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This paper describes the application of a situational management training program for project managers and functional managers of a large project-oriented engineering department of a national production company. The engineering department oversees the design and construction of large capital products for the company. The steps included a situational assessment of management needs from the perspectives of project managers, project team members, functional managers, and functional staff members; an assessment of the present skill levels of project and functional managers from the perspectives of all four groups; and an identification of the areas to be targeted for management development.