PROJECT MANAGEMENT JOURNAL
CASE STUDY: INTEGRATING THE OWNER’S AND
THE CONTRACTOR’S PROJECT ORGANIZATION
Energoproject Holding, Belgrade, Yugoslavia
INTRODUCTION
If it could help you turn your strug-
gling interface between owner/contrac-
tor from a losing one, due to divergent
cultural backgrounds, into a winning
one, would you not be interested in ac-
complishing that? This was the question
which an owner and contractor asked
themselves. It did not take them very
long to answer yes. But actually building
an integrated project organization ex-
acted much of their energy and time.
They used various tools, but it was the
Linear Responsibility Analysis that
played a key role in their success. This
article describes how they built the win-
ning interface.
The project situation is presented first,
and this is followed by a description of
activities the owner and the contractor
undertook to design and implement the
integration. Finally, the conclusion high-
lights traits and demands on manage-
ment during the integration.
THE PLAYERS AND THE STAGE
The owner and contractor come from
different geographical regions and cul-
tures. The owner is a Middle East-based
developer. The contractor is from Eu-
rope and in the business of designing
and building industrial and construction
projects worldwide. Both companies
have one thing in common: they are
state-run. And this is where the similari-
ties end, and the dissimilarities begin.
The dissimilarities are remarkable, espe-
cially the cultures. For example, large
power distances between managers and
employees are characteristic of the
owner’s country, while these same
power distances in the contractor’s
country tend to be much smaller. Further
differences concern religions, role of the
woman in the society, and managerial
styles, to mention few. More details
about creating a project style based on
these differences will be discussed in the
section on implementing the integration.
In terms of the task, the project was
an overseas development one with
high national priority on the owner’s
Number 4
23
Dr. Dragan Z. Milosevic
part. The site was in an isolated desert
area with poor communication facili-
ties. The project was one of the fast
track type that placed with the contrac-
tor the responsibility to overlap design,
procurement, and building activities.
With all this, the dollar value of a few
hundred million, and a very tight
schedule, the project appeared to be
an appealing professional challenge.
But the desert project site location cre-
ated bigger challenges than were ini-
tially anticipated.
The most “vocal” of them was peo-
ple-related and read: “How do you re-
cruit very good people to work on a
site with very harsh living conditions?”
Basically, the challenge was never en-
tirely solved, because the conditions
prevented the contractor from attract-
ing the required number of skilled
managers.
To make matters worse, there was
also a diverse and highly unstable en-
vironment. Day in and day out, the
environment kept changing. One day,
the local government would pass a bill
to raise the taxes on the foreign con-
tractors. The next day, new customs
clearance regulations would emerge.
Then, reorganizations of the owner’s
head offices would come up to pro-
duce power shifts within the manage-
ment echelons. The contract called for
purchasing a percentage of construc-
tion materials locally and paying for
them with local currency. Sometimes
these materials fell in short supply,
jeopardizing the project progress. Past
due payments were a standard. Worse,
the local government severely suffered
from a shortage of hard currency that
was the major pay currency to the in-
ternational contractors. In a bid to con-
trol the shortage, the government
sometimes offered the contractors
changes in the contractual terms of
payment. This usually was on a “take-
it-or-leave-it” basis, and the changes
included shifting from pay-by-cash to
pay-by-credit. Taken overall, the con-
tractors felt like they were riding a
December 1990
roller coaster that alternately made
them sick and delighted, but that they
were not able to get off until after the
ride was over.
BADLY NEEDED INTEGRATION
Prior to implementation of the proj-
ect at hand, the owner and the contrac-
tor had a few joint projects with the
following highlights:
• The contractor was to do the work,
the owner to inspect it.
• There was a focus on the technical
aspect of the project.
• There was a minor emphasis on time,
cost, scope.
It was not until the environment be-
came unstable, as described above, that:
• Some joint projects did not meet their
time, cost, and scope.
• The need for better utilization of the
scarce resources became obvious.
• The project discussed here with its
high national priority was almost ready
to begin.
Responding to these factors, the
owner’s and the contractor’s manage-
ment called for an approach to effec-
tively execute the project. Their
respective project management de-
partments had responsibility for devel-
oping a plan for integrating their
project organizations.
WHY INTEGRATION?
The owner and the contractor had
four reasons to search for ways to inte-
grate the efforts:
• To demonstrate the contractor’s
sound organization approach.
Volume XXI
24 PROJECT MANAGEMENT JOURNAL
• To illuminate the owner’s involvement.
• To identify the way of the integration.
• To respond to the environmental
changes.
First, the owner wished to be as-
sured that the contractor had a sound
and realistic approach to the organiza-
tion and successful completion of the
project.
Second, both the owner and the con-
tractor wanted the integrated organiza-
tion to clearly illustrate the owner’s
level of involvement in the project.
Third, both the owner and the con-
tractor had a strong need to recognize
the way the integration would go.
But, why the first three reasons? Be-
cause the previous experience of the
owner and contractor suggested that the
project organization significantly influ-
1. DEFINE THE
INTEGRATED PROJECT
ORGANIZATION
Tasks
Operating system
Managing system
Integrative effort
Roles and relationships
4. STRUCTURE THE
OVERALL ORGANIZATION
Overall project organization
structure
Contractor’s organization
structure
Owner’s organization
structure
5. DESIGN THE
INTEGRATION
Integration design technique
Designing the integration
Satisfying the criteria
Figure 1. Actions for the Integrating Project Organization
enced the project’s performance. They
also found support for this approach in
the literature on organizing for project
management [13, p.53][5, p. 84][1, p.69].
Fourth, both the owner and the con-
tractor felt that unless they responded to
the fast-paced environmental changes
described above, their ability to pursue
the project objectives would be seriously
damaged. What is the rationale behind
this reason for integration? Recognition
of the owner’s and the contract’s organi-
zations as two separate systems created
an interface (boundary) between them.
On the other hand, the changes in
the environment, bolstered by the
demanding project task and availabil-
ity of few skilled managers, might
bring about a change in how the proj-
ect was to be designed, procured, or
constructed. Such a change might
2. RECOGNIZE THE
ENVIRONMENTAL IMPACT
Environmental impact
External project stakeholders
External project stakeholders’
influences
3. DEFINE THE PROJECT
EXECUTION PROCESS (PEP)
Decision points
Subsystems
Nature of the project
execution process
6. IMPLEMENT THE
INTEGRATION
Planning
Key issues
Tracking and Correcting
happen, for example, because of
changes in taxation, customs clearance
regulations, overdue payments, con-
tractual terms of payments, or the un-
availability of construction materials.
Any of these could imperil the project.
Hence, a need surfaced to respond to
these changes. The response, the
owner and contractor believed, could
only be possible by their joint effort. To
successfully complete this project, it
became clear that effective manage-
ment was essential at the owner/con-
tractor interface through integration.
INTEGRATION ACTIVITIES
The owner and the contractor chose
a structured approach to integrate their
project organizations, as summarized
in Figure 1. It provides a vehicle to
study a project and recognize avenues
for this integration.
The approach had six key activities:
• Define the integrated project organi-
zation
• Recognize the environmental impact
• Define the project execution process
• Structure the overall organization
• Design the integration
• Implement the integration.
DEFINE THE INTEGRATED
PROJECT ORGANIZATION
Project organization may be consid-
ered as the structure of authority and
responsibility relationships in a project
purposely set up to achieve specific
objectives [7, p. 16]. To the owner and
the contractor such dictionary-style
definitions were not “tangible” enough
to be used as a practical tool for inte-
gration. Rather, they created an opera-
tional definition by combining their
expertise with the definitions offered
in the literature [4][15, p. 170]. This type
of definition identifies a number of ob-
servable criteria, which, if satisfied, in-
dicate that what is being defined as the
integrated project organization exists.
The adopted definition distinguished
the criteria of:
Criterion 1 - the tasks and their
positions. Tasks are pieces of the
project execution process to be done;
their positions are places where they
are in the project execution process.
Criterion 2-the operating systems.
The managing system is that system of
 PROJECT MANAGEMENT JOURNAL 25

activity through which the project is

achieved. Table 1. Examples of External Project Stakeholders and Their
Influences on the Project
Criterion 3- the managing system:
The managing system is one that keeps
Sub-environment Stakeholder Influence
the operating system going.
Criterion 4- the integrative effort:
Political Local • Investment policies
The integrative effort means the quality
Government • Project implementation policies
of the state of collaboration that exists
• Taxes
among project contributors that is re-
• Availability of funds
quired to achieve unity of effort.
• Fair competition requirements
Criterion 5- the roles of the project
contributors and their relation-
Legal Local Customs • Approval of temporary import
ships: The roles define individual au-
Authorities • Customs clearance
thority and responsibility in performing
• Severe penalties for breeching
the tasks; the relationships are those
the customs clearance law
among project contributors in perform-
• Issue of customs clearance
ing their roles.
certificate as a prerequisite
of Final Acceptance Certificate
RECOGNIZE THE
ENVIRONMENTAL IMPACT
Institutional The Owner’s • Issue of variation orders
There were three questions the
Head Office • Adjudicating on the validity
owner and contractor needed to an-
of the contractor’s claims
swer in recognizing the environmental
• Granting of extensions of time
impact:
• Issue of certificates
• Issue of payment orders
● Who affects the project?
• Release of performance bond
● How is the project influenced?
● Why is the environment important?
Cultural Local • Claims for local purchase of
and Sociological Community agricultural products
Here are the answers.
• Environmental considerations
Who affects the project? In the
• Claims for support of local
view of the owner and the contractor, it
was the external project stakeholders community affairs
who affected the project. These stake-
Technological Computer • Massive increase in cheap
holders consisted of all elements outside
Technology computer power
the project that might affect it [2, p.37].
• Increase in controllability of
How is the project influenced?
the project
Starting from the nature of their influ-
• Increase in productivity
ence, the owner and the contractor visu-
• Suitable warranties and support
alized the external project stakeholders
through the following subenvironments:
Economic Local • Materials available for local
political, legal, institutional, cultural and
Manufacturers currency
sociological, technological, and eco-
of Materials • Irregular supply of materials
nomic. Following this pattern of classifi-
• Varying quality of materials
cation, they identified 28 major
stakeholders; e.g., local government
(political), local customs authority Why is the environment important? But they did not overlook that such
(legal), the owner’s head office (institu- It was important because these in- an organization hinged on the nature
tional), local community (cultural and flueces virtually determined the cli- of the project task as well [6].
sociological), computer technology mate in which the project existed.
(technological), and local manufacturers That being the case, the owner and DEFINE THE PROJECT
of materials (economic). the contractor felt that one of the EXECUTION PROCESS
Since there was no precise tech- major jobs of their project manage- The owner and the contractor chose
nique of quantitatively evaluating the ment was to design an integrated to represent the project task by the
influence of the project stakeholders project organization capable of re- Project Execution Process (PEP). Here
upon the projects, the owner and the sponding to the project stakeholders’ is how that happened:
contractor identified and studied their influences. That organization, they
influence in order to understand them. were clear, would largely be shaped ● Select the PEP
Examples of their influences are indi- by the nature of the project ● Develop the PEP
cated in Table 1. stakeholders’ influences. ● Why the PEP, why not WBS?
26
Select the PEP. The owner and the
contractor needed a tool that would
define, organize and graphically dis-
play the total work to be done in order
to complete the project (requirement
1). The tool would also exhibit a start
and finish point of the project tasks
(requirement 2), an emphasis on deci-
sions in between the two (requirement
3), and the interdependencies (re-
quirement 4). They decided that tool
which met all these criteria was the PEP
[15, p. 107]. The next step was to de-
velop it.
Develop the PEP. The PEP which
the owner and the contractor devel-
oped is shown in Figure 2. It was a
five-level process:
Level 0, total project execution
Level 1, primary level
Level 2, key level
Level 3, operational level
Level 4, task level.
PROJECT MANAGEMENT JOURNAL
Each of these levels consisted of a set
of decision points and subsystems.
The PEP had inherent discontinuity
created by the need for decisions. Ar-
rangement of the decision points was
hierarchical, whereby the primary deci-
sion points (e.g., “construction com-
plete”) were at the highest level and below
them were key decision points (e.g.,
“plant erected”), and the operational deci-
sion points (e.g., “area 3 erected” ).
Essentially, the decision points acted
as points in the PEP which the owner
anti the contractor had to pass through
to achieve the project progress.
The primary decision points sepa-
rated the primary subsystems of the
PEP system, thereby determining their
interfaces. Similarly, other decision
points defined other subsystems and&-
termined the interfaces between them.
In that way, the hierarchy of the deci-
sion points produced the hierarchy of
these subsystems: the primary subsys-
Figure 2. Project Execution Process
tems (e.g., “construction”), the key sub-
systems (e.g., “plant erection” ), the oper-
ational subsystems (e.g., “area 3“) anti
task subsystems (e.g., “machinery”). In-
terdependence between the subsystems
of a level was sequential or reciprocal
[14].
Sequential interdependence between
subsystem A and subsystem B means
that subsystem A must be completed
before subsystem B can commerce. Re-
ciprocal interdependence between sub-
system A and subsystem B is when the
outputs of each of the subsystems be-
come the inputs for the other and the
process moves forward through the se-
ries of steps. For simplicity sake, in
Figure 2 the subsystems are repre-
sented as if these interdependencies
were of sequential type only.
Why the PEP, why not WBS?
Because the owner and the contrac-
tor felt that PEP is more comprehen-
sive than WBS. PEP is virtually a sort
 PROJECT MANAGEMENT JOURNAL
of cross-fertilization of WBS and the
milestones. PEP’s subsystems are the
same as the work packages of WBS,
while its decision points basically act
as the milestones. For this reason, PEP
could meet the above requirements
from section “Select the PEP”; the stand-
alone WBS could not. The owner and
the contractor believed that WBS, com-
bined with the milestones, could also
suffice. However, they preferred PEP’s
stress on the need for the decisions,
especially for having some unseasoned
managers in charge. Often such manag-
ers tend to overlook the critical impor-
tance of the need for the decisions.
STRUCTURE THE
OVERALL ORGANIZATION
Setting the overall project structure
was another key responsibility of the
owner and the contractor in integrating
their project organizations. Here is how
it worked.
● Contingency approach
● Contractor’s organization structure
● Owner’s organization structure
in which they:
● Determined the structuring concept
● Structured the contractor’s projector-
ganization
Figure 3. Overall Organization Chart
● Structured the owner’s project orga-
nization
The contingency approach. The
owner and the contractor adopted to
shape the overall project organization
structure by project situational factors
such as the environmental impact, PEP,
and people available. This meant that a
change in the project situation would
create a structural change. Hence, over
the course of the project, different orga-
nization structures were used. Figure 3
indicates one of these structures, relating
to the construction stage.
The contractor’s organization
structure. Major traits of the structure
(see one of its stages in Figure 3) were:
(a) self-reliance qualities, (b) combined
discipline and area-based grouping, and
(c) individual capabilities of the manag-
ers. For the desert project location, with
poor communication facilities combined
with the demanding PEP, a “construction
site-based” organization structure was
set. It had self-reliance qualities, and the
project manager permanently dwelt in
the site. On the other hand, it was PEP
construction operations which largely
shaped the core of the site organiza-
tion. But, the grouping of major ele-
ments of the organizations was also
affected by the following factors. The
requirements for technical consistency
within civil and mechanical engineer-
27
ing disciplines led to a division of the
construction operations department into
two separate subunits: civil and mechan-
ical. Further, these two subunits were
area-based structured. The environmen-
tal impact mostly determined the struc-
turing of the administrative department.
Finally, the contractor tailored the
structure to account for the individual
capabilities of the managers assigned.
For example, instead of having a proj-
ect control unit report directly to the
project manager and due to lack of an
experienced project control manager,
the contractor had this unit report to
the field engineering department man-
ager. The latter was headed by a sea-
soned manager.
The owner’s organization struc-
ture. The owner’s structuring concept
included: (a) the head office as a major
decision maker, (b) the resident depart-
ment built around PEP, and (c) response
to the short supply of skilled managers.
For the remote project construction site
and the demanding PEP, the owner de-
cided to establish site organization (see
one of its stages in Figure 3) that en-
compassed all managing and operating
functions needed for inspection of
the contractor’s on-site work. How-
ever, although the project manager
was living at the site, major decisions
were made at the head office. To tell
28
the truth, the head office based the
decisions, key examples of which are
given in Table 1, on the recommenda-
tions made by the site organization. It
is a normal practice in the owner’s
country, just like as it is in other devel-
oping countries [12, p. 171].
Next, like the contractor, the owner
designed its site organization-the resident
department charged with supervision of
the contractors construction operations–
around PEP. Requirements for skill
grouping and coordination first divided
the resident department into civil and me-
chanical subunits, while geographic lay-
out further divided the two subunits into
area-based groups. On the other hand,
the structuring of the administrative de-
partment was also dominated by the en-
vironmental impact.
Finally, selecting the structure took
into account availability of very few
skilled managers.
DESIGN THE INTEGRATION
This was another critical activity that
clearly mapped what should happen
to integrate the project organization
into one that would allow the project’s
key mangers to work together effec-
tively. To design the integration, the
contractor and the owner answered
three questions:
● Which integration technique should
be used?
● What is the integration design like?
● Are the criteria for integration satisfied?
Which integration technique
should be used? The owner and the
contractor sought to select a technique
capable of integrating their project or-
ganizations. They needed a technique
that would meet the operational cri-
teria of an integrated project organiza-
tion. There were three choices: CPM,
TREND (Transformed Relationships
Evolved Form Network Data), and LRA
(Linear Responsibility Analysis) tech-
nique.
CPM was not selected because it
would emphasize the time relationships
of the project activities rather than the
human relationships (for this reason,
CPM was primarily used for time man-
agement purposes). Viewing the proj-
ect as a social organization, the owner
and the contractor believed that inte-
gration should focus on the relation-
PROJECT MANAGEMENT JOURNAL
ships among people, which were the
nuclei of criteria 4 and 5. While TREND
is capable of meeting these criteria, it
was rejected because it required a
PERT network, which was not avail-
able [15, p. 171].
So the owner and the contractor de-
cided to use LRA. LRA meets criteria4
and 5 requirements, but unlike TREND
it did not call for a PERT network, and
LRA is less complex than TREND.
What is the integration design
like? Designing the integration had six
steps: (1) tasks, (2) interdependencies,
(3) job positions, (4) responsibility
symbols, (5) roles of contributors, and
(6) differentiation of people.
First, the owner and the contractor
established the tasks to be accomplished
in order to complete the project. In fact,
the tasks were subsystems and decision
points from the PEP. Thus, each level of
the PEP, except for the project level,
created a task group for which a separate
LRA was constructed. Linking task
groups (i.e., between the individual
LRAs) was accomplished by including
the decision points into an immediate
lower level task group. For example,
the decision points of the primary level
were included into the task group of
the key level (see Figure 4). Following
this pattern downward the PEP, they
linked the LRAs for individual levels of
the PEP.
In the second step, the owner and
the contractor defined sequential and
reciprocal interdependencies between
the tasks, within each task group. Since
the two interdependencies required
different types and degrees of integra-
tion, this helped them define the in-
tegrative effort needed. For example,
reciprocal interdependence requires
greater integration than sequential and
needs a more flexible approach.
Third, the owner and the contractor
determined the job positions contrib-
uting to performance of each task
group. The job positions related to
both the owner’s and the contractor’s
project site organization.
In the fourth step, they, combining
their experience and the references in
the literature, selected ten symbols that
related the job positions with tasks and
depicted how job positions contrib-
uted to performance of the tasks. The
symbols, described in the Appendix,
included (1) operating function: “Per-
forms task”; (2) managing functions:
“Approves task performance,” Recom-
mends, ” “General supervision, ”
“Boundary (interface) control,” “Moni-
toring,” “Maintenance”; (3) informa-
tion input functions: “Instructions and
information, “ “Advice and informa-
tion”; and (4) information output func-
tion: “Must be informed. ”
Fifth, by symbols from the fourth
step, the owner and the contractor de-
scribed roles of contributors (or job
positions) in performing the tasks. In
doing so, they proceeded as follows:
(1) operating, (2) managing, (3) infor-
mation input, and (4) information out-
put functions.
Finally, in the sixth step, for each task
group the owner and the contractor
showed the causes of differentiation be-
tween the contributors to particular
tasks. These differentiators included
skill, location, time, and sentience [9].
The differentiators (see the Appendix for
details), separated the contributors by
creating interfaces between them. An
examination of the interfaces (bound-
aries) shown on LRAs indicated to the
owner and the contractor the amount of
integrative effort that would be neces-
sary in individual areas of the project.
Are the criteria for integration
satisfied? In designing the integration
the owner and the contractor con-
structed separate LRA for each task
group. A small part of a simplified LRA
(information input and output func-
tions are omitted for clarity) for a key
level is shown in Figure 4. To check on
whether the designed project organi-
zation was integrated, the owner and
the contractor referred to the opera-
tional criteria of the integrated project
organization.
The LRAs constructed identified the
tasks, i.e., the work subsystems and the
decision points, and their positions
and levels (e.g., primary, key). In Fig-
ure 4, the tasks are shown by task
boxes. This meant that Criterion l–the
tasks and their positions–was satisfied.
In the LRAs, the task boxes defined
the operating system and those in-
volved in it. This satisfied Criterion 2–the
operating system.
The LRAs also defined who managed
the operating system. In Figure 4, this is
shown by membership of the managing
functions. Thus, Criterion 3—the manag-
ing system–was met.
 PROJECT MANAGEMENT JOURNAL 29

Interdependencies between the
tasks, and differentiation between the
contributors on the basis of skill, loca-
tion, time and sentience were overlaid
on the LRAs (Figure 4). In that way, the
interfaces between the contributors
and effort needed for the integration of
the interfaces (boundaries) by the
managers were indicated. This met Cri-
terion 4–the integrative effort.
By designing the operating and man-
aging systems, and the integrative ef-
fort, the owner and the contractor
defined the roles and contributions of
people to each task and their relation-
ships in carrying out the tasks. This
meant that Criterion 5–the roles of the
project contributors and their relation-
ships–was fulfilled.
Since all operational criteria adopted
were satisfied, the owner and the con-
tractor found that the designed project
organization was an integrated one.
IMPLEMENT THE INTEGRATION
To build an effective integrated project
organization, the owner and the contrac-
tor placed high priority on implementing
the integration process and focused their
efforts on making the integration hap-
pen. For this purpose, they first installed
the project organization that they had
designed. What followed involved plan-
ning, a focus on key issues, and tracking
and correcting the integration.
Planning. The owner and the con-
tractor used formal planning for imple-
menting the integration. To this end, a
manual was developed. It included im-
portant points in the integration pro-
cess such as: identification of key
issues and mechanisms for considering
them: preparing procedures for inte-
grating the interfaces (boundaries) be-
tween the contributors; defining
progress reporting requirements; track-
ing and correcting open items; defining
actions and responsibilities for pinpoint-
ing and resolving potential problems.
Key issues. In order to increase ef-
fectiveness of the integration, the
owner and the contractor focused their
efforts on key issues such as style, team
building, and making implementation
of the integration a project concern.
Style refers to the distinctive manner
of expression and acting of the key
contributors which becomes charac-
teristic of the culture of the integrated
project organization [3, p.95]. The
owner and the contractor took ac-
tions to create such a style that would
support managing the project as well

Figure 4. A Small Part of a Simplified Linear Responsibility Analysis

for a Key Level of the Project Execution Process
30 PROJECT MANAGEMENT JOURNAL

Table 2. Examples of Actions Taken by the Owner’s and the Contractor’s

Project Managers to Create the Desired Project Style

THE PROJECT STYLE CHARACTERISTICS ACTIONS

Counterparts working together Tour the site with counterpart project

PHYSICAL (teamwork) manager daily
APPEARANCE; Project-related pictures, charts, Make your office look like,a “war room”
and schedules on office walls

We are one team with two sides

Both cultures are interesting
MYTHS and Both sides’ interests should be satisfied Whenever possible, let the counterparts have
STORIES: We trust young managers a joint office
Get the job done Organize group visits to local historical sites
Separate yourself from the position and
stick to the problem
Both project managers are good, and
committed to the project

Gather ideas and information from

CEREMONIES: all over the project organization From time to time, attend lower level
Frequent meetings at all levels joint project meetings
Frequent social gatherings and festivities Celebrate each key event completion

Plan, organize and control with your

counterparts
MANAGEMENT Make decisions Ask counterparts for joint report on an issue
STYLE: No finger pointing for wrong decisions, Recognize high-performance managers monthly
learn the lesson
Quickly execute the decision
If you need help, don’t hesitate to refer
to your boss

as implementing the integration. The
style and some of the actions are de-
scribed in Table 2. Building this was
important because the owner and the
contractor had very divergent cultural
backgrounds as indicated in the intro-
duction of this paper.
Team building activities played a
major role in obtaining consensus on
the integration. The owner and the
contractor took several actions to fos-
ter a team spirit on the project. One
action was keeping all contributors in-
volved and informed. Another was
aimed at understanding roles and rela-
tionships and building a foundation for
teamwork. Identifying the interfaces
and their integration was also one of
these team building actions. The intent
was to create a project situation sup-
portive of running the project and im-
plementing the integration. To
reinforce awareness of the integration,
the owner and the contractors made it
a project concern. This was achieved
by creating a commitment to integra-
tion. Project concern for integration
began with actions of building senior
and project management commitment.
Following involved project manage-
ment advocating the appropriateness
of the integration and inculcating the
commitment of the key contributors.
Thus a commitment to implementing
integration pervaded all key contribu-
tors of the owner and the contractor.
Tracking and correcting. Prob-
lems in implementing integration were
twofold: those. in the initiation stage
were project-people-related, while
those in the project termination stage
were largely of an out-of-project nature.
In the initial integration phase, nei-
ther the owner’s nor the contractor’s
project personnel were able to give up
their own perspectives and shift to a
common perspective. They had diffi-
culty unlearning “the contractor is to do
the work, the owner to approve/reject
it” approach in favor of the joint prob-
lem solving. Because of this, initiating
integration moved slowly. But, the
project’s key managers kept their eyes
open, pinpointed the problems and
corrected them. In doing so, they used
a lot of management-by-walking-
around as well as formal reporting
techniques. Gradually, the integration
forces began to move faster and faster
until they got to full speed. Once this
happened, it continued through proj-
ect termination.
Project termination often abounds
with decisions regarding settling the
final accounts that may have serious
financial consequences for the owner
and the contractor. Hence, the owner’s
and the contractor’s head offices felt
that this was the time to get more in-
volved in negotiating the contract price
changes. The changes were due to the
contract modifications, omissions, and
additions. In this negotiation, each
side’s head office approach was more
likely to get involved in hard negotia-
 PROJECT MANAGEMENT JOURNAL
tion than in principled negotiation.
But, principled negotiation was fa-
vored by the integrated project organi-
zation [8, p.215]. In this case, hard
negotiation did not work, supposedly
because the integrated approach
proved to be successful. The two proj-
ect managers were allowed to run the
project termination show the way they
wanted. They continued the integra-
tive process established earlier. All the
contract changes eventually were set-
tled and the project was phased out.
The owner and the contractor
viewed the project as successful be-
cause: (a) the project met the time,
cost, and performance criteria, (b) the
project was being used by the owner,
(c) the owner was satisfied with the
process by which the project was com-
pleted, and (d) the project started to
benefit the owner [11, p.70]. Admit-
tedly, the integrated project organiza-
tion was only one factor contributing
to this view. Still, when asked to com-
ment on what made the project suc-
cessful, a large majority of the owner’s
and the contractor’s managers re-
sponded: “The way both project orga-
nizations worked as a team. ”
CONCLUSION
In a sizeable, high priority, interna-
tional project, integrating the owner’s
and the contractor’s project organiza-
tion was a major determinant of the
project’s success. The project situation
was characterized by an unstable envi-
ronment, demanding tasks, scarcity of
skilled managers, and divergent cul-
tural backgrounds.
The integration was a complex,
structured operation. First, it was nec-
essary to define what was meant by an
integrated project organization. Fur-
ther activities included recognizing the
environmental impact on the project
and developing a project execution
process. These determined the overall
project organization, which was fol-
lowed by designing and implementing
an integrated project organization.
The integration was resource- and
time-consuming. It could not have hap-
pened if the entire organization of the
owner and the contractor, from senior
management to the project contributors,
had not accepted it as something of great
value in achieving project objectives.
But, it eventually paid off. As one of the
31
project key managers put it: “If I were
manager of a similar project, I would
use integration again. ”
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