Project Management:

A Managerial Approach 4/e

By Jack R. Meredith and Samuel J. Mantel, Jr.

Published by John Wiley & Sons, Inc.

Presentation prepared by RTBM WebGroup

Project Management
A Managerial Approach

Chapter 5

Project Organization
Growth of Project Oriented
Organizations
 There are many reasons for the rapid
growth, but most of them can be grouped
in four general areas:
 Speed and market responsiveness have
become absolute requirements for successful
competition
 The development of new products, processes,
or services regularly requires input from diverse
areas of specialized knowledge
Chapter 4-1
Growth of Project Oriented
Organizations

 Four reasons for growth (cont.)

 Rapid expansion of technological possibilities in

almost every area of enterprise tends to
destabilize the structure of organizations
 A majority of senior managers rarely feel much
confidence in their understanding and control
of the activities in their areas
Chapter 4-2
Types of Project Organizations
 There are two fundamentally different ways
of organizing projects within the parent
organization
 The project as part of the Functional Organization
 The project as a free-standing part of the parent
organization
 A third type, called a Matrix Organization is a
hybrid of the two main types
 Each has advantages and disadvantages
Chapter 4-3
 The Project as Part of the
Functional Organization
 Advantages of using the functional elements of the
parent organization as the administrative home for a
project include:
 Maximum flexibility in the use of staff
 Individual 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 individuals choose to leave the project
 The functional division contains the normal path of
advancement for individuals whose expertise is in the
functional area
Chapter 4-4
The Project as Part of the
Functional Organization
 There are also disadvantages to housing the project
in a functional area:
 The client is not the focus of activity and concern
 The functional division tends to be oriented toward the
activities particular to its function
 Occasionally, no individual is given full responsibility for
the project
 There are often several layers of management between
the project and the client
 There is a tendency to suboptimize the project
Chapter 4-5
 Pure Project Organization
 Advantages of a 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 project manager
 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 maintain a
permanent cadre of experts who develop skills in specific
technologies
Chapter 4-6
 Pure Project Organization
 Advantages of a pure project organization (cont.)
 A project team that has a strong and separate identity and
develops a high level of commitment from its members
 Because the authority is centralized, the ability to make a
swift decision is enhanced
 Unity of command exists
 Pure project organizations are structurally simple and
flexible, which makes them relatively easy to understand
and implement
 The organizational structure tends to support a holistic
approach to the project Chapter 4-7
Pure Project Organization
 Disadvantages of a pure project organization:
 Each project tends to be fully staffed which can lead to a
duplication of effort in every area from clerical staff to
technological support
 There is a need to ensure access to technological
knowledge and skills that results in an attempt by project
managers to stockpile equipment and technical assistance
 The functional division is a repository of technical lore, but
it is not readily accessible to team members of the pure
project team

Chapter 4-8
Pure Project Organization
 Disadvantages of a pure project organization
(cont.)
 Pure project groups seem to foster inconsistency in the
way in which policies and procedures are carried out
 In a pure project organization, the project takes on a life
of its own
 There tends to be concern among team members about
“life after the project ends”

Chapter 4-9
The Matrix Organization
 The matrix organization is a combination of
functional and pure project
 A matrix organization can take on a wide variety
of specific forms
 “Project” or “strong” matrix organization most
resembles the pure project organization
 The “coordination” or “functional” or “weak” matrix
most resembles the functional form
 The “balanced” matrix lies in between the others

Chapter 4-10
The Matrix Organization
 Rather than being a stand alone organization,
like the pure project, the matrix project is not
separated from the parent organization:

Chapter 4-11
The Matrix Organization
 As with other organizational forms, the matrix
organization has its own unique advantages:
 The project is the point of emphasis
 Because the project is overlaid on the functional
divisions, the project has reasonable access to the
reservoir of technology in all areas
 There is less anxiety about what happens when
the project is completed

Chapter 4-12
 The Matrix Organization
 Advantages of a Matrix (cont.)
 Response to client’s needs is as rapid as in the pure
project organization
 Matrix management gives the project access to
representatives from the administrative units of the
parent firm
 The matrix organization allows a better company-
wide balance of resources to achieve goals
 There is a great deal of flexibility in precisely how
the project is organized within the matrix
Chapter 4-13
The Matrix Organization
 There are also disadvantages to using the
matrix organization; most involve conflict
between the functional and project managers:
 The balance of power between the project and
functional areas is very delicate
 The movement of resources from project to
project may foster political infighting
 Problems associated with shutting down projects
can be as severe as in a pure project organization
Chapter 4-14
The Matrix Organization

 Disadvantages of a Matrix (cont.)

 The division of authority and responsibility in a
matrix organization is complex, and uncomfortable
for the project manager.
 Matrix management violates the management
principle of unity of command. Project workers
have at least two bosses, their functional heads
and the project manager.

Chapter 4-15
Mixed Organizational Systems
 Divisionalization is a means of dividing a large
organization into smaller more flexible units
 This enables the parent organization to
capture some of the advantages of small,
specialized organizational units while retaining
some of the advantages that come with larger
size units

Chapter 4-16
Mixed Organizational Systems
 Pure functional and pure project organizations
may coexist in a firm

Chapter 4-17
Mixed Organizational Systems
 Advantages of a mixed organization:
 The hybridization of the mixed form leads to flexibility
 The firm is able to meet special problems by appropriate
adaptation of its organizational structure
 Disadvantages include:
 Dissimilar groupings within the same accountability center
tend to encourage overlap, duplication, and friction
because of incompatibility of interests
 Conditions still exist that result in conflict between
functional and project managers

Chapter 4-18
 Choosing an
Organizational Form
 Selecting the organizational interface between the
project and the firm is a difficult task
 The choice is determined by the situation, but is also partly
intuitive
 Must consider the nature of the potential project, the
characteristics of the various organization options, the
advantages and disadvantages of each, the cultural
preferences of the parent organization, and then make the
best compromise that can be made

Chapter 4-19
 Choosing an
Organizational Form
 Criteria for the selection of a project organization:
 1. Define the project with a statement of the objective(s)
that identifies the major outcomes desired
 2. Determine the key tasks associated with each objective
and locate the units in the parent organization that serve
as functional “homes” for these types of tasks
 3. Arrange the key tasks by sequence and decompose them
into work packages
Chapter 4-20
 Choosing an
Organizational Form
 Criteria for the selection of a project organization
(cont.):
 4. Determine which organizational units are required to
carry out the work packages and which units will work
particularly closely with which others
 5. List any special characteristics or assumptions
associated with the project
 6. In light of items 1-5, and with full cognizance of the
pros and cons associated with each structural form,
choose a structure
Chapter 4-21
The Project Management Office
With the increasing role of projects in
today’s organizations and the move toward
“management by projects,” the need has
arisen for an organizational entity to help
manage these fast-multiplying forms of getting
work done. This is the role of the Project
Management Office (PMO), a.k.a. the Project
Office, the Program Management Office, the
Project Support Office, and so on.

Chapter 4-22
The Project Management Office
There are a variety of forms of PMOs to
serve a variety of needs. Some of these are at
a low level in the organization and others
report to the highest levels. The best PMOs
(Baker, 2007) have some common
characteristics, however, including the traits
of being run like the best businesses (a
business plan, focused, emphasis on results),
enjoying strong executive support, being
future-oriented learning organizations, and
offering the best project leadership in the
organization. Chapter 4-22
 Purposes of the Project
Management Office (PMO)
A major contribution of PMOs is to
establish project administration procedures
for selecting, initializing and planning,
budgeting, and scheduling projects as well as
to serve as a repository for reports on the
performance of the planning, budgeting,
scheduling, and resource allocation processes.
PMO files also often contain reports on risk
management, project audits, evaluations, and
histories.

Chapter 4-22
 Purposes of the Project
Management Office (PMO)
It is important to note that the role of the
PMO is that of an enabler/facilitator of
projects, not the doer of projects. Top
management cannot allow the PMO to usurp
the technical aspects—scheduling, budgeting,
etc.—of running the project. Those are the
project manager’s responsibility. Although the
PMO may, on occasion, become involved in
some project management tasks, it should be
for the purpose of facilitating liaison with top
management, not to do the work of the project
team. Chapter 4-22
Task of the Project Management Office
To achieve its goals, PMOs commonly perform many of the
following tasks (Block, 1999):
 
Establish and enforce good project management processes
such as procedures for bidding, risk analysis, project selection,
progress reports, executing contracts, and selecting software
Assess and improve the organization’s project management
maturity
Develop and improve an enterprise project management system
Offer training in project management and help project
managers become certified
•Identify, develop, and mentor project managers and maintain a
stable of competent candidates

Chapter 4-22
Task of the Project Management Office
 Offer consulting services to the organization’s project managers
 Help project managers with administrative details such as
status reports
 Establish a process for estimation and evaluation of risk •
Determine if a new project is a good “fi t” for the changing
organization
 Identify downstream changes (market, organization) and their
impacts on current projects: Are the projects still relevant? Is
there a need to change any project’s scope? Are there any cost
effects on the projects?
• Review and manage the organization’s project risk portfolio,
including limiting the number of active projects at any given
time and identifying and reining in runaway projects as well as
managing potential disasters

Chapter 4-22
Task of the Project Management Office
 Conduct project reviews and audits, particularly early in each
project’s life cycle, and report project progress relative to the
organization’s goals
 Maintain and store project archives
 Establish a project resource database and manage the resource
pool
 Serve as a champion to pursue project management excellence
in the organization and encourage discussion on the value of
individual projects in the firm
 Serve as a “home” for project managers to communicate with
each other and with PMO staff
 Collect and disseminate information and techniques reported in
project evaluations that can improve project management
practices
• Assist in project termination
Chapter 4-22
 Forms of the Project Management
Office
There are various forms of PMOs that have similar
responsibilities. That is, some organizations may only want a
limited PMO that represents an information center, reporting
on project progress and assessing the organization’s project
maturity. At the next level, the PMO may establish project
management procedures and practices, promulgate lessons
learned from prior projects, create a database for risk
analysis, help project managers with administrative and
managerial matters, and possibly even offer basic training in
project management. At the upper level, the PMO may
establish a resource database and monitor inter-project
dependencies, manage the project portfolio to ensure
attainment of the organization’s goals, audit and prioritize
individual projects, and generally establish an enterprise
project management system.
Chapter 4-22
 Implementing the Project
Management Office
The best way to implement a PMO is to treat it as a
project and apply good project management procedures.
In addition, given the role of this special type of project,
it is also suggested that the effort not be initiated until
it has the full commitment of the top managers of the
organization. It should also have a senior management
sponsor/champion who is determined to see this
project through to success. One way to initiate the
project is through a pilot program in one of the areas
that falls under the responsibility of the PMO project
champion. Following its completion, the pilot project
can be assessed, any mistakes corrected, and the
benefits publicized to the rest of the organization.
Chapter 4-22
The Project Team
 To staff a project, the project manager works from
a forecast of personnel needs over the life cycle of
the project
 A work breakdown structure (WBS) is prepared to
determine the exact nature of the tasks required to
complete the project
 Skills requirements for these tasks are assessed and like
skills are aggregated to determine work force needs
 From this base, the functional departments are contacted
to locate individuals who can meet these needs
 Certain tasks may be subcontracted
Chapter 4-22
The Project Team
 There are some people who are more critical to
the project’s success than others and should
report directly to the project manager or the
project manager’s deputy:
 Senior project team members who will be having a
long-term relationship with the project
 Those with whom the project manager requires
continuous or close communication
 Those with rare skills necessary to project success

Chapter 4-23
Human Factors and the
Project Team
 Meeting schedule and cost goals, without
compromising performance is a technical
problem, with a human dimension
 Project professionals tend to be perfectionists
 Pride in workmanship leads the team member to
improve (and thus change) the product
 These changes cause delays in the project

Chapter 4-24
Human Factors and the
Project Team
 Motivating Project Team Members:
 The project manager often has little control over the
economic rewards and promotions of project team
members, but this does not mean he/she cannot
motivate members of the team
 How are technical employees motivated?
 Recognition
 Achievement
 The work itself
 Responsibility
 Advancement
 The chance to learn new skills Chapter 4-25
Some Advantages of Empowering
Project Teams
 Empowerment of project teams is also a
motivational factor:
 1. It harnesses the ability of the team members to
manipulate tasks so that project objectives are met.
The team is encouraged to find better ways of doing
things
 2. Professionals do not like being micromanaged.
Participative management does not tell them how to
work but given a goal, allows them to design their
own methods
 3. The team members know they are responsible and
accountable for achieving the project deliverables
Chapter 4-26
Some Advantages of Empowering
Project Teams
 Advantages of Empowerment (cont.):
 4. There is a good chance that synergistic solutions
will result from team interaction
 5. Team members get timely feedback on their
performance
 6. The project manager is provided a tool for
evaluating the team’s performance

Chapter 4-27
 Interpersonal Conflict
 The focus of conflict can often be related to the stage in
the project’s life cycle
 When the project is first organized, priorities, procedures and
schedules all have roughly equal potential to cause conflict
 During the buildup phase, priorities become significantly more
important than any other conflict factor
 In the main program phase schedules are the most important
cause of conflict followed by technical disagreements
 At the project finish, meeting the schedule is the critical issue

Chapter 4-28
 Interpersonal Conflict
 Conflict and the Project Manager
 Most of the conflict on project teams is the result of
individuals focusing on the project through the eyes of
their individual discipline or department
 Conflict avoiders do not make successful project
managers
 On occasion, compromise appears to be helpful, but
most often, gently confronting and resolving the conflict
is the method of choice, for a win-win situation

Chapter 4-29