Larson PM 8e Ch03 Im

Project Management: The Managerial Process
Chapter 3
Organization: Structure and Culture
Chapter Outline
1. Project Management Structures

A. Organizing Projects within the Functional Organization
B. Organizing Projects as Dedicated Teams
C. Organizing Projects within a Matrix Arrangement
D. Different Matrix Forms
2. Project Management Office (PMO)
3. What Is the Right Project Management Structure?
A. Organization Considerations
B. Project Considerations
4. Organizational Culture
A. What Is Organizational Culture?
B. Identifying Cultural Characteristics
5. Implication of Organizational Culture for Organizing Projects
6. Summary
7. Key Terms
8. Review Questions
9. Snapshot from Practice: Discussion Questions
10. Exercises
11. Case 3.1: Moss and McAdams Accounting Firm
12. Case 3.2: Horizon Consulting
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill.
1
Chapter Learning Objectives

After reading this chapter you should be able to:
LO 3-1 Identify different project management structures and understand their

strengths and weaknesses.
LO 3-2 Distinguish three different types of matrix structures and understand

their strengths and weaknesses.
LO 3-3 Describe how project management offices (PMOs) can support and
improve project execution.
LO 3-4 Understand organizational and project considerations that should be

considered in choosing an appropriate project management structure.
LO 3-5 Appreciate the significant role that organizational culture plays in

managing projects.
LO 3-6 Interpret the culture of an organization.
LO 3-7 Understand the interaction between project management structure and

the culture of an organization.
2
Review Questions
1. What are the relative advantages and disadvantages of the functional, matrix,
and dedicated team approaches to managing projects?
The advantages of the functional approach include:

 No radical alteration in basic structure of the parent organization
 Maximum flexibility in use of staff within functional units
 In-depth expertise can be brought to bear on specific components of the
project
 Normal career paths can be maintained
The advantages of the matrix approach include:

 Flexible utilization of resources across projects and functional duties
 Project focus is provided by having a designated project manager
 Specialists maintain ties with their functional group
 Balances project prerogatives with technical requirements
The advantages of the dedicated team approach include:

 Does not disrupt the basic structure of the parent organization
 Concentrated project focus
 Projects tend to get done quickly
 Strong cross-functional integration
The weaknesses of the functional approach include:

 Lack of project focus
 Poor cross-functional integration
 Slow
 Lack of project ownership
The weaknesses of the matrix approach include:

 Decision making can be bogged down as agreements have to be negotiated
between project managers and functional managers
 Stress induced by multiple superiors
The weaknesses of the dedicated project team include:

 Dilemma of what to do with people once the project is over
 Technical expertise limited to the people on the team
 We/they attitude emerges between project team and rest of organization which
inhibits integration of project with mainstream operations
 Expensive – creation of project management role and duplication of services
across projects
3
Suggestion:
Begin the discussion by identifying the strengths and weaknesses of the functional
organization. Record responses on the left side of a large whiteboard. Next, identify
the strengths and weaknesses of the dedicated team approach on the right side of the
whiteboard. In the middle, record the strengths and weaknesses of the matrix
organization. Use this framework to discuss the relative merits of different kinds of
matrix organizations.
2. What distinguishes a weak matrix from a strong matrix?
The most distinguishing characteristic between a weak and strong matrix is the
relative influence the project manager has over project participants and functional
managers. In a weak matrix, the project manager role is limited to coordinating
project activities. The functional managers are responsible for managing their
segment of the project. The project manager has little formal authority over the
project. In a strong matrix, the project manager controls most aspects of the project,
including design trade-offs and assignment of project personnel. The functional
managers are responsible for supporting project completion. A project manager in the
weak matrix is not likely to be involved in performance appraisals and compensation
decisions while project managers in a strong matrix would be.
3. Under what conditions would it be advisable to use a strong matrix instead of a

dedicated project team?
Both structures can be quite effective. The strong matrix would be recommended
when the organization cannot afford to have people work full-time on the project and
when the culture of the organization supports the dual authority structure. Dedicated
project teams are recommended when speed is essential to success and there is not
enough project work to warrant a formal matrix structure. Dedicated project teams are
also recommended when the prevalent culture within the organization does not
support collaboration and innovation.
4. How can project management offices (PMOs) support effective project

management?
PMOs support effective project management by:

 tracking project progress,
 promulgating best practices,
 providing project management training and consulting services,
 integrating latest advances in field of project management,
 being an organizational advocate.
It should be noted that the extent to which a PMO performs the above functions will
vary from one organization to the next.
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5. Why is it important to assess the culture of an organization before deciding what

project management structure should be used to complete a project?
The culture of the organization can impact the effectiveness of different project
management structures. Organizational cultures that do not encourage teamwork,
collaboration, and cross-functional integration need a stronger project management
structure (i.e., project team, project matrix) to be successful. Conversely, a functional
matrix can be effective in an organization in which the culture of the organization is
conducive to project management.
6. Other than culture, what other organizational factors should be used to

determine which project management structure should be used?
The two major considerations are the percentage of core work that involves projects
and resource availability. Organizations, whose main business evolves around
projects, should consider a projectized form of structure. Organizations that have
mainstream operations and projects should use a matrix structure. When resource
availability is limited, then a matrix structure should be used that allows sharing
personnel across projects and operations.
7. What do you believe is more important for successfully completing a project—

the formal project management structure or the culture of the parent
organization?
Both are important and an argument can be made for either structure or culture. The
bias of the authors is that culture is more important than structure since it more
directly impacts behavior. A positive organizational culture can compensate for the
inherent weaknesses of the formal structure. For example, a functional matrix can be
effective if the norms and customs of the organization value teamwork and effective
problem-solving. Conversely, a functional matrix is likely to be disastrous in a
negative culture that encourages competition and looking out only for yourself.
Alternatively, one could argue that an organization can circumvent a negative culture
by creating an independent project team or a strong project matrix. In either case, the
strategy is to insulate the project team from the dominant organizational culture and
create a unique project subculture.
5
Snapshot from Practice: Discussion Questions

3.1 Skunks Works at Lockheed Martin
1. Do you agree that true innovation can only come from a small group of dedicated
professionals?
While some students will cite individual examples of brilliance, most will agree with the
statement and will cite the inability of large organizations to innovate.
3.2 The Birth of the Mac

1. Is projectitis the price you pay for truly innovative projects?
While intense commitment is important, projectitis can be mitigated by limiting the

number of perks and attention devoted to a project team.
2. What similarities and differences do you see between the Lockheed’s Skunk Works
and Apple’s Mac team?
Both the Mac and Skunk Works were small, dedicated project teams. The big difference
is the absence of projectitis in the Skunk Works team. Kelly Johnson did not shower his
team with perks. Here Steve Jobs’ flamboyant leadership style contributed to the we-they
attitude.
3.3 2018 PMO of the Year: Telstra – Capital Planning & Delivery PMO, Melbourne,
Australia
1. Which of the four kinds of PMOs described in the chapter does Telstra’s PMO appear
to be?
Telstra’s PMO appears to operate as a Command Control Center, empowered to cancel

projects that fail to contribute to Telstra’s mission. The PMO also operates as a weather
station monitoring progress and a Resource pool providing PM expertise.
3.4 Google-y
1. How important do you think the perks Google employees receive are for maintaining
the culture of Google?
This is open to debate. We would argue that the perks contribute to a sense of belonging
to a unique, special company. People like to feel special and important. These feelings
contribute to high commitment. Perks also reflect the founder’s commitment to employee
health. Perks may be more important in retaining employees.
2. How does the custom of “dogfooding” contribute to the culture at Google?
Dogfooding reflects a commitment to rapid prototyping and getting user feedback early
in the development process. Making prototypes public reinforces shared accountability
and maintaining high standards.
6
Exercises
1. Going to college is analogous to working in a matrix environment in that most
students take more than one class and must distribute their time across multiple
classes. What problems does this situation create for you? How does it affect
your performance? How could the system be better managed to make your life
less difficult and more productive?
This could be used as a written assignment or the subject of an in-class discussion.

Students are likely to focus on heavy workload periods (exam week, midterms) when
multiple assignments are due. Students should be encouraged to discuss the trade-offs
they make between competing assignments and the impact it has on their
performance. Students should be encouraged to explore the basis for making these
trade-offs. Why do students devote more time to one class rather than another?
Students should be encouraged to discuss whether similar reasons would be given for
working harder on one project over another in a business situation.
Most students will recommend leveling the workload to more evenly spread out
assignments across the term. The instructor should be prepared to answer why this
does not occur and explore barriers to coordinating assignments made by instructors
and parallels it has for business organizations.
Some colleges (most notably Colorado College) have a curriculum in which students
take one class at a time. You may offer this as an alternative and ask students what
they think about this approach.
2. You work for LL Company, which manufactures high-end optical scopes for
hunting rifles. LL Company has been the market leader for the past 20 years
and has decided to diversify by applying its technology to develop a top-quality
binocular. What kind of project management structure would you recommend
they use for this project? What information would you like to have to make this
recommendation, and why?
This could be used as a short-written assignment, an exam question, or a basis for

class discussion. Regardless of how it is used, the following issues should be
addressed:
How important is project management to LL Company? LL Company appears to

have a stable product line and does not engage heavily in product development. If so,
then a formal matrix structure should not be recommended.
What is the culture like at LL Company? Does it support informal collaboration and
teamwork? Will whoever be in charge of the binocular project have trouble getting
the support and cooperation of people needed to complete the project? If yes, then a
dedicated project team would be recommended to reduce the project dependencies on
7
other parts of the organization. If no, then an informal matrix could be arranged
where a project manager is assigned to oversee the completion of the project.
How much innovation is required to produce the binoculars? Chances are very little
given the similarity between rifle scopes and binoculars. If true, then the project may
essentially be a manufacturing one and could be completed within the manufacturing
department with minimal input from other functional areas.
3. You work for Barbata Electronics. Your R&D people believe they have come up
with an affordable technology that will double the capacity of existing MP3
players and uses an audio format that is superior to MP3. The project is code
named KYSO (Knock Your Socks Off). What kind of project management
structure would you recommend they use for the KYSO project? What
information would you like to have to make this recommendation and why?
This could be used as a short-written assignment, an exam question, or a basis for

class discussion. Regardless of how it is used, the following issues should be
addressed.
How important is project management to Barbata Electronics (BE)? Given the level
of competition in the electronics industry, BE is probably heavily engaged in product
development. If so, then a formal matrix structure or project organization should be
considered.
What is the BE culture like? Does it support informal collaboration and teamwork?
Will whoever is in charge of the KYSO have trouble getting the support and
cooperation of people needed to complete the project? If yes, then a dedicated project
team would be recommended to reduce the project dependencies on other parts of the
organization. If no, then an informal matrix could be arranged where a project
manager is assigned to oversee the completion of the project.
How urgent is the KYSO? How innovative is KYSO? Chances are quite a bit. If so,
then a dedicated project team is warranted if resources are available.
8
4. This chapter discussed the role of values and beliefs in forming an organization’s
culture. The topic of organization culture is big business on the Internet. Many
companies use their Web pages to describe their mission, vision, and corporate
values and beliefs. There also are many consulting firms that advertise how they
help organizations to change their culture. The purpose of this exercise is for you
to obtain information pertaining to the organizational culture for two different
companies. You can go about this task by very simply searching on the key
words “organizational culture” or “corporate vision and values.” This search
will identify numerous companies for you to use to answer the following
questions. You may want to select companies that you would like to work for in
the future.
a. What are the espoused values and beliefs of the companies?
b. Use the worksheet in Figure 3.6 to assess the Web page. What does the web
page reveal about the culture of this organization? Would this culture be
conducive to effective project management?
Results will vary depending upon which companies students choose to focus on.
Below are corporate sites which, at the time of this writing (July 2019), contained
information about corporate values and culture.
Intel Corporation:
http://www.intel.com/intel/index.htm?iid=HPAGE+header_aboutintel&
Ford Motor Company:

http://corporate.ford.com/
Hewlett-Packard Development Company:

http://www8.hp.com/us/en/hp-information/index.html
Google:
https://www.google.com/about/company/
Nokia:
http://company.nokia.com/en/about-us
5. Use the cultural dimensions listed in Figure 3.5 to assess the culture of your
school. Instead of employees, consider students, and instead of management, use
faculty. For example, member identity refers to the degree to which students
identify with the school as a whole rather than their major or option. Either as
individuals or in small groups rate the culture of your school on the 10
dimensions.
Responses will vary depending upon the experiences and perspectives of the students.
Below is a summary of a most recent discussion at our College.
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1. Member identity
Job ______________________X__________________________________Organization
Students tend to identify with both the University and their major (i.e., I am an OSU
management student.)
2. Team emphasis
Individual ______X__________________________________________________Group
While the initial tendency is to focus on the number of group assignments – when students
look at the total educational experience, they tend to agree they spend much more time
working as individuals than in groups.
3. Management focus
Task __________________________X__________________________________People
This may reflect our students’ focus on culture.
4. Unit integration
Independent ______X__________________________________________Interdependent
Students and majors operate virtually independent of each other.
5. Control
Loose ________________________________X____________________________Tight
Control is seen as fairly tight with assignments and exams the primary mechanisms for
control.
6. Risk tolerance
Low ______X________________________________________________________High
The grading system appears to cultivate risk avoidance.
7. Reward criteria
Performance __________X_____________________________________________Other
Grades are considered the primary award and while most students agree that they are tied
to performance they do see favoritism and grade inflation playing a role in allocation.
8. Conflict tolerance
Low ______X________________________________________________________High
Most students agree that the culture does not encourage conflict especially with professors.
9. Means-ends orientation
Means ____________________________X________________________________Ends
Despite educational goals most students consider teachers and themselves focusing on
results (grades).
10. Open-system focus
Internal ________X_________________________________________________External
While the university has external focus, most students admit that they find life at a
residential college in a small town as rather insular.
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a. Which dimensions were easy to evaluate and which ones were not?
Students found control most difficult while conflict tolerance was the easiest.
b. How strong is the culture of your school?
When the university is considered the school, most students argued that it was not
very strong and that there were fairly independent subcultures by college (i.e.,
Engineering versus Liberal Arts). When they considered the school to be the
College of Business, they felt it was fairly strong and uniform.
c. What functions does the culture serve for your school?
Students tend to struggle with this question. Some of the more perceptive students
argue that in addition to encouraging predictable student behavior that culture
legitimizes the authority of faculty to teach as they see fit.
d. Do you think the culture of your school is best suited to maximizing your
learning? Why or why not?
This question generates a lot of debate. Some point to low risk and conflict
tolerance as undermining true learning while others argue that if you think beyond
the classroom, “going to college” is a powerful learning experience.
e. What kind of projects would be easy to implement in your school and what
kind of projects would be difficult given the structure and culture of your
school? Explain your answer.
When pressed for time, we often ask this question after doing the culture
assessment. Students tend to identify short-term, class-related projects that are
pretty straight forward in which individual tasks can be divided between students.
Long-term and innovative projects that require multidisciplinary contributions are
often mentioned as being difficult to implement. We encourage students with
student government or Greek experience to talk about their experience
implementing more ambitious projects.
11
6. You work as an analyst in the marketing department for Springfield

International (SI). SI uses a weak matrix to develop new services. Management
has created an extremely competitive organizational culture that places an
emphasis upon achieving results above everything else. One of the project
managers that you have been assigned to help has been pressuring you to make
his project your number one priority. He also wants you to expand the scope of
your work on his project beyond what your marketing manager believes is
necessary or appropriate. The project manager is widely perceived as a rising
star within SI. Up to now you have been resisting the project manager’s pressure
and complying with your marketing manager’s directives. However, your most
recent interchange with the project manager ended by his saying, “I’m not
happy with the level of help I am getting from you and I will remember this
when I become VP of Marketing.” How would you respond and why?
This mini case focuses on corporate politics and internal competition. While students
will want to talk about bigger issues, we force them to discuss how they respond at
that moment in time. Responses range from “I’m sorry that you are not happy. I will
try to do better in the future,” “Can you tell me in specific terms what you are
unhappy about?” to “That’s a threat and I do not respond well to threats.” Once we
have explored the merits of specific responses, we engage in a deeper analysis by
identifying key questions you should ask yourself:
a. What is the likelihood that your antagonist will become VP of Marketing?

b. If the PM does become VP of Marketing, do you want to be working for this
company when this happens?
c. Will your marketing manager be unable to protect you?
d. What would it take to accommodate your antagonist’s requests?
e. Can you be helpful and not undermine your other work?
If the answer is yes to the first three questions, then it may be wise to problem solve
around the last two, especially if your response to e is yes.
You can personalize the discussion by asking students if they have ever been in a
situation like this.
12
Case 3.1
Moss and McAdams Accounting Firm
Bruce Palmer had worked for Moss and McAdams (M&M) for six years and was
just promoted to account manager. His first assignment was to lead an audit of
Johnsonville Trucks. He was quite pleased with the five accountants who had been
assigned to his team, especially Zeke Olds. Olds was an Army vet who had returned
to school to get a double major in accounting and computer sciences. He was on top
of the latest developments in financial information systems and had a reputation for
coming up with innovative solutions to problems.
(Rest of case not shown due to length.)
This case is intended to illustrate the problems that can arise in a competitive work
environment in which a matrix structure is used to complete projects.
1. If you were Palmer at the end of the case, how would you respond?
Students will argue that Palmer should tell his side of the story and complain about
Crosby to Sands. We would argue that this would come across as “sour grapes,” that
Palmer should simply accept the decision since it appears Sands has already made up
her mind. He should take advantage of this situation to request additional support or
adjust the Johnsonville schedule. We would recommend that once the project is over,
he should approach Sands and tell his side of the story so that she can anticipate this
kind of problem with Crosby in the future.
2. What, if anything, could Palmer have done to avoid losing Olds?
Hindsight is wonderful, and it should be pointed out that Palmer responded in a

reasonable manner. Yes, he should have contacted Sands about the problem, but
students should be asked to discuss why he hesitated to contact Sands. Here the
norms against “ratting on a colleague” and complaining instead of solving the
problem should be explored. Some students will point out that he should have
renegotiated his agreement with Crosby when the situation did not improve.
Switching Olds’ schedule so that he worked for him first and then Crosby in the
afternoon may have leveled the playing field. Another alternative would be to have
Olds alternate days working on each project. These suggestions would all depend
upon the nature of the work Olds was performing.
3. What advantages and disadvantages of a matrix type organization are apparent

from this case?
The case tends to highlight the disadvantages of matrix management rather than the
advantages. Still, the flexibility to share critical resources across multiple projects
should not be ignored. At the same time this flexibility can breed competition
between managers trying to optimize contributions to their project.
13
4. What could the management at M&M do to more effectively manage situations

like this?
First, Sands should be criticized for coming up with a solution without consulting
with Palmer. Second, Sands should have been aware that such problems might occur
and made it a point to check with Palmer as to how things were working out. Here the
importance of MBWA should be highlighted. The culture and reward system at
M&M appear to encourage the aggressive behavior exhibited by Crosby. Students
should be asked if this is necessarily a bad thing. If top management at M&M wants
to discourage this kind of behavior, then they could recruit less aggressive team
players. They could incorporate as part of the formal review of performance input
from other account managers who share resources with that person. Cooperation with
other account managers could be stressed in the formal evaluation of individual
managers. Here the use of 360-degree feedback in which peers evaluate each other’s
performance could be mentioned.
14
Case 3.2
Horizon Consulting
Patti Smith looked up at the bright blue Carolina sky before she entered the offices
of Horizon Consulting. Today was Friday, which meant she needed to prepare for
the weekly status report meeting. Horizon Consulting is a custom software
development company that offers fully integrated mobile application services for
iPhone™, Android™, Windows Mobile® and BlackBerry® platforms. Horizon was
founded by James Thrasher, a former marketing executive, who quickly saw the
potential for digital marketing via smartphones. Horizon enjoyed initial success in
sports marketing, but quickly expanded to other industries. A key to their success
was the decline in cost for developing smartphone applications, which expanded the
client base. The decline in cost was primarily due to learning curve and ability to
build customized solutions on established platforms.
(Rest of case not shown due to length.)
The objective of this case is to provide a positive example of a matrix organization.

While it can be used at a specific case, it is particularly useful when used with the Moss
and McAdams Accounting Firm case, which is a negative example of a matrix
organization in action.
1. How successful was the post meeting?
The meeting was very successful. Participants helped each other make the best
decisions available.
2. What factors contributed to the success or failure of this meeting?
The project priority system established an agreed upon “pecking order” and the
cooperative culture contributed to the participant collaboration.
3. What kind of project management structure does Horizon use? Is it the right
structure? Explain.
Horizon relies on a strong matrix structure to complete projects. Account Managers

manage multiple projects and engage in direct sales activities. App engineers work
full-time on a specific project while the other engineers and designers work across
multiple projects. Account managers are responsible for the work on each project and
contribute to the performance reviews of participants. The heads of Software
Development and Graphics manage schedules.
A strong matrix structure appears to be ideally suited for Horizon’s business

environment. The business is project driven and projects do not require full-time
involvement by all participants. Project authority resides with the Account Managers
who have direct contact with customers. The authority is appropriate given the
15
importance of meeting customer needs and iterative fashion in which products evolve.
Horizon has a project priority system that guides decision making. The organizational
culture at Horizon appears to be collaborative which supports a matrix structure.
Potentially contentious decisions are resolved amicably.
When utilizing Horizon Consulting in conjunction with Moss and McAdams Accounting,
we find it useful to compare the organizational cultures and mechanisms that contribute
to their distinct cultures.
Mechanisms M&M Accounting Firm Horizon Consulting

Reward System Competitive – partners are Shared – Rewards
selected from cohort group distributed based on
individual performance
and performance of the
firm
Project Priority System No formal system – priorities Formal Priority System in
are implied by management place and is used to make
actions decisions
Work Environment Formal – emphasis on position Informal – deemphasizes
within the organization position rank and
encourages egalitarian
behavior
Employee Appear to recruit competitive, Letting go of Stephen
Selection/Retention performance-driven individuals Stills suggests that
who produce results organization seeks team
players
Culture Competitive culture, Collaborative culture,
individuals look out for their individuals encourage to
interests first. help each other and do
what is best for the firm
16

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Project Management: The Managerial Process

Organization: Structure and Culture

1. Project Management Structures

Chapter Learning Objectives

LO 3-1 Identify different project management structures and understand their

LO 3-2 Distinguish three different types of matrix structures and understand

LO 3-4 Understand organizational and project considerations that should be

LO 3-5 Appreciate the significant role that organizational culture plays in

LO 3-6 Interpret the culture of an organization.

LO 3-7 Understand the interaction between project management structure and

The advantages of the functional approach include:

The advantages of the matrix approach include:

The advantages of the dedicated team approach include:

The weaknesses of the functional approach include:

The weaknesses of the matrix approach include:

The weaknesses of the dedicated project team include:

2. What distinguishes a weak matrix from a strong matrix?

3. Under what conditions would it be advisable to use a strong matrix instead of a

4. How can project management offices (PMOs) support effective project

PMOs support effective project management by:

5. Why is it important to assess the culture of an organization before deciding what

6. Other than culture, what other organizational factors should be used to

7. What do you believe is more important for successfully completing a project—

Snapshot from Practice: Discussion Questions

3.2 The Birth of the Mac

While intense commitment is important, projectitis can be mitigated by limiting the

Telstra’s PMO appears to operate as a Command Control Center, empowered to cancel

2. How does the custom of “dogfooding” contribute to the culture at Google?

This could be used as a written assignment or the subject of an in-class discussion.

This could be used as a short-written assignment, an exam question, or a basis for

How important is project management to LL Company? LL Company appears to

This could be used as a short-written assignment, an exam question, or a basis for

Ford Motor Company:

Hewlett-Packard Development Company:

b. How strong is the culture of your school?

c. What functions does the culture serve for your school?

6. You work as an analyst in the marketing department for Springfield

a. What is the likelihood that your antagonist will become VP of Marketing?

(Rest of case not shown due to length.)

2. What, if anything, could Palmer have done to avoid losing Olds?

Hindsight is wonderful, and it should be pointed out that Palmer responded in a

3. What advantages and disadvantages of a matrix type organization are apparent

4. What could the management at M&M do to more effectively manage situations

(Rest of case not shown due to length.)

The objective of this case is to provide a positive example of a matrix organization.

1. How successful was the post meeting?

2. What factors contributed to the success or failure of this meeting?

Horizon relies on a strong matrix structure to complete projects. Account Managers

A strong matrix structure appears to be ideally suited for Horizon’s business

Mechanisms M&M Accounting Firm Horizon Consulting

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