CBFS Bachelor’s Degree Program

Project Management
Course Code : UG104

Chapter 2: Organization Structure

Mirza Jamal Ahmed

jamal@cbfs.edu.om
1
 Learning Objectives

Demonstrate the Understand organizational

understanding of different and project considerations
project management that should be considered
structures and understand in choosing an appropriate
their strengths and project management
weaknesses structure

2
 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
• A project management structure provides a framework for launching and
implementing project activities within a parent organization.
• The best structure balances the needs of the project with the needs of the
organization by defining the interface between the project and parent organization
in terms of authority, allocation of resources, and eventual integration of project
outcomes into mainstream operations.

3
 Project Management Structures

• Organizing Projects: Functional Organization

• Different segments of the project are delegated
to respective functional units.
• Coordination is maintained through normal management channels.
• Used when the interest of one functional area dominates the project or
one functional area has
a dominant interest in the project’s success.

4
Functional Organizations

FIGURE 3.1
5
Functional Organization

6
 Functional Organization of Projects

• Advantages • Disadvantages
1. No Structural Change 1. Lack of Focus
2. Flexibility 2. Poor Integration
3. In-Depth Expertise 3. Slow
4. Easy Post-Project 4. Lack of Ownership
Transition

7
Functional Organization of Projects (advantages)
1. No Structural Change
• Projects are completed within the basic functional structure of the
parent organization. There is no radical alteration in the design and
operation of the parent organization
2. Flexibility
• There is maximum flexibility in the use of staff. Switching of
appropriate specialists between projects
3. In-Depth Expertise
• With narrow scope, in-depth expertise can be brought to bear on
the most crucial aspects of the project.
4. Easy Post-Project Transition
• Normal career paths within a functional division are maintained.

8
Functional Organization of Projects (disadvantages)
1. Lack of Focus
• Each functional unit has its own core routine work to do;
responsibilities get pushed aside to meet primary obligations.
• Different priorities for different units.
2. Poor Integration
• Functional specialists tend to be concerned only with their segment of
the project
3. Slow
• Slow response time—project information and decisions have to be
circulated through normal management channels.
4. Lack of Ownership
• Week motivation; additional burden; no identification; Lack of
ownership discourages strong commitment.

9
 Project Management Structures (cont’d)

• Organizing Projects: Dedicated Teams

• Teams operate as separate units under the leadership of a
full-time project manager.
• The interface between the parent organization and the
project teams will vary between tight rein through
financial controls or maximum freedom to get the project
done.
• Projects are the dominant form of business (construction
firm or a consulting firm).
• In a projectized organization where projects are the
dominant form of business, functional departments are
responsible for providing support for its teams.
10
Dedicated Project Team

FIGURE 2 11
 Project Organization: Dedicated Team

• Advantages • Disadvantages
1. Simple 1. Expensive
2. Fast 2. Internal Strife
3. Cohesive 3. Limited Technological
Expertise
4. Cross-Functional
Integration 4. Difficult Post-Project
Transition

12
 Project Organization: Dedicated Team (advantages)
1. Simple
• the functional organization remains intact with the project team operating
independently
2. Fast
• Participants devote their full attention to the project and are not distracted by other
obligations and duties. Response time tends to be quicker because most decisions
are made within the team and are not deferred up the hierarchy.
3. Cohesive
• Participants share a common goal and personal responsibility toward the project and
the team.
4. Cross-Functional Integration
• Specialists from different areas work closely together and become committed to
optimizing the project.

13
 Project Organization: Dedicated Team (disadvantages)
1. Expensive
•Project manager and resources are assigned on a full-time basis (duplication of efforts
across projects and a loss of economies of scale).
2. Internal Strife
•A disease known as projectitis develops; A strong we–they divisiveness emerges between
the project team and the parent organization. Miss-integration of outcomes into
mainstream
3. Limited Technological Expertise
•Technical expertise is limited somewhat to the talents and experience of the specialists
assigned to the project.
4. Difficult Post-Project Transition
•Transition back of employees to their original functional departments may be difficult
(prolonged absence)
14
 Projectized Organizational Structure

3–15
FIGURE 3
Projectized Organization

16
 Project Management Structures (cont’d)

• Organizing Projects: Matrix Structure

• Hybrid organizational structure (matrix) is overlaid on the normal
functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both functional and project managers.
• Matrix structure optimizes the use of resources.
• Allows for participation on multiple projects while performing normal functional
duties.
• Achieves a greater integration of expertise and project requirements.
• Designed to optimally utilize resources by having individuals work on multiple
projects as well as being capable of performing normal functional duties.

3–17
 Matrix Organization Structure

3–18
FIGURE 4
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 Why will the task be done? How will the project involvement
to 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?

TABLE 3.1
3–19
 Different Matrix Forms

• Weak Form
• The authority of the functional manager predominates, and the project
manager has indirect authority.
• Balanced Form
• The project manager sets the overall plan, and the functional manager
determines how work to be done.
• Strong Form
• The project manager has broader control and functional departments act as
subcontractors
to the project.

3–20
 Different Matrix Forms (weak form)

• The authority of the functional manager predominates, and the project

manager has indirect authority.
• This form is very similar to a functional approach with the exception
that there is a formally designated project manager responsible for
coordinating project activities.
• Functional managers are responsible for managing their segment of the
project and decide who does what and when the work is completed.
• The project manager basically acts as a staff assistant who monitor the
project indirectly and draws the schedules and checklists, collects
information on status of work, and facilitates project completion.

3–21
Weak Matrix Organization

22
 Different Matrix Forms (balanced form)

• The project manager is responsible for defining what needs to be

accomplished while the functional managers are concerned with how it
will be accomplished.
• The project manager establishes the overall plan for completing the
project, integrates the contribution of the different disciplines, sets
schedules, and monitors progress.
• The functional managers are responsible for assigning personnel and
executing their segment of the project according to the standards and
schedules set by the project manager.

3–23
Balanced Matrix Organization

24
 Different Matrix Forms (strong form)

• Attempts to create the “feel” of a project team within a matrix environment.

• The project manager controls most aspects of the project, including scope
trade-offs and assignment of functional personnel as well as controls when and
what specialists do and has final say on major project decisions.
• The functional manager has title over her people and is consulted on a need
basis.

3–25
Composite Organization
PMO

26
 Project Organization: Matrix Form

• Advantages • Disadvantages
1. Efficient 1. Dysfunctional Conflict
2. Strong Project Focus 2. Infighting
3. Easier Post-Project Transition 3. Stressful
4. Flexible 4. Slow

3–27
 Project Organization: Matrix Form (advantages)

1. Efficient
• reduces duplication required in a projectized structure through sharing resources & dividing
personnel energy on as-needed basis.
2. Strong Project Focus
• provided by having a formally designated project manager who is responsible for coordinating
and integrating contributions of different units.
3. Easier Post-Project Transition
• specialists maintain ties with their functional group, so they have a homeport to return to
once the project is completed.
4. Flexible
• provide for flexible utilization of resources and expertise within the firm.

3–28
Project Organization: Matrix Form (disadvantages)
1. Dysfunctional Conflict
• tension between functional managers and project managers who bring critical expertise
and perspectives to the project.
2. Infighting
• Any situation in which equipment, resources, and people are being shared across projects
and functional activities lends itself to conflict and competition for scarce resources.
3. Stressful
• Violates the management principle of unity of command. Project participants have at least
two bosses—their functional head and one or more project managers.
4. Slow
• Decision making can get slow down as agreements have to be forged across multiple
functional groups. (balanced matrix).

3–29
Organizational Influences on Projects

30
 Choosing the Appropriate Project Management Structure

• Organization (Form) Considerations

• Project Considerations

3–31
 Choosing the Appropriate Project Management Structure

• Organization (Form) Considerations

• How important is the project to the firm’s success?
• What percentage of core work involves projects?
• If over 75 percent of work involves projects, then an organization should
consider a fully projectized organization.
• If an organization has both standard products and projects, then a matrix
arrangement would appear to be appropriate.
• If an organization has very few projects, then a less formal arrangement is
probably all that is required.
• What level of resources (human and physical)
are available?

3–32
Choosing the Appropriate Project Management Structure (cont’d)

• Project Considerations
• Size of project
• Strategic importance
• Novelty and need for innovation
• Need for integration (number of departments involved)
• Environmental complexity (number of external interfaces)
• Budget and time constraints
• Stability of resource requirements

3–33
 Organizational Culture

• There is a strong connection between project management structure,

organizational culture, and project success.
• Organizations successfully manage projects within the traditional functional
organization because the culture encouraged cross-functional integration.
• Conversely, we have seen matrix structures break down because the culture
of the organization did not support the division of authority between
project managers and functional managers.
• Companies relying on independent project teams because the dominant
culture would not support the innovation and speed necessary for success.

3–34