Lecture 5 Project & Organization Structure KEC Dhapakhel Lalitpur

Outline Organization System View of Project Management Organizational Structure in a Project Functional Organization Pure Project Organization Matrix Organization Organizational Structure Influences on Projects By Pushpa Thapa

Organization Organization is a group of people having different knowledge and skills working together to achieve an organizational goal. Projects can’t be run in isolation. Projects must be operated in abroad organizational environment. Project Managers need to take the holistic or system view of a project and understand how it is simulated within the larger organization. By Pushpa Thapa

System View of Project Management Project Management System is an organized set of tools and procedures for helping managers and teams to achieve project goals. Three parts of projects’ system view include: Systems Philosophy: View things as systems, interacting components working within the environment to fulfill some purposes. Systems Analysis: Problem solving approach Systems Management: Address business, technological and organizational issues before making changes to systems. By Pushpa Thapa

Three Sphere Model for Systems Management Business Organization Technology How much Cost? Where is Funds? Who are Stakeholders? What will be Profit? Which technology will be used & why? Which software, hardware & network will be required? Proven technology Vs. Obsolete technology Where to get necessary technological support from? How to cope with technological changes? What are tangible and intangible benefits? What are long term & short term effects? What skills and facilities will be required? How will resource be mobilized? What type of resource development will be required? Proven Technology: Such documentation shall provide confidence in the technology from practical operations, with respect to the ability of the technology to meet the specified requirements. Obsolete Technology: It refers to outdated computer hardware, software, technology, services or practices that are no longer used, even if they are in working condition. By Pushpa Thapa

System View of Project Management Three Key Essences Structured Approach: Organizational Structure Disciplined Approach: Coordinated Management Processes Defined Approach: Purposefully defined inputs and outputs for each process In social sciences, coordinated management of meaning (CMM) "theorizes communication as a process that allows us to create and manage social reality"."Taking the communication perspective" consists of looking at communication (rather than through it to what it is ostensibly about) and seeing it as a two-sided process of (1) coordinating actions with others, and (2) making or managing meanings. These interwoven threads of stories and actions comprise the texture of social worlds. Much of the development of the theory consists of heuristic models and concepts that enable the user to perceive and describe the ongoing processes of communication. By Pushpa Thapa

Organizational Structure in a Project Organizational structure represents the formal relationship and main line of communication, flow of responsibilities and authorities through the management hierarchy. 3 Basics Organizational Structures: Functional Organization Pure Project or Project Organization Matrix Organization By Pushpa Thapa

Functional Organization CEO Department 1 Project A Project B Department 2 Project X Department 3 Department 4 Project P In this form of organization, all activities of the enterprise are grouped and divided according to functions like production, marketing, finance and others. Each department is in the charge of a specialist who is called functional manager. The functional manager has a control over the functions in his charge and no matter on those functions found in other part of the organization.  By Pushpa Thapa

Functional Organization Project tasks are performed as part of functional department Suitable for small projects Head of the Department acts as Project Manager No designated Project Manager May have separate Project Coordinator with limited authority Members have lack of Global view of the project By Pushpa Thapa

Functional Organization Advantages Disadvantages Flexibility: in the use of existing HR Specialization Access to functional knowledge, experience and technical skills of functional departments Lack of project focus Decision delays Poor communication By Pushpa Thapa

Pure Project Organization CEO Department 1 Department 2 Department 3 Project A Project B By Pushpa Thapa

Pure Project Organization Project Organization is separate from functional units. The Project Manager has his own line organization with project authority and responsibility. Projects are directly reported to the head of the organization. Problems while coordinating with departmental functions. By Pushpa Thapa

Pure Project Organization Advantages Disadvantages Focus on project objectives Clear authority Effective communication Use of labor force as required Duplication of facilities and efforts Lack of job security Project specific benefit may create conflict between project and non-project staff Useful for large projects only By Pushpa Thapa

Matrix Organization Project Manager 1 Project Manager 2 CEO Department 1 D1 Staff Department 2 D2 Staff Department 3 D3 Staff Department 4 D4 Staff Matrix Organisation is a combination of two or more organisation structures. For example, Functional Organisation and Project Organisation. The employee has to work under two authorities (bosses). The authority of the Functional Manager flows downwards while the authority of the Project Manager flows across (side wards). So, the authority flows downwards and across. Therefore, it is called "Matrix Organisation". By Pushpa Thapa

Matrix Organization Combination of functional and pure project organization. Temporary project structure is imposed over functional design. Project team is assigned from the functional department. Project Manager heads the project. By Pushpa Thapa

Matrix Organization Advantages Disadvantages Focus on project objectives Enhanced coordination – Project Manager & Departmental Heads Flexibility Efficient Team feeling Motivation Opportunity for skill enhancement Free time for top level management Multiple command Duplication of work for departments Possibility for conflict between functional department head and PM causing Power Struggle Requires high interpersonal skill Expensive By Pushpa Thapa

Matrix Organization Strong Matrix Weak Matrix Balanced Matrix Project Managers are more Powerful in terms of Authority PMs are simply Project Coordinator having limited Authority Power is balanced between PM and Functional manager Staff are assigned for project according to project needs by PM PM rules but members are under functional managers Functional manager assigns work PM negotiates PM expedites/ facilitates the project Functional Manager facilitates all support to the project By Pushpa Thapa

Organizational Structure Influences on Projects Project Characteristics Functional Organization Weak Matrix Organization Balanced Matrix Organization Strong Matrix Organization Pure Project Organization PM’s Authority Little or None Limited Low/ Moderate Moderate/High High to Full Involvement of Team Member from Overall Organization Virtually None 0-25 % 15-60 % 50-95 % 85-100 % PM’s Role Part Time Full Time Common Title for PM’s Role Project Coordinator/ Leader Project Manager/ Officer Project /Program Manager PM’s Administrative Staff Organizational Influences on Project Management There are three main ways in which organizational factors influence project management: 1. Culture – A good project manager should be cognizant of the organizational culture, working styles in an organization, and who is influential in facilitating work. 2. Organizational Process Assets (OPA) – This would include process, policies, templates, metrics, historical data, project knowledge, domain expertise, communication, control procedures and more. Note that organizational maturity has significant impact on OPA. 3. Organization structure – This refers to how employees are organized. There are four types of organizational structures: Functional: Specialized functional divisions/departments e.g. finance, research, marketing, engineering, IT etc., each with their respective functional managers Functional manager controls budget One supervisor for each employee Little or no resource availability for projects Project team could be comprised of members across departments Part time or no project administration staff Project coordination happens at functional manager level Projectized: Organization is divided into project teams each with its project manager who works with high degree of independence and authority. Almost all resources work on projects Project manager controls budget Project staff reports to project manager Full time project administration staff Project coordination happens within the project team Matrix: This model is a mix of functional and projectized and has three variants – weak matrix, balanced matrix, and strong matrix. All resources have two managers – functional and project. Project manager’s authority increases from weak to strong matrix while functional manager’s authority decreases from weak to strong matrix. Authority is equally shared in balanced matrix. Composite: This is mix of above models with different parts of organization structured differently as per business needs. Project Expediter: Acts as project staff and communications coordinator. A project expediter cannot make or enforce decisions – typically found in functional or weak matrix where there is some project structure but functional manager is more powerful. Project Coordinator: Similar to project expeditor with some limited power to make decisions. Typically reports to a higher manager – typically found in weak matrix organizations. Manager of project managers is typically seen in strong matrix or composite organizations. By Pushpa Thapa

Organizational Structure Influences on Projects Organization Structure also represents the top level view of “Structure of Ownership” and “ Main Line of Reporting Order” for the project. The organizational structure influences the project manager’s authority, but project manager’s need to remember positive consequences of other system approaches to project management i.e. disciplined approach and definite approach. The organizational structure also help Project Manager to understand the organizational hierarchy and managed the project in a disciplined manner. By Pushpa Thapa

References Project Management, Harvey Maylor, 2003, Pearson India. Project Management in Nepal, Dr. Govind Ram Agrawal, 2005, M.K. Publishers, Nepal. Project Management: A Systems Approach to Planning, Scheduling and Controlling, Harold Kerzner, 1987, CBS Publishers, New Delhi. Lecture Notes of MSTIM, Pulchowk Campus by Dr. Rajendra Prasad Adhikari. IT Project Management, NAAS, 2009. By Pushpa Thapa