Module 3

Project Management Organizational

Structure and the Key Players in
Project Management Process
MGT 3203 – PROJECT MANAGEMENT

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Learning Objectives
At the end of the module, the students should be able to:
 differentiate a program manager from a project manager;
 compare and contrast the different forms of organizational structures used
in organizing projects;
 select the best organizational structure in organizing projects based from
their advantages & disadvantages;
 describe the roles of the project owner, project sponsor, project manager,
and project team members ; and
 design an optimal organizational structure for a project.

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 Differences between Program Manager and
Project Manager
Project Manager Program Manager

Focuses on scope, schedules, resources people, politics and negotiating

Manages projects portfolios

Performs technical tasks strategic tasks

Handles risk management change management (program and

environmental changes)
Deals with project requirements business strategies and objectives

Responsible for ensuring projects get completed on maximizing ROI and value delivery
time, within budget

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Project organization
• Also known as “enterprise project management” or
managing organization by projects or “project-oriented firm”
• It applies project management practices and tools across an
enterprise.
• In some cases, it is a natural fit to an organization’s
traditional business.

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Four general reasons for the rapid
growth of project-oriented organizations

Speed and market Diverse inputs required Rapid expansion of Senior managers lack of
responsiveness in product technological confidence
development possibilities

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Why it is difficult to move from a non-project
environment to a full-fledged project –oriented
organization?

• The transition process is time consuming.

• There is no universally best organization structure.
• Any time a project is initiated, three organizational issues
arise:
• How to tie the project to the parent firm?
• How to organize the project itself?
• How to organize activities that are common to other projects?

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Major organizational forms used to
house projects
Functional Projectized Matrixed
Organization Organization Organization

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Organizing Projects within Functional
Organization
 Division of labor is not the type of product or project
supported but based on the kind of work perform.
 Functionally organized projects are embedded in the
functional division in which the project will be carried out
successfully
 Employees of the organization routinely work on
numerous projects or support multiple product lines.
 Projects could be also assigned to all relevant functional
divisions with the top management supervising and then
have a project manager or facilitator for proper
coordination
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Functional Organization

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Advantages and Disadvantages of Projects
in a Functional Organization
Advantages Disadvantages
1. There is a maximum flexibility in the use of the 1. The client is not the focus of activity and
staff. concern.
2. Individual experts can be utilized by many 2. The functional division tends to be
different projects. oriented toward the activities particular to
its function.
3. Specialists in the division can be grouped to 3. In functionally organized projects, no
share knowledge and experience. individual is given full responsibility for the
project.
4. The functional division also serves as a base of 4. The lack of coordinated effort tends to
technological continuity when individuals choose make response to client needs slow and
to leave the project and even the parent firm. difficult.

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Advantages and Disadvantages of Projects
in a Functional Organization

Advantages Disadvantages
5. The functional division contains 5. There is tendency to sub optimize
the normal path of advancement the project.
for individuals whose expertise is 6. The motivation of people assigned
the functional area. to the project tends to be weak.
7. This organizational arrangement
does not facilitate a holistic approach
to the project.

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Organizing Projects with Projectized
Structure
a structure that is particularly created for executing
projects
principally tailored to meet the demands of
complex projects
 isolates exclusive function
 maintains a strong focus on completing the project
 disbands when the project is finished

no formal departments

 project manager has the extensive authority for budgets,
personnel and other decision instead of a functional
manager

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The firm’s administrative support groups report to the CEO or
President as staff units; while the line units are the various
standalone projects of the firm.
CEO

Administrative
Support

Project Alpha Project Beta Project Charlie

Staff Staff Staff

Staff Staff Staff

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Advantages and Disadvantages of Projects in a
Projectized Organization
Advantages Disadvantages
1. The project manager has full line 1. When the organizations takes on
authority over the project. several projects, it is common for each
one to be fully staffed.
2. All members of the project work 2. The need to access to technological
force are directly responsible to the knowledge and skills results in an
project manager. attempt by the project manager to
stockpile equipment and technical
assistance in order to be certain that it
will be available when needed.

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Advantages and Disadvantages of Projects in a
Projectized Organization
Advantages Disadvantages
3. When the project is removed from the 3. Though individuals engaged in projects
functional division, the lines of communication develop considerable depth in technology of the
are shortened. project, they tend to fall behind in other areas of
their technical expertise.

4. When there are several successive projects of 4. Projectized project teams seem to foster
a similar kind the projectized organization can inconsistency in the way in which policies and
maintain a more or less permanent pool of procedures are carried out.
experts who develop considerable skills in
specific technologies

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Advantages and Disadvantages of Projects in a
Projectized Organization
Advantages Disadvantages
5. The project team that has a strong and separate 5. Team members form strong
identity of its own tends to develop a high level of attachments to project and to each
commitment from its members. other known projectitis.
6. Authority is centralized, thus, the ability to make 6. The worry on “life after project end”
swift decisions is greatly enhanced. of members.
7. Unity of command exists.
8. Projectized organizations are structurally simple and
flexible which makes them relatively easy to
understand and to implement.
9. The organizational structure tends to support a
holistic approach to the project.

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 Organizing Projects with a Matrix Organization
 A project management structure that combines the very best
components of functional organization and project
organization structures besides the recognition of intrinsic
defects inside these two structures.
 Staffing, training, job assignment and evaluation of the
project’s personnel are supervised by the functional
managers.
 Departments such as manufacturing and finance exist under
the vertical functional hierarchy.
 Horizontal structures created by the projects that have some
access to functional departments’ resources.
 Project manager directs when and what the team members
perform.

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Matrix Organization

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Advantages and Disadvantages of Projects in a
Matrix Organization
Advantages Disadvantages
1. The project is the point of importance 1. Oftentimes there is apparent tension
between functional manager and
project manager which has the tendency
to become personal.
2. Since the project organization is 2. There is conflict and competition in
placed on top on the functional the sharing of scarce resources.
divisions, getting labor and talent
from them for the time being, the
project can make use of the whole
pool of technology in all functional
division.
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 Advantages and Disadvantages of Projects in a
Matrix Organization
Advantages
6. With simultaneous projects, matrix organization permits a
better companywide balance of resources to accomplish the
differing time, cost and scope of each project.
7. The matrix organization covers a wide range of what are
between the functional and projectized organizational
structures.

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 Forms of matrix organization
1. Functional, lightweight or weak matrix – the balance of
authority in this form supports the functional manager.
2. Middleweight or balanced matrix – this form resembles
the traditional matrix arrangement in which both parties
work closely together and jointly approve technical and
operational decisions.
3. Project, heavyweight or strong matrix – the balance of
authority in this form is strongly inclined on the side of
the project manager.

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Organizing the Virtual Projects
 Use of internet and other modern communication
technologies paved the way to the rise of virtual
projects.
 A virtual project has project team that may work in
different time zones, in geographically dispersed places,
in different organizations and in different cultures.
 Often a matrix type of structure.

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Guidelines for a successful organization using
virtual form of organization (Gratton, 2007)
1. Use virtual teams for challenging and interesting projects, but be
sure that the project has meaning for both the company and the
team.
2. Use volunteerism in selecting team members because they are
more enthusiastic and dedicated to the success of the project.
3. Include few team members who already knew each other. Make
sure one in every six or seven are “boundary spanners” with lots
of the outside contacts.
4. Create an online resource for the team to learn about each other,
collaborate, brainstorm and draw inspiration.
5. Encourage frequent communication.
6. Divide the project into geographically independent parts to avoid
hindering one location for delays of other places.

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Electronic communication being used for
virtual form of organization
Teleconferencing – this mode of communication
allows all essential persons to share conversation and
resent their view in real time. The absence of visual
needs the one speaking to make proper identification
when participating in the discussion via telephony
technology.

Videoconferencing – this manner of communication

saves time and money for the geographically
dispersed team for periodic face to face meeting.
When important issues could not be discussed and
resolved with email, teleconferencing and voice
contact must be used.
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Basic considerations in Selecting the
Optimal Organizational Structure
1. Project size – a project could be small, medium & large
2. Project length – number of calendar periods it takes from the time the execution of element
starts to the moment it is completed
3. Experience with project management organization – familiarity with other organizations’
way of handling projects
4. Philosophy and visibility of upper level management – the beliefs & the presence of
support of top management
5. Project location – the geographic location using the street address, nearest major city or the
latitude & longitude
6. Available resources – accessibility of needed resources
7. Unique aspects of the project – the best control of human resource classified as labor-
intensive & capital intensive; labor intensive projects need a formal structure while capital
intensive may use informal organizational form

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Process in selecting project form or
structure
List any special
Determine units
Determine the Arrange the key characteristics Select a
Define the project to be involved in
key tasks tasks or assumptions structure
the project
for the project

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 tasks.
3. Arrange key tasks by sequence and decompose them into work packages.
4. Determine which organizational units are required to carry out the work packages and which units
will work closely with each other.
5. List any special characteristics or assumptions associated with the project such as level of
technology needed, project length and size, potential problem with people involved in the project,
possible political problems between the functional units, among others.
6. Based on the results of the previous steps, and full understanding of the pros and cons of the
different structural forms, select a structure.

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Key Players in PM Process
Project Project
Owner sponsor

Project Project Team

Manager Member

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