Organisational Structure

and Projects

Sources:
• Gray Clifford F., Larson Erik W. , Project management: the
managerial process, McGraw-Hill ;
• PMBOK® PMI, USA;
• Mantel S., Meredith J., Shafer S., Project management core
textbook, Wiley)

For academic purpose and private circulation only

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 Organisational Structure
and Projects
• 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.

• An appropriate organizational structure balances the

needs of the project
with the needs of the given organization.
Projects in a Functional Organizations
• 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.
Functional Organizations

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Projects in a Functional Organizations
Projects in a Functional
Organizations

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 Advantages
• Maximum flexibility in the use of staff
• Experts can be utilized by many different projects
• Specialists can be grouped to share knowledge and
experience
• Easy Post-Project Transition
• No Structural Change required for implementing
projects
• Functional division serves as a base of technological
continuity
• Functional division contains the normal path of
advancement.

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 Disadvantages
• Client is not the focus of the activity
• Functional units tend to be oriented toward the
activities of that particular function, hence poor
integration in regards to project.
• No individual is given full responsibility, lack of
ownership of the project.
• Response to client needs is slow and arduous
• Tendency to suboptimize the project
• Motivation tends to be weak
• A holistic approach to the project is not facilitated

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Functional Form Best for…

•In-depth application of a technology, when

project is concentrated in one functional area;

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Projects in a Projectized
Organization
• Organize Projects with 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.
Projects in a Projectized
Organization

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Projects in a Projectized
Organization

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Projects in a Projectized Organization

FIGURE 3.3
Advantages
• Project manager has full authority
• All members report to the project manager
• Focus on client
• Cross-Functional Integration
• Simple and cohesive
• Short lines of communication; faster decision making
• When there are similar projects, expertise can be
retained
• Strong and separate identity
• Swift decisions making
• Unity of command
• Structurally simple and flexible
• Supports a holistic approach

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 Disadvantages
• Duplication in staffing, Expensive
• Workers tend to fall behind in other areas of their
technical expertise
• Limited Technological Expertise
• Difficult Post-Project Transition, worry about life
after the project is over
• Inconsistency in policies and procedures

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Project Form Best for…

•Handling a large number of similar; repeated

kind of projects
•Handling a one-time project that requires
much control, but is not focused on one
functional area

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 Projects in a Matrixed Organization
Matrixed project organization

• It is a combination of standalone projectized and

functional organization structures
• Keeps desirable features of both standalone
projectized and functional projects
• Avoids some of the disadvantages of each type.
• Can take on a variety of specific forms
• Matrix structure optimizes the use of resources.

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 Different Matrix Organization
Structure
• Weak or Lightweight Form or Weak Matrix
• Matrices in which the authority of the functional manager
predominates and the project manager has indirect
authority.
• Balance (or Middleweight) Form or Balanced Matrix
• The traditional matrix form in which the project manager
sets the overall plan and the functional manager
determines how work to be done.
• Strong (Heavyweight) Form or Strong Matrix
• Resembles a project team in which the project manager
has broader control and functional departments act as
subcontractors to the project.
Weak Matrix Organization
Structure

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Balanced Matrix Organization
Structure

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Strong Matrix Organization
Structure

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Strong Matrix Organization
Structure

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Strong Matrix Organization
Structure

FIGURE 3.4
 Different Organization Structure
Organisational Structure
Functional Matrix Projectized
Project Weak Matrix Balanced Strong
Characteristics Matrix Matrix
Project Manager's Little or None Limited Low to Moderate High to
Authority Moderate to High Almost Total

Resource Availability Little or None Limited Low to Moderate High to

Moderate to High Almost Total

Who controls the Functional Functional Mixed Project Project

project budget Manager Manager Manager Manager

Project Manager's Part-time Part-time Full Time Full Time Full Time
Role

Project Management Part-time Part-time Part-time Full Time Full Time

Administrative Staff
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Advantages of Matrix Organization
Structure
• The project is the point of emphasis
• The project has access to the entire organization
for labor and technology
• Strong Project Focus
• Easier Post-Project Transition, less anxiety about
what happens when the project is completed
• Response to client needs is rapid
• Access to administrative units of firm
• Better balance of resources, efficient
• Great deal of organizational flexibility

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Disadvantages of Matrix
Organization Structure
• Power balance is delicate
• Projects compete for resources
• Division of authority and responsibility is complex
• Matrix management violates the management
principle of unity of command

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Matrix Form Best for…

•Projects that require inputs from several

functional areas
•Projects that use technology from several
functional areas

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Projects in Composite Organizational
Structure
• Many organizations involve different organisational structures at
various levels i.e. composite organization.
• For example:
Even a fundamentally functional organization may create a special
project team to handle a critical project.
Such a team may have many of the characteristics of a project team in
a projectized organization.
The team may include full-time staff from different functional
departments.
Team may operate outside the standard, formalized reporting
structure.
Team may develop its own set of operating procedures, and

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Projects in Composite
Organizational Structure

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Projects in Composite
Organizational Structure

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 Project Management Structures:

Network Organizations
• An alliance of several organizations for the
purpose of creating products or services.

• A “hub” or “core” firm with strong core

competencies outsources key activities to a
collaborative cluster of satellite organizations.
Illustration: Mountain Bicycle Network Project

FIGURE 3.5
 Project Organization: Network Form

• Advantages • Disadvantages
• Cost Reduction • Difficult to coordinate
problems &
• High Level of Expertise breakdowns
• Flexible • Loss of Control
• Conflict
Choosing the Appropriate Organisational
Structure For Projects

Organization Considerations
Project Considerations

Organization Considerations
• What percentage of core work involves projects?

• How important is the project(s) to the firm’s

success?

• What level of resources (human and physical) are

available?
Choosing the Appropriate Organisational
Structure For Projects

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
Project Management Office (PMO)

Purposes:

• Establish project administrative procedures

• Ensures the firm’s project portfolio supports its
overall goals and strategies
• Gradual assimilation of project management
practices into the entire firm
• Facilitator of projects, not the doer of projects

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Tasks of the Project Management Office

• Establish and enforce good project management

practices
• Improve project management maturity
• Improve project management systems
• Offer training
• Information center
• Help with administrative details
• Establish a process for dealing with risk
• Determine if a project is a good fit
• Identify impact of changes on projects 5-37
Tasks of the Project Management Office
Continued……..

• Conduct project reviews and audits

• Maintain and store project archives
• Serve as a champion to pursue project management
• Serve as a home for project managers
• Collect and disseminate lessons learned
• Assist in project termination

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THANK YOU

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