11

Chapter ThreeChapter Three

OrganizationalOrganizational

StructuresStructures

22

Types of organizations where Types of organizations where projects reside:projects reside:

• CorporationsCorporations• Government Agencies (EPA, Government Agencies (EPA,

Department of Energy, TSA)Department of Energy, TSA)• Healthcare institutionsHealthcare institutions• International bodies (World Health International bodies (World Health

Organization, World Trade Organization, World Trade Organization, UNICEF, etc.)Organization, UNICEF, etc.)

• Professional AssociationsProfessional Associations

33

Organizational CultureOrganizational Culture

• Described by shared values, norms, Described by shared values, norms, beliefs, and expectationsbeliefs, and expectations

• Design policies and procedures Design policies and procedures according to these beliefsaccording to these beliefs

• Authority and relationships are Authority and relationships are defined by culturedefined by culture

44

Project-Based OrganizationsProject-Based Organizations

• Operations consist “primarily” of Operations consist “primarily” of projects.projects.

• Architectural firms, engineering Architectural firms, engineering firms, consultants, etc.firms, consultants, etc.

• Organizations who adopted Organizations who adopted management of projects ( ex: their management of projects ( ex: their finance system is designed to track, finance system is designed to track, control multiple projects)control multiple projects)

55

Non-project based Non-project based organizationsorganizations

• Projects are invisible in the Projects are invisible in the organizationorganization

• Have classical management Have classical management structurestructure

• Departmental division of work Departmental division of work

66

x

GeneralManager

Engineering Production Sales MarketingAdminis-tration Director Level

Division Level

Department Level

Section Level Functional Responsibility

The Functional Structure

Admin.

xx

Project coordination

77

Functional Structure Functional Structure AdvantagesAdvantages• Easier budgeting and cost control are possibleEasier budgeting and cost control are possible

• Better technical control is possibleBetter technical control is possible

• Specialists can be shared Specialists can be shared

• Personnel can be used on many Personnel can be used on many different projects.different projects.

88

Advantages Advantages (Continued)(Continued)

• It provides continuity in the functional It provides continuity in the functional disciplines; policies, proceduresdisciplines; policies, procedures

• Lines of responsibility are easily Lines of responsibility are easily defined and understandable.defined and understandable.

99

Functional Structure Functional Structure DisadvantagesDisadvantages• No one individual is directly No one individual is directly

responsible for the total project (i.e., no responsible for the total project (i.e., no formal authority; committee solutions).formal authority; committee solutions).• It does not provide the project-oriented It does not provide the project-oriented

emphasis necessary to accomplish the emphasis necessary to accomplish the project tasks.project tasks.• Coordination becomes complex, and Coordination becomes complex, and

additional lead time is required for additional lead time is required for approval of decisions.approval of decisions.

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Disadvantages Disadvantages (Continued)(Continued)

• Decisions normally favor the strongest Decisions normally favor the strongest functional groups.functional groups.• There is no customer focal point.There is no customer focal point.• Response to customer needs is slow.Response to customer needs is slow.

1111

Division Manager

Departmental Project Management

Department ZDepartment X Department Y

Project Leaders Project Leaders Project Leaders

Section Level Section Level Section Level

1212

Project ExpeditorProject Expeditor

PIPING HVAC CHEMICAL DRAFTING

ENGINEERING DIVISION

LIAISON

DEPT.

Formal authority / reporting flow

Informal authority / reporting flow

legend

1313

Project Coordinator Project Coordinator (Line-Staff organization)(Line-Staff organization)

DEPT. MANAGER DEPT. MANAGER

PROJECT MGR.

DIVISION MGR.LEGEND

FORMAL FLOW

INFORMAL FLOW

1414

Project Coordinator Project Coordinator WeaknessesWeaknesses• Shared authority with upper management.Shared authority with upper management.

• Line-staff project managers who reported to Line-staff project managers who reported to a division head did not have any authority or a division head did not have any authority or control over those portions of a project control over those portions of a project in in other divisionsother divisions; that is, the project manager ; that is, the project manager in the engineering division cannot direct in the engineering division cannot direct activities in the manufacturing division.activities in the manufacturing division.

1515

Pure Project (Projectized) Structure

General Manager

Project AManager

Project BManager

Project CManager

ENG. MFG.ENG. MFG. ENG. MFG.

Project coordination

1616

Projectized Structure Projectized Structure AdvantagesAdvantages• Complete line authority over the project Complete line authority over the project

• The project participants work directly for the The project participants work directly for the project manager. project manager.

• Strong communications channels.Strong communications channels.

• Staffs can maintain expertise on a given Staffs can maintain expertise on a given project without sharing key personnel.project without sharing key personnel.

• Rapid reaction time is provided. Rapid reaction time is provided.

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Advantages Advantages (Continued)(Continued)

• A focal point develops for out-of-company A focal point develops for out-of-company customer relationscustomer relations

• Interface management becomes easier as Interface management becomes easier as unit size is decreased.unit size is decreased.

1818

Projectized Structure Projectized Structure DisadvantagesDisadvantages• Cost of maintaining this form Cost of maintaining this form

• Duplication of effort, facilities, and Duplication of effort, facilities, and personnel; inefficient usagepersonnel; inefficient usage

• Tendency to retain personnel on a Tendency to retain personnel on a project long after they are needed. project long after they are needed.

1919

Disadvantages Disadvantages (Continued)(Continued)• No share of Technology No share of Technology

• There is a lack of career continuity There is a lack of career continuity and opportunities for project and opportunities for project personnel.personnel.

2020

2121

The Matrix Management Structure

Engineering Operations Finance Others

Project Mgr.X

Project Mgr.Y

Project Mgr.Z

GeneralManager

Project Responsibility

Fu

nct

ion

al R

esp

onsi

bili

ty

2222

Matrix DevelopmentMatrix Development• Horizontal as well as vertical channels Horizontal as well as vertical channels

must exist for making commitments.must exist for making commitments.• There must be quick and effective There must be quick and effective

methods for conflict resolution.methods for conflict resolution.• There must be good communication There must be good communication

channels and free access between channels and free access between managers.managers.

2323

Matrix Development Matrix Development (Continued)(Continued)

• All managers must have input into the All managers must have input into the planning process.planning process.

• Both horizontally and vertically Both horizontally and vertically oriented managers must be willing to oriented managers must be willing to negotiate for resources.negotiate for resources.

• The horizontal line must be permitted The horizontal line must be permitted to operate as a separate entity except to operate as a separate entity except for administrative purposes.for administrative purposes.

2424

Matrix Structure Matrix Structure AdvantagesAdvantages• Policies and procedures can be set up Policies and procedures can be set up

independently for each projectindependently for each project

• Rapid responses are possibleRapid responses are possible

• Each person has a “home” after project Each person has a “home” after project completion.completion.

• Because key people can be shared, the Because key people can be shared, the program cost can be minimizedprogram cost can be minimized

2525

Matrix Structure Matrix Structure AdvantagesAdvantages (Continued)(Continued)• Authority and responsibility are Authority and responsibility are

sharedshared

• Stress is distributed among the team Stress is distributed among the team (and the functional managers)(and the functional managers)

2626

Matrix Structure Matrix Structure DisadvantagesDisadvantages• Multidimensional information flow.Multidimensional information flow.• Multidimensional work flow.Multidimensional work flow.• Dual reporting.Dual reporting.• Continuously changing priorities.Continuously changing priorities.• Management goals different from Management goals different from

project goals.project goals.• Potential for continuous conflict and Potential for continuous conflict and

conflict resolution.conflict resolution.• Difficulty in monitoring and control.Difficulty in monitoring and control.

2727

The Strong Matrix Structure (With a Director of Project Management)

Director:Project Mgmt.

Director:Engineering

Director:Manufacturing

Director:Finance/Admin.

Project Mgr. X

Project Mgr. Y

Project Mgr. Z

General Manager

2828

Composite OrganizationComposite Organization

• Most organizations have all of these Most organizations have all of these structures at various levels called structures at various levels called composite organizationcomposite organization

Ex: New product development with a Ex: New product development with a skunks work team (HP disk drives) skunks work team (HP disk drives)

2929

PMOPMO

• Can exist in any organizational formCan exist in any organizational form

• Can have advisory influence orCan have advisory influence or

• Can have formal grant authorityCan have formal grant authority

• PM directly reports to PMOPM directly reports to PMO

3030

Which Structure Is Best For Project Management?

3131

Factors For Selecting Factors For Selecting An Organizational An Organizational FormForm• Project sizeProject size

• Project lengthProject length

• Project management experienceProject management experience

• Philosophy and visibility of Philosophy and visibility of executivesexecutives

• Project locationProject location

• Available resourcesAvailable resources

• Unique aspects of the projectUnique aspects of the project