Chapter 13
Types of Project
Organizations
Learning Objectives
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The characteristics of the three types of
organization structures:
- functional
- project
- matrix
The advantages and disadvantages of
each
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Real World Example
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Vignette: The Customer is Always Right
NCR Financial Solutions Group Ltd., Dundee, Scotland
The program management office (PMO) realized that they
were missing internal customer commitments and projects
goals were not being met.
The PMO determined three levels of internal customer
bases and four types of external customers. They started a
rigorous training program for project managers to improve
their skillset and receive PMI certification.
After making these improvements the PMO has seen a 3040 % reduction in cycle time over a five-year period.
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Real World Example

Vignette: What’s Your Organizational Quotient?
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It is critical to understand the collaborations, relationships,
and networks of the informal organization.
“OQ” is the ability to balance both formal and informal power
structures
Some of the issues that are common among most companies
are:
 Need for ways to energize a sluggish working
environment.
 Problem in grooming future leadership.
 Existence of poor social networks and communications
among executive leadership teams.
 Lack of informal social networks / ties between employee
teams.
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Solution:
 Companies:
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need to resist the urge to try to micromanage
employee relationships.
should not completely rely on power structure.
senior executives and project managers should try to
create loose parameters around informal organizations
that operate independently.
must locate the right people to place in project
management positions.
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Functional-Type Organization
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Used in businesses that sell and produce
standard products.
Groups consist of individuals performing
the same function.
Periodically undertake in-house projects.
Team members can be assigned to the
project.
Team members continue regular
functional jobs.
Project manager does not have complete
authority over team.
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FIGURE 13.1
Functional Organization Structure
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Project-Type Organization
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Used in companies in the project
business, not selling products.
Work on multiple projects at a time.
Project team is dedicated to one project.
Project manager has complete authority
over team.
Each project team tends to be isolated.
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FIGURE 13.2
Project Organization Structure
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Matrix-Type Organization
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A mix of functional and project
organization structures.
Used in companies that work on multiple
projects at a time.
Provides project and customer focus.
Retains functional expertise.
Individuals can be assigned to various
types of projects.
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Matrix-Type Organization
(Cont.)
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Both project managers and functional
managers have responsibilities.
The Project Manager is the intermediary
between customer and company.
The Functional Manager decides how
tasks will be accomplished.
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FIGURE 13.3
Matrix Organization Structure
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Functional Organization
Advantages
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Reduces duplication and overlap of
activities.
Provides specialization and functional
excellence.
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Functional Organization
Disadvantages
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Can be insular.
Teamwork is not emphasized.
Decisions may be parochial.
Structure can slow communication,
problem solving and decision making.
Lack of customer focus.
Stronger allegiance to function than
project.
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Project Organization
Advantages
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Team has full control over resources.
Organization is highly responsive to
customer.
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Project Organization
Disadvantages
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Can be cost inefficient.
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Tendency to stretch out work during slow
periods.
Potential for duplication on concurrent
projects.
Low level of knowledge transfer.
No functional “home”.
People may be laid off at the end of the
project.
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Matrix Organization
Advantages
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Allows efficient utilization of resources.
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Provides a core of functional expertise.
Facilitates information flow.
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Individuals can be moved among projects.
Learning and knowledge transfer.
Improved communication.
Customer focused.
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Matrix Organization
Disadvantages
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Team members have a dual reporting
relationship.
A proper balance of power must be
established between project and
functional managers.
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Conflicts regarding priorities can arise
between managers.
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