Projects in organizations organization Structures

Learning Objectives Understand the governance of projects within organizations Understand various organizational approaches to managing project work Understand the benefits and techniques of a Project Management Office Understand the importance and requirements for managing multiple projects within an organization

Part I. organization Structures

Definitions of organizational structures with projects Pure Functional organization Projects fall within the organizational units Pure Project organization Company consists solely of project teams Used by companies that “do” projects Hybrid or Mixed organization Some projects within the units Some projects as self-contained units Matrix organization (Hybrid with prof PMs) Various levels of matrix organizations Project members belong both to project and functional unit

Pure Functional organization

Advantages of projects within functional organizations Highly flexible staff use Ease of switching experts among projects in same functional division Technological continuity Quicker career advancement of specialists

Some problems of projects within functions Project not client focused Different goals between functional parent division and project PM competes with FM for role of central project responsibility Slow response to client needs Weaker project team motivation than in pure project organization

Problem -- Complex Projects can overwhelm hierarchies Project Organization Team members must coordinate complex activities and process large amounts of information in tight time constraints Team members require multiple, complementary skills from multiple disciplines Project Processes Fast track schedules and unplanned activities require flexibility and commitment

Pure Project Organization

Advantages of pure project PM with full project authority Shorter communication lines than hybrid organization Higher project commitment of team Faster decision making Unity of command makes life easier for staff Organization is structurally simple and flexible

Problems with pure project Stockpiling of expertise and equipment to assure critical state never reached Experts develop too much depth --- not enough breath Inconsistency in carrying out policies and procedures Projectitis: excessive attachment of team to project Team worries of “life after the project ends”

The Matrix Structure… Is a viable way to handle complex project activities within a hierarchical organization However, also has dangers Imbalance of focus within the organization Conflicts in responsibility, authority, and power Confusion for team members on evaluation and career

Weak Matrix

Strong Matrix

Advantages of Matrix Approach PM sole responsible for project managing Access to entire technology of firm No worry about “life after project” Rapid response to client need Consistent with policies, procedures of parent firm Company wide sharing of resources Flexible between “weak” and “strong” matrix organization

Disadvantages of Matrix Approach Political infighting: PM against FM Political infighting: PM against PM Projects resist shutdown Over reliance on negotiating skills of PM Confusing for team members – who is my boss?

Advantages of Strong Matrix Achieves coordination efficiencies All specialists can be co-located Faster resolution of interdisciplinary issues Responsive to customer needs Ties incentives to customer needs Rewards tied to customer goals Provides training for general managers Exposes team to broad view of customer needs and functional units Uncovers leadership potential in team

Project Manager’s Role

Matrix organization – What is it trying to achieve? A matrix organization tries to achieve an optimum balance between two objectives Growing and sharing deep technical expertise; vs Responsiveness to rapidly changing customer needs Emerging market trends are driving many organizations towards the strong matrix form

How to decide which approach is best? What is the critical success factor that makes your company competitive in the marketplace Deep, current technical expertise Fast response to market and customers Length of projects vs. appraisal cycles Who do specialists need to please? How much influence do the PMs have?

Policies required for Matrix approach Rules for assigning priorities to projects Authority and power of PMs Physical location of project specialists Outsourcing policies Budgeting and cost allocations

Part II. Project Management Office

What is a Project Management Office? A PMO is a separate office, staffed with full time employees, to help coordinate all project activities within the organization.

Common Reasons why organizations formed a PMO Need for consistent project management - 65% Avoid project delays and help with planning - 50% Contain cost, improve project performance - 40% Improve customer satisfaction - 25%

Other Reasons to Establish PMO To establish and keep good project management processes To distribute project management expertise through organization To improve project success rate To reduce project lead times To consolidate project data To own an “enterprise project management” system

PMO Tasks (I) 1.Establish and enforce good project management processes 2.Assess/improve organizations project management maturity 3.Acquire enterprise project management system 4.Train and certify PMs 5.Cultivate competent PMs

PMO Tasks (II) 6.Consulting services for company PMs 7.Help PMs with administrative details 8.Risk evaluation 9.Product “fit” for organization 10.Monitor market changes and alert PMs of potentially needed scope changes 11.Review and limit organizations OVERALL project risk portfolio

PMO Tasks (III) 12.Audits and project reviews 13.Keep project management database 14.Help launch new projects 15.Recognize and reward project management excellence 16.“Home” for PMs 17.Disseminate project management knowledge

How to Build a PMO Get backing and sponsorship from senior management (VP or at least FM) Pilot project in VP/fm’s area of control In second iteration, expand PMO to cover the whole organization PMO will self propagate due to it’s usefulness

Potential PMO Problems Unrealistic expectations: PMO may not save a project already in trouble PMO cannot correct upper management failures such as: Inflated project goals Insufficient project support Inadequate resource availability

Project Portfolio Management Managing across projects

What is Portfolio Management? Projects Programs Portfolio Portfolio – The prioritized set of all projects and programs Program – a single, coordinated effort with multiple independent projects Project – a unique effort with defined beginning and end with defined deliverables and resources

Why Portfolio Management? Unsure or what projects are active Lack of understanding of project interdependence Uncertainty with regard to how projects support organizational strategy Resources that work overtime while other resources are under-utilized Consistent failure to meet project cost, schedule, or milestones

Goals of Project Portfolio Management To limit the number of projects so that important ones get adequate attention To identify projects that support strategy To eliminate undesirable projects – too much risk, too many resources, too fuzzy, etc. To balance resources and needs To balance short- medium- and long-term returns

Getting Started Many companies are now doing portfolio management Usually start with PMO first Many tools are available

Self Assessment Quiz List three organization structures to handle projects - What are the characteristics of each? What is the difference between a strong matrix and a weak matrix? List several responsibilities or activities that a PMO can do for an organization. What is project portfolio management? What benefits are derived from PPM?

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