CHAPTER 5

Project Management Organizational Structure

Objectives

At the end of this chapter, the learner will be able to:

 Differentiate a program manager from a project manager;

 Identify a project organizational structure;

 Compare and contrast the different forms of organizational structures used in organizing projects;

 Select the best organizational structure in organizing projects based from their advantages and
disadvantages;

 Categorize the different forms of matrix organizational structure based on the authority of the functional
and project manager;

 Design an optimal organizational structure for a project.

 Program Manager vs. Project Manager

A program manager synchronizes groups of related projects instead of just manage individual projects.
The program manager supervises horizontally across the functional projects involved with the program. From a
business point of view this manager makes certain that cross-project work endeavor stays viable and recognizes
gains.

A lot of project managers look up to program managers and aspire to be in their shoes one day. In
order to be able to get to that level, project managers, as well as their organizations, must clearly
understand the general responsibilities that are expected from each role.
Project Manager vs. Program Manager
Factors of Comparison Project Manager Program Manager

Focuses Consent Context

Scope, schedules, resources People, politics and negotiating

Manages Projects Portfolios

Performs More technical tasks More strategic tasks

Handles Risk-Management Change management (program and

environmental changes)

Deals Project requirements Business strategies and objectives

Responsible Ensuring projects get completed on Maximizing ROI and value delivery
time, within budget
 The Project Organizational Structure
A project organization is a structure that facilitates the coordination and implementation of
project activities. Its major basis is to form an environment that encourages good relations between the
team members with a least amount of troubles, overlaps and conflict. The form of organizational
structure that will be employed for the project is one of the vital decisions in project management.

Every project is exclusive because it is a one-time effort with definite start and end. Each
project has its distinctive characteristics. The organizational situation, the project characteristics in
which it will function, and the level of authority the project manager is provided ought to be reflected
on in designing the blueprint of an organizational structure.

One of the key objectives of the organizational structure is to lessen uncertainty and disorder
that usually transpires at the project initiation stage. The structure delineates the interactions amongst
members of the project management and the dealings with the external environment. The structure
also identifies the authority by way of a graphical diagram named an organization chart.
Forms of Project Organizational Structure

A project structure can be in different forms. Every form has its own advantages and disadvantages.
There are often varied project organizational structures that are used in the organization. These structures are at
times informal and often overlap and sometimes even oppose each other. The different types of organizational
structures utilized for projects can often be described as follows:

Organizing Projects within a Matrix Organization

The functional structure is the oldest yet the most effective organizational technique. This strategy is the
best suited for routine functions. However, it doesn’t work effectively when used in complex projects.
 Organizational Chart of a Functional Organization
President

Vice President
Vice President Vice President Human Vice President Vice President
Vice President Finance Research &
Production Resource Marketing Customer Service
Development

Manager Accounting

Chief Engineer

Manager Operations Manager Logistiics

Advantages and Disadvantages of Projects in a Functional Organization
Advantages
1. There is a maximum flexibility in the use of staff.
2. Individual experts can be utilized by many different
projects.
3. Specialist in the division can be grouped to share
knowledge and experience.
4. The functional division also serves as a base of
technological continuity when individuals choose to
leave the project and even the parent firm.
The functional division contains the normal path of
advancement for individuals whose expertise is in the
functional area.
Disadvantages
1. The client is not the focus of activity and concern.
2. The functional division tends to be oriented toward
the activities particular t its function.
3. In functionally organized project no individual is
given full responsibility for the project.
4. The lack of coordinated effort tends to make
response to client needs slow and difficult.
5. There is tendency to suboptimize the project
6. The motivation of people assigned to the project
tends to be weak.
7. This organizational arrangement does not facilitate
a holistic approach to the project.
Organizing Projects within a Projectized Organization
Projectized organization is a structure that is particularly created for executing projects. It is really
principally tailored to meet the demands of complex projects by isolating exclusive function and maintaining a
strong focus on completing the project. When the project is completed, this structure disbands. This structure
is powerful in maintaining dedicated resources all through the life of the project.

President

Administrative
Support

Project Alpha Project Bravo Project Charlie Project Delta Project Fox

Team Team Team Team Team

Organizational Chart of a Projectized Organization

Advantages and Disadvantages of Projects in a Projectized Organization
Advantages Disadvantages

1. The project manager has full line authority over the 1. When the organizations takes on several projects, it
project. is common for each one to fully staffed.

2. All members of the project work force are directly 2. The need to access to technological knowledge and
responsible to the project manager. skills results in an attempt by the project manager to
stockpile equipment and technical assistance in order
to be certain that it will be available when needed.

3. When the project is removed from the functional 3. Though individuals engaged in projects develop
division, the lines of communication are shortened. considerable depth in technology of the project, they
tend to fall behind in other areas of their technical
expertise.

4. When there are several successive projects of a 4. Projecterized project teams seem to foster
similar kind the Projectized organization can maintain inconsistency in the way in which policies and
a more or less permanent pool of experts who procedure are carried out.
develop considerable skills in specific technologies.
 Advantages Disadvantages

5. The project team that has a strong and separate 5. Team members form strong attachments to the
identity of its own tends to develop a high level of project and to other known as projectitis.
commitment from its members.

6. Because authority is centralized, the ability to make 6. The worry on “life after project ends” of members.
swift decisions is greatly enhanced.

7.Unity of command exist.

8. Projectized organizations are structurally simple

and flexible which makes them relatively easy to
understand and to implement.

9. The organizational structure tends to support a

holistic approach to the project.
 Organizing Projects within a Matrix Organization

Matrix organization is actually a project management structure that combines the

very best components of functional organization and project organization structures
besides the recognition of intrinsic defects inside these two structures. When properly
coordinated this model functions very well in multiple projects. The staffing, training, job
assignment and evaluation of the project's personnel are supervised by the functional
managers. In order to best achieved objectives of individualized projects via the optimal
use of resources the functional specialists are assigned one or more projects.
 Organizational Chart of a Matrix Organization

Chief Executive Officer

Vice President Vice President Vice President Human

Vice President Finance
Marketing Operation Resource

Project Manager Alpha

Project Manager Beta

Project Manager Charlie

 Advantages and Disadvantages of Projects in a Matrix Organization
Advantages Disadvantages
1. The project is the point of importance 1. Oftentimes there is apparent tension between
functional manager and project manager which has
the tendency to become personal.

2. Because the project organization is placed on top on 2.There is conflict and competition in the sharing of
the functional divisions, getting labor and talent from scarce resources.
them for the time being, the project can make use of
the whole pool of technology in all functional division.

3. There is less worry about what happens when the 3. Matrix management violates the unity of command
project is finished than a projecterized organization principle with two bosses functional head and project
because team members are still close to their manager.
functional organization.

4.Response to client need is rapid and flexible. 4. Decision making can get delayed because
agreements with multiple functional groups have to
be considered.
5. With matrix management , the project has access to
representatives from the administration of the parent
firm.

6. With simultaneous projects, matrix organization

permits a better companywide balance of resources to
accomplish the differing time, cost and scope of each
project.

7. The matrix organization cover wide range of what

are between the functional and projecterized
organizational structures.
There are several forms of matrix organization based on the authority of the
functional and project manager, specifically;

1. Functional, lightweight or weak matrix- The balance of authority in this form

supports the functional manager.

2. Middleweight or balanced matrix- This form resembles the traditional matrix

arrangement in which both parties work closely together and jointly approve
technical and operational decisions.

3. Project, heavyweight or strong matrix- The balance of authority in this form is

strongly inclined on the side of the project manager.
 Forms of Matrix Organization
Forms of Matrix Authority of the Functional Manager
(FM)
Weak Matrix FM calls most of the shots and decides who
does what and when the work is completed
Balanced Matrix FM is concern for assigning personnel and
executing their segment of the project
according to the standards set by the
project manager.
Strong matrix The FM is consulted on need basis especially The PM controls most aspects of the
with regard to personnel.
Authority of the Project Manager
A PM act as a staff assistant who draws
the schedules and checklist, collect
information on status of work and
facilities project completion.
PM ha indirect authority to expedite
and monitor the project.
The PM establishes the overall plan for
completing the project, integrates the
contribution of the different disciplines,
set scheules, and monitors progress.
project including scope trade-offs and
assignments of functional personnel.
There are four types of electronic communication being used help in beating the lack of formal and
informal personal contact between members of the project team. These manners of electronic
communication have been extensively even before managers by managers of virtual projects.

1. The Internet – It provides a faster and cheap mode of communication worldwide. This is a necessary ways
of contacting all participants in virtual project especially with virtual project manager who depends on
emails to exchange project data with his dispersed team. Email is an effective, easier and faster tool for
exchanging information updates of project activities.
2. The pager-Each member has a paging system with individual pager number. A particular team member
can be “paged” whenever an issue surface that requires the person’s attention. This mode of
communication is good for quick response to problems and issues. A culture though must be developed
by the team to respond quickly every time the pager rings.
3. Teleconferencing – This mode of electronic communication allows all essential persons to share
conversation and resent their view in real time. The absence of visual though needs the one speaking to
make proper identification when participating in the discussion via this telephony technology.
4. Videoconferencing – This manner of communication saves time and money for the geographically
dispersed team for periodic face-to-face meeting. When important issues could ne be discussed and
resolved with email, teleconferencing and voice contact, the use of teleconferencing must be
appropriately utilized.
 Selecting the Optimal Organizational Structure
Here are some basic considerations that may influence the selection of the organizational structure for project management:

1. Project size – a project could be small, medium and large.

2. Project length – number of calendar periods it takes from the time the execution of element starts to the moment it is
completed.

3. Experience with project management organization – familiarity with other organizations’ way of handling projects.

4. Philosophy and visibility of upper level management – the beliefs and the presence of support of top management.

5. Project location – the geographic location using the street address, nearest Major city, or the latitude and longitude.

6. Available resources – the accessibility of needed resources.

7. Unique aspects of the project – the best control of human resources classified as labor-intensive and capital intensive; labor
intensive projects need a formal structure while capital intensive may use informal organizational form.