Manual 1

Project Time Management

Book 3 of 3
Organizational Structure and its Impact on
Project Management
 Manual 1 Project Life Cycle and Organization

Contents
Section A: Introducing Organizational Influences 3
Organizational Influences 3
Organizational Systems 3
Organizational Cultures and Styles 4
Organizational Structure 4
The Role of the PMO in Organizational Structures 7
Project Management System 8

Section B: The Various Life Cycle Organizational Structures 9

Types of Organizational Structures 9
Types of Matrix Organizational Structures 9
Organizational Structure and Project Management Authority 9
Organizational Culture, Values, and Norms 10
Organizational Structures 10
Organizational Structure and Project Manager Authority 11
Organizational Culture, Values, and Norms 11
Organizational Infrastructure 12
Identify Workplace Project Life Cycles 12
Selecting a life Cycle 15

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 Manual 1 Project Life Cycle and Organization

Topic 1: Organizational
Structure and its Impact on
Project Management
Section A: Introducing Organizational
Influences
Organizational Influences
Projects are typically part of an organization that is larger than the project. Examples of organizations
include corporations, government agencies, healthcare institutions, international bodies, professional
associations, and others. Even when the project is external (joint ventures, partnering), the project will still
be influenced by the organization or organizations that initiated it. The maturity of the organization with
respect to its project management system, culture, style, organizational structure and project
management office can also influence the project. The following sections describe key aspects of these
larger organizational structures that are likely to influence the project.

Organizational Systems
Project-based organizations are those whose operations consist primarily of projects. These organizations
fall into two categories:

• Organizations that derive their revenue primarily from performing projects for others under contract –
architectural firms, engineering firms, consultants, construction contractors, and government
contractors.
• Organizations that have adopted management by projects. These organizations tend to have
management systems in place to facilitate project management. For example, their financial systems
are often specifically designed for accounting, tracking, and reporting on multiple, simultaneous
projects.

Non-project-based organizations often may lack management systems designed to support project needs
efficiently and effectively. The absence of project-oriented systems usually makes project management
more difficult. In some cases, non-project-based organizations will have departments or other subunits
that operate as project-based organizations with systems to support them. The project management team
should be aware of how its organization’s structure and systems affect the project.

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 Manual 1 Project Life Cycle and Organization

Organizational Cultures and Styles

Most organizations have developed unique and describable cultures. These cultures are reflected in
numerous factors, including, but not limited to:

• Shared values, norms, beliefs, and expectations

• Policies and procedures
• View of authority relationships
• Work ethic and work hours.

Organizational cultures often have a direct influence on the project. For example:

• A team proposing an unusual or high-risk approach is more likely to secure approval in an aggressive
or entrepreneurial organization
• A project manager with a highly participative style is apt to encounter problems in a rigidly
hierarchical organization, while a project manager with an authoritarian style will be equally
challenged in a participative organization.

Organizational Structure
The structure of the performing organization often constrains the availability of resources in a spectrum
from functional to projectized, with a variety of matrix structures in between. Figure 1 shows key project-
related characteristics of the major types of organizational structures.

Organizational
Matrix
Structure
Functional Projectized
Project
Characteristics Balanced Strong
Weak Matrix
Matrix Matrix
Low to Moderate to High to Almost
Project Manager’s Authority Little of None Limited
Moderate High Total
Low to Moderate to High to Almost
Resource Availability Little of None Limited
Moderate High Total

Who controls the Project Functional Functional Project Project

Mixed
Budget Manager Manager Manager Manager

Project Manager’s Role Part-time Part-time Full-time Full-time Full-time

Project Management
Part-time Part-time Part-time Full-time Full-time
Administrative Staff

Figure 1 - Organizational Structure Influences on Projects

The classic functional organization, shown in Figure 2, is a hierarchy where each employee has one clear
superior. Staff members are grouped by specialty, such as production, marketing, engineering, and
accounting at the top level. Engineering may be further subdivided into functional organizations that
support the business of the larger organization, such as mechanical and electrical. Functional
organizations still have projects, but the scope of the project is usually limited to the boundaries of the
function.

The engineering department in a functional organization will do its project work independent of the
manufacturing or marketing departments. When new product development is undertaken in a purely
functional organization, the design phase, often called a design project, includes only engineering
department staff. Then, when questions about manufacturing arise, they are passed up the organizational
hierarchy to the department head, who consults with the head of the manufacturing department. The
engineering department head then passes the answer back down the hierarchy to the engineering
functional manager.

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 Manual 1 Project Life Cycle and Organization

Chief
Project Executive
Coordination

Functional Functional Functional

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Figure 2 - Functional Organization (Grey boxes represent staff engaged in project activities)

Project
Coordination Chief
Executive

Project Project Project

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Figure 3 - Projectized Organization (Grey boxes represent staff engaged in project activities)

At the opposite end of the spectrum is the projectized organization, shown in Figure 3. In a projectized
organization, team members are often collocated. Most of the organization’s resources are involved in
project work, and project managers have a great deal of independence and authority. Projectized
organizations often have organizational units called departments, but these groups either report directly
to the project manager or provide support services to the various projects.

Chief
Executive

Functional Functional Functional

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Project
Coordination
Figure 4 - Weak Matrix Organization (Grey boxes represent staff engaged in project activities)

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 Manual 1 Project Life Cycle and Organization

Chief
Executive

Functional Functional Functional

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Project Manager Staff Staff

Project
Figure 5 - Balanced Matrix Organization (Grey boxes represent staff engaged in project activities) Coordination

Matrix organizations, as shown in Figures 4 through 6, are a blend of functional and projectized
characteristics. Weak matrices maintain many of the characteristics of a functional organization and the
project manager role is more that of a coordinator or expediter than that of a manager. In similar fashion,
strong matrices have many of the characteristics of the projectized organization, and can have full-time
project managers with considerable authority and full-time project administrative staff. While the
balanced matrix organization recognizes the need for a project manager, it does not provide the project
manager with the full authority over the project and project funding.

Chief
Executive

Functional Functional Functional Manager of Project

Manager Manager Manager Managers

Staff Staff Project

Staff
Manager

Staff Staff Staff Project

Manager

Project
Staff Staff Staff Manager

Project
Figure 6 - Strong Matrix Organization (Grey boxes represent staff engaged in project activities) Coordination

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 Manual 1 Project Life Cycle and Organization

Chief
Executive

Functional Functional Functional Manager of

Manager Manager Manager Project

Project
Staff Staff Staff Manager

Project
Staff Staff Staff Manager

Staff Staff Staff Project

Manager

Project B Project A
Coordination Coordination

Figure 7 - Composite Organization (Grey boxes represent staff engaged in project activities)

Most modern organizations involve all these structures at various levels, as shown in Figure 7 (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, may
develop its own set of operating procedures and may operate outside the standard, formalized reporting
structure.

The Role of the PMO in Organizational Structures

Many organizations realize the benefit of developing and implementing a PMO. This is often true of those
organizations employing a matrix organizational structure, and almost always true of those employing a
projectized organizational structure, especially when the parent organization is involved with the
simultaneous management of multiple and/or sequential projects. A PMO can exist in any of the
organizational structures, including those with a functional organization, with increasing likelihood of
occurrence toward the rightmost columns in Figure 1.

A PMO’s function in an organization may range from an advisory influence, limited to the recommendation
of specific policies and procedures on individual projects, to a formal grant of authority from executive
management. In such cases, the PMO may, in turn, delegate its authority to the individual project
manager. The project manager will have administrative support from the PMO either through dedicated
staff or through a shared staff member. The project team members will either be dedicated to the project
or might include staff members who are shared with other projects and, in turn, are managed by the PMO.

Project team members will report either directly to the project manager or, if shared, to the PMO. The
project manager reports directly to the PMO. Additionally, the flexibility of the PMO’s centralized
management can offer the project manager a greater opportunity for advancement within the
organization. Specialty project team members can also be exposed to alternative project management
career options in organizations with PMOs.

Note that if a PMO exists, Figure 3 would have an additional box, labeled PMO, between the project
manager layer and the chief executive layer. Similarly in Figures 6 and 7, the “manager of project
managers” would normally be the PMO manager, whereas in the other organizational structures (Figures
4 and 5), the PMO usually does not directly report to the chief executive.
2

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 Manual 1 Project Life Cycle and Organization

Project Management System

The project management system is the set of tools, techniques, methodologies, resources, and
procedures used to manage a project. It can be formal or informal and aids a project manager in
effectively guiding a project to completion. The system is a set of processes and the related control
functions that are consolidated and combined into a functioning, unified whole.

The project management plan describes how the project management system will be used. The project
management system content will vary depending upon the application area, organizational influence,
complexity of the project, and availability of existing systems. The organizational influences shape the
system for executing projects within that organization. The system will adjust or adapt to accommodate
any influence imposed by the organization.

If a PMO exists in the performing organization, one of the functions of the PMO would typically be to
manage the project management system, in order to ensure consistency in application and continuity on
the various projects being performed.

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 Manual 1: Project Life Cycle and Organization

Section B: The Various Life Cycle

Organizational Structures
Projects are usually part of a larger organization such as a corporation or professional association. The
systems, cultures, styles, and structures of the organization influence the project. Organizational
structures exist on a spectrum between project-based and non-project based organizations.

Project based Organizations whose operations consist mainly of projects and tend to have management
systems in place to facilitate management of the project. Also referred to as a projectized
organization.

Non-project Organizations whose operations do not consist primarily of projects based and tend not to
have management systems in place to facilitate management of the project.

It is important to note that decision-making and resource allocation are often constrained by the structure
of the performing organization. Organizational structures span a continuum of involvement and level of
authority of the project manager.

Types of Organizational Structures

The functional organizational structure is the classic hierarchy where each associate has one clear
supervisor for all work based primarily on one’s technical discipline, specialty, or department; i.e.,
marketing, manufacturing, engineering, etc. The scope of the project work assignments tends to be
limited to the boundaries of that functional or technical department. The project manager is more like a
part-time facilitator with no positional authority, and communication channels are almost exclusively
vertical.

The matrix organizational structure is one in which the project manager shares responsibility with the
functional managers for assigning priorities and for directing the work or individuals assigned to the
project. There are three types of matrix organizations. The terms weak and strong refer to the authority of
the project manager from their point of view: the more authority, the stronger the matrix.

Types of Matrix Organizational Structures

Strong The project manager has a greater share of decision-making authority.

Decision-making responsibilities and authority are truly shared between the

project manager and two or more functional managers. The project manager tends
Balanced
to be full-time and has a low to moderate level of authority, and a higher
percentage (15_60%) of the project team is assigned full-time.
The project manager has a less proportionate share of decision-making authority
Weak
than either the strong or balanced

The projectized organizational structure is the exact opposite of the functional hierarchical approach to
managing a project or program. A full-time project manager is assigned with full-time administrative
support staff and a collocated, full-time, project team of specialists who report to them on a solid-line,
vertical basis for the life of the project. The project manager typically reports to a manager of project
managers (or vice president) residing in a project management support office (or center of excellence)
providing a high authority level on the project.

Organizational Structure and Project Management Authority

The following figure indicates the level of authority a project manager has in relation to the organizational
structure used. In most cases, project managers work within an existing structure and are unable to
change it for the projects they manage. Knowing the issues involved with the structure helps formulate the
communications, staffing, risk, and procurement management plan.

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 Manual 1: Project Life Cycle and Organization

Organizational Matrix
Structure Functional Projectized
Project
Characteristics Balanced
Weak Matrix Strong Matrix
Matrix
Project Manager’s Low to Moderate to High to Almost
Little of None Limited
Authority Moderate High Total
Percent of performing
Organization’s personnel
Virtually None 0-25% 15-60% 50-95% 85-100%
assigned full time to
project work

Project Manager’s Role Part-time Part-time Full-time Full-time Full-time

Project Project Project

Project Project
Common Titles for Manager/ Manager/ Manager/
Coordination / Coordination /
Project Manager’s Role Project Program Program
Project Leader Project Leader
Officer Manager Manager
Project Management
Part-time Part-time Part-time Full-time Full-time
Administrative Staff

For most applications, it is assumed that the project manager is operating in a strong matrix environment.
That is, the project manager has the strength and authority, as opposed to the functional managers.

Organizational Culture, Values, and Norms

Other key influences on how projects are managed within an organization are the culture, values, and
norms of an organization. To be most effective, the project manager should understand, identify, and
operate within the expectations dictated by the organization’s culture and norms. Additionally, a deep
understanding of the values of the organization should allow the project manager to identify the most
important factors that the organization perceives as its success criteria.

Organizational Structures
Functional

• Hierarchy where each employee has one clear supervisor.

• Staff members are grouped by specialty.

Matrix

• Blend of functional and projectized.

Projectized

• Collocated team members.

• Most resources are involved with project work.
• Project managers are more independent and have more authority.

The Functional organization structure is the classic hierarchy where each associate has one clear
supervisor for all work based primarily on one’s technical discipline, specialty, or department; i.e.,
marketing, manufacturing, engineering, etc.

The scope of the project work assignments tends to be limited to the boundaries of that function or
technical department. The project manager is more like a part-time facilitator with no positional authority,
and communication channels are almost exclusively vertical.

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 Manual 1: Project Life Cycle and Organization

The Matrix organizational structure is one in which the project manager shares responsibility with the
functional managers for assigning priorities and for directing the work or individuals assigned to the
project. There are three types of matrix organizations. The terms weak and strong refer to the authority of
the project manager from their point of view: the more authority, the stronger the matrix.

• Strong: The project manager has a greater share of decision making authority.
• Balanced: Decision-making responsibilities and authority are truly shared between the project
manager and two or more functional managers. The project manager tends to be full-time and has a
low to moderate level of authority, and higher percentage (15-60%) of the project team is assigned
full-time.
• Weak: The project manager has a less proportionate share of decision making authority than either
the strong or balanced.

The Projectized organizational structure is the exact opposite of the functional hierarchical approach to
managing a project or program. A full-time project manager is assigned with full-time administrative
support staff and a collocated, full-time, project team of specialists who report to them on a solid-line,
vertical basis for the life of the project. The manager typically reports to a manager of project managers
(or vice president) residing in a project management support office (or center of excellence) providing a
high authority level on the project.

Organizational Structure and Project Manager Authority

The figure below indicates the level of authority a project manager has in relation to the organizational
structure used. In most cases, project managers work within an existing structure and are unable to
change it for the projects they manage. Knowing the issues involved with the structure helps formulate the
communications, staffing, risk, and procurement management plan.

For most applications, it is assumed that the project manager is operating in a strong matrix environment.
That is, the project manager has the strength and authority, as opposed to the functional managers.

Major Project Life Cycles

• Waterfall
• Incremental
• Spiral
• Evolutionary

Organizational Culture, Values, and Norms

Organizations usually have unique and describable cultures. Corporate culture is visible in policies,
procedures, and views of authority relationships. These cultures are reflected in their:

• Shared values.
• Norms.
• Beliefs.
• Expectations.

To be most effective, the project manager should understand, identify, and operate within the expectation
dictated by the organization’s culture and norms. Additionally, a deep understanding of the values of the
organization should allow the project manager to identify the most important factors that the organization
perceives as its success criteria.

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 Manual 1: Project Life Cycle and Organization

Organizational Infrastructure
An infrastructure must include:

• Project manager position descriptions.

• Reward system congruence.
• Career paths.
• Competency models.
• Training and development opportunities.
• Certification.

The organizational infrastructure should provide the project manager clear guidance regarding
performance expectations, and how to more successfully perform within the organization. This starts with
the basic description of the project manager’s position, but extends to include the information in the list
above.

The project manager should work with the organization to understand how they can continually improve
and contribute to the organization.

Identify Workplace Project Life Cycles

There are many project life cycle models that a project manager can use to manage a project. The project
manager is responsible for selecting the life cycle that best supports the type of project being managed.

Major Project Life Cycles

• Waterfall
• Incremental
• Spiral
• Evolutionary

Each of these life cycles are expired on the following pages.

Waterfall Life Cycle

Definition

Analysis

Design

Implementation

Installation

Operation

Advantages Disadvantages

• Simple Milestones • Not useful until finished

• Clear review points • Takes a long time

• Easily understood • Escalating

• Known and trusted • High number of errors

• Decisions documented • Frequent changes that impact contract

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 Manual 1: Project Life Cycle and Organization

Incremental Life Cycle

Functions developed separately

Design

Concept Implement

Architecture
Design Design
Install,
Operate and
Implement
Requirement Maintain
s
Design

Implement

Advantages Disadvantages

• Mini-projects • More complex

• Allocation of scarce resources • Increased risk of miscommunication

• Partitions risk • Modular architecture

• Faster delivery • Increased time testing and integrating

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 Manual 1: Project Life Cycle and Organization

SPIRAL LIFE CYCLE

Operations and Production

Support

Unit
Evaluate Test Requirements
Sub-System
Evaluation Identity
Requirements
System
Requirements
Evaluation
Business
Risk Requirement
Analysis

1. Proof of
Concept Conceptual
Design
2. First Logical
Build Design
Physical
3. Second Design
Build
Final
Construct Design
4. Final
Build Design

Advantages Disadvantages

• Risk reduced • Complexity

• Critical success factors • Delivery expectations

• Detailed user requirements • Heavy user involvement

• Encourages re-use • Few practitioners

• Validates assumptions and feasibility • Risk assessment expertise required

EVOLUTIONARY LIFE CYCLE

Rush to base functionality

Continued……
Concept
Explo. System Reqs.
STRATEGY Alloc Design Implement
Concept
Explo. System Reqs.
Concept Explo. Reqs. STRATEGY Alloc Design Implement Install Maint.
STRATEGY
System Design Implement Install Maint.
Design
alloc

Time

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 Manual 1: Project Life Cycle and Organization

Advantages Disadvantages

• Satisfying • Open architecture

• Fast delivery • Heavy user involvement

• Cash flow advantage • Experienced team and management

• Expects change • Meets intermediate needs

• Room to abandon • Needs support and development

Selecting a life Cycle

The project manager can use a matrix to compare the different types of life cycles that may be considered
for a specific type of project being managed.

Life Cycle
Req Arch Sys Risk Size Team
Model
Waterfall K K I L S to M New

Incremental K K D M M to L New

Spiral U U D/I H M to L Exp.

Evolutionary K U D H M to L Exp.

D = Divisible K = Known
I = Indivisible U= Unknown

L = Low M = Medium H = High I = Risk

The above matrix was developed specifically for managing information technology projects and evaluating
whether the system requirements and architecture are known or unknown, and if the system components
are divisible or not (determining if work can be divided for the project team).

Depending on the specific nature of the project being managed, these columns may be adapted to more
accurately reflect project parameters. However, the Risk, Size, and Team columns are common to all
projects.

Note: Under the Team column, new indicates the team is new to this life cycle and exp. indicates the team
is experienced in working with this type of life cycle.

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