Chapter Three - Project Management Structure: Tsegabrhan Mekonen (PHD) 1

Chapter Three - Project Management Structure
Chapter Objectives:
• To Identify and understand the different types of project
organization
• To choose the appropriate project management structure
• To appreciate the role of culture in project organization
Tsegabrhan Mekonen (PhD) 1

Project Management Structures
• To manage a project, project owner (a company…) has
to set up a project organization, which can supply the
resources for the project and provide service during its
life cycle
• It explains how the activities of the project and the
people involved are organized.
• A project structure defines the lines of authority,
responsibility, accountability, communication
framework, work centers…
• An effective organization ensures that clear lines of
authority exist, and that every member of the project
knows what he or she must do to make the project a
success Tsegabrhan Mekonen (PhD) 2
Why Organize the Work?
• Provides a basis for organizing the project
– Budget and estimates

– Schedule and tracking
– Documentation
– Personnel assignments

• Challenges to Organizing Projects
– The uniqueness and short duration of projects
relative to ongoing longer-term organizational
activities
– The multidisciplinary and cross-functional nature of
projects creates authority and responsibility
dilemmas.
• Choosing an Appropriate Project Management
Structure
– The best system balances
the needs of the project
with the needs of the
Project Organogram
• The structure of project organization is
important for the smooth functioning of the
project.
• There are three main types of project organizations
in practice:
– Functional project organization
– Pure Project organization
– Matrix

• Organizing Projects: Functional organization

– It uses functional units of the parent organization as
home for the project
– Different segments of the project are delegated
to respective functional units.
– Coordination is maintained through normal
management channels.
– Used when the interest of one functional area
dominates the project or one functional area has a
dominant interest in the project’s success.
Cont’d
1. The Project as part of the functional organization
Proj. Coordination
CEO
Production Engineering … Marketing ….

Manager
Staff Staff Staff
Staff Staff
The circled boxes represent staffs engaged in the project

Functional Organizations
8
Tsegabrhan Mekonen (PhD)
Cont’d
Characteristics Functional Org Structure
Project Mgr’s Authority Little
Resource Availability Little
Who controls project budget Functional Manager
Project Mgr’s Role Part-time
Project Mgr Admin Staff Part-time

Functional Organization of Projects
• Disadvantages
• Advantages
1. Less focus on the project
1. No Structural Change
2. Problem of shared
2. Flexibility in the use of responsibility/ lack of
staff ownership
3. In-Depth Expertise & 3. Poor Integration/ lack of
an expert can be used coordinated effort
by many projects
4. Slow and Sub-optimization of
4. Knowledge sharing is the project
easy
5. Weak individual motivation
5. Individual
development 6. Does not facilitate holistic
Tsegabrhan Mekonen (PhD)approach 10
Project Management Structures (cont’d)
2. Organizing Projects: Pure Project/ Projectized

organization
– Dedicated Teams
– Teams operate as separate units under the
leadership of a full-time project manager.
– In a projectized organization where projects are the
dominant form of business, functional departments
are responsible for providing support for its teams.

Cont’d
Pure project organization
Project Manager
Production Engineering … Marketing ….

Manager
Line A Mechanical Product B

Cont’d….
Pure Project/Projectised organization
CEO
Project Project Project

Manager Manager Manager
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
(Circled boxes represent staff engaged in project activities.)

Projectized Organizational Structure

Dedicated Project Team

Cont’d
Projectized
Characteristics
Org Structure
Project Mgr’s Authority High to Almost Total
Resource Availability High to Almost Total
Who controls project budget Project Manager
Project Mgr’s Role Full-time
Project Mgr Admin Staff Full-time

Cont’d
• Advantages • Disadvantages
1. Simple and short 1. Expensive
communication 2. Effort duplication
2. PM will have full 3. Creates inconsistency in
responsibility & the application &
authority procedure of the parent
3. Fast decision making company
and unity of command 4. Distort the staff
4. Cohesive and tends to relationship with parent:
support holistic problem of
approach “projectitis”…”WE”
5. Cross-Functional 5. The worry of “life after
Integration the project”
cont’d
3.Organizing Projects: Matrix Structure
– Hybrid organizational structure (matrix) is
overlaid on the normal functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both
functional and project managers.
– Matrix structure optimizes the use of
resources.
• Allows for participation on multiple projects while
performing normal functional duties.
• Achieves a greater integration of expertise and
project requirements.
Cont’d….
Matrix Project organization
CEO
Project Dept HR Dept Finance Dept
Mgr Project A Staff Staff
Mgr Project B Staff Staff
Proj. Coordination
Matrix Organization Structure

Cont’d….
Strong Matrix Org Structure

Characteristics
Project Mgr’s Authority Moderate to High
Resource Availability Moderate to High
Who controls project budget Project Manager
Project Mgr Admin Staff Full-time

Project Organization: Matrix Form
• Advantages • Disadvantages
1. Efficient 1. No unity of command
2. Flexible/Reasonable 2. Dysfunctional Conflict/
access to staff Infighting
3. Strong Project Focus 3. Stressful/A tough job to
balance all project at the
4. Easier Post-Project
HQ
Transition/No problem
of “life after project” 4. This may slow the decision
making process

Different Matrix Forms
• Weak Form
– The authority of the functional manager
predominates and the project manager has indirect
authority.
• Balanced Form
– The project manager sets the overall plan and the
functional manager determines how work to be
done.
• Strong Form
– The project manager has broader control and
functional departments act as subcontractors to the
project. Tsegabrhan Mekonen (PhD) 23
Cont’d….
Matrix Project organization/Weak
CEO
Functional Functional Functional

Manager Manager Manager
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
(Circled boxes represent staff engaged in project activities.)

Cont’d….
Weak Matrix Org Structure

Characteristics
Project Mgr’s Authority Limited
Resource Availability Limited
Who controls project budget Functional Manager
Project Mgr’s Role Part-time

Cont’d….
Matrix Project organization/Balanced
CEO
Engineering Dept HR Dept Finance Dept
Project manager Staff Staff
Project manager Staff Staff
Proj. Coordination
Cont’d….
Balanced Matrix Org Structure

Characteristics
Project Mgr’s Authority Low to Moderate
Resource Availability Low to Moderate
Who controls project budget Mixed

Description Weak Matrix Balanced Matrix Strong Matrix
PM Title Project coordinator, PM PM
or
project leader
PM focus Split focus between Projects and Projects and
project and project work project work
functional
responsibilities
PM Power Minimal authority Balance of authority Significant authority
and power and power and power
PM Time Part-time on Full-time on projects Full-time on projects
projects
Org. Style Most like functional Blend of both weak & Most like a
strong matrix projectized
organization
PM report Functional manager A functional manager, Manager of project
to but shares authority managers
and power
Cont’d….
Mixed Project organization
– A mix of both Functional & Pure is the usual

practice in project organization
• “Matrix management works, but it sure is difficult at times.

All matrix managers must keep up their health and take
Stress-Tabs. —A Project Manager” (Larson and Gray, 2011:
65)

Choosing the Appropriate Project Management
Structure
• Organization (Form) Considerations
– How important is the project to the firm’s
success?
– What percentage of core work involves projects?
– What level of resources (human and physical)
are available?

Choosing the Appropriate Project Management Structure
(cont’d)
• Project Considerations
– Size of project
– Strategic importance
– Novelty and need for innovation
– Need for integration (number of departments
involved)
– Environmental complexity (number of external
interfaces)
– Budget and time constraints
– Stability of resource requirements
Organizational Culture
• Organizational Culture Defined
– A system of shared norms, beliefs, values, and
assumptions which bind people together,
thereby creating shared meanings.
– The “personality” of the organization that sets
it
apart from other organizations.
• Provides a sense of identify to its members.
• Helps legitimize the management system of the
organization.
• Clarifies and reinforces standards of behavior.
Identifying Cultural Characteristics
• Study the physical characteristics

of an organization.
• Read about the organization.
• Observe how people interact
within the organization.
• Interpret stories and folklore
surrounding the organization.

Organizational Culture Diagnosis Worksheet
Power Corp. (extracted from Gray and Larson (2017)

I. Physical Characteristics:
Architecture, office layout, décor, attire
Corporate HQ is 20 Story modern building—president on top floor.
Offices are bigger in the top floors than lower floors. Formal business
attire (white shirts, ties, power suits, . . . ) Power appears to increase
the higher up you are.
II. Public Documents:
Annual reports, internal newsletters, vision statements
At the heart of the Power Corp. Way is our vision . . . to be the global
energy company most admired for its people, partnership and
performance. Integrity. We are honest with others and ourselves. We
meet the highest ethical standards in all business dealings. We do
what we say we will do. Tsegabrhan Mekonen (PhD) 34
Organizational Culture Diagnosis Worksheet (Cont’d)
III. Behavior:
Pace, language, meetings, issues discussed, decision-making style,
communication patterns, rituals
Hierarchical decision-making, pace brisk but orderly, meetings start on time
and end on time, subordinates choose their words very carefully when
talking to superiors, people rarely work past 6:00 P.M., president takes top
performing unit on a boat cruise each year . . .
IV. Folklore:
Stories, anecdotes, heroines, heroes, villains
Young project manager was fired after going over his boss’s head to ask for
additional funds.
Stephanie C. considered a hero for taking complete responsibility for a
technical error.
Jack S. was labeled a traitor for joining chief competitor after working for
Power Corp. for 15 years.
Implications of Organizational Culture for Organizing Projects
• Challenges for Project Managers in Navigating

Organizational Cultures
– Interacting with the culture and subcultures
of the parent organization
– Interacting with the project’s clients or customer
organizations
– Interacting with other organizations connected to the
project

Key Dimensions Defining an Organization’s Culture

Cultural Dimensions of an Organization Supportive
of Project Management

Chapter Three - Project Management Structure: Tsegabrhan Mekonen (PHD) 1

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Chapter Three - Project Management Structure

Tsegabrhan Mekonen (PhD) 1

– Budget and estimates

Tsegabrhan Mekonen (PhD) 3

Tsegabrhan Mekonen (PhD) 5

• Organizing Projects: Functional organization

Production Engineering … Marketing ….

Staff Staff Staff

The circled boxes represent staffs engaged in the project

Project Mgr’s Authority Little

Resource Availability Little

Who controls project budget Functional Manager

Project Mgr’s Role Part-time

Project Mgr Admin Staff Part-time

2. Organizing Projects: Pure Project/ Projectized

Tsegabrhan Mekonen (PhD) 11

Production Engineering … Marketing ….

Line A Mechanical Product B

Tsegabrhan Mekonen (PhD) 12

Project Project Project

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Circled boxes represent staff engaged in project activities.)

Tsegabrhan Mekonen (PhD) 14

Tsegabrhan Mekonen (PhD) 15

Project Mgr’s Authority High to Almost Total

Resource Availability High to Almost Total

Who controls project budget Project Manager

Project Mgr’s Role Full-time

Project Mgr Admin Staff Full-time

Tsegabrhan Mekonen (PhD) 16

Project Dept HR Dept Finance Dept

Mgr Project A Staff Staff

Mgr Project B Staff Staff

Tsegabrhan Mekonen (PhD) 20

Strong Matrix Org Structure

Resource Availability Moderate to High

Who controls project budget Project Manager

Project Mgr’s Role Full-time

Project Mgr Admin Staff Full-time

Tsegabrhan Mekonen (PhD) 22

Functional Functional Functional

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Circled boxes represent staff engaged in project activities.)

Tsegabrhan Mekonen (PhD) 24

Weak Matrix Org Structure

Project Mgr’s Authority Limited

Resource Availability Limited

Who controls project budget Functional Manager

Project Mgr’s Role Part-time

Project Mgr Admin Staff Part-time

Engineering Dept HR Dept Finance Dept

Project manager Staff Staff

Project manager Staff Staff

Balanced Matrix Org Structure

Project Mgr’s Authority Low to Moderate

Resource Availability Low to Moderate

Who controls project budget Mixed

Project Mgr’s Role Full-time