UNIT - IV PROJECT ORGANISATION & CONFLICT MANAGEMENT

Formal Organisation Structure – Organisation Design – Types of project

organizations. Conflict – Origin & Consequences. Project Teams. Managing conflict – Team
methods for resolving conflict.

FORMAL ORGANIZATION STRUCTURE:

The Formal organizational structure is an officially codified hierarchical arrangement of
relationships between different jobs within the organizational units and relationships between
departments within the organization. It includes hierarchical relationships and assigns
competence, ties and responsibilities.

Characteristics of Formal Organization:

 Organization structure stands on division of labor which brings efficiency in
organizations operations.
 Policies and objectives of organizations are determined.
 Individual activities are limited.
 Organizations communicate messages through straight chain of command.
 Arbitrary structure of organization.

Example of Formal Organization:

ORGANIZATIONAL DESIGN:
Organizational design is a step-by-step methodology which identifies dysfunctional aspects
of work flow, procedures, structures and systems, realigns them to fit current business
realities/goals and then develops plans to implement the new changes. The process focuses on
improving both the technical and people side of the business.

TYPES OF PROJECT ORGANIZATIONS:

1. Pure Project Organization:
A pure project is a separate organization, similar to its own company, created especially for
and singularly devoted to achievement of the project goal. Whatever is needed to accomplish
project goals — all necessary human and physical resources—is incorporated into the pure
project organization. These organizations are able to respond to the changing demands of the
environment, the customer, and the parent organization. Heading the pure project
organization is the pure project manager. Pure project manager has formal authority over all
people and physical resources assigned to the project, and, thus, maximum control. The pure
project manager is involved in the project from start to finish: during proposal preparation,
she requests and reconciles plans from functional areas and prepares preliminary budget and
schedule estimates; after acceptance, she hires personnel; during project execution, she
allocates resources and approves changes to requirements and the project plan. When
personnel must be “borrowed” from functional areas, she negotiates to obtain them.

Pure Project Variations:

Three common variations of the pure project structure are the project center, the partial
project, and the stand-alone project.
In the project center, the structure of the parent organization remains the same except for the
addition of a separate “project arm” and project manager. This form is shown in the diagram
below for the Iron Butterfly Company and two of its pure-project arms, LOGON and
SPECTOR. Resources and personnel are borrowed from functional and staff areas for as long
as needed.
In a partial project, the functions critical to the project (such as construction or engineering)
are assigned to the project manager while other, support-oriented functions (such as
procurement and accounting) remain within functional areas of the parent organization. For
example, the LOGON project manager might have full control over design and fabrication,
yet receive functional support from the areas of finance, human resources, and marketing.
The manager of a partial project has direct control over all major project tasks, but receives
assistance from areas in the parent company over which he does not have control.
The stand-alone project is an entire organization created especially for the purpose of
accomplishing the project. It is typically used for large-scale government public works, or
development and installation projects that involve one or more prime contractors, dozens of
subcontractors, and numerous supporting organizations, suppliers, and consultants.
 Pure projects as an “arms” to the functional organization.
Advantages of 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 PM.
 Pure project organizations are structurally simple and flexible, which makes them
relatively easy to understand and to implement.
 Unity of command exists.
 The organizational structure tends to support a holistic approach to the project.
 The project team that has a strong and separate identity of its own tends to develop a
high level of commitment from its members. Motivation is high and acts to foster the
task orientation

Disadvantages of Pure Project Organization:

 When the parent organization takes on several projects, it is common for each one to
be fully staffed. This can lead to considerable duplication of effort in every area from
clerical staff to the most sophisticated (and expensive) technological support units.
 In pure project organizations, the project takes on a life of its own. Team members
form strong attachments to the project and to each other. A disease known as
projectitis develops. A strong we –they divisiveness grows, distorting the
relationships between project team members and their counterparts in the parent
organization. Friendly rivalry may become bitter competition, and political infighting
between projects is common.
 Another symptom of projectitis is the worry about “life after the project ends.”
Typically, there is considerable uncertainty about what will happen when the project
is completed. Will team members be laid off? Will they be assigned to low-prestige
 work? Will their technical skills be too rusty to be successfully integrated into other
projects? Will our team (that old gang of mine) be broken up?

2. Project Organization Structure:

In a project-type organization, all the individuals on the project team work for the project
manager. Has full control over the resources. There is no conflict with other projects over
priorities or resources, because all the resources for a project are totally dedicated to that
project. The project organization is highly responsive to the customer.

For example, if the customer makes changes to the project work scope, the project manager
has the authority to reassign resources to accommodate the changes immediately. In a
project-type organization, team members experience high anxiety about reassignment as their
project nears completion, especially because they don’t have a functional home to which they
can return.
3. The Functional Organization Structure:
By bringing specialists from the same discipline together in one organizational unit, a
functional-type organization reduces duplication and overlap of activities. It provides the
benefits associated with specialization: an environment in which individuals can share and
keep up with the knowledge and skills of their particular discipline. For example, all
individuals in a computer engineering unit can share software and discuss approaches to
developing computer systems.

Functional-type organizations can be insular, though, with each functional component

concerned about only its own performance. Teamwork with other functions is not
emphasized, and there is little cross-fertilization of ideas among functions. Project focus is
not emphasized either, and decisions may be parochial rather than in the best interests of the
overall project. The hierarchical structure causes communication, problem resolution, and
decision making to be slow.

4. Matrix Organization Structure:

Is a grid-like structure of authority and reporting relationships created by the overlay of a
project organization on a traditional, functional organization? The matrix-type organization is
kind of a hybrid—a mix of both the functional and project organization structures. It provides
the project and customer focus of the project structure, but it retains the functional expertise
of the functional structure. The project and functional components of the matrix structure
each have their responsibilities in contributing jointly to the success of each project and the
company. The project manager is responsible for the project results, whereas the functional
managers are responsible for providing the resources needed to achieve the results.
The matrix-type organization provides for effective utilization of company resources. The
functional components (systems engineering, testing, and so forth), home of the technical
staff, provide a pool of expertise to support ongoing projects.
Each functional manager in a matrix organization structure is responsible for how the
assigned work tasks will be accomplished and who (which specific people) will do each task.
The functional manager of each organization component provides technical guidance and
leadership to the individuals assigned to projects. He or she is also responsible for ensuring
that all tasks assigned to that functional component are completed in accordance with the
project’s technical requirements, within the assigned budget, and on schedule.

Different Matrix Forms:

Weak matrix— This form is very similar to a functional approach with the exception that
there is a formally designated project manager responsible for coordinating project activities.
Functional managers are responsible for managing their segment of the project. The project
manager basically acts as a staff assistant who draws the schedules and checklists, collects
information on status of work, and facilitates project completion. The project manager has
indirect authority to expedite and monitor the project. Functional managers call most of the
shots and decide who does what and when the work is completed.

Balanced matrix—This is the classic matrix in which the project manager is responsible for
defining what needs to be accomplished while the functional managers are concerned with
how it will be accomplished. More specifically, the project manager establishes the overall
plan for completing the project, integrates the contribution of the different disciplines, sets
schedules, and monitors progress. The functional managers are responsible for assigning
personnel and executing their segment of the project according to the standards and schedules
set by the project manager. The merger of “what and how” requires both parties to work
closely together and jointly approve technical and operational decisions.

Strong matrix—This form attempts to create the “feel” of a project team within a matrix
environment. The project manager controls most aspects of the project, including scope trade-
offs and assignment of functional personnel. The project manager controls when and what
specialists do and has final say on major project decisions. The functional manager has title
over her people and is consulted on a need basis. In some situations a functional manager’s
department may serve as a “subcontractor” for the project, in which case they have more
control over specialized work. For example, the development of a new series of laptop
computers may require a team of experts from different disciplines working on the basic
design and performance requirements within a project matrix arrangement. Once the
specifications have been determined, final design and production of certain components (i.e.,
power source) may be assigned to respective functional groups to complete.
Selecting an organization form for projects:
The diagram shows the approximate applicability of different project organization forms,
based upon four criteria:
 Frequency of new projects (how often, or to what degree the parent company is
involved in project-related activity)
 Duration of projects (how long a typical project lasts)
 Size of projects (level of human, capital, or other resources in relation to other
activities of the company)
 Complexity of relationships (number of functional areas involved in the project and
degree of interdependency).

Matrix and pure project forms are applicable to projects of medium and higher complexity,
and of medium or larger size. These kinds of projects require large amounts of resources and
information, and need project managers and integrators with strong authority. For smaller
projects involving several functional areas, task forces and cross functional teams are more
appropriate. Part-time task forces managed by expeditors can effectively handle short-term
projects involving one or a few functional areas. Projects of longer duration, but small in
scope, are best handled by full-time project teams with coordinators. When the team size
needed to accomplish the task becomes large and the interrelationships complex, then a
temporary matrix or partial project should be set up. Teams, task forces, and project centers
are appropriate when the existing structure and work flow of the organization cannot be
disrupted.
In selecting a project form, consider the relative importance of the following criteria: the
stake of the project, the degree of technological uncertainty, the criticalness of time and cost
goals, and the uniqueness of the project.8 For example, task forces and teams are generally
appropriate when the project task involves high certainty and little risk, and when time and
cost are not major factors. When the risk and uncertainty is great, when time and cost goals
are critical, or when there is much at stake, matrix and pure project forms better afford the
obligatory high level of integration and control. When a project differs greatly from the
normal business of the firm, it should use a partial or full pure project form.

CONFLICT ORIGIN AND CONSEQUENCES:

ORIGINS OF CONFLICT:
In all organizations, differences in objectives, opinions, and values lead to conflict. Conflict
arises between customers and contractors, project staff and functional groups, and different
contractors and departments. It occurs between people on the same team, different teams in
the same organization, and teams in different organizations. Some conflict is natural; too
much is destructive.
 Between User and Contractor:
Seeds of conflict between the customer and the contractor are sown early in a project during
contract negotiations. The customer wants to minimize cost, the contractor to maximize
profit. One’s gain is the other’s loss. In the extreme, each side strives for an agreement that
provides an “out” in case it cannot keep its part of the bargain; each tries to make the other
side responsible in case of failure. In technology-based firms, the non-technical, “legal types”
who negotiate contracts may try to enlarge their prestige by using legalistic frameworks that
try to cover all eventualities. After negotiations are completed, the contract itself becomes a
source of conflict. In cost-plus agreements there is little incentive for the contractor to control
expenses, and the customer must closely supervise and question everything. Such scrutiny is
a constant irritant to the contractor. In fixed price contracts, costs may have to be periodically
renegotiated and revised upward. This is also a source of conflict.

 Within the Project Organization:

High-level interdependency in projects between functional areas increases the amount of
contact between them and, at the same time, the chances of conflict. The different areas have
different ideas, goals, and solutions for similar problems—differences that sometimes must
be resolved without the benefit of a common superior. Work priorities, schedules, and
resource allocations also lead to conflict. The priorities of functional areas working in
multiple projects might conflict with priorities of project managers. In matrix organizations,
functional managers sometimes see project managers as impinging on their territory, and they
resent having to share planning and control with them. They might refuse to release certain
personnel to projects, or try to retain authority over the personnel they do release. Workers
with dual reporting relationships are often confused about priorities and loyalties.

 The Project Life Cycle:

Thamhain and Wilemon investigated sources of conflict in a study that involved 100 project
managers. They determined that the three greatest sources of conflict are schedules, project
priorities, and the workforce. Other sources of conflict identified are technical opinions and
performance trade-offs, administrative and organizational issues, interpersonal differences,
and costs. They also found that the sources of conflict change from one phase to the next, as
summarized in the diagram.

CONSEQUENCES OF CONFLICT:
Conflict is inevitable in human endeavours, and is not always detrimental. Properly managed,
a certain amount of conflict:
 Compels people to search for new approaches
 Causes persistent problems to surface and be dealt with
 Forces people to clarify their views
 Stimulates interest and creativity
  Gives people the opportunity to test their capacities.
Called groupthink, lack of conflict is a sign of over-conformity. It causes dullness and
sameness, and results in poor or mediocre judgment. In contrast, conflict over differences in
opinion stimulates discussion and can enhance problem-solving. In project groups charged
with exploring new ideas or solving complex problems, some conflict is essential. However,
conflict between teams that should be cooperating can be devastating. Each group develops
an “us versus them” attitude, and selfishly strives to achieve its own objectives. Left
uncontrolled and unresolved, destructive conflict spirals upward and creates hostility.

MANAGING CONFLICT:
In general there are five ways how project managers deal with conflicts:
 Withdraw or retreat from the disagreement
 Smooth over or de-emphasize the importance of the disagreement (pretend it does not
exist)
 Force the issue by exerting power
 Compromise or bargain to bring at least some degree of satisfaction to all parties
 Confront the conflict directly; work through the disagreement with problem-solving.

In a heated argument, it may be best to withdraw until emotions have calmed down, or to de-
emphasize the disagreement before it gets distorted out of proportion. The project manager
might force the issue by using authority; this gets the action done, but risks creating hostility.
If authority must be used, it is better that it is based upon knowledge or expertise. To bargain
or compromise, both sides must be willing to give up something to get something, and,
ultimately, they may feel they lost more than they gained. Of the five approaches, the only
one that works at resolving the underlying issues is confrontation.
Confrontation involves identifying potential or existing problems, then facing up to them. At
the organization level, this happens by all areas involved in the project agreeing on project
objectives, plans, labor requirements, and priorities. It requires careful monitoring of
schedules, close contact between project groups, and prompt resolution of technical
problems. At the individual level, a project manager confronts conflicts by raising questions
and challenges such as:
 How do you know this redesign will solve the problem? Prove it to me.
 What have you done to correct the malfunctions that showed up on the test we agreed
to?
 How do you expect to catch up on lost time when you haven’t scheduled overtime?

Questions like these demonstrate that the project manager is vitally interested and alert, and
that everything is subject to question.

TEAM METHODS FOR RESOLVING CONFLICT:

The following team methods focus on conflict stemming from work roles and group
interaction:
 1. Role Clarification Technique:
Conflict in projects often arises because people have mixed expectations about work plans,
roles, and responsibilities. In particular, disagreements arise because:
 The project is new and people are not clear about what they are supposed to do and
what others expect of them
 Changes in projects and work reassignments have made it unclear how individuals in
the team should interact
 People get requests they do not understand, or hear about things on the grapevine that
they think they should already know
 Everyone thinks someone else is handling a situation that, really, no one is
 People do not understand what their group or other groups are doing.

The role clarification technique (RCT) is a systematic procedure to help resolve these sources
of conflict. As the title “role clarification” suggests, the goal is that everyone understands
their own and others’ major responsibilities and duties, and that everyone knows what others
expect of them.
RCT is similar to team-building. It includes data collection, a day-long meeting, and a
consultant who serves as facilitator. When incorporated as part of team-building for a new
team, it allows the project manager and team to negotiate team member roles. It is especially
useful in cases where responsibilities are somewhat ambiguous.
The technique as applied to an existing team begins with each person answering a
questionnaire prior to a meeting.
 What does the organization expect of you in your job?
 What do you actually do in your job?
 What should others know about your job that would help them?
 What do you need to know about others’ jobs that would help you?
 What difficulties do you experience with others?
 What changes in the organization or activities would improve the group’s work?

At the start of the group meeting, ground rules are announced: people must be candid, give
honest responses, and express their concerns, and everyone must agree to decisions. The
meeting begins with each person reading the answers to the first three questions. As each
person reads, others are given the chance to respond. It is important that each person hears
how others see her job and what they expect of her.

2. Intergroup Conflict Resolution:

When two or more groups conflict because of mixed expectations, a procedure similar to
intergroup problem-solving (IGPS) can be used. The procedure begins with each group
preparing a list of what they would like the other groups to start doing, stop doing, and
continue doing in order to improve relations. As a variation, the groups might also guess what
the others think about them and want from them. Guesses are often accurate and facilitate
reaching an agreement. The groups share their lists in a meeting, and negotiate an agreement
stating what each will do in return for equitable changes on the part of the other. The focus is
on finding solutions, not fault. A facilitator oversees the meeting and the negotiation. To
increase the groups’ commitment, the agreements are put in writing.

Another approach is for Team A to select a subgroup of members to represent it. Names in
the subgroup are given to Team B, which selects three or four members from the list. Team B
also prepares a list of names and gives it to Team A. This creates a mixed team with
representatives that both sides agree to. The mixed team tries to resolve problems between
the teams. It can interview people in other teams, invite a facilitator, and so on. The mixed
team prepares a list of actions, people to be responsible, a time frame, and ways to prevent
problems from recurring. This approach is easy to implement without a consultant, and
requires less involvement from members than the first method, but it also tends to have less
impact.

PROJECT TEAMS:
A project team is a group of individuals working interdependently to achieve the project
objective.

Stages of Team Development and Growth:

B. W. Tuckman has defined four stages of team development: forming, storming, norming
and performing. In 1977, Tuckman, jointly with Mary Ann Jensen, added a fifth stage to the 4
stages, adjourning.

Forming: During this initial stage the members get acquainted with each other and
understand the scope of the project. They begin to establish ground rules by trying to find out
what behaviours are acceptable with respect to both the project (what role they will play,
what performance expectations are) and interpersonal relations (who’s really in charge). This
stage is completed once members begin to think of themselves as part of a group.
Storming: As the name suggests, this stage is marked by a high degree of internal conflict.
Members accept that they are part of a project group but resist the constraints that the project
and group put on their individuality. There is conflict over who will control the group and
how decisions will be made. As these conflicts are resolved, the project manager’s leadership
becomes accepted, and the group moves to the next stage.

Norming: The third stage is one in which close relationships develop and the group
demonstrates cohesiveness. Feelings of camaraderie and shared responsibility for the project
are heightened. The norming phase is complete when the group structure solidifies and the
group establishes a common set of expectations about how members should work together.

Performing: The team operating structure at this point is fully functional and accepted.
Group energy has moved from getting to know each other and how the group will work
together to accomplishing the project goals.

Adjourning: During this stage, the team prepares for its own disbandment. High
performance is no longer a top priority. Instead attention is devoted to wrapping up the
project. Responses of members vary in this stage. Some members are upbeat, basking in the
project team’s accomplishments. Others may be depressed over loss of camaraderie and
friendships gained during the project’s life.

The Effective Project Team:

A project team is a group of interdependent individuals working cooperatively to achieve the
project objective.

Characteristics associated with effective project teams include:

• a clear understanding of the project objective
• clear expectations of each person’s role and responsibilities
• a results orientation
• a high degree of cooperation and collaboration
• a high level of trust

Barriers to Team Effectiveness:

 Unclear Goals.
 Unclear definition of roles and responsibilities.
 Lack of project structure.
 Lack of Commitment.
 Poor Communication.
 Poor Leadership.
 Turnover of project team members.
 Dysfunctional behavior.

Types of Project teams:

Functional Organization:
Functional organization organizations are those that are subdivided into functional units, i.e.
marketing unit, finance unit, HR unit etc. For Functionally organization projects, the project
is assigned to the Functional unit that has the most interest in ensuing its success or can be
most helpful in implementing it.

Advantages and disadvantages of projects in Functional organization

 There is maximum flexibility in the use of staff.

 Individuals 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
individual choose to leave the project and even the parent firm.
 The Functional division contains the normal path of advancement for individuals
whose expertise is in the Functional area.

Disadvantages:

 A primary disadvantage is this arrangement is that that the client is not the focus of
activity and concern.
 The functional division tends to be oriented towards the activities particularly to its
function.
 Occasionally in Functionally organized projects, no individual is given full
responsibility for the project.
 The same reasons that lead to lack of coordinated efforts tends to make response to
client needs slow and arduous.
 There is a tendency to sub optimize the project.
 The motivation of the people assigned to the project tends to be weak Such an
organizational arrangement does not facilitate holistic approach.
 Cross-communication and sharing of knowledge is slow and difficult to its best.
Pure Project Organization:

An organization in which the project is separated from the rest of the parent system. It
becomes a self-contained unit with its own technical staff, its administration, tied to the
parent firm by the tenuous strands of periodic progress reports and oversight. Some parent
organizations prescribe administrative, financial, personnel and control procedures in detail.
Others allow the project total freedom within the final accountability.

Advantages and Disadvantages of the 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 PM.
 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 manipulate a more or less permanent cadre of experts who develop
considerable skill in specific technologies.
 The project team that has a strong and separate identity of its own tends to develop a
high level of commitment from its members.
 Because authority is centralized, the ability to make swift decisions is greatly
enhanced.
 The entire project organization can react more rapidly to the requirements of the client
and the needs of senior management.
 Unity of command exists.
 Pure project organizations are structurally simple and flexible, which makes them
relatively easy to understand and to implement. The organizational structure tends to
support a holistic approach to the project.
Disadvantages:

 When the parent organization takes on several projects, it is common for each on to be
fully staffed.
 In fact, the needs to ensure access to technical knowledge and skills result in an
attempt by the Pm to stockpile equipment and technical assistance in order to certain
that it will be available when needed.
 Though individuals Engaged with project develop considerable depth in the
technology of the project, they tend to fall behind in other areas of their technical
expertise Pure project group seems to foster inconsistency in the way in which
policies and procedures are carried out.
 In pure project organizations, the project takes on a life of its own.
 Another symptom of projectitis is the worry about life after the project ends.

The Matrix Organization:

The matrix organization is the combination of the two: it is pure project organization overlaid
on the functional divisions of the parent firm. A matrix organization can take on a wide
variety of specific forms, depending on which of the two extremes (functional or pure
project). The strong matrix resembles the pure project organization. The weak matrix
resemble functional organization. Balanced matrix lies in the middle of the two extremes.
The matrix is not separated from its parent organization In matrix organization the Pm
controls when and what these people will do, while functional managers control who will be
assigned to the project and what technology will be used.

ADVANTAGES OF MATRIX:

 The project is the point of emphasis the PM, takes responsibility for managing the
project.
  Because the project organization is overlaid on the functional divisions, temporarily
drawing labor and talent from them, the project has reasonable access to the entire
reservoir of technology in all functional divisions.
 There is less anxiety about what happens when the project is completed than is typical
of the pure project organization.
 Response to clients’ needs is as rapid as in the pure project case, and the matrix
organization is just flexible.
 With matrix management, the project will have- or have access to – representatives
from the administrative units of parent firm.
 Where there are several projects simultaneously under way, matrix organization
allows a better companywide balance of resources to achieve the several different
time/cost performance targets of individual projects.

DISADVANTAGES OF MATRIX:

In the case of functionally organized projects, there is no doubt that the functional
division is the focus of decision- making power in the pure project case, it is clear that the
PM is the power center of the project.

 With matrix organizations, the power is more balanced.

 Often, the balance is fairly delicate.
 While the ability to balance time, cost, and performance between several projects is
an advantage of matrix organization, the ability has its dark side.
 For strong matrices, problems associated with shutting down a project are almost as
severe as those in pure project organizations.
 In matrix-organized projects, the PM controls administrative decisions and the
functional heads control technological decisions.
 Matrix management violates the management principle of unity of command.

Virtual Projects: With the rapid increase in globalization, many projects now involve global
teams with team members operating in different countries and different time zones, each
bringing a unique set of talents to the project. These are known as virtual projects because the
team members may never physically meet before the team is disbanded and another team
reconstituted. Advanced telecommunications and computer technologies allow such virtual
projects to be created, conduct their work, and complete their project successfully.

Quasi-Projects: Led by the demands of the information technology/systems departments,

project management is now being extended into areas where the final performance (or
“scope”) requirements may not be understood, the time deadline unknown, and/or the budget
undetermined. This ill-defined type of project (which we call a “quasi-project”) is extremely
difficult to manage and is often initiated by setting an artificial due date and budget, and then
completed by “de-scoping” the required performance to meet those limits. However, new
tools for these kinds of quasi-projects are now being developed—prototyping, phase gating,
and others—to help these teams achieve results that satisfy the customer in spite of all the
unknowns.