University of Sydney
PMGT5877 Management of Project Oriented Organisations
Literature Review : Management of Project Oriented Organisations
Group 2
Student Name
Student ID
Mario Jheinner Vargas
310056098
Fernando Videira Alves
310333326
Fransiskus Ass Aryan Bunbuarka
310328950
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Executive Summary
This paper illustrates the analysis of an intensive research in several books and organisational
theories, exemplifies the nature of various organisational structures and how those structural
mechanisms affect project management. To this end, suitable organisational characteristics to
develop projects are identified and classify them into cultural and structural characteristics.
These implicit characteristic inside organisations allow or hinder the achievement of projects.
Definitions and clarifications from practical examples of project oriented organisation are
differentiated with non-project oriented organisations. There will be suggestion of what may
be the most suitable scenarios which Project Managers could obtain the maximum
performance to achieve the organisational goals and with this, keep evolving the industry and
managing changes to attend market needs.
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Table of Contents
Executive Summary............................................................................................................................... 2
Table of Contents .................................................................................................................................. 3
Introduction .......................................................................................................................................... 4
Project Oriented Organisation Structure and Culture ............................................................................ 5
Structure of Organisation .................................................................................................................. 6
Culture of Organisation ..................................................................................................................... 8
The Management Style of Project Oriented Organisation .................................................................... 9
Conclusion .......................................................................................................................................... 11
Reference............................................................................................................................................ 12
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Introduction
The nature of organisations dramatically affects the performance of projects due to projects
are developed in and for organisations. According to the Project Management Institute
(2008), projects affects an organisation because projects are the essence to achieve the
organisation’s strategic plan and consequently projects could generate changes as the
organisation evolves. Therefore, the organisational design, structure and intrinsic culture
could create resistance to change in order to maintain the status quo or contrarily those could
encourage the change as a mechanism to improve and as result the organisation evolves
according to the changeable market. Jones (2001) suggests that different organisational
factors such as culture and structure that contribute in the creation of value (goods or
services) and directly affects the long term existence of organisations. As organisations
become mature and develop trying to survive in a rather fast-changing environment, more
project-based type organisation naturally appear in order to deal with such changes in an
efficient way and always focusing on the various stakeholder’s requirements and needs. But
why project-oriented organisation is becoming more common in some types of industries
including the ones that are considered rather operational is what this paper wants to explore.
This paper will be divided into two main parts. First is culture and structure of project
oriented organisation which then both culture and structure will be discussed in depth in
separate section. Second is the management style of project oriented organisation.
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Project Oriented Organisation Structure and Culture
An organisation exists in order to supply goods or services for a market. Jones (2001)
identifies culture and structure as the most important for project managers to facilitate the
evolution and organisational goal through projects. These components could influence on the
project’s performance, the maturity as well as the expertise of project managers’ ability to
control the influences (Project Management Institute, 2008). These components interact
among them like gears where each gear may increase or decrease the speed of development
and change capability, as showed in figure 1.
Figure 1. Organisation, source: (Jones, 2001)
Druker (2003) suggests that the contemporary market changes quickly and organisational
structures and cultures must focus in giving prompt solution and providing opportunities for
innovation in order to react to this, as IBM in the late 50s responded to the change. IBM was
one of the biggest entrepreneurial companies creating mainframes, but it was Apple’s
brilliance who unexpectedly sold many PCs in the mid-50s (Druker, 2003). In fact, many
mainframe makers underestimated MAC’s capacity but not IBM which immediately took a
position creating the facilities and structure to become years late in the world largest PC
Company; The reason behind it was the IBM’s organisational structure and culture which
allowed swift reactions to the untimely change. In order to understand structure and culture
influence, the next two sections will explore about each separately (Druker, 2003)
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Structure of Organisation
Structure could be seen as a system composed by vary forces which give form to an
organisation. Mintzberg (1991) explains that there is no such thing as best structure however
these factors: Direction, Efficiency, proficiency, concentration, innovation, cooperation and
competition, will pull and push the structure to give the organisation a form.
Structure may have different meanings. Jones (2001) suggests that the organisational
structure is “The formal system of task and authority relationships,” in other words, how
people interact within the organisation with respect to specific regulations in order to achieve
the organisational plan. On the other hand, Project Management Institute (2008) argues from
a project’s perspective that structure affects the availability of resources which can be
counterproductive in the achievement of the project scope.
There are numbers of structure that are commonly used by organisations (Project
Management Institute, 2008) which is showed in figure 2 below. The classic and most
common type of structure is functional structure which is based on a hierarchical model
which roles and responsibilities are very strict and clearly defined in the organisation’s
Figure 2. Organizational Structures. Source: Project
Management Institute, 2008
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policy. There are also matrix structure organisations where weak matrix tend to work as a
functional structure, balanced matrix shows some need for PM, and strong matrix is more
project oriented.
Project oriented structures tend to be more informal structure of an organisation. Larsen
(2002) argues that the structure can be pictured as spaghetti; it does not have formal
hierarchical structure or traditional management structure. In a project oriented structure,
project managers have the authority to use resources as they intend; employees may work for
different project teams. This characteristic will be explored more in the management style
section.
Consultant companies such as SAP and
PriceWaterhouseCoopers are examples of
Project Oriented Organisation which PM
has great authority. On the other hand
Google works in a team work structure
where projects are assigned to a team
according to their skills, innovation,
communication and creations abilities.
Figure 3. Organizational Structures. Source: (Google, 2010),
(SAP, 2010), (PriceWaterHouse Coopers, 2010), (Company
Coca Cola, 2010), (Corporation, 2010), (Australian
Government Department of Helath and Ageing, 2010)
There are structural factors that can encourage projects if they are balanced correctly. Jones
(2001) finds that figure 6 on the next page illustrates the factors. According to the research
developed by the ProjekManagement Group (Gareis & Martina, 2000), project oriented
organisations define and orient the organisation based on projects. The organisational strategy
is managed by portfolio managers which weight more mutual adjustment than strict rules or
written regulations. Project Oriented organisations also provide integrative functions with
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low level
height
of hierarchical
avoiding
disadvantages
of
the
a
Bureaucracy model which
implies
following
rules
instead of solving customer
needs.
Figure 4. Structural Factors. Source: Jones, 2001.
The last balloon in figure 6
shows
centralization
decentralization;
this
vs.
is
described as the level of independency that each project group interacts within organisation
and forms structure. For the ProjektManagement Group (Gareis & Martina, 2000), the best
project oriented scenario is with high level of independency in each project group while they
were oriented and ruled by the Project Management knowledge and Code of Conducts and
Ethics. This project oriented model has an implicit culture which will be described next.
Culture of Organisation
Norms are common knowledge of how to develop the work and what would the common
criteria to validate the work done. Jones (2001) argues that each company has an implicit
culture which they do not realise. The culture is a series of pattern given by employees, CEO,
owner and any stakeholder who influence the organisation. Sometimes the culture is given
strictly by rules, standard operating procedure (SOP) and policies in a standardization
structures (Jones, 2001).
A number of cultural patterns such as teamwork, centralised knowledge, high
communication, responsibility could enhance Project’s success. The culture, for example, of
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Google is focused on teamwork; their culture is renowned as high professional degree with
high sense of commitment and creativity. Their flat structures increase the level of
communication among the organisations. Similar with Microsoft, Their cultural policies
allow employees to communicate directly with Bill Gates. Some of these factors are example
of project oriented organisations where culture and structure facilitates the project manager’s
work and consequently the successful achievement of projects.
Culture could affects projects because culture affects the human resource and this react to an
action. Some examples of how an organisation affects its human resource is SAP which their
award policy increment the level of commitment, its global model promotes diversity in
culture and race, its flat structure enhance communication among the organisation (SAP,
2010). In addition, there is also some of the informal culture perceived by externals
environment which is SAP consultants are seen as arrogant. The human resource
management should be seen as key resource which can be affected by projects and can affect
projects. Since the nature of project oriented organisation is different from the traditional
organisation, HRM may experience difficulties or challenges in managing their employees
which will be discussed in the following section. However, culture and structure are evolving
every day according to the market and the human resource that works insight (Jones, 2001).
Organisational Managers and Project Managers should understand how organisations are
transformed and keep looking what is coming in the future.
The Management Style of Project Oriented Organisation
HRM in project oriented organisation may hold opposing views with HRM in traditional
organisation (Turner et al, 2008). Human Resource Department (HRD) may not have
responsibility to assign employees into a project. Larsen (2002) noted that in project oriented
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organisation, project manager will have the authority to select his/her team members; HRD’s
roles are just assisting project managers and staff about their problems.
However, become a project manager does not mean that they do not have problems.
“Managers are human and they do not always operate according to set principles” (The Times
100, 2009), they can only deliver the projects if only their team members are well managed.
Thus it is suggested, as Turner, et al (2008) found, that top executives allocate a well trained
or experienced project managers who could achieve “work-life balance” and more focus on
their team members.
Since the nature of project oriented organisation is different from the traditional organisation,
Human Resource Management (HRM) may experience difficulties or challenges in managing
their employees. Turner, et al (2008) noted that employee may suffer from pressures such as
overwork, insecurity of future jobs, and career development problems. Larsen (2002) noted
that team projects in project oriented organisation may consist of team members from other
projects. Moreover, He also found that some employee may prefer this structure because of
they may have more power in terms of decision making, but others may miss the ladder of
position in a traditional organisation. Thus, HRM will have extra work to manage and
develop strategies for employee in a project oriented organisation.
There are numbers of strategies that Turner, et al (2008) and Larsen (2002) suggested and
found from numbers of project oriented organisation in the HRM for project oriented
organisation. They are:
1. Assign HRM roles inside the projects,
2. Increase the loyalty level inside team members,
3. Maintain close relationship between managing director and staff ,
4. Assign the right project manager to control the employee,
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5. Encourage staff members to be more creative with ideas,
6. Put an open office inside workplace,
7. Give appraisals to staff members, and
8. Set project manager roles as a career development path.
Turner, et al (2008) and Larsen (2002) believe that these strategies may please employee with
their issues in the workplace.
Conclusion
This paper has analysed why structure and culture is essential inside an organisation where
both of them acts as a gear which may increase or decrease the development and change
inside an organisation, project oriented organisation structure has been differentiated between
other common structures of organisation where the structure is less hierarchical and has
mutual adjustment, integration and decentralisation as its characteristics and analysed
cultures from examples of project oriented organisation where teamwork, centralised
knowledge, high communication, responsibility could enhance Project’s success rate.
Moreover, issues and solution to challenges in HRM has been explored where employee’s
problem with work-life balance may be overcome with strategies such as assign HRM role
inside project teams or maintain close relationship between directors and team members.
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Reference
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Australian Reinsurace Pool Corporation 2010, ‘Australian Government Architecture’,
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_05-06.asp>
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