PART II: ADVANCED TOPICS IN PROJECT MANAGEMENT
Outline of Presentation Part II
Brief Overview of Part II
Introduction to Project Organization
Organization Examples
The Functional Organization Form
Advantages and Disadvantages of the
Functional Organization Form
The Project Matrix Organization Form
The Functional Project Matrix
The Balanced Project Matrix
The Strong Project Matrix
Advantages and Disadvantages of the
Strong Project Matrix Form
Project Teams
Advantages and Disadvantages of
Project Teams
Which Project Organization Form is
Best?
The Project-Based Organization
Impact of Organizational Culture on
Projects
The Project Management Office (PMO)
Functions, Advantages and Disadvantages
of the PMO
Introduction to Project Portfolio Manage-
ment
The Project Portfolio Management Process
Portfolio Selection: Qualitative Models
Portfolio Selection: Quantitiative Models
Project Portfolio Management Software
Issues in Project Portfolio Management
The Project Management Methodology
Review of Selected Project Management
Methodologies:
PMBOK
APMBOK
IPMA Baseline
PRINCE2
 Projects in the
Functional Organization Form
 The Functional Form of Organization

In the functional form of organization, work activities are

structurally segmented according to their “function’ – i.e.
their similarity of purpose. For example:

- Accounting & Finance

- Production
- Research & Development
- Marketing
- IT Support
- Procurement
- General Administration
These are the typical functions one would expect to find
in most commercial organizations.
University of Texas at Austin, USA
Projects in the Functional Organization Form

Functional Area of the Organization (E.g.: IT or HR)

Staff
The functional form of
organizing projects is best
Staff suited for those projects
whose scope of work is
basically confined to one
Staff functional area of the
organization only and for
which there is no (or only
Staff
minimal) necessity for
HRIS
Project
interaction with separate
functional areas.
Staff
Projects in the Functional Organization Form

If more than one functional area is involved in a project, the coordination

of project activities takes place through the hierarchy

Project Coordination

Functional Area A Functional Area B Functional Area C

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Project Coordination in Functional Organizations

Corporation X
Project
Coordination
Human
Human Finance
Finance &
&
Resources
Resources Administration
Administration

Marketing
Marketing Engineering
Engineering Manufacturing
Manufacturing Procurement
Procurement

Electronics Software Mechanical Receiving

Receiving
Electronics Software Mechanical Design Purchasing
Purchasing
Engineering Engineering Engineering Design &
& Inspection
Inspection
Engineering Engineering Engineering

Customer
Customer Domestic
Domestic International
International Production
Production
Fabrication
Fabrication Assembly
Assembly Testing
Testing
Service
Service Sales
Sales Sales
Sales Scheduling
Scheduling
The Functional Form- Advantages

No alteration in the existing

structure and operations of
the organization is necessary
as functional units are already
well established.

The project simply avails the

existing structure and diverse
resources which are available
in its functional areas in order
to undertake the projects
which it wants.
 The Functional Form - Advantages

The functional form of project

organization offers high flexibility
in assigning personell employed
in the different functional units to
work on projects.

Functional employees can divide

their time working on different
projects and can be immediately
reassigned to other projects once
their work has been completed.
 The Functional Form - Advantages

The functional form of organiza-tion

offers the possibility of (very) focussed
utilisation of knowledge, expertise and
experience on a pro-ject by employees
in any given functional area. Also, as
these em-ployees are familiar with
each other, communication between
them would normally be good, re-
action time to issues quick, and
authority and responsibility clear
defined. The project work may be
simpler to estimate because of past
experience with similar projects.
 The Functional Form - Advantages

Functional employees work-ing

on projects can maintain their
normal career paths in their
respective functional areas or
„home bases“. This is important
because it allows functional
employees to keep abreast of
developments concerning them
in their respective areas, which
they may not be able to do in a
(dedicated) project team, and it
does not jeopardize their
promotional chances.
 The Functional Form - Disadvantages

If a project has a comparatively

broad scope, and crosses
several functional lines, the
different functional areas may
have different perceptions as to
the priority level which should
be accorded to the project.
Hence, reluctance by one
functional area to support the
project and provide the
resources needed for it may
result in delays to the project.
The Functional Form - Disadvantages

Inadequate integration across

different functional areas is a
common criticism of managing
projects in the project functional
form. Functional specialists tend
to be concerned primarily with
their specific part of the project
work and not the whole project.
Thus, a holistic perspective is
often lacking and this is not a
good way for managing projects,
particularly of a complex kind.
 The Functional Form - Disadvantages

Functional staff working on a project

may display a lack of identification
with, and committment to the pro-ject.
This is because project work is often
seen as additional work which distracts
them from their routine functional
work (which for them usually has
priority) and for which there may be no
incentive or reward system. A sense of
„project ownership“ is frequently
lacking and the high level of motivation
usually found among (dedicated)
project teams is absent.
 The Functional Form - Disadvantages

In cross-functional projects,
project response and overall
completion times tend to be
higher due to the require-
ment of channeling (poten-
tially large amounts of)
project information, as well
as decision-making and
problem-solving through the „normal“ management channels.
Lack of horizontal communication across functional areas may
require rework of work performed. Conflict and rivalry bet-
ween functional areas may also impede communication. Res-
ponse times to clients and changing environmental conditions
are slow.
 The Functional Form - Disadvantages

A strong criticism of the

functional form of organi-zing
projects is that there is no
individual who has full
authority and responsibility for
the project. Instead, authority
and responsibility is shared
between different individuals
from different parts of the
organization in which case no
proper accountability fo the
project can be expected.
The Project Matrix Organization
 What is the Project Matrix Organization?

The Matrix organization is a form of project organization

within the framework of which temporary horizontal
(project) levels are applied over the permanent vertical
(functional) levels of the organization.

Project Management defines three basic project matrix

forms: the Functional Matrix, Balanced Matrix, and Project
Matrix.

In practice, the matrix structure can assume many different

manifestations and these may change over the course of
the project life-cycle.
 The Project Matrix Organization Form

GENERAL MANAGER

Project
Project Functional Functional Functional Functional
Level
Level Level A Level B Level C Level D

Project
Project 1
1 FI FI FI FI

Project
Project 2
2 FI FI FI FI

Project
Project 4
4 FI FI FI FI

Project
Project N
N FI FI FI FI
Functional
Interfaces
 The Functional Project Matrix

In the Functional or „Weak“ Project Matrix, an individual is

selected who will oversee and coordinate the project activities
across the various involved functional levels of the
organization.

Functional managers are responsible for managing their

respective segments of the project, decide who does what and
when the project is to be completed, and evaluate the
participants.

Their influence is greater than that of the project manager, who

has indirect authority to expedite and monitor the project.
 The Functional (“Weak”) Project Matrix

Functional
Functional Functional
Functional Functional
Functional
Manager
Manager Manager
Manager Manager
Manager

Staff
Staff Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Project
Project Coordination
Coordination
 The Balanced Project Matrix

In the Balalanced Project

Matrix an individual is
selected who will manage
the project across the
various functional levels of
the organization and who
will interact with the
functional managers on an
equal basis and jointly approve technical and operational
decisions. The project manager defines what needs to be
accomplished and the functional managers decide how and by
whom it will be accomplished within the plan, various desig-
nated functional inputs, standards and schedules established
by the project manager.
 The Balanced Project Matrix

Functional
Functional Functional
Functional Functional
Functional
Manager
Manager Manager
Manager Manager
Manager

Staff
Staff Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

PM
PM Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Project
Project Coordination
Coordination
 The Strong Project Matrix

In the Project – or „strong“ - Matrix a project manager is

selected to oversee the completion of the project across the
various involved functional levels of the organization.

The project manager is ultimately is responsible for the

project‘s completion, has final say on major project deci-
sions and controls most aspects of the project, including
the assignment of functional personell, what they do and
when.

The functional managers maintain title over their respective

personell and have consultation rights.
 The (Strong) Project Matrix

Functional
Functional Functional
Functional Functional
Functional Manager
Manager of
of
Manager
Manager Manager
Manager Manager
Manager Project
Project Mgrs.
Mgrs.

Project
Project
Staff
Staff Staff
Staff Staff
Staff Manager
Manager

Project
Project
Staff
Staff Staff
Staff Staff
Staff Manager
Manager

Project
Project
Staff
Staff Staff
Staff Staff
Staff Manager
Manager

Project
Project
Staff
Staff Staff
Staff Staff
Staff Manager
Manager

Project
Project Coordination
Coordination
 Example of a Strong Project Matrix System

Senior Management

Lead
Lead Project
Project ENGINEERING
ENGINEERING MANUFACTURING
MANUFACTURING MARKETING
MARKETING
Manager
Manager

PA
PA E1
E1 E2
E2 E3
E3 MA1
MA1 MA2
MA2 MA3
MA3 M1
M1 M2
M2 M3
M3

PM X 1
1 2 1 3 2 1

PM Y 1
1 3 1 4 0,5 1

PM Z 0,5
0,5 1 3 7 2 0,5
The Strong Project Matrix - Advantages

Resources are scarce in any

organization! A big advantage of the
matrix is that it allows for the
sharing of diverse resources across
multiple projects within the respec-
tive functional areas, enabling the
functional personell to flexibly divide
their attention, effort and time
among these projects and thereby
reducing the costly duplica-tion of
resources which is inherent in setting
up (dedicated) project teams.
 The Strong Project Matrix - Advantages

The matrix ensures a strong

project focus by having a project
manager who performs a
coordinating and integrating role
across functional areas, enabling
a more holistic approach towards
undertaking the project than is
possible in the purely functional
form of project organization
where the different functional
areas are usually only concerned
with their portion of the project
work.
 The Strong Project Matrix - Advantages

By using a project matrix, the

entire spectrum of the functional
areas‘ technology, expertise and
experience which can be brought
to bear on the project can easily be
and flexibly be accessed since all
project work is performed within
the area.
 The Strong Project Matrix - Advantages

Functional personell can maintain

close ties with their respective
areas.

They are not required to leave

their home bases in the orga-
nization which they may have to
do if they are assigned to work
on a project full-time as in a
(dedicated) project team and
hence they will feel more
confident as they can keep
abreast of developments directly
concerning them and their future
in the organiza-tion.
The Strong Project Matrix - Disadvantages

A major criticism of the project matrix is

that it explicitly violates the established
hierarchical principle „Unity of Command“
(Fayol, 1916) which demands that an
employee report to only one superior and
not two as is the case in the matrix.

Dual Reporting (i.e. to both a project and

functional manager) may cause stress for
the employee, especially when both
managers do not get along and issue
diverging or conflicting orders.
The Strong Project Matrix - Disadvantages

In the matrix environment,

there is a potential for
conflict between project
managers and functional
managers due to diverging
agendas, possibly unclear
patterns of authority and
accountability and so forth,
and this may occasionally
engender a personal
animosity which will be
detrimental for the project.
The Strong Project Matrix - Disadvantages

Unhealthy competition over the

sharing of project inputs, equip-
ment, human resources and faci-lities
etc. may arise in the matrix
environment between project
managers who each are endeavou-
ring to acquire the best available
inputs for their respective projects
from the functional areas.
Consequently, there is the possi-bility
that underhand „deals“ may be made
between project and func-tional
managers.
 Problems With Matrix Organizations

• Failure to understand the key principles and roles in

the matrix organizational environment

• Distrust in organizational forms which are not based

on Fayol‘s „unity of command“

• Apprehensions of functional managers over the

apparent superority of the project goals over those of
the functional entity

• Senior management shortcomings in terms of clearly

delineating in writing the formal and reciprocal roles
of all the key managers involved in the project
 Problems With Matrix Organizations

• Lacking understanding by the project team to

understand the role and responsibilities of the
functional professionals and their managers

• Incompetent project and functional managers /

project managers who manage less and coordinate
more / decision referall by project managers to
senior management

• Inadequate stakeholder management

• Lack of trust, integrity, loyalty and committment by

project team members
 Issues of Concern in the Project Matrix

• Visible and Sustained Commitment by Top Management

• Supportive Organizational Culture
• Tackling Resistance to Change
• Effective Project Prioritization System
• Commitment by Functional Managers and Employees
• Delineation of Roles and Responsibilities
• Decision-Making Conflicts between Project and Functional Areas
• Empowerment
• Communication, Cooperation and Coordination
• Professional Project Managers
• System of Rewards and Incentives
• Meeting Training Needs (e.g. in Teamwork, Interpersonal Skills,
Conflict Resolution)
• Learning from Experience
• Institutional and Infrastructural Framework (e.g. PMO)
 Case Study of a Project
Matrix Organization

Adtranz, Sweden

Students are required to read the Case Study working paper

Exploring the Multi-Project Matrix: Process Dynamics of a
Projectified Organization by Mats Engwall & Anna Sjoegren
Kaellqvist (2001)
The (Pure) Project-Based
Organization
 About the Project-Based Organization

In a project-based organization, most of the work

performed is project work and this is reflected in
the organization‘s structure which is not based on
the functional paradigm but changes acccording
to the projects which the organization has in its
portfolio.

Project-based organizations are often found in

the defence and construction industries, in the
movie industry, in some NGOs and in some
outsourced industries.
 The Project-Based Organization

Project
Project Project
Project Project
Project
Manager
Manager Manager
Manager Manager
Manager

Staff Staff Staff

Staff
Staff Staff

Staff
Staff Staff Staff
Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Staff
Staff Staff
Staff Staff
Staff

Project
Project Coordination
Coordination
 Structure of a Project-Based Organization

Corporation X

Human
Marketing
Resources
Other Other
Projects Projects
Finance and
Legal
Administration

Project Manager Project Manager

(Project A) (Project B)

Subcontractors
Engineering Manufacturing Procurement Engineering
(X, Y, Z)

Manufacturing Procurement