditional functional and the the project organization (16). Since both size and formalization of project organizations may vary over the life cycle, it would appear logical to investigate the changes in conflict that could also develop; Thamhain and Wilemon have done so for a variety of small, industrial projects. They found that the mean intensity of conflict from all sources, the pattern of conflict arising from various specified sources, and the conflict resolution modes used by project managers all vary systematically over the project life cycle (17). The purpose of one study (18) reported here was to extend the Wilemon and Thamhain findings to determine its relevance to the major R&D project environment.

Job Satisfaction. Payne et al described job satisfaction as an individual’s effective response to his job (10). Although long a subject of research, the relationship of job satisfaction to performance is by no means settled. The preponderance of evidence seems to indicate that the ties between job satisfaction and productivity or other measures of performance are weak or inconclusive (19). However, even the weak indicators of a relationship should not be put aside lightly (20). In addition, there is conceptual appeal that such a link ought to exist in many situations.

Based on support from literature and personal observation, the authors developed Figure 2 to demonstrate the predicted relationships among the variables discussed above.

Study Approach

This study presented in this article consisted of a synthesis and analysis of existing data, drawing support from the literature as appropriate. Empirical data was generated in the conduct of several independent research efforts each under the direction of one of the authors. The separate research efforts culminated in four notable reports summarized in Table 1. All data was created in the same organizational environment although at different times. The general sources of data were program offices of the Air Force’s Aeronautical Systems Division. These offices are charged with managing the acquisition activities associated with acquiring all major new Air Force aircraft weapon systems. The responsibilities of these offices include conceptual studies, concept validation, hardware demonstration, prototype development, test article development and fabrication, test and evaluation, production modification, and initial support activities. Offices ranged in size from very small, approximately five individuals, to an office of more than two hundred.

Most data analyzed in the study were generated through use of questionnaires. Standard instruments, modified as necessary, were used to measure satisfaction, organizational climate, source of conflict, conflict intensity, and method of conflict resolution. Measures of organizational climate were obtained through use of the short form version of the Likert Profile of Organizational Characteristics (13). The summed score of all questionnaire items may be considered an indicant of the individual’s perception of the general style or system of management prevalent in the organization. The average of the scores for all subjects sampled in an organization or group of organizations and relative to an ideal climate of openness, support, trust, and participation. Job Satisfaction was measured by use of the satisfaction scales from the Job Diagnostic Survey short form (21). The seven scales indicated in Table 1 provide separate measures of the individual’s affective reactions or feelings obtained from actually performing at his job. Sources of conflict, conflict intensity, and method of conflict resolution were measured using a questionnaire developed by Thamhain and Wilemon (17) modified to fit the Air Force project environment. The questionnaire includes the seven potential conflict sources and five conflict handling modes indentified in Table 2, essentially measuring the frequency of occurrence of each. Finally, the level of bureaucracy was measured with a number of specifically designed questions.

Figure 2 Relationships Among Variables. (Note: Research data did not address performance and turnover.)

The synthesis presented in this article involved extracting values of the major variables from the various studies and matching them with phases of the project life cycle. Analysis was necessarily restricted to identifying and demonstrating differences across life cycle phases. No attempt is made to support the existence of cause and effect relationships.

Synthesis of Findings by Project Phase

The combination of study results supports the existence of marked similarities in the organizational environments of major R&D projects within the identified life cycle phases, while simultaneously identifying several significant differences in the organizational environments characteristic of the separate phases. These similarities and differences are summarized in Table 2. Those studies which did not distinguish phase III from phase IV drew most of their data for this portion of the life cycle from projects involved in tasks more descriptive of the execution phase, so it is assumed that the data presented for phases III and IV combined more nearly represents projects in phase III of the life cycle.

Phase I. Data from projects in the conceptual phase consistently indicate that the teams are small and use a relatively organistic type of structure. The overall climate is rated low in the System 4 or participative management portion of Likert’s scale. Conflict intensity is highest in this phase. Manpower resources is the most noteworthy source of this conflict, with the next four sources listed grouped closely behind as generators of conflict. While confrontation (in a problem-solving mode) is the favored means of conflict resolution, smoothing and compromise are also well-used techniques. The highest levels of satisfaction are found in this phase for six of the seven measures. Thus the organizational environment of phase I is indicative of small participative work groups, with the members working together under considerable conflict and with a relatively informal set of work rules. They resolve their differences in a generally collegial manner with apparent concern for the feelings of others, and they derive considerable satisfaction from the work.

Phase II. Data from projects in the planning phase indicate a substantial increase in project size, a multiple of five-to-eight relative to the sizes encountered in phase I. The type of structure is generally organistic but with significant mechanistic characteristics, while the climate is rated mid-range in a System 3, or consultative type of organization. Conflict intensity is lower than in phase I. Program priorities is the predominant conflict source, with the next four listed sources grouped closely together but in a clearly subordinate position. Confrontation and compromise are the preferred conflict resolution modes, while smoothing has decreased and forcing has increased in importance relative to phase I. Internal work motivation rates high in this phase but is not supported by the other job satisfaction measures, indicating that overall satisfaction is not high. The organizational environment of phase II can be characterized as a relatively large work group organized along semiorganistic lines with mechanistic tendencies — a consultative system. The members work together under considerable conflict which arises predominantly from project-oriented priorities, schedules, and technical issues. Differences are resolved in a generally collegial manner, but job satisfaction is not particularly high.

Table 1. Research Data.

1. Findings of the Barndt, Larsen and Ruppert study.

2. Findings of the Haddox and Long study.

Phase III. Data from projects in the execution phase indicate that project sizes are generally comparable to but reflect a wider range than those in phase II. The type of organization is organistic with some mechanistic tendencies, while the climate is rated near the high area of System 3, a consultative but near participative type of organization. Conflict intensity is lower than in phases I or II, but is still relataively high. Program priorities, technical issues and administrative procedures are closely grouped as principle sources of conflict clearly dominating the remaining sources. While confrontation and compromise remain the preferred conflict resolution modes, forcing is also an important technique in this phase. In general, satisfaction in phase II appears to be relatively low. It should be remembered in interpreting this data that the level of bureaucracy, the organizational climate, and the satisfaction values were generated from data sources somewhat contaminated with phase IV-type work tasks. The organizational environment of phase III can be characterized as a relatively large work group organized along semi-organistic lines with some mechanistic overtones. The members work together under a conflict situation arising from priorities and technical issues combined with the administrative procedures necessary to resolve them. Use of power and authority to resolve differences (forcing) is increased in phase III, while job satisfaction is reduced.

Table 2. Structural and Behavioral Characteristics of Phases

Phase IV. The data from projects in the termination phase indicate a marked, significant reduction in project size from those in phases II and III. Conflict intensity is relatively low in this phase, with program priorities, administrative procedures, and schedules being dominant. Confrontation, compromise and smoothing are the preferred conflict resolution modes. Although not complete, these data indicate some significant differences in the organizational environment of phase IV relative to phases II and III. The environment can be characterized as medium-sized groups working under relatively low conflict intensities. In terminating their projects, the principle conflicts are generated from project priorities and schedules, with the needed administrative procedures taking on increased significance. Differences are resolved in the collegial mode as was done in the earliest phases.

Reviewing the Life Cycle. Reviewing the findings for each specific project life cycle phase in comparison to each other reveals some interesting relationships. In the most general terms, the life cycle theory is supported, with marked differences occuring in the organizational environments of projects from different phases. More specific analysis indicates that project size clearly is much different across the phases, with phases II and III having by far the largest project teams, phase I the smallest, and phase IV having intermediate sized project teams. The level of bureaucracy parallels this pattern, with the greater bureaucracy corresponding to the greater size, as would be expected. The level of bureaucracy measure demonstrates statistically significant differences between phase II and phases I and III at the 95% level of confidence. Organizational climate also changes markedly across phases, with the early and later phases having projects more representative of System 4, while the middle phases are more System 3-oriented. Statistical tests of the organizational climate scale indicated that all scores were significantly different from each other at the 95% level of confidence (22). Conflict intensity decreases consistently across the phases. The differences between alternate phases are statistically significant (95% confidence level), but those between adjacent phases are not (18). Thus there would appear to be a slowly declining trend in conflict intensity across life cycle phases. Both the sources of conflict and the resolution modes change across phases in a manner consistent with the changes in size, level of bureaucracy, and organizational climate. Finally, job satisfaction in general seems to be highest for the smallest, most organistic organizations and lower for those organizations most mechanistic in nature.

Discussion and Conclusions

The data synthesized in this article can be criticized from several aspects. It was drawn from a variety of research efforts using different samples collected at different times over a two-year period. As such, the findings are not directly relatable to one another, and in some cases the differences are not statistically significant or cannot be tested for significance. The data producing instruments in some cases demonstrate only face validity. For these reasons, no firm support can be claimed for generalizable conclusions.

Despite these shortcomings, the study, by noting important differences between projects in different phases, has served to strengthen the belief that there may be extensive variability in internal organizational environments over the life cycle of a major R&D project. Findings clearly indicate several differences between the projects representing various phases and suggested others. Based on these differences several very tentative conclusions concerning the internal environments of projects over their life cycle were reached and are presented in the form of the following propositions:

• Individual project organizations tend to be relatively small in the early and late phases of their life cycle, and much larger in their middle phases. This may be a function of the type of tasks being performed in the individual phases.

• Project organizations tend to be more mechanistic in nature and exhibit less favorable organizational climates in their mid phases than in either the early or late phases of the life cycle. The most favorable organizational climate and the most organistic type of organization is found in the initial phase of the project life cycle. This may be related to the size of the work groups found in the individual phases.

• As the project progresses in its life cycle, the overall intensity of conflict decreases. Administrative matters and program priorities become relatively more important as sources of conflict, while manpower resources become less important sources of conflict. Cost objectives and individual personalities are relatively unimportant sources of conflict across the life cycle, although the conflicts they present may be among the most difficult to resolve.

• As conflict resolution modes, smoothing decreases while compromise and forcing increase in relative use over most of the project life cycle. This trend reverses itself in the latter phases of the life cycle. This pattern of changes in conflict resolution modes may be associated with the changes in level of bureaucracy, size, and organizational climate which occur over the life cycle.

• Project organization size is negatively related to the extent of organistic (project) orientation in the work group, perceived organizational climate, and the team member’s job satisfaction.

• The perceived organizational climate in project organizations is positively related to the extent of organistic (project) orientation in the work group, and to the perceived job satisfaction of the team members.

• Performance is positively related and turnover is negatively related to the level of perceived job satisfaction in project organizations.

The above relationships suggest that major changes may occur in the organizational and behavioral environment of the single project as it progresses through phases of its life cycle. Such changes could have numerous implications for managers of project managers and for the project managers themselves. For example, the idea of specifically choosing a project manager to see the project completely through its life cycle may need to be discarded in favor of selecting at each phase point, a new project manager best suited to the anticipated project environment. Project managers themselves may be able to use their understanding of the tendency toward changes in such variables as conflict sources, organizational climate, and satisfaction to restructive tasks, create special communication paths, and otherwise make managerial adjustments to maintain an internal environment most conducive to project goal accomplishment.