Reasons for Growth of Project Oriented Organizations:
First, speed and market responsiveness have become absolute requirements for successful
competition. It is no longer competitively acceptable to develop a new product or service using
traditional methods in which the potential new product is passed from functional area to
functional area until it is deemed suitable for production and distribution.
Second, the development of new products, processes or services regularly requires inputs from
diverse areas of specialized knowledge. Unfortunately, the exact mix of specialties appropriate
for the design and development of one product or service is rarely suitable for another product or
service.
Third, the rapid expansion of technological possibilities in almost every area of enterprise tends
to destabilize the structure of organizations. Mergers, downsizing, reorganizations, new
marketing channels and other similar major disturbances all require system-wide responsiveness
from the total organization. Again, no traditional mechanism exists to handle change on such a
large scale satisfactorily but project organization can.
Finally, a large majority of senior managers rarely feel much confidence in their understanding
of and control over a great many of the activities going on in their organizations. Projects are
properly planned, integrated with other related activities and reported routinely on their progress.
The Major Advantages of Using Functional Elements of the Parent Organization as the
Administrative Home for a Project Are:
1. There is maximum flexibility in the use of staff. If the proper functional division has been
chosen as the project’s home, the division will be the primary administrative base for individuals
with technical expertise in the fields relevant to the project.
2. Individual experts can be utilized by many different projects. With the broad base of technical
personnel available in the functional divisions, people can be switched back and forth between
the different projects with relative ease.
3. Specialists in the division can be grouped to share knowledge and experience. Therefore, the
project team has access to whatever technical knowledge resides in the functional group. This
depth of knowledge is a potential source of creative, synergistic solutions to technical problems.
4. The functional division also serves as a base of technological continuity when individuals
choose to leave the project and even the parent firm. Perhaps, technological continuity is the
procedural, administrative and overall policy continuity that results when the project is
maintained in a specific functional division of the parent firm.
5. The project may be a source of glory for those who participate in its successful completion,
but the functional field is their professional home and the focus of their professional
advancement.
The Major Disadvantages of Using Functional Elements of the Parent Organization as the
Administrative Home for a Project Are:
1. The client is not the focus of activity and concern. The functional unit has its own work to do,
which usually takes precedence over the work of the project and hence over the interests of the
client.
2. The functional division tends to be oriented toward the activities particular to its function. It is
not usually problem oriented in the sense that a project should be to be successful.
3. Occasionally in functionally organized projects, no individual is given full responsibility for \
the project. This failure to pinpoint responsibility usually means that the PM is made
accountable for some parts of the project, but another person is made accountable for one or
more other parts.
4. There are often several layers of management between the project and the client.
5. The project is not in the mainstream of activity and interest and some project team members
may view service on the project as a professional detour.
6. The motivation of people assigned to the project tends to be weak.
7. There is a tendency to sub-optimize the project. Project issues that are directly within the
interest area of the functional home may be dealt with carefully, but those outside normal
interest areas may be given short shrift.
Pure Project Organization
In a 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. Some parent
organizations prescribe administrative, financial, personnel and control procedures in detail.
Others allow the project almost total freedom within the limits of final accountability.
Advantages of Pure Project
1. The project manager has full line authority over the project. There is a complete work force
devoted to the project. The PM is like the CEO of a firm that is dedicated to carrying out the
project.
2. All members of the project work force are directly responsible to the PM. There are no
functional division heads whose permission must be sought or whose advice must be heeded
before making technological decisions.
3. When the project is removed from the functional division, the lines of communication are
shortened. The shortened communication lines result in faster communications with fewer
failures.
4. When there are several successive projects of a similar kind, the pure project organization can
maintain a more or less permanent cadre of experts who develop considerable skill in specific
technologies.
5. The project team that has a strong and separate identity of its own tends to develop a high
level of commitment from its members. Motivation is high and acts to foster the task
orientation.
6. Because authority is centralized, the ability to make swift decisions is greatly enhanced. The
entire project organization can react more rapidly to the requirements of the client and the
needs of senior management.
7. Unity of command exists in a pure organization.
8. Pure project organizations are structurally simple and flexible, which makes them relatively
easy to understand and to implement.
9. The organizational structure tends to support a holistic approach to the project.
Disadvantages of Pure Project
1. When the parent organization takes on several projects, it is common for each one to be
fully staffed. This can lead to considerable duplication of effort in every area from
clerical staff to the most sophisticated technological support units. If a project does not
require a full-time personnel manager, it must have one nonetheless because personnel
managers come in integers and staff is usually not shared across projects.
2. 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.
3. Removing the project from technical control by a functional department has a serious
disadvantage if the project is characterized as high technology. Though individuals
engaged with projects develop considerable depth in the technology of the project, they
tend to fall behind in other areas of their technical expertise.
4. Pure project seem to foster inconsistency in the way in which policies and procedures are
carried out.
5. In pure project organizations, the project takes on a life of its own. A disease known as
projectitis develops. Friendly rivalry may become bitter competition and political
infighting between projects is common.
6. Another symptom of projectitis is the worry about life after the project ends. Typically,
there is considerable uncertainty about what will happen when the project is completed.
The Matrix Organization
The matrix organization is a combination of the functional and the pure project
organizations. It is a pure project organization overlaid on the functional divisions of the
parent firm. Being a combination of pure project and functional organization structures, a
matrix organization can take on a wide variety of specific forms, depending on which of
the two extremes (functional or pure project) it most resembles. The project or strong
matrix most resembles the pure project organization.
Advantages of Matrix Organization
1. The project is the point of emphasis. The PM takes responsibility for managing the project, for
bringing it in on time within cost and to specification. The matrix organization shares this
virtue with the pure project organization.
2. Because the project organization is overlaid on the functional divisions, temporarily drawing
labor and talent from them, the project has reasonable access to the entire reservoir of
technology in all functional divisions.
3. There is less anxiety about what happens when the project is completed than is typical of the
pure project organization. Even though team members tend to develop a strong attachment for
the project, they also feel close to their functional home.
4. Response to client needs in the matrix organization is just flexible. The matrix organization
responds flexibly and rapidly to the demands made by those inside the parent organization.
5. With matrix management, the project will have or have access to representatives from the
administrative units of the parent firm. As a result, consistency with the policies, practices and
procedures of the parent firm tends to be preserved. This consistency with parent firm
procedures tends to foster project credibility in the administration of the parent organization.
6. Matrix organization allows a better companywide balance of resources to achieve the several
different time/cost/performance targets of the individual projects. This holistic approach to the
total organization’s needs allows projects to be staffed and scheduled in order to optimize total
system performance rather than to achieve the goals of one project at the expense of others.
7. While pure project and functional organizations represent extremes of the organizational
spectrum, matrix organizations cover a wide range in between.
Disadvantages of Matrix Organization
1. With matrix organizations, the power is more balanced. Often, the balance is fairly delicate.
When doubt exists about who is in charge, the work of the project suffers. If the project is
successful and highly visible, doubt about who is in charge can foster political infighting for
the credit and glory. If the project is a failure, political infighting will be even more brutal to
avoid blame.
2. While the ability to balance time, cost and performance between several projects is an
advantage of matrix organizations, that ability has its dark side. The set of projects must be
carefully monitored as a set, a tough job. Further, the movement of resources from project in
order to satisfy the several schedules may foster political infighting among the several PMs.
3. For strong matrices, problems associated with shutting down a project are almost as severe as
those in pure project organizations. The projects having individual identities resist death. Even
in matrix organizations, projectitis is still a serious disease.
4. In matrix-organized projects, the PM controls administrative decisions and the functional
heads control technological decisions. The distinction is simple enough when writing about
project management, but for the operating PM the division of authority and responsibility
inherent in matrix management is complex.
5. Matrix management violates the management principle of unity of command. Project workers
have at least two bosses, their functional heads and the PM. There is no way around the split lo
yalties and confusion that result.
Choosing an Organizational Form
Since it is our objective to provide criteria for the selection of a project organization, we shall
illustrate the process with an example using the following procedure:
1. Define the project with a statement of the objective 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.
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—for example, level
of technology needed, probable length and size of the project, any potential problems with the
individuals who may be assigned to the work, possible political problems between different
functions involved and anything else that seems relevant, including the parent firm’s previous
experiences with different ways of organizing projects.
6. In light of the above and with full cognizance of the pros and cons associated with each
structural form, choose a structure.
Risk Identification through Failure Mode and Effect Analysis (FMEA)
FMEA is the application of a scoring model such as those used for project selection. It is easily
applied to risk by using six steps.
1. List possible ways a project might fail.
2. Evaluate the severity (S) of the consequences of each type of failure on a 10-point scale where
1 is ‘no effect’ and ‘10’ is ‘very severe.’
3. For each cause of failure, estimate the likelihood (L) of its occurrence on a 10-point scale
where ‘1’ is ‘remote’ and 10 is ‘almost certain.’
4. Estimate the ability to detect (D) a failure associated with each cause. Using a 10 point scale,
‘1’ means detectability is almost certain using normal monitoring/control systems and ‘10’
means it is practically certain that failure will not be detected in time to avoid or mitigate it.
5. Find the Risk Priority Number (RPN) where RPN = S x L x D.
6. Consider ways to reduce the S, L and D for each cause of failure with a significantly high
RPN.
Human Factors and the Project Team
Some advantages of empowerment for project teams are:
1. It harnesses the ability of the team members to manipulate tasks so that project objectives are
met. The team is encouraged to find better ways to do things.
2. Professionals do not like being micromanaged. Participative management does not tell them
how to work but, given a goal, allows them to design their own methods.
3. The team members know they are responsible and accountable for achieving the project
deliverables.
4. There is a good chance that synergistic solutions will result from team interaction.
5. Team members get timely feedback on their performance.
6. The PM is provided a tool for evaluating the team’s performance.