Unit II

Project
Organization and
Team Management

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 • Project Organization
• Factors in Designing a Project
Structure
• Types of Organizational Structure
• Features of an Organizational
Structure
Unit Outline • Project Team Management
• Areas of Project Team Management
• Team Building
• Keys to Managing Project Team
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3
 Guiding Questions

 What is project organization?

 What are the factors in designing a project structure?
 What are the different types of project organization
structure?
 What are the features of an organizational structure?
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 Project Organization
What is project organization?
 Project organization refers to the structures, systems, and
processes put in place to manage and execute projects within
an organization.
 Project organization is a structure that facilitates the
coordination and implementation of project activities.
 Project organization provides a framework for organizing and
coordinating project activities, resources, and stakeholders to
achieve project objectives.
 Project organization’s main purpose is to create an
environment that fosters interactions among the project team
members with a minimum amount of disruptions, overlaps and
conflict. 5
 Project Organization…Cont’d
 One of the important decisions in project management is
forming project organizational structure that will be used
for running the project.
 Project organizational structure is the backbone of all the
operating procedures and workflows at any project
undertakings.
 Project organizational structure determines the
procedures that the project manager must follow and the
amount of authority the project manager possesses.
 Project organizational structure has direct influence over
project success. 6
 Project Organization…Cont’d
 The project organization structure defines:
o the relationships among members of the project
management,
o the relationships with the external environment, and
o the authority by means of a graphical illustration
called an organization chart.

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 Project Organization…Cont’d
Why is project organization important?
 Project organization helps to align team members in a
project.
 Project organization minimizes disruption to workflow
and conflict among team members, as well as leads to
maximum productivity among team members involved in
a project.
 Project organization optimizes resources, provides clear
communication about roles and responsibilities, and
reduces potential roadblocks (barriers).
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 Factors in Designing a Project Structure
 There are two design factors that significantly influence
the process of developing a project organization
structure. These are:
1) the level of specialization, and
2) the need for coordination.
 Specialization affects the project organizational structure
by the degree of specialty in technical areas or
development focus; projects can be highly specialized
and focus on a specific area of development, or have
different broad specializations in many areas of
development. 9
Factors in Designing a Project Structure…Cont’d
 Coordination is required to bring unity to the various
elements that make up a project.
o The project work is organized around a work
breakdown structure (WBS) that divides the overall
project goals into specific activities or tasks for each
project area or component; the project manager must
design an organizational structure that ensure that the
various components are integrated so that their efforts
contribute to the overall project goal.

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Factors in Designing a Project Structure…Cont’d
o Integration is the degree of collaboration and mutual
understanding required among the various project
components to achieve project goals.
o Most projects are characterized by the division of
labour and task interdependencies, creating the need
for integration to meet project objectives.

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Factors in Designing a Project Structure…Cont’d
o The goal of the project organization structure is the
achievement of harmony of individual efforts toward
the accomplishment of the group goals.
o The project manager’s principal responsibility is to
develop integrating strategies to ensure that a
particular component or activity is organized in a way
that all of the components, parts, subsystems, and
organizational units fit together as a functioning,
integrated whole according to the project master
plan.
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 Types of Project Organization
 There are three types of project organizational structure:
1) Functional-Based Structure
2) Project-Based Structure
3) Matrix-Based Structure

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 Types of Project Organization…Cont’d
Functional-Based Structure
 A functional-based project organization is a structure where
projects are managed within existing functional departments
of an organization rather than through a separate project
management structure.
 This means that the project responsibilities are distributed
among different functional units, such as marketing,
finance, production, and human resources, based on their
expertise.
 In this type of organization, the project manager has limited
authority, and decision-making remains with the functional
managers. 14
 Types of Project Organization…Cont’d
 This structure allows for specialized expertise and
efficient resource allocation within each department.
However, coordination and communication across
departments may be challenging.
 The functional managers, not other staff, coordinate the
project, and they select team members from each
department to support the project, in addition to their
functional responsibilities.
 The project team members report to their respective
functional heads rather than to a dedicated project
manager.
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 Types of Project Organization…Cont’d

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 Transition 4. Lack of Ownership

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Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
Project-Based Structure
 A Project-Based Organization (PBO) is a type of
organizational structure in which the primary mode of
operation revolves around projects rather than functional
departments.
 In a Project-Based Project Organization (PBPO), projects
are the central units of work, and resources, including
personnel, finances, and technology, are structured
around specific projects rather than traditional
hierarchical departments.
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 Types of Project Organization…Cont’d
 In this type of organization, project managers have a high
level of authority to manage and control the project
resources.
 The project manager in this structure has total authority
over the project and can acquire resources needed to
accomplish project objectives from within or outside the
parent organization, subject only to the scope, quality,
and budget constraints identified in the project.

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 Types of Project Organization…Cont’d
 In the project based structure, personnel are specifically
assigned to the project and report directly to the project
manager.
 The project manager is responsible for the performance
appraisal and career progression of all project team
members while on the project. This leads to increased
project loyalty.
 Complete line authority over project efforts affords the
project manager strong project controls and centralized
lines of communication. This leads to rapid reaction time
and improved responsiveness. 20
 Types of Project Organization…Cont’d
 Project teams develop a strong sense of project
identification and ownership, with deep loyalty efforts to
the project and a good understanding of the nature of
project’s activities, mission, or goals.
 In the project-based structure, the coordination of work
is project-oriented, thus vertical. Also, the authority to
supervise work belongs to project managers—one per
project. And they allocate staff members to projects,
which means that those members are dedicated to
projects (instead of departments).
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 Types of Project Organization…Cont’d
 Project 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.

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 Types of Project Organization…Cont’d
 Advantages of a project-based structure:
o The project manager has full line authority over the
project
o All members of the project work force are directly
responsible to the project manager
o When the project is removed from the functional
division, the lines of communication are shortened
o 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. 23
Types of Project Organization…Cont’d
o 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.
o Pure project organizations are structurally simple and
flexible, which makes them relatively easy to
understand and implement.
o The organizational structure tends to support a holistic
approach to the project.
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 Types of Project Organization…Cont’d
 Disadvantages of a pure project organization:
o Each project tends to be fully staffed which can lead
to a duplication of effort in every area from clerical
staff to technological support.
o 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.

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Types of Project Organization…Cont’d
Advantages Disadvantages
1. Simple 1. Expensive

2. Fast 2. Internal Strife (conflict)

3. Cohesive 3. Limited Technological Expertise

4. Cross-Functional 4. Difficult Post-Project Transition
Integration

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Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
Matrix-Based Structure (Hybrid)
 A matrix organization combines elements of both
functional and project-based structures.
 A matrix-based structure is set up on a grid to
demonstrate staff reporting patterns to more than one
authority. It is a hybrid of functional and projectized
organizational structures, and project managers share
authority with other functional managers in this
structure.
 In a matrix organization, team members report to both a
functional manager and a project manager. 28
 Types of Project Organization…Cont’d
 This structure allows for efficient resource utilization,
enhanced cross-functional collaboration, and knowledge
sharing.
 Depending on the decision-making capacity of the project
manager, a matrix structure is one of the three subtypes:
1) Weak,
2) Balanced, or
3) Strong.

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 Types of Project Organization…Cont’d
Weak Structure
 Weak matrix project organizations maintain many of the
characteristics of a functional organization, and the role
of the project manager is more of a coordinator.
 In a weak matrix project organization, the project
coordinator (or project manager) reports to the
functional manager rather than having direct authority
over project resources.
 The functional manager retains most of the decision-
making power, while the project coordinator primarily
facilitates communication and coordination among
different functional departments. 30
Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
Balanced Structure
 In a balanced matrix project organization, the project
manager reports to both the functional manager and the
project sponsor (or a higher-level project authority).
 This structure is a mix of functional and projectized
organizational structures, where power and decision-
making are shared between functional managers (who
control resources) and project managers (who oversee
project execution).

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 Types of Project Organization…Cont’d
 Balanced matrix organization recognizes the need for a
project manager, it does not provide the project manager
with the full authority over the project and project
funding.
 Both project managers and functional managers have
equal (similar) levels of authority.
 The project manager sets the overall project plan and
the functional manager determines how work to be done.

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Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
Strong Structure
 Strong matrix organizations have many of the
characteristics of the projectized organization, and have
full-time project managers with considerable authority
and full-time project administrative staff.
 In a strong project organization, the project manager
reports to the project management office (PMO) or
directly to a senior executive such as a program manager,
portfolio manager, or even a chief project officer (CPO).
In some cases, the project manager may report to the
CEO or a high-level executive depending on the
organization’s structure. 35
 Types of Project Organization…Cont’d
 A strong matrix project organization gives the project
manager full authority over the project, including
budget, resources, and decision-making.
 Project managers have more authority than functional
managers over the project.

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Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
Matrix Problems
 Unclear line of authority, two bosses, dual reporting,
which violates the principle of UNITY OF COMMAND or
‘No Man Can Serve Two Masters’. In other words,
employees report to multiple managers (functional and
project managers), which can lead to confusion and
power struggles (conflict of authority).
 The dual reporting structure increases bureaucracy and
communication challenges (increases the risk of
miscommunication).
 Decision making can be delayed due to the need for
approval from multiple managers. 38
Types of Project Organization…Cont’d

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 Types of Project Organization…Cont’d
 As with other organizational forms, the matrix
organization has its own unique advantages:
o Enhances organizational flexibility.
o Involvement creates high motivation and increased
organizational commitment.
o Team members have the opportunity to learn new
skills.
o Provides an efficient way for the organization to use
its human resources.
o Useful as a vehicle for decentralization.

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 Types of Project Organization…Cont’d
 There are also disadvantages to using the matrix
organization; most involve conflict between the
functional and project managers:
o Employees are uncertain about reporting
relationships.
o The dynamics of group behavior may lead to slower
decision making, one-person domination, compromise
decisions, or a loss of focus.
o More time may be required for coordinating task-
related activities.

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 Types of Project Organization…Cont’d
Level of Managerial Power

High Project Manager Power

Projectized

Matrix
Structures

Functional Low Project Manager Power

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 Types of Project Organization…Cont’d
Influences of Organizational Structure on Projects (PMBOK)
Project Organizational Structure Type
Characteristics
Functional Matrix Project
Weak Balanced Strong
Project Manager’s Little or limited Low to Moderate to High to
Authority None moderate high almost
total
Who controls the Functional Functional Mixed Project Project
project budget Manager Manager Manager Manager

Project manager’s Part-time Part-time Full-time Full-time Full-time

role

Common title for Project Project Project Project Project

project manger’s Coord./Lea Coord./Le manager/Of manager/Pr manager
role der ader ficer ogram /Program
manager manager
Project management Part-time Part-time Part-time Full-time Full-time
administrative staff 43
 Types of Project Organization…Cont’d
When to Use a Functional Organization
 Projects with high degree of certainty, stability,
uniformity and repetition.
o Requires little communication
o Role definitions are clear
When to Use a Project or Matrix Organization
 Project with high degree of uncertainty.
o Open communication needed among members
o Roles are defined on project basis
 Requirements change during development.
 New technology develops during project.
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 Types of Project Organization…Cont’d
Choosing the Appropriate Project Management Structure
 Organization (form) considerations
o How important is the project to the firm’s success?
o What percentage of core work involves projects?
o What level of resources (human and physical) are available?
 Project Considerations
o Size of project
o Strategic importance
o Novelty and need for innovation
o Need for integration (No of departments involved)
o Environmental complexity (No of external interfaces)
o Budget and time constraints
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o Stability of resource requirements
 Features of an Organization Structure
 The features of an organizational structure define the
roles and relationships among members of the project,
as well as between projects.
 The primary features of an organization structure are as
follows:
o Hierarchy refers to the systematic arrangement of
authority, responsibilities, and relationships within an
organization. It establishes clear lines of
communication, reporting, and decision-making,
helping organizations function efficiently.

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 Features of an Organization Structure
o Division of Labor refers to the systematic allocation
of different tasks to individuals or groups within an
organization to enhance efficiency, productivity, and
specialization.
o Span of Control refers to the number of subordinates
that a manager can effectively supervise within an
organization. It can be narrow (few subordinates per
manager) or wide (many subordinates per manager),
depending on various factors such as industry,
management style, and the complexity of tasks.

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Features of an Organization Structure…Cont’d
o Position Type (Line vs. Staff): A line position is a team
member who is directly involved with the project.
A staff position supports those line positions, but are
not directly involved with the project.
o Centralization: This defines how the decision making
occurs. In a centralized project, few people own
decisions, whereas in a decentralized project,
decision-making authority is distributed across the
organization.

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