PMP

Chapter # 2
THE ENVIRONMENT IN WHICH PROJECTS OPERATE
• Outline
• Enterprise Environmental Factors
• External To The Organization
• Organizational Process Assets
• Processes, Policies, And Procedures
• Executing, Monitoring, And Controlling:
• Organizational Knowledge Repositories
• Organizational Systems
• Organizational Governance Frameworks
• Governance Framework
• Governance Of Portfolios, Programs, And Projects
• Management Elements
• Organizational Structure Types
• Organizational Structure Types
• Organizational Structure Types
• Project Management Office
THE ENVIRONMENT IN
WHICH PROJECTS
OPERATE
• OVERVIEW
• 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
• In addition to EEFs and OPAs, organizational
systems play a significant role in the life cycle of the
project.
• System factors that impact the power, influence,
interests, competencies, and political capabilities of
the people to act within the organizational system
are discussed further in the section on
organizational systems (see Section 2.4).
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.
The following EEFs 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, and code of
conduct.
• Geographic distribution of facilities and resources. Examples include factory locations, virtual teams,
shared systems, and cloud computing.
• 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.
EEFS EXTERNAL TO THE ORGANIZATION

The following EEFs 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.
ORGANIZATIONAL PROCESS ASSETS

• Organizational process assets (OPAs) are the plans, processes, policies,

procedures, and knowledge bases 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 that 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:
Processes, policies, and procedures; and
Organizational knowledge bases.
PROCESSES, POLICIES, AND
PROCEDURES
• The organization’s processes and procedures 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;
• Specific organizational standards such as policies (e.g., human resources policies, health and safety policies,
• security and confidentiality policies, quality policies, procurement policies, and environmental policies);
• 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 material contracts).
Executing, Monitoring, and Controlling:
• Change control procedures, including the steps by which performing organization standards, policies, plans, and
• procedures or any project documents will be modified, and how any changes will be approved and validated;
• Traceability matrices;
• Financial controls procedures (e.g., time reporting, required expenditure and disbursement reviews,
• accounting codes, and standard contract provisions);
• Issue and defect management procedures (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);
• Procedures 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 procedures.
• Closing. Project closure guidelines or requirements (e.g., final project audits, project evaluations,
deliverable
• acceptance, contract closure, resource reassignment, and knowledge transfer to production and/or
operations).
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
management 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).
ORGANIZATIONAL
SYSTEMS
• Management elements,
• Governance frameworks, and
• Organizational structure types.
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.
ORGANIZATIONAL
GOVERNANCE
FRAMEWORKS
• Recent PMI research reveals that governance refers
to organizational or structural arrangements at all
levels of an organization designed to determine and
influence the behavior of the organization’s
members [9]. This research suggests that the
concept of governance is multidimensional and:
• Includes consideration of people, roles, structures,
and policies; and
• Requires providing direction and oversight through
data and feedback.
GOVERNANCE FRAMEWORK

• Governance is the framework within which authority is exercised in organizations.

This framework includes but is not limited to:
• Rules,
• Policies,
• Procedures,
• Norms,
• Relationships,
• Systems, and
• Processes.

This framework influences how:

• Objectives of the organization are set and achieved,
• Risk is monitored and assessed, and
• Performance is optimized.
ORGANIZATIONAL STRUCTURE TYPES

• 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.
FACTORS IN ORGANIZATION STRUCTURE
SELECTION

• Factors to consider in selecting an organizational structure include but are not limited to:
Degree of alignment with organizational objectives,
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,
Efficiency of performance,
Cost considerations,
 Physical locations (e.g., colocated, regional, and virtual), and
Clear communication (e.g., policies, status of work, and organization’s vision).
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.
• There are several types of PMOs in organizations. Each type varies in the degree of control and influence it has on
projects within the organization, such as:
• Supportive. Supportive PMOs provide a consultative role to projects by supplying templates, best practices,
training, access to information, and lessons learned from other projects. This type of PMO serves as a project
repository. The degree of control provided by the PMO is low.
• Controlling. Controlling PMOs provide support and require compliance through various means. The degree of
control provided by the PMO is moderate. Compliance may involve:
• Adoption of project management frameworks or methodologies;
• Use of specific templates, forms, and tools; and
• Conformance to governance frameworks.
• Directive. Directive PMOs take control of the projects by directly managing the projects. Project managers are
assigned by and report to the PMO. The degree of control provided by the PMO is high.
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.
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