Project Management: A
Managerial Approach
The Project in the Organization
© 2006 John Wiley and Sons, Inc.
Overview
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•
•
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Project “Fit” in Organizations
Types of Organizations
The Project Management Office (PMO)
Project Teams
© 2006 John Wiley and Sons, Inc.
Defining the Project
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As PM, before you start a project , you need to
define/address/solve three issues:
1. How does your project relate to the company in terms of
responsibility and reporting.
2. How to organize project after people have been hired.
3. Are there activities/resources to be shared with other
projects?
•
i.e. you may not be allowed to hire external resources, you may
need to share administrative personnel.
© 2006 John Wiley and Sons, Inc.
Company Organization
• Companies need to organize people and resources in
different manners.
• Focus: specialize the human elements of a group.
• Functional division is most common:
Company  Subsidiary  Product Groups 
Customer Divisions  Functional Departments
Product Process Sections Shifts
© 2006 John Wiley and Sons, Inc.
Company Organization
Example: United Technologies (a complicated Structure)
• United Technologies (www.utc.com)
• Pratt & Whitney
– Military Division
» Aircraft Engines
»
»
»
Manufacturing
Heat Treatment Department
Shifts 1-3
© 2006 John Wiley and Sons, Inc.
Types of Project Organizations
• Two fundamentally different ways of organizing
projects within the parent organization
– The project as part of the Functional Organization
– The project as a free-standing part of the parent
organization
• A third type, called a Matrix Organization is a
hybrid of the two main types
• Each has advantages and disadvantages
© 2006 John Wiley and Sons, Inc.
Organizational Strategies
The
Functional
Organization
The
Matrix
Organization
(hybrid)
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The “Pure”
Project
Organization
The Functional Organization
• Project is usually place under a department with a
special interest in it, or a division that can do the
most for it.
– Criteria to select “Host” department
• Division/Dept most interested in its success.
• Dept with most expertise in that type of project.
– Example: A warehouse expansion under a warehouse
dept.
© 2006 John Wiley and Sons, Inc.
The Functional Organization
© 2006 John Wiley and Sons, Inc.
The Functional Organization
• Advantages:
– Maximum flexibility in the use of staff
– Individual experts can be utilized by many different
projects
– Specialists in the unit can be grouped to share knowledge
and experience.
– The unit serves as a base to ensure technological
continuity
• (invest in training given more secure continuity of staff in dept)
– The unit contains the normal path of advancement for
employees
• (sense of career after project completion)
© 2006 John Wiley and Sons, Inc.
•
The Project as Part of the Functional
Organization
Disadvantages:
– Not client focused:
• project is a side job, 1 time deal, additional duty.
– Does not facilitate project execution.
• Project tends to drag longer that it should
– Not problem oriented, instead, it’s functional & activity
oriented.
• Project less efficient – activity based – no urgency to complete project.
– Sometimes no individual is fully responsible for a project
© 2006 John Wiley and Sons, Inc.
The Project as Part of the Functional
Organization
• Disadvantages:
– Lack of coordinated efforts to be responsive
– Tendency to sub-optimize the project
• (the project may not receive attention and priority with top
priority from the unit)
– Weak motivation to the individuals assigned to the
project.
© 2006 John Wiley and Sons, Inc.
The Pure Project Organization
• Company major divisions are based on projects. E.g.,
engineering firms and software firms.
• Reasons for having more such an organization: shorter
product life cycle and requirement for more specialized &
integrated knowledge of product/process/services.
• The project is a self-contained unit with its own technical
and administrative staff. It allows the project total freedom
within the limits of final accountability.
• Some companies prescribe administrative, financial,
personnel, and control procedures in detail.
© 2006 John Wiley and Sons, Inc.
The Pure Project Organization
• If company is in the business of doing only projects, you will have
this type of organization structure.
• Major Engineering Firms are set up this way:
– Major Engineering firms that work on long, huge projects.
• Bechtel (http://www.bechtel.com/)
• Jacobs Engineering (http://www.jacobs.com/)
• Stone & Webster (now Shaw Group) (http://www.shawgrp.com)
– Divisions are set up for these type of projects – airports, refineries,
power plants.
– Every project is a department, project lasts for many years.
– Disbanded after completion.
– This type of companies who organize themselves around projectw
will only accept large profitable projects.
© 2006 John Wiley and Sons, Inc.
Pure Project Organization
© 2006 John Wiley and Sons, Inc.
Pure Project Organization
• Advantages of a pure project organization (cont.)
– A project team that has a strong and separate identity and
develops a high level of commitment from its members
– PM has full line authority over the project (each team member
has only one boss)
– All members are directly responsible
– Efficient communications and decisions
– Pure project organizations are structurally simple and flexible,
which makes them relatively easy to understand and implement
– The organizational structure tends to support a holistic approach
to the project
© 2006 John Wiley and Sons, Inc.
Pure Project Organization
• Disadvantages of a pure project organization:
– Each project tends to be fully staffed: duplication of support
efforts
– Sub optimal use of resources
– Foster inconsistency in following policy and procedures.
– Less loyalty to the parent company
– Life after the project ends
– More difficult to support (and share) technology development
– The functional division not readily accessible to team members
of the pure project team
© 2006 John Wiley and Sons, Inc.
The Matrix Organization
• The matrix organization is a combination of functional
and pure project
– A pure project organization overlaid on the functional divisions
of the parent company.
– To take advantages of both project and functional organizations
and avoid some disadvantages.
– Can take on a wide variety of specific forms
• “Project” or “strong” matrix organization most resembles the pure
project organization
• The “coordination” or “functional” or “weak” matrix most resembles the
functional form
• The “balanced” matrix lies in between the others
© 2006 John Wiley and Sons, Inc.
The Matrix Organization
• Rather than being a stand alone organization, like
the pure project, the matrix project is not separated
from the parent organization:
FD1
P1
R1
P2
R3
P3
R3
FD2
FD3
© 2006 John Wiley and Sons, Inc.
FD4
FD5
Matrix Variations
 - Strong Project, Weak Functional matrix
 - Strong Functional, Weak Project matrix.
 Example, including a functional organization
with a project office under the president’s
office
 - Balanced matrix (Ideal: 50/50 balance.)
© 2006 John Wiley and Sons, Inc.
The Matrix Organization
• Advantages:
– The project is the point of emphasis
– Because the project is overlaid on the functional
divisions, the project has reasonable access to the
reservoir of technology in all areas
– There is less anxiety about what happens when the
project is completed
© 2006 John Wiley and Sons, Inc.
The Matrix Organization
• Advantages of a Matrix (cont.)
– Response to client’s needs is as rapid as in the pure
project organization
– The matrix organization allows a better company-wide
balance of resources to achieve goals
© 2006 John Wiley and Sons, Inc.
The Matrix Organization
• Disadvantages
– conflict between the functional and project managers
• Problem: violate unity of command. Each person has two
bosses.
– The balance of power between the project and
functional areas is very delicate
– The movement of resources from project to project may
foster political infighting
– Problems associated with shutting down projects can be
as severe as in a pure project organization
© 2006 John Wiley and Sons, Inc.
Mixed Organizational Systems
• An organization consisting of both functional and
departments
• Mostly a project department exists in a functional
organization
• Divides a large organization into smaller more flexible
units
– Flexibility to meet needs is increased
• Has the advantages of small, specialized organizational
units while retaining some of the advantages that come
with larger size units
© 2006 John Wiley and Sons, Inc.
Mixed Organizational Systems
• Pure functional and pure project organizations
may coexist in a firm
© 2006 John Wiley and Sons, Inc.
Mixed Organizational Systems
• Advantages of a mixed organization:
– Flexibility
– The firm can meet special problems by appropriate
adaptation of its organizational structure
• Disadvantages include:
– Dissimilar groupings within the same accountability
center tend to encourage overlap, duplication, and
friction because of incompatibility of interests
– Conditions still exist that result in conflict between
functional and project managers
© 2006 John Wiley and Sons, Inc.
Staff Organization
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Choosing an Organizational Form
• Selecting the organizational interface between the project
and the firm is a difficult task
– Determined by the situation, but is also partly intuitive
– Must consider: the nature of the potential project, the
characteristics of the various organization options, the advantages
and disadvantages of each, the cultural preferences of the parent
organization, and then make the best compromise that can be made
© 2006 John Wiley and Sons, Inc.
Choosing an Organizational Form
• Criteria for the selection of a project organization:
– 1. Define the project with a statement of the objective(s) 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
© 2006 John Wiley and Sons, Inc.
Choosing an Organizational Form
• Criteria for the selection of a project organization (cont.):
– 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
– 6. In light of items 1-5, and with full cognizance of the
pros and cons associated with each structural form,
choose a structure
© 2006 John Wiley and Sons, Inc.
The Project Team
• To staff a project, the project manager works from a
forecast of personnel needs over the life cycle of the
project
– A work breakdown structure (WBS) is prepared to determine
the exact nature of the tasks required to complete the project
– Skills requirements for these tasks are assessed and like skills
are aggregated to determine work force needs
– From this base, the functional departments are contacted to
locate individuals who can meet these needs
– Certain tasks may be subcontracted
© 2006 John Wiley and Sons, Inc.
The Project Team
• Some people are more critical to the project’s
success than others and should report directly to
the project manager or the project manager’s
deputy:
– Senior project team members who will be having a
long-term relationship with the project
– Those with whom the project manager requires
continuous or close communication
– Those with rare skills necessary to project success
© 2006 John Wiley and Sons, Inc.
Project Team Key Staff
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Project engineer (design / analysis)
Manufacturing engineer (production)
Field manager (at customer site)
Contract administrator (paperwork)
Project controller (cost)
Support services manager (subcontracts
© 2006 John Wiley and Sons, Inc.
Typical Organization for
Engineering Projects
© 2006 John Wiley and Sons, Inc.
Team Members Who Report to
PM or Deputy PM
• Break down work structure into tasks
• Assess skills needed for each task
• Recruit skilled workers from functional
departments
• Negotiate with employee AND FM to get
worker for project
• If no local skill available subcontract!
© 2006 John Wiley and Sons, Inc.
How to Staff a Project Team
• Project engineer (often the deputy PM)
• Senior project team members
• Members who require close communication with
PM
• Members with essential, rare skills
© 2006 John Wiley and Sons, Inc.
Risk Management
• Risk identification
• Qualitative risk analysis (to prioritize their effects on
project objectives)
• Quantitative risk management (measure the probability
and consequences of each risk)
• Risk response planning (procedures and techniques to
reduce threats to the project’s objectives)
• Risk monitoring and control (identify risk and evaluate
its impact)
© 2006 John Wiley and Sons, Inc.
Copyright 2006 John Wiley & Sons, Inc.
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© 2006 John Wiley and Sons, Inc.