Why Care About Organizational Effectiveness?

IN THIS SECTION: Organizational Effectiveness Evaluation | Why care about organization effectiveness?

The design and structure of your project organization is a critical component for capital effectiveness. Effective organizations are designed around the work process and that the necessary resources are developed in-house and deployed to projects. By comparing organizational data from different project organizations, we found that organizational attributes have their strongest effect on project practices, for example Front-End Loading (FEL), which, in return, have a dramatic effect on project outcomes. Thus, the key to OE is organizing your project organization so that Best Practices are used when implementing project practices.

Capital effectiveness is driven by the effectiveness of how your project organization is executing capital projects, i.e. at the project and organizational level. At the project level, project practices, such as team development and FEL, are critical for achieving competitive project performance. Capital effectiveness is also driven by the effectiveness of your project organization. The organizational system is what either promotes or restricts Best Practice implementation.

IPA has developed a unique database of 50-plus project organizations from various industries worldwide. Our organization database covers different types of organizations, from central engineering over individual business units to individual sites. This database includes organizational-level data, such as information on portfolios, personnel, work processes, and organizational structures.

To quantify the effect of organizational characteristics on project performance, we linked the organizational-level data to IPA’s Process Plants Database. Through quantitative analysis, we identified what organizational approach leads to better project results and what organizational elements are critical in designing a project organization. Our OE evaluation provides metrics around three elements of organizational effectiveness: people, work process, and organizational structure.

The OE evaluation will provide you with a better understanding of the effectiveness of your project organization, its strengths and weaknesses, and whether it is set up to support Best Practice implementation.