Chapter Three
Organizational
Structures
1
Types of organizations where
projects reside:
• Corporations
• Government Agencies (EPA, Department
of Energy, TSA)
• Healthcare institutions
• International bodies (World Health
Organization, World Trade Organization,
UNICEF, etc.)
• Professional Associations
2
Organizational Culture
• Described by shared values, norms,
beliefs, and expectations
• Design policies and procedures according
to these beliefs
• Authority and relationships are defined by
culture
3
Project-Based Organizations
• Operations consist “primarily” of projects.
• Architectural firms, engineering firms,
consultants, etc.
• Organizations who adopted management
of projects ( ex: their finance system is
designed to track, control multiple
projects)
4
Non-project based organizations
• Projects are invisible in the organization
• Have classical management structure
• Departmental division of work
5
The Functional Structure
General
Manager
Director Level
Engineering
Production
Sales
Marketing
AdminisAdmin.
tration
Division Level
Project coordination
Department Level
Section Level
x
x
Functional Responsibility
x
6
Functional Structure
Advantages
• Easier budgeting and cost control are
possible
• Better technical control is possible
• Specialists can be shared
• Personnel can be used on many
different projects.
7
Advantages
(Continued)
• It provides continuity in the functional
disciplines; policies, procedures
• Lines of responsibility are easily
defined and understandable.
8
Functional Structure
Disadvantages
• No one individual is directly
responsible for the total project (i.e., no
formal authority; committee solutions).
• It 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.
9
Disadvantages
(Continued)
• Decisions normally favor the strongest
functional groups.
• There is no customer focal point.
• Response to customer needs is slow.
10
Departmental Project Management
Division Manager
Department X
Project Leaders
Section Level
Department Y
Project Leaders
Section Level
Department Z
Project Leaders
Section Level
11
Project Expeditor
ENGINEERING DIVISION
LIAISON
DEPT.
PIPING
HVAC
CHEMICAL
DRAFTING
legend
Formal authority / reporting flow
Informal authority / reporting flow
12
Project Coordinator
(Line-Staff organization)
LEGEND
DIVISION MGR.
FORMAL FLOW
PROJECT MGR.
INFORMAL FLOW
DEPT. MANAGER
DEPT. MANAGER
13
Project Coordinator
Weaknesses
• Shared authority with upper management.
• Line-staff project managers who reported to
a division head did not have any authority or
control over those portions of a project in
other divisions; that is, the project manager
in the engineering division cannot direct
activities in the manufacturing division.
14
Pure Project (Projectized) Structure
General Manager
Project coordination
Project B
Manager
Project A
Manager
ENG.
MFG.
ENG.
MFG.
Project C
Manager
ENG.
MFG.
15
Projectized Structure
Advantages
• Complete line authority over the project
• The project participants work directly for the
•
•
•
project manager.
Strong communications channels.
Staffs can maintain expertise on a given
project without sharing key personnel.
Rapid reaction time is provided.
16
Advantages
(Continued)
• A focal point develops for out-of-company
customer relations
• Interface management becomes easier as
unit size is decreased.
17
Projectized Structure
Disadvantages
• Cost of maintaining this form
• Duplication of effort, facilities, and
personnel; inefficient usage
• Tendency to retain personnel on a
project long after they are needed.
18
Disadvantages
(Continued)
• No share of Technology
• There is a lack of career continuity
and opportunities for project
personnel.
19
20
The Matrix Management Structure
General
Manager
Project Mgr.
X
Project Mgr.
Y
Project Mgr.
Z
Functional Responsibility
Engineering
Operations
Finance
Others
Project Responsibility
21
Matrix Development
• Horizontal as well as vertical channels
must exist for making commitments.
• There must be quick and effective
methods for conflict resolution.
• There must be good communication
channels and free access between
managers.
22
Matrix Development
(Continued)
• All managers must have input into the
planning process.
• Both horizontally and vertically
oriented managers must be willing to
negotiate for resources.
• The horizontal line must be permitted
to operate as a separate entity except
for administrative purposes.
23
Matrix Structure
Advantages
• Policies and procedures can be set up
independently for each project
• Rapid responses are possible
• Each person has a “home” after project
completion.
• Because key people can be shared, the
program cost can be minimized
24
Matrix Structure
Advantages (Continued)
• Authority and responsibility are
shared
• Stress is distributed among the team
(and the functional managers)
25
Matrix Structure
Disadvantages
•
•
•
•
•
Multidimensional information flow.
Multidimensional work flow.
Dual reporting.
Continuously changing priorities.
Management goals different from
project goals.
• Potential for continuous conflict and
conflict resolution.
• Difficulty in monitoring and control. 26
The Strong Matrix Structure (With a
Director of Project Management)
General Manager
Director:
Project Mgmt.
Director:
Engineering
Director:
Manufacturing
Director:
Finance/Admin.
Project Mgr. X
Project Mgr. Y
Project Mgr. Z
27
Composite Organization
• Most organizations have all of these
structures at various levels called
composite organization
Ex: New product development with a skunks
work team (HP disk drives)
28
PMO
• Can exist in any organizational form
• Can have advisory influence or
• Can have formal grant authority
• PM directly reports to PMO
29
Which Structure Is Best For
Project Management?
30
Factors For Selecting
An Organizational Form
•
•
•
•
Project size
Project length
Project management experience
Philosophy and visibility of
executives
• Project location
• Available resources
• Unique aspects of the project
31