1. Lecture 5 Project & Organization Structure
KEC
Dhapakhel
Lalitpur

2. 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

3. 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

4. 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

5. 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Obsolete Technology: It refers to outdated computer hardware, software, technology, services or practices that are no longer used, even if they are in working condition.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

6. 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

7. 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

8. 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

9. 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

10. 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

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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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 % %
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

19. 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

20. 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