Project ManagementA Managerial ApproachChapter 4

Project Organization

Growth of Project Oriented OrganizationsThere are many reasons for the rapid growth, but most of them can be grouped in four general areas:TimeDiversified knowledgeRapid expansion of technological possibilities.Senior managers rarely feel much confidence

Chapter 4-1

Growth of Project Oriented OrganizationsThere are many reasons for the rapid growth, but most of them can be grouped in four general areas:Speed and market responsiveness have become absolute requirements for successful competitionThe development of new products, processes, or services regularly requires input from diverse areas of specialized knowledgeChapter 4-1

Growth of Project Oriented Organizations

Four reasons for growth (cont.)Rapid expansion of technological possibilities in almost every area of enterprise tends to destabilize the structure of organizationsA majority of senior managers rarely feel much confidence in their understanding and control of the activities in their areas

Chapter 4-2

Types of Project OrganizationsThere are two fundamentally different ways of organizing projects within the parent organizationThe project as part of the Functional OrganizationThe project as a free-standing part of the parent organizationA third type, called a Matrix Organization is a hybrid of the two main typesEach has advantages and disadvantagesChapter 4-3

The Project as Part of the Functional Organization

The Project as Part of the Functional OrganizationChapter 4-4

AdvantagesDisadvantages

Maximum flexibility

Stimulates sharing of knowledge & experience

Place of Continuity

Path for career advancementClient is not the focus

Limited to the functional area

Unclear responsibility

Time Consuming

Slow decision making

Tendency to sub optimize

The Project as Part of the Functional OrganizationAdvantages of using the functional elements of the parent organization as the administrative home for a project include:Maximum flexibility in the use of staff. Individual experts can be utilized by many different projectsSpecialists in the division can be grouped to share knowledge and experienceThe functional division also serves as a base of technological continuity when individuals choose to leave the projectThe functional division contains the normal path of advancement for individuals whose expertise is in the functional areaChapter 4-4

The Project as Part of the Functional OrganizationThere are also disadvantages to housing the project in a functional area:The client is not the focus of activity and concernThe functional division tends to be oriented toward the activities particular to its functionOccasionally, no individual is given full responsibility for the projectThere are often several layers of management between the project and the client. Thats why it is time consumingThere is a tendency to suboptimize the projectChapter 4-5

Pure Project Organization

Pure Project OrganizationChapter 4-6

AdvantagesDisadvantagesFull Line AuthorityShortened Line of CommunicationCadre of expertsHigher CommitmentSwift DecisionUnity of CommandSimple & flexible StructureDuplication of effortNegative Tendency of PMLacking of Expertise KnowledgePotential threatUncertainty about future

Pure Project OrganizationAdvantages of a pure project organization:The project manager has full line authority over the project. All members of the project work force are directly responsible to the project managerWhen the project is removed from the functional division, the lines of communication are shortenedWhen there are several successive projects of a similar kind, the pure project organization can maintain a permanent cadre of experts who develop skills in specific technologiesChapter 4-6

Pure Project OrganizationAdvantages of a pure project organization (cont.)A project team that has a strong and separate identity and develops a high level of commitment from its membersBecause the authority is centralized, the ability to make a swift decision is enhancedUnity of command existsPure project organizations are structurally simple and flexible, which makes them relatively easy to understand and implementChapter 4-7

Pure Project OrganizationDisadvantages of a pure project organization:Each project tends to be fully staffed which can lead to a duplication of effort in every area from clerical staff to technological supportThere is a need to ensure access to technological knowledge and skills that results in an attempt by project managers to stockpile equipment and technical assistanceThe functional division is a repository of technical lore, but it is not readily accessible to team members of the pure project teamChapter 4-8

Pure Project OrganizationDisadvantages of a pure project organization (cont.)Pure project groups seem to foster inconsistency in the way in which policies and procedures are carried out. In a pure project organization, the project takes on a life of its own and it can threatens the parent organizations cultureThere tends to be concern among team members about life after the project endsChapter 4-9

The Matrix OrganizationThe matrix organization is a combination of functional and pure projectA matrix organization can take on a wide variety of specific formsProject or strong matrix organization most resembles the pure project organizationThe coordination or functional or weak matrix most resembles the functional formThe balanced matrix lies in between the others

Chapter 4-10

The Matrix OrganizationRather than being a stand alone organization, like the pure project, the matrix project is not separated from the parent organization:

Chapter 4-11

The Matrix OrganizationAs with other organizational forms, the matrix organization has its own unique advantages:The project is the point of emphasisBecause the project is overlaid on the functional divisions, the project has reasonable access to the reservoir of technology in all areasThere is less anxiety about what happens when the project is completed

Chapter 4-12

The Matrix OrganizationChapter 4-12

AdvantagesDisadvantagesRapid as pure project

Participation of admin from Parent Firm

Balance of resourcesBalance of PowerPolitical InfightingTough Shutting DownUncomfortable for PMViolates Unity of Command

The Matrix OrganizationAdvantages of a Matrix (cont.)Response to clients needs is as rapid as in the pure project organizationMatrix management gives the project access to representatives from the administrative units of the parent firmThe matrix organization allows a better company-wide balance of resources to achieve goals

The Matrix OrganizationThere are also disadvantages to using the matrix organization; most involve conflict between the functional and project managers:The balance of power between the project and functional areas is very delicateThe movement of resources from project to project may foster political infightingProblems associated with shutting down projects can be as severe as in a pure project organizationChapter 4-14

The Matrix OrganizationDisadvantages of a Matrix (cont.)The division of authority and responsibility in a matrix organization is complex, and uncomfortable for the project manager. Matrix management violates the management principle of unity of command. Project workers have at least two bosses, their functional heads and the project manager.

Chapter 4-15

Mixed Organizational SystemsDivisionalization is a means of dividing a large organization into smaller more flexible units This enables the parent organization to capture some of the advantages of small, specialized organizational units while retaining some of the advantages that come with larger size unitsChapter 4-16

Mixed Organizational SystemsPure functional and pure project organizations may coexist in a firmChapter 4-17

Choosing an Organizational FormA useful procedure for selecting an organizational form is:Identify the specific outcomes desiredDetermine the key tasks to attain these outcomesSequence the key tasksDetermine which project subsystems will be assigned which steps and which subsystems must closely cooperateIdentify any firm or project characteristicsConsider all pros and cons, then make a decision

Chapter 4-31

Choosing an Organizational FormCriteria for the selection of a project organization:1. Define the project with a statement of the objective(s) that identifies the major outcomes desired2. Determine the key tasks associated with each objective and locate the units in the parent organization that serve as functional homes for these types of tasks3. Arrange the key tasks by sequence and decompose them into work packagesChapter 4-20

Choosing an Organizational FormCriteria for the selection of a project organization (cont.): 4. Determine which organizational units are required to carry out the work packages and which units will work particularly closely with which others 5. List any special characteristics or assumptions associated with the project 6. In light of items 1-5, and with full cognizance of the pros and cons associated with each structural form, choose a structure