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Chapter 3: Project Organization

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Learning Outcomes

• Students be able to explain organizatin structure in project management

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Discussion Topics

• Organization a system to achieve goals• Alternative organizational structures (1)

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References• Information Systems Project Management,

David Olson, Olson, David L., 2003, Introduction to Information Systems Project Management, 2nd Ed., McGrawHill, ISBN: 0-07-282402-6.

• Schwalbe, Kathy, 2003, Information Technology Project Management, 3rd Ed., Course Technology, Inc., ISBN: 0619159847.

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Organization Designs

• there are a number of options

• Project Managers need to understand relative advantages and disadvantages of each

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Organization Structure

• range of activities organization does• management hierarchy

– reporting relationships• major subdivisions• responsibilities & type of work for each

subdivision• official lines of authority & communicationInformal organization also important

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Alternative Structures

• there are a number of options• best depends on goals, type of work, environment• DIFFERENTIATION - organizational specialization

– functional– geographic– product– customer– process

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Functional Organization

integration by rules, procedures, coordinated plans, budgets

works well in repetitive, stable environmentsthe most prevalent form

B ean K ou n terA ccou n tin g

S ilas M arn erF in an ce

S n id e ly W h ip lashM arke tin g

A tlan ta P h oen ix B u tte

Joh n D oeP rod u c tion

S ieg fried H illM IS

H ieron ym u s B otchC E O

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Geographic Differentiation

Standardized accounting and reporting procedures

Can tailor to unique requirements of localeOften used with functional within regions

T V sa les P roduc tion

D an McG annS t Louis

T elem arket P roduc tion

Joe K elleyB altim ore

spec ia l order

C y S eym ourN ew York

John McG rawC E O

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Product Differentiation

If produce a variety of products.

Integration between subdivisions tends to be lowuse standardized financial & reporting

D r. S w eitzerT obacco

produc tion m arketing

J . R ipperH ealth P roducts

A . O nass isT ankers

m arketing legal

J . H elm sE nv ironm enta l

M egaglom erateO ctop i

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Customer Differentiation

If a particular customer very important

Integration level depends on interdependence of products (usually low)

func tions

G eorge PattonM ilitary S ales

geographic

C he G ueveracovert sa les

explos ives peace prizes

A . N obelspec ia l ops

G unn R unnerO vernight Delivery

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Process Differentiation

some logical process basis for differentiation

need more integration, as problem in one area affects others; task forces, teams

C ustom erC ontac tor

S ys tem sA nalys is

P rogram m ing C us tom erT ra in ing

Little 600 C onsultingP hyllis K night

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Project Organization

• traditional organizational design– when change required, add layers of mgmt, rules– less flexibility, slow

• Projectscomplexity change

uncertaintyunpredictability

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Project Organizations

• need to be highly differentiated to meet variety of problems

• need to be highly integrated to respond rapidly• need to be highly flexible• must integrate subunits through

horizontal relationships• must have structures suited to

unique environments

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Comparison

Traditional Project

rigid, clumsy horizontal communication

l ittleboss

anotherone

bigboss

littleboss 2

etc

bigboss 2

suprem ehigh ru ler

s taffpeople

des ignerfo lk

custom erlia ison

w orkerbees

pro jec tm anager

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Information Systems Project Management—David Olson3-16Advantages of the Traditional (Classic)

Organization• Easier budgeting and cost control are possible• Better technical control is possible• Flexibility in the use of manpower• A broad manpower base to work with• Continituity in the functional disciplines:

policies, procedures, and lines of responsibility are easily defined and understandable

• Admits mass production activities within established specifications

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Information Systems Project Management—David Olson3-17Advantages of the Traditional (Classic)

Organization (Cont’d)• Good control over personnel, since each

employee hone and only one person to report to

• Communication channels are vertical and well established

• Quick reaction capability exits, but may be dependent upon the priorities of the functional managers

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Information Systems Project Management—David Olson3-18Disadvantages of the Traditional

(Classical) Organization• No one individual is directly for the total project• Does not provide the project-oriented emphasis

necessary to accomplish the project tasks• Coordination becomes complex, and additional

lead time is required for approval of decisions• Decision normally favor the strongest functional

groups

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Information Systems Project Management—David Olson3-19Disadvantages of the Traditional

(Classical) Organization• No customer focal point• Response to customer needs is low• Difficulty in pinpointing responsibility; this is

the result of little or no direct project reporting, very little project-oriented planning and no project authority

• Motivation and innovation are decreased• Ideas tend to be functionally oriented with

little regard for ongoing projects

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Pure Project Organizations

if high complexity, major resource requirements, heavy stake outcome

PURE PROJECT organization appropriate

separate organization created for this goalTYPES PROJECT CENTER

STAND-ALONE PROJECTPARTIAL PROJECT

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Summary

• organization structure is means to achieve goals & respond to problems

• differentiation

• project organizations more flexible

• need to know criteria for appropriate project organization structure