Project Management: A Managerial Approach Text: Jack R. Meredith and Samuel J. Mantel, Jr. Reference: Eric w. Larson

Project Management A Managerial Approach Chapter 4 Project Organization

Project Management Structures Challenges to Organizing Projects The uniqueness and short duration of projects relative to ongoing longer-term organizational activities The multidisciplinary and cross-functional nature of projects creates authority and responsibility dilemmas. Choosing an Appropriate Project Management Structure The best system balances the needs of the project with the needs of the organization. Northern University Bangladesh

Why structure selection? The nature of work organization is important as it: Defines responsibility and authority; Outline reporting arrangement; Determines the management overhead (costs) Sets the structure behind the organizational culture; Determines one group of stakeholders in project activities Northern University Bangladesh

Types of project management structure: Functional Organization: The project as part of the Functional Organization Project based organization: The project as a free-standing part of the parent organization. Matrix Organization :A third type, called a Matrix Organization is a hybrid of the two main types. Network Organization. * Each has advantages and disadvantages Northern University Bangladesh

Functional Organizations Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

Types of project management structure: Functional Organization: Project based organization: Matrix Organization : Network Organization. Northern University Bangladesh

Project based/Pure project organization Dedicated Teams: Teams operate as separate units under the leadership of a full-time project manager. In a projectized organization where projects are the dominant form of business, functional departments are responsible for providing support for its teams Northern University Bangladesh FIGURE 3.2

Project Organizational Structure Northern University Bangladesh

Project Based Organization Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

Project based 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 Northern University Bangladesh

Project Based 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 Northern University Bangladesh

Project Based 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 Northern University Bangladesh

Project Based 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” Northern University Bangladesh

Types of project management structure: Functional Organization: Project based organization: Matrix Organization : Network Organization. Northern University Bangladesh

The Matrix Organization The matrix organization is a combination of functional and pure project. A matrix organization can be defined as a team approach, usually to the development of a product or another specific project. In a matrix, a team is created from people from different parts of the company, with different strengths and areas of expertise. Northern University Bangladesh

Matrix Organization Structure Northern University Bangladesh

The Matrix Organization Rather than being a stand alone organization, like the pure project, the matrix project is not separated from the parent organization: Northern University Bangladesh

Northern University Bangladesh Division of Project Manager and Functional Manager Responsibilities in a Matrix Structure Project Manager Negotiated Issues Functional Manager What has to be done? Who will do the task? How will it be done? When should the task be done? Where will the task be done? How much money is available to Why will the task be done? How will the project involvement do the task? impact normal functional activities? How well has the total project Is the task satisfactorily How well has the functional been done? completed? input been integrated? Northern University Bangladesh

Different Matrix Forms Functional (also Weak or Lightweight) Form Matrices in which the authority of the functional manager predominates and the project manager has indirect authority. Balance (or Middleweight) Form The traditional matrix form in which the project manager sets the overall plan and the functional manager determines how work to be done. Strong (Heavyweight) Form Resembles a project team in which the project manager has broader control and functional departments act as subcontractors to the project. Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

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. Northern University Bangladesh

Network Organizations An alliance of several organizations for the purpose of creating products or services. A “hub” or “core” firm with strong core competencies outsources key activities to a collaborative cluster of satellite organizations. Northern University Bangladesh

Mountain Bicycle Network Project Northern University Bangladesh

Project Organization: Network Form Advantages Cost Reduction High Level of Expertise Flexible Disadvantages Coordination of Breakdowns Loss of Control Conflict Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh

Rated Effectiveness of Different Project Structures by Type of Project Source: Larson, E. W., and Gobeli, D. H., “Matrix Management: Contradictions and Insights,” California Management Review, vol. 29, no. 4 (Summer 1987), p. 137. Northern University Bangladesh

Northern University Bangladesh 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 Northern University Bangladesh

Northern University Bangladesh 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 Northern University Bangladesh

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 Northern University Bangladesh

Human Factors and the Project Team Motivating 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 motivate members of the team How are technical employees motivated? Recognition Achievement The work itself Responsibility Advancement The chance to learn new skills Northern University Bangladesh

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 Northern University Bangladesh

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 Northern University Bangladesh