Ch 4
Project Organization
“Organize - to form into an
association for a common purpose
or arrange systematically”
Chapter 4 Project Organization
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Project Organization
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Specialization of the human elements
Different types = functional, product
line, geographical location, production
process, type of customer, subsidiary
organization, time, vertical or horizontal
organization
How to tie project to the parent firm
How to organize the project itself
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Project as Part of Functional
Organization
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E.g. new technology project – under
vice president of engineering
Introduction of new product line –
under vice president of marketing
Project assigned to the functional unit
that has most interest
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President
VP Finance
VP Marketing
VP
Manufacturing
New Layout –
Robot Line
VP
Engineering
Project New
Model Proton
SURIE
Functional Organization
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Major Advantages
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Maximum flexibility in the use of staff
Individual experts can be utilized by many
different projects
Specialist in the division can be grouped to
share knowledge and experience
Functional division serves as a base of
technological continuity
Functional division contains normal of
advancement
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Disadvantages
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The client is not the focus of activity and
concern
Tend to be oriented towards functional
activities
No individual is given full responsibility for the
project
Slow response to client’s needs
Tendency to sub-optimize the project
Motivation of project team is weak
Does not facilitate a holistic approach to the
project
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Pure Project Organization
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Project is separated from the rest of the
parent system
Becomes self contained unit
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Advantages
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PM has full line authority over the project
All project workforce directly responsible to
the PM
Lines of communication are shortened
Maintain permanent group of experts
High level of commitment
Ability to make swift decisions
Unity of command
Simple and flexible structure
Support holistic approach to the project
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Project Organization
President
Vice President Project A
Vice President Project B
Vice President Project C
Finance
Finance
Finance
Manufacturing
Manufacturing
Chapter 4 Project Organization
Manufacturing
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Disadvantages
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Duplication of effort
Stockpile equipment and technical
assistance “just in case”
Lack of expertise in high technology
project
Foster inconsistency and cutting corners
Project takes on a life of its own
Worry about “life after project ends”
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Matrix Organization
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Combination of functional and pure
project organizations
Matrix project is not separated from
parent organizations
Individuals come from respective
functions divisions and are assigned to
the project full time or part time
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Matrix Organization
President
Manufacturing
Program Manager
R&D
Marketing
PM1
PM2
PM3
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Matrix Organization
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Cross-functional team members
Draw temporarily on technological expertise
of relevant functions
High technology areas – integrate functional
specialties
Iterations in adapting “over the wall”
approach
Systems approach – integrity of product
design
Close coordination and communication among
all parties
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Advantages of Matrix
Approach
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The project is the point of emphasis
Reasonable access t pools of technical talents
Less anxiety about what happens after
project completion
Rapid response to client needs
Access to administrative units of the parent
firms
Better balance of company resources in
multiple projects
Flexibility in control
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Disadvantages
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Delicate balance of power
Movement of resources – conflict
Projects resist death
Complex division of authority and
responsibility
Violates the principle of unity of
command
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Mixed Organizational Systems
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Divisionalization – breaking down large
organization into smaller more flexible units
Spin-off the large projects as subsidiaries or
independent operations
Allow formation of venture team
Hybrid leads to flexibility
Dissimilar groupings encourage overlap,
duplication and friction
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Mixed Organization
President
Project M
Finance
Engineering
Chapter 4 Project Organization
Project N
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Staff Organization
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Set up like functional organization
Adds a staff office to administer
projects
Used for small, short run projects
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Staff Organization
President
Project S
Finance
Manufacturing
Chapter 4 Project Organization
Engineering
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Choosing an Organizational
Form
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Functional form – major focus on in-depth
technology, require large capital investment
Pure project – large number of similar
projects
Matrix organization – require integration of
inputs from several functional areas and
involves reasonably sophisticated technology
and several projects must share technical
expertise
Matrix organizations are complex
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Selection of Project
Organization
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Define the project / objectives
Determine the key tasks
Arrange key tasks by sequence and
decompose them into work packages
Determine project subsystems
List special characteristics – level of
technology, probable length, resource
requirements, level of outsourcing
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Project Team
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Project office – control center, chart
room (focus of all project activity)
Close location to project manager
Co-location of external parties
Reduce physical distance
Better communication
Pressure to complete tasks
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Key Team Members
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Project Engineer
Manufacturing Engineer
Field Manager
Contract Administrator
Project Controller
Support Services Manager
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Work Organization
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Project engineer (technical performance) and
project controller (budget) report to PM
PM forecast of personnel needs
Prepare WBS to determine exact nature of
tasks
Skills requirements are assessed and
aggregated
Outsourcing of certain tasks
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Typical Organization of
Engineering Projects
Project Manager
Project Engineer
Project controller
Manufacturing Engineer
Control Administrator
Field Manager
Support Services Manager
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Staff Critical to Project
Success
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Senior project team members
Staffs whom the PM will require close
communication
Staffs with rare skills for project success
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Human Factors
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Technical problem with a human dimension
Perfectionist – can cause delay
Motivation – recognition, achievement,
responsibility, advancement, the work itself
Interpersonal conflict
Management by Objectives (MBO) – allows
worker to take responsibility for design and
performance of a task
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Advantages of MBO
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Participative mechanism
Allow professionals to design their own
method
Team members know what is expected of
them
Members have the opportunity to participate
in deciding their own responsibilities
Members get timely feedback on their
performance
Project manager is provided a tool for
evaluating and controlling performance
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MBO
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Superior set objectives in consultation
and agreement with subordinates
Subordinate develops action plan, a
detailed plan and scheduled that will
result in achieving the objective
Final plan becomes a contract
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Major Sources of Conflict
Life cycle phase
Project formation
Buildup phase
Main program
Phase out
Conflict source
Priorities, procedures,
schedules
Priorities, schedule,
procedures
Schedule, technical,
manpower
Schedules, personality,
manpower
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