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CHAPTER 1

INTRODUCTION TO

PROJECT MANAGEMENT

Prepared by: Dr. Maria Elisa Linda T. Cruz

CHAPTER 3.

PROJECT

ORGANIZATION

Prepared by:

Dr. Maria Elisa Linda T. Cruz

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Chapter 3. Topics

3.1 The Project as Part of the

Functional Organization

3.2 Pure Project Organization

3.3 The Matrix Organization

3.4 Mixed Organizational Systems

3.5 Choosing an Organizational Form

Course Unit Instructional Outcomes

At the end of the chapter, the students should be able to:

1. Discuss the importance of Project Organization.

2. Discuss the different organizational forms used to house projects and see how each of them fits the parent organization.

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Course Unit Instructional Outcomes

At the end of the chapter, the students should be able to:

3. Discuss the advantages and disadvantages of each form.

4. Discuss some critical factors that might lead to choose one form from the other.

5. Discuss the selection process of a project organization form/structure.

6. Choose the best organizational form for various situations.

Why Project Organization?

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Importance of Project Organization

The Project Organization defines the human infrastructure of the

project.

This task is designed to define the project organization chart, the

roles, and the relationships of the project team.

The organizational structure clearly identifies roles and

responsibilities of each position, augmenting the existing role

definitions where necessary to cover all of the responsibilities.

The Project Organization technique that is used in this step provides

a standard set of roles and responsibilities which can be customized

for a particular project. This should cover all personnel resources

required, both full and part time.

Reference: https://www.sei.cmu.edu/intro/process/template/t_intro/f_13.htm

INTRODUCTION

A firm, if successful, tends to grow,

adding resources and people,

developing an organizational structure.

Commonly, the focus of the structure is

specialization of the human elements of

the group.

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INTRODUCTION

To our knowledge, it is rare for a PM to have

much influence over the interface between the

organization and the project, choice of

interface usually being made by senior

management.

The PM’s work, however, is strongly affected by

the project’s structure, and the PM should

understand its workings.

Organizational Issues Related to Projects

1. How to tie project to parent firm

2. How to organize the project

3. How to organize activities common to

multiple projects

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PROJECT ORGANIZATIONAL FORMS

1. Functional

Organization

2. Pure Organization

3. Matrix Organization

4. Mixed

Organizational

Systems

5.Other UNLIMITED

organizational forms

FUNCTIONAL ORGANIZATION

The project is assigned to the functional unit that has

the most interest in ensuring its success or can be

most helpful in implementing it.

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FUNCTIONAL ORGANIZATION

Advantages:

1. There is maximum flexibility in the use of staff.

2. Individual experts can be utilized by many different

projects.

3. Specialists 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.

5. Finally, not the least important, the functional division

contains normal path of advancement for individuals whose

expertise is in the functional area.

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Disadvantages:

1. A primary disadvantage of this arrangement is that

the client is not the focus of activity and concern.

2. The functional division tends to be oriented toward

the activities particular to its function.

3. Occasionally in functionally organized projects, no

individuals is given full responsibility for the project.

4. The same reasons that lead to lack of coordinated

effort tend to make response to client needs slow

and arduous.

Disadvantages:

5. There is a tendency to suboptimize the

project.

6. The motivation of people assigned to the

project tends to be weak.

7. Such an organizational arrangement does

not facilitate a holistic approach to the

project.

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Pure Organization

• At the other end of the organizational spectrum is

pure project organization.

• The project is separated from the rest of the parent

system. It becomes a self-contained unit with its own

technical staff, its own administration, tied to the

parent firm by the tenuous strands of periodic

progress reports and oversight.

Pure Project Organization

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Pure Project Organization

Some of the advantages are the following:

The project manager has full line authority over the project.

All members of the project work force are directly responsible

to the PM.

When the project is removed from the functional division, the

lines of communication are shortened.

The project team that has strong and separate identity of its

own tends to develop a high commitment from its members.

Because authority is centralized, the ability to make swift

decisions is greatly enhanced.

Unity of command exists.

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Some of the disadvantages are the

following:

When the parent organization takes on several

projects, it is common for each to be fully staffed.

In fact, the need to ensure access to

technological knowledge and skills results in an

attempt by the PM to stockpile equipment and

technical assistance in order to be certain that

it will be available when needed.

Another symptom of PROJECTITIS is the worry about

“life after the project ends”.

Matrix Organization

• The functional and the pure project organizations

represent extremes. The matrix organization is a

combination of the two. It is a pure project

organization overlaid on the functional divisions of the

parent firm.

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Matrix Organization

Matrix Project Organization

Matrix structure optimizes the use of

resources.

• Allows for participation on multiple

projects while performing normal

functional duties.

• Achieves a greater integration of

expertise and project requirements.

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Matrix Project Advantages

Flexibility in way it can interface with

parent organization

Strong focus on the project itself

Contact with functional groups

minimizes projectitis

Ability to manage fundamental

trade-offs across several projects

Matrix Project Disadvantages

Violation of the unity of command principle

Project workers are often faced with conflicting orders from the PM and the functional manager

The organization’s full set of projects must be carefully monitored by the program manager

Complexity of managing the organization’s full set of projects intra-team conflict

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Virtual Projects

Projects which work on the

project team crosses time, space,

organizational or cultural

boundaries.

Gratton (2007) offers rules for

success:

Only virtual teams for projects that are challenging

and interesting.

Solicit volunteers as much as possible

Include a few members in the team who already

know each other

Create an online resource for team members to learn

about each other

Encourage frequent communication, nut not social

gatherings

Divide the project work into geographically

dependent modules as much as possible

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PROJECT ORGANIZATION

Pure Mixed Organizational Systems

Mixed Organizational Systems

Pure functional and pure project

organizations may coexist in a firm. This

results in the mixed form shown in the

figure.

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Mixed Organizational Systems

Staff Organization

The firm sets up what appears to be a standard

form of functional organization, but it adds a staff

office to administer all projects. This frees the

functional groups of administrative problems while

it uses their technical talents.

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

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CURRENT SCENARIO

Though the ways of interfacing project and parent

organization are many and varied, most firms

adopt the matrix form as the basic method of

housing projects. To this base, occasional pure,

functional, and hybrid projects are added if these

possess special advantages in special cases.

The managerial difficulties posed by matrix

projects are more than offset by their relatively

low cost and by their ability to get access to

broad technical support.

Choosing an Organizational Form

The choice of an organizational form for

projects is not addressed to PMs or

aspiring PMs.

It is addressed to senior management.

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Choosing an Organizational Form

Selection Process of a Project Organization

Form/Structure:

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.

Choosing an Organizational Form

Selection Process of a Project Organization

Form/Structure: (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.

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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

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

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Summary

Chapter 3.

Project Organization