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Advanced Project Management

Chapter 5

BASIC PROJECT
ORGANIZATION STRUCTURES
Basic Project Organization
Small and Medium Projects
Chapter 5 2
Levels of Project
Organization:
1. External or Global Project Organization
- Involves parent departments and
companies in projects.

2. Internal Project Organization


- Project is independent from external
relationships.
- Exclusive within the individuals and
group members.
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1. External
Organization Forms
• Dedicated Project Team ( Including task force)
• Matrix
• Functional Matrix
• Balanced Matrix
• Project Matrix
• Contract Matrix
• Hybrid Structures
• Modular Structures
• Hybrid Structures
• Modular Network Structures

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II. Larger Project Organizations
and Internal Structure Forms

• Internal functionalization
• Divisionalization
• The ‘Federal’ organization
• Central and decentralized form of larger
organization

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Project Organization
External Organization Forms
Chapter 5 6
A. Dedicated Project Team

• Also called task force, working group, special


team.
• Preferred organization by project managers.
• Project manager has full authority over
resources.
• Temporary organization on project length basis.
• Reduces team members when no longer needed.
• Appropriate for company’s single projects.
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A. Dedicated Project Team
PROS
1. Goal oriented, simpler and easier to control.
2. Avoids problems of more complex organization
forms.
3. Better integration of members.
4. Faster, more direct communication.
5. Conflicts are easier to solve.

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A. Dedicated Project Team
PROS

6. Maximizes project completion within budget and


specification.
7. Easily contained within a given accommodation
unit.

Note: Containment is important for confidential


natured projects.

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A. Dedicated Project Team
CONS
1. Not a flexible way to use company resources.
2. In a company, more teams, more specialist in
payroll.
3. Difficulty of switching specialists between
projects.
4. Difficult division of labor within functions.
5. Not for several simultaneously handled small
projects

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B. Task Force Organization

• Special form of dedicated project


team.
• Assembled to perform particular
tasks.

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B. Task Force Organization
Task force preferred situation:

1. Task force for a management project.


• Projects on startup.
• Ideal for carrying out initial studies.
• Used thereafter for implementation of
agreed move.

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B. Task Force Organization

• Delegates are in with the development of


project schedule and accommodation
plans.
• Delegates come from all significant
functional departments.
• Given security to offices to preserve
confidentiality.

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B. Task Force Organization
Requirements for delegates:

1. Removed from original workplace to


work secretly.
2. Delegates are sufficiently senior for
decisions needing authority.

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B. Task Force Organization
Task force preferred situation:

2. Task force for rescuing an ailing


project
• Projects that a relate and needs
rescue.
• Force dedicated to rescuing project
form disaster.

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B. Task Force Organization
Steps to take:
1. Decide who will lead the force.
2. If no one is available, senior delegate is
chosen from each functional group.
3. (The functional group needs to have work
remaining on the project.)
4. Accommodation (war room) is set up for
delegate use.
5. Force member issues instruction to own
group.
6. Expert project manager oversee the
project.
7. Expert project manager reports to the
owner.
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C. Matrix Organization

• Fashionable for projects during 1970’s


and 1980’s.
• Flexible and can cope with complex
organizational needs.

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C. Matrix Organization
CONDITIONS
• Matrix or project manager is appointed to
manage.
• Functional groups are intact beyond
project life.
• Individuals on project are responsible to
two (2) managers:
a) Parent group functional manager
b) Project manager
• Authority is shared between functional and
project manager. 18
C. Matrix Organization

ROLE OF MANAGERS

• Functional managers allocates their own


departmental personnel. Responsible for
technical decisions.
• Project managers rely on functional
departments’ support and services.

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C. Matrix Organization
ADVANTAGES OF MATRIX CONCEPT
• Permits integration of individuals, groups,
organizational units and companies into a
single organization.

• Flexible arrangement to organize small mixed-


function group.

• Establishes a group of organizational identity.


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C. Matrix Organization
PROBLEMS WITH MATRIX ORGANIZATION

• Creates many human relations problem.


• Conflicts with traditional organization
theory:
1. Inherent dual subordination.
2. Division of authority and
responsibility.
3. Without corresponding authority.
4. Disregard for hierarchical principles.
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C. Matrix Organization
PROBLEMS WITH MATRIX ORGANIZATION

• Brings project manager, functional


manager or other company managers in
direct confrontation.
• Project manager’s authority doesn’t match
responsibility.
• There is an ‘Authority Gap’.
• Complex, ambiguous and uncertain
structures.
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C. Matrix Organization

FORMS OF MATRIX ORGANIZATION

• Functional Matrix (Weakest Form)


• Balanced Matrix
• Project Matrix (Strongest Form)

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D. Hybrid Structures

• Two or more project organization


exists together in a company.

• Also found in projects involving


more than one company.

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Forms of Hybrid
Structures

1. Single Company

• Full-time- individuals and groups whose work


is totally utilized.
• Part-time- individuals or groups with rare
skills retained in functional departments.

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Forms of Hybrid
Structures

2. Large Project/ Multiple company

• Companies that have their own project


organization.
• Companies have different authority
relationships with their people.

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E. Modular Network
Structures
• Used by project oriented
companies and obtains maximum
flexibility.

• Individuals, functional groups and


small mixed-organization units
operate in discrete facilities.
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E. Modular Network
Structures
• Loose, flexible network of
relationship is founded within and
between.

• Entities operate on modular basis.


“Plugged in and out” of projects as
required.
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External Organization Forms
ORGANIZATIONAL RESPONSIBILITIES
Chapter 5 29
Organizational Responsibilities
Two Methods for Clarifying Organizational Responsibilities

1. Contractor- Consignee II. Responsibility Matrix


Principle
• Method for overcoming potential conflict between • Table indicating who is expected to do what in
project manager and functional manager. a project.
• Project manager has written contractual
relationships with outside companies. • Permits individuals to check what their
responsibilities are.
• They need to maintain goodwill and reputation to
ensure future business.
• Project manager has formal basis of authority.
• Authority is formal and both parties know the
extent and limitations of their contractual
relationship.

Chapter 5 30
Advanced Project Management
Chapter 6

ORGANIZING THE LARGER


PROJECT
Organizations
Sizes of Organizations

1. Small Organization II. Medium Organization


• Individuals as members of small mixed project • As projects grows, functional individuals are
while still belonging to their function groups. replaced by functional groups.
• Individual motivation is high. • Integrating project manager is close to the
• Low risk of conflict. Integration is good. action and is small enough to allow mutual
• Emphasizes informality, flexibility and adjustments and effective horizontal groups.
adaptation.
• Conflict is minimal.
• Motivation is high.
• Teamwork prevails.
• Great vitality and enthusiasm.
Chapter 6 32
Organizations
Sizes of Organizations

III. Large Organization


• Large project organizations must
divisionalized with:

• Dedicated internal project teams


• Functional structure
supplemented with a matrix.

• Develops an internal organizational structure.

Chapter 6 33
FACTORS INFLUENCING THE
ORGANIZATIONAL
STRUCTURE

1. Number and size of organizational


units.
2. Organizational structure form of
these units.
3. The extent of functionalization.
4. The span of control at each level.
5. Degree of centralization and
decentralization.

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Larger Project
Internal Organization Forms
Chapter 6 35
INTERNAL
ORGANIZATION
Structure of relationships between individuals and groups working on
the project viewed as a separate entity.

Chapter 6 36
Variable Factors
1. Sizes of organizational units.

2. Degree of centralization and


decentralization.

3. Overall form of organizational


structure.

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Concepts

1. Internal Functionalism

2. Divisionalization

3. Project headquarters assuming role


of parent company

4. Federal Project Organization


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MATRIX ORGANIZATION

Chapter 6 39
DIVISIONAL ORGANIZATION

Chapter 6 40
FEDERAL ORGANIZATION

Chapter 6 41
Practical Aspects of Basic
Form in Larger Project Forms in Larger
Projects

1. Centralization versus
decentralization

2. Centrally controlled project


organization

3. Federal Organization

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1. Centralization versus
Decentralization

1. Conflicting needs
• Discrete division handled
independently.
• Though handled independently,
integration is still needed.

2. Need for control and performance


measurement.

3. Need for individual project units to


be autonomous. 43
II. Centrally Controlled
Project Organization

• Increased central staff function


that support the project manager.

• Leads to formation of
headquarters.

• Composing strong staff groups at


the centre.
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II. Centrally Controlled
Project Organization

• Tall hierarchy, small span of


control.

• Strong centralized department


assists in control.

• Bureaucracy leading to
“Organizational Arthritis.”
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II. Centrally Controlled
Project Organization
PROBLEMS WITH OVER-CENTRALIZED
CONTROL

• Uncertainty in authority and


responsibility due to complexity.

• Information overload at center.

• Longer times for decision-making.

• Motivation and teamwork impaired.


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III. Federal Organization
• Extreme opposite of centrally
controlled project organization.

• Flat, flexible, decentralized.

• Smaller central staff at centre.

• Minimized hierarchical interference


and central control.
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III. Federal Organization
• Project organization arranged in
independent organizational units.

• Organizational units aligned with


Work Breakdown Structure (WBS)
and Organization Breakdown
Structure (OBS).

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ACCOUNTABILITY

Being answerable for satisfactory fulfillment of task.

Chapter 6 49
RESPONSIBILITY

Obligation incurred by job holders in organization.

Chapter 6 50
DELEGATION OF
ACCOUNTABILITY
RESPONSIBILITY
1. Delegation of activity to
managers.

2. There is discrete responsibility for


every task.

3. Managers should be aware what


is expected of them.

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Consenquences:

1. Smaller units increases solidarity


and unit loyalty.

2. Team development and


teamwork are facilitated.

3. Creates shared values, common


clear-cut objectives and aligns
self-interest.
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Consenquences:

4. Smaller units increases solidarity


Individual and group motivation
is increased.

5. Hierarchical control minimized


and replaced by self-control.

6. Reduced dysfunctional conflict


and politics.
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Changes needed in adopting
approach

1. Attitude and culture.

2. Establishment of criteria system


and information movement.

3. Implementation of good reward


system.

4. Establishment of larger
progression structure.
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Internal Organization Forms
Organization and Project Life Cycle
Chapter 6 55
Stages
1. Conception
2. Definition
3. Design
4. Procurement
5. Execution
6. Commissioning and
handover.
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Project Organization
Typical Progression

1. Conception
2. Definition
3. Design
4. Execution

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Project Organization
Typical Progression

1. Conception
2. Definition
3. Design
4. Execution

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Internal Organization Forms
Management Contracting
Chapter 6 59
Discrete management
roles that use management
contractors
1. Overall management role
integrating all those involved.

2. Client management roles.

a. Pre-contract management,
organization, planning and control
of:
• Conception
• Definition
• The contracting process. 60
Discrete management
roles that use management
contractors
b. Post- contract.
• Decision, approvals, liaison, direction.
• Administration, supervision, technical
monitoring, quality control of:
1. Design and procurement
2. Execution/ construction.
3. Design management role
4. Execution/construction
management role.

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Discrete management
roles that use management
contractors

4. Design management role.

5. Execution/construction
management role.

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Management Contacting
Combined Management Roles
Chapter 6 63
Combined
Management Roles

1. Dual management
2. Tripartite management
3. Management contracting
a) Construction management
b) Design and build
c) Project management
contracting

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I. Dual Management

1. Mirror image organizational


structure.

2. Both client and contractor have


own project managers.

3. Based on trust and teamwork


between owner and contractor.
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I. Dual Management

Forms of dual management

1. Clients project manager and


team lead in PM role, with
contractor in secondary role.

2. Main contractor takes


primary role and the owner,
secondary.
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I. Dual Management

Forms of dual management

3. Both project managers form


an implicit partnership.

4. Contractor’s PM is combined
with client’s team in explicit
partnership.

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II. Tripartite Management

1. Management roles shared


between three parties.

2. Each might have own project


manager.
• The client or owner
• A consultant or an
architect
• A construction contractor68
II. Tripartite Management

3. Contract procurement method


• No single point accountability and
responsibility for the whole project.

• Overall integration between client,


design and contractor is weak or
missing.

• Bias
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III. Management Contracting

1. Construction Management
Contracting

2. Design and Build

3. Project Management
Contracting

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III. Management Contracting

1. Construction Management
Contracting

• An alternative to using principal


contractor.

• Has a construction management


agent for the client. Contracts are let
directly to the client.

• Contractor lets the construction


contract after approval of client. 71
III. Management Contracting

2. Design and Build


• One contractor is employed to design,
manage and construct the project.

• As a principal contractor, carries out all


design and construction.

• As the client’s agents, managing the


consultants and contractors who carry out
actual design and construction.

• As a combination. 72
III. Management Contracting

3. Project Management Contracting


• Client has responsibility for three
management roles during:

i. Pre-contract
ii. Post contact
iii. Overall project management

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THANK YOU!
Escalona, Carmela Jane H.
Project Management
AR52FC2

Instructor
Ar. Rolando A. Pinangat