Project Management: A Managerial Approach Chapter 4 – Project Organization © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Overview Project “Fit” in Organizations Types of Organizations The Project Management Office (PMO) Project Teams © 2006 John Wiley and Sons, Inc.

Growth of Project Oriented Organizations There are many reasons for the rapid growth, but most of them can be grouped in four general areas: Speed and market responsiveness have become absolute requirements for successful competition The development of new products, processes, or services regularly requires input from diverse areas of specialized knowledge © 2006 John Wiley and Sons, Inc.

Growth of Project Oriented Organizations Four reasons for growth (cont.) Rapid expansion of technological possibilities in almost every area of enterprise tends to destabilize the structure of organizations A majority of senior managers rarely feel much confidence in their understanding and control of the activities in their areas © 2006 John Wiley and Sons, Inc.

Types of Project Organizations There are 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.

The Project as Part of the Functional Organization Advantages of using the functional elements of the parent organization as the administrative home for a project include: Maximum flexibility in the use of staff Individual experts can be utilized by many different projects Specialists in the division can be grouped to share knowledge and experience The functional division also serves as a base of technological continuity when individuals choose to leave the project The functional division contains the normal path of advancement for individuals whose expertise is in the functional area © 2006 John Wiley and Sons, Inc.

The Project as Part of the Functional Organization There are also disadvantages to housing the project in a functional area: The client is not the focus of activity and concern The functional division tends to be oriented toward the activities particular to its function Occasionally, no individual is given full responsibility for the project There are often several layers of management between the project and the client There is a tendency to suboptimize the project © 2006 John Wiley and Sons, Inc.

Pure Project Organization Advantages of a pure project organization: The project manager has full line authority over the project All members of the project work force are directly responsible to the project manager When the project is removed from the functional division, the lines of communication are shortened When there are several successive projects of a similar kind, the pure project organization can maintain a permanent cadre of experts who develop skills in specific technologies © 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 Because the authority is centralized, the ability to make a swift decision is enhanced Unity of command exists 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 which can lead to a duplication of effort in every area from clerical staff to technological support There is a need to ensure access to technological knowledge and skills that results in an attempt by project managers to stockpile equipment and technical assistance The functional division is a repository of technical lore, but it is not readily accessible to team members of the pure project team © 2006 John Wiley and Sons, Inc.

Pure Project Organization Disadvantages of a pure project organization (cont.) Pure project groups seem to foster inconsistency in the way in which policies and procedures are carried out In a pure project organization, the project takes on a life of its own There tends to be concern among team members about “life after the project ends” © 2006 John Wiley and Sons, Inc.

Pure Project Organization © 2006 John Wiley and Sons, Inc.

The Matrix Organization The matrix organization is a combination of functional and pure project A matrix organization 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: © 2006 John Wiley and Sons, Inc.

The Matrix Organization As with other organizational forms, the matrix organization has its own unique 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 Matrix management gives the project access to representatives from the administrative units of the parent firm The matrix organization allows a better company-wide balance of resources to achieve goals There is a great deal of flexibility in precisely how the project is organized within the matrix © 2006 John Wiley and Sons, Inc.

The Matrix Organization There are also disadvantages to using the matrix organization; most involve conflict between the functional and project managers: 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.

The Matrix Organization Disadvantages of a Matrix (cont.) The division of authority and responsibility in a matrix organization is complex, and uncomfortable for the project manager. Matrix management violates the management principle of unity of command. Project workers have at least two bosses, their functional heads and the project manager. © 2006 John Wiley and Sons, Inc.

Mixed Organizational Systems Divisionalization is a means of dividing a large organization into smaller more flexible units This enables the parent organization to capture some of 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: The hybridization of the mixed form leads to flexibility The firm is able to 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.

© 2006 John Wiley and Sons, Inc. Staff Organization © 2006 John Wiley and Sons, Inc.

Choosing an Organizational Form Selecting the organizational interface between the project and the firm is a difficult task The choice is 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.

© 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.

© 2006 John Wiley and Sons, Inc. The Project Team There are some people who 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.

Human Factors and the Project Team Meeting schedule and cost goals, without compromising performance is a technical problem, with a human dimension Project professionals tend to be perfectionists Pride in workmanship leads the team member to improve (and thus change) the product These changes cause delays in the project © 2006 John Wiley and Sons, Inc.

Human Factors and the Project Team Inspiring Project Team Members: The project manager often has little control over the economic rewards and promotions of project team members, but this does not mean he/she cannot facilitate motivation of team How are technical employees motivated? Recognition Achievement The work itself Responsibility Advancement Learning new skills © 2006 John Wiley and Sons, Inc.

Human Factors and the Project Team Empowerment of project teams is also a motivational factor: 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 of doing 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 © 2006 John Wiley and Sons, Inc.

Human Factors and the Project Team Advantages of Empowerment (cont.): 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 project manager is provided a tool for evaluating the team’s performance © 2006 John Wiley and Sons, Inc.

Interpersonal Conflict The focus of conflict can often be related to the stage in the project’s life cycle When the project is first organized, priorities, procedures and schedules all have roughly equal potential to cause conflict During the buildup phase, priorities become significantly more important than any other conflict factor In the main program phase schedules are the most important cause of conflict followed by technical disagreements At the project finish, meeting the schedule is the critical issue © 2006 John Wiley and Sons, Inc.

Interpersonal Conflict Conflict and the Project Manager Most of the conflict on project teams is the result of individuals focusing on the project through the eyes of their individual discipline or department Conflict avoiders do not make successful project managers On occasion, compromise appears to be helpful, but most often, gently confronting and resolving the conflict is the method of choice, for a win-win situation © 2006 John Wiley and Sons, Inc.

PLC and Conflict Intensity © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein. © 2006 John Wiley and Sons, Inc.