Project management a managerial approach chapter 04

Project Management: A
Managerial Approach
Chapter 4 – Project Organization
© 2006 John Wiley


Overview
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Project “Fit” in Organizations
Types of Organizations
The Project Management Office (PMO)
Project Teams

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Growth of Project Oriented
Organizations
• There 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 competition
– The development of new products, processes, or
services regularly requires input from diverse areas
of specialized knowledge
© 2006 John Wiley

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 organizations
– A majority of senior managers rarely feel much
confidence in their understanding and control of the
activities in their areas
© 2006 John Wiley


Types of Project Organizations
• There are two fundamentally different ways of
organizing projects within the parent organization
– The project as part of the Functional Organization
– The project as a free-standing part of the parent
organization

• A third type, called a Matrix Organization is a
hybrid of the two main types
• Each has advantages and disadvantages
© 2006 John Wiley


The Project as Part of the Functional
Organization

• Advantages 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 projects
– Specialists in the division can be grouped to share knowledge and
experience
– The functional division also serves as a base of technological
continuity when individuals choose to leave the project
– The functional division contains the normal path of advancement
for individuals whose expertise is in the functional area
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The Project as Part of the Functional
Organization
There are also disadvantages to housing the project in a
functional area:
– The client is not the focus of activity and concern
– The functional division tends to be oriented toward the activities
particular to its function
– Occasionally, no individual is given full responsibility for the
project
– There are often several layers of management between the
project and the client
– There is a tendency to suboptimize the project
© 2006 John Wiley

Pure Project Organization
• Advantages 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 manager
– When the project is removed from the functional division, the
lines of communication are shortened
– When 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 technologies

© 2006 John Wiley


Pure Project Organization
• Advantages 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 members
– Because the authority is centralized, the ability to make a swift
decision is enhanced
– Unity of command exists
– Pure project organizations are structurally simple and flexible,
which makes them relatively easy to understand and implement
– The organizational structure tends to support a holistic approach
to the project
© 2006 John Wiley


Pure Project Organization

• Disadvantages 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 support
– There is a need to ensure access to technological knowledge and
skills that results in an attempt by project managers to stockpile
equipment and technical assistance
– The functional division is a repository of technical lore, but it is
not readily accessible to team members of the pure project team

© 2006 John Wiley


Pure Project Organization
• Disadvantages 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
– There tends to be concern among team members about
“life after the project ends”
© 2006 John Wiley


Pure Project Organization

© 2006 John Wiley

The Matrix Organization
• The matrix organization is a combination of
functional and pure project
– A matrix organization can take on a wide variety of
specific forms
• “Project” or “strong” matrix organization most resembles
the pure project organization
• The “coordination” or “functional” or “weak” matrix most
resembles the functional form
• The “balanced” matrix lies in between the others
© 2006 John Wiley


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

© 2006 John Wiley


The Matrix Organization
• As with other organizational forms, the matrix
organization has its own unique advantages:
– The project is the point of emphasis
– Because the project is overlaid on the functional
divisions, the project has reasonable access to the
reservoir of technology in all areas
– There is less anxiety about what happens when the
project is completed

© 2006 John Wiley


The Matrix Organization
• Advantages of a Matrix (cont.)
– Response to client’s needs is as rapid as in the pure
project organization
– Matrix management gives the project access to
representatives from the administrative units of the parent
firm
– The matrix organization allows a better company-wide
balance of resources to achieve goals
– There is a great deal of flexibility in precisely how the
project is organized within the matrix
© 2006 John Wiley


The Matrix Organization
• There 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 delicate
– The movement of resources from project to project may
foster political infighting
– Problems associated with shutting down projects can be
as severe as in a pure project organization
© 2006 John Wiley

The Matrix Organization
• Disadvantages 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.

© 2006 John Wiley


Mixed Organizational Systems
• Divisionalization 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 units

© 2006 John Wiley


Mixed Organizational Systems
• Pure functional and pure project organizations may
coexist in a firm

© 2006 John Wiley

Mixed Organizational Systems
• Advantages of a mixed organization:
– The hybridization of the mixed form leads to flexibility
– The firm is able to meet special problems by
appropriate adaptation of its organizational structure

• Disadvantages include:
– Dissimilar groupings within the same accountability
center tend to encourage overlap, duplication, and
friction because of incompatibility of interests
– Conditions still exist that result in conflict between
functional and project managers
© 2006 John Wiley


Staff Organization

© 2006 John Wiley


Choosing an Organizational Form
• Selecting the organizational interface between the project
and the firm is a difficult task
– The choice is determined by the situation, but is also partly
intuitive
– Must consider the nature of the potential project, the
characteristics of the various organization options, the advantages
and disadvantages of each, the cultural preferences of the parent
organization, and then make the best compromise that can be made

© 2006 John Wiley


Choosing an Organizational Form
• Criteria for the selection of a project organization:
– 1. Define the project with a statement of the objective(s) that
identifies the major outcomes desired
– 2. 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 tasks
– 3. Arrange the key tasks by sequence and decompose them into
work packages
© 2006 John Wiley


Choosing an Organizational Form
• Criteria 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
© 2006 John Wiley