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Project management structures

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The document discusses different project management structures for organizing projects, including functional, projectized, and matrix structures. It provides details on how each structure works, its advantages and disadvantages, and considerations for choosing the appropriate structure based on factors like project characteristics, organizational needs, and the level of authority and resources allocated to the project manager. The key structures covered are the functional structure where different project segments are delegated to functional units, projectized structure with dedicated project teams, and matrix structure with dual reporting relationships to functional and project managers.

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Project Management Structures
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.
Significance of Organizational structures in PM  Organizational structures have direct influence over the project.  Organizational structures determine the procedures that the project manager must follow and the amount of authority the project manager possesses.
Project Management Structures 1.Functional organization  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.
Functional Design for a Small Manufacturing Company CEO Vice president, operations Vice president, marketing Vice president, finance Vice president, human resources Vice president, R&D Scientific director Labor relations director Plant human resource manager Controller Accounting supervisor Regional sales managers District sales managers Plant managers Shift supervisors Lab manager
Functional Organization of Projects  Advantages 1. No Structural Change 2. Flexibility 3. In-Depth Expertise 4. Easy Post-Project Transition  Disadvantages 1. Lack of Focus 2. Poor Integration 3. Slow 4. Lack of Ownership
2.Project Organization  In a project organization participants are grouped into projects, each of which has a problem to be solved within time and budget.  Key properties:  Teams are assembled for a project as it is created. Each project has a project leader.  All participants are involved in the complete project.  Teams are disassembled when the project terminates
Project Management Structures  Organizing Projects: 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.
Project Organization: Dedicated Team Advantages 1. Simple 2. Fast 3. Cohesive 4. Cross-Functional Integration Disadvantages 1. Expensive 2. Internal Strife 3. Limited Technological Expertise 4. Difficult Post-Project Transition
3.Matrix Structure  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.
3.Matrix Structure  Matrix Design  Employees in the resulting matrix are members of both their departments and a project team under a project manager.  The matrix creates a multiple command structure in which an employee reports to both departmental and project managers.
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.
A Matrix Organization Employees CEO Project manager B Project manager C Vice president, engineering Vice president, production Vice president, finance Vice president, marketing Project manager A
Matrix Design Advantages  Enhances organizational flexibility.  Involvement creates high motivation and increased organizational commitment.  Team members have the opportunity to learn new skills.  Provides an efficient way for the organization to use its human resources.  Team members serve as bridges to their departments.  Useful as a vehicle for decentralization.
Matrix Design Disadvantages  Matrix Design Disadvantages  Employees are uncertain about reporting relationships.  Managers may view design as an anarchy in which they have unlimited freedom.  The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.  More time may be required for coordinating task- related activities.
Level of managerial power
Information Technology Project Management, Fifth Edition, Copyright 2007 17 Influences of Organizational Structure on Projects Project Characteristics Organizational Structure Type Functional Matrix Project Weak Matrix Balanced Matrix Strong Matrix Project manager’s authority Little or none Limited Low to Moderate Moderate to high High to almost total Percent of performing organization’s personnel assigned full-time to project work Virtually none 0-25% 15-60% 50-95% 85-100% Who controls the project budget Functional manager Functional manager Mixed Project manager Project manager Project manager’s role Part-time Part-time Full-time Full-time Full-time Common title for project manager’s role Project Coordinator/ Project Leader Project Coordinator/ Project Leader Project Manager/ Project Officer Project Manager/ Program Manager Project Manager/ Program Manager Project management administrative staff Part-time Part-time Part-time Full-time Full-time PMBOK® Guide, 2000, 19, and PMBOK® Guide 2004, 28.
When to use a Functional Organization  Projects with high degree of certainty, stability, uniformity and repetition.  Requires little communication  Role definitions are clear  The more people on the project, the more need for a formal structure  Project manager insists on a previously successful structure
When to Use a Project or Matrix Organization  Project with degree of uncertainty  Open communication needed among members  Roles are defined on project basis  Requirements change during development  New technology develops during project
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?  What level of resources (human and physical) are available?
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
Steps in choosing an Organizational form  steps 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
Steps in 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

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Project management structures

  • 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  The best system balances the needs of the project with the needs of the organization.
  • 3. Significance of Organizational structures in PM  Organizational structures have direct influence over the project.  Organizational structures determine the procedures that the project manager must follow and the amount of authority the project manager possesses.
  • 4. Project Management Structures 1.Functional organization  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.
  • 5. Functional Design for a Small Manufacturing Company CEO Vice president, operations Vice president, marketing Vice president, finance Vice president, human resources Vice president, R&D Scientific director Labor relations director Plant human resource manager Controller Accounting supervisor Regional sales managers District sales managers Plant managers Shift supervisors Lab manager
  • 6. Functional Organization of Projects  Advantages 1. No Structural Change 2. Flexibility 3. In-Depth Expertise 4. Easy Post-Project Transition  Disadvantages 1. Lack of Focus 2. Poor Integration 3. Slow 4. Lack of Ownership
  • 7. 2.Project Organization  In a project organization participants are grouped into projects, each of which has a problem to be solved within time and budget.  Key properties:  Teams are assembled for a project as it is created. Each project has a project leader.  All participants are involved in the complete project.  Teams are disassembled when the project terminates
  • 8. Project Management Structures  Organizing Projects: 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.
  • 9. Project Organization: Dedicated Team Advantages 1. Simple 2. Fast 3. Cohesive 4. Cross-Functional Integration Disadvantages 1. Expensive 2. Internal Strife 3. Limited Technological Expertise 4. Difficult Post-Project Transition
  • 10. 3.Matrix Structure  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.
  • 11. 3.Matrix Structure  Matrix Design  Employees in the resulting matrix are members of both their departments and a project team under a project manager.  The matrix creates a multiple command structure in which an employee reports to both departmental and project managers.
  • 12. 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.
  • 13. A Matrix Organization Employees CEO Project manager B Project manager C Vice president, engineering Vice president, production Vice president, finance Vice president, marketing Project manager A
  • 14. Matrix Design Advantages  Enhances organizational flexibility.  Involvement creates high motivation and increased organizational commitment.  Team members have the opportunity to learn new skills.  Provides an efficient way for the organization to use its human resources.  Team members serve as bridges to their departments.  Useful as a vehicle for decentralization.
  • 15. Matrix Design Disadvantages  Matrix Design Disadvantages  Employees are uncertain about reporting relationships.  Managers may view design as an anarchy in which they have unlimited freedom.  The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.  More time may be required for coordinating task- related activities.
  • 17. Information Technology Project Management, Fifth Edition, Copyright 2007 17 Influences of Organizational Structure on Projects Project Characteristics Organizational Structure Type Functional Matrix Project Weak Matrix Balanced Matrix Strong Matrix Project manager’s authority Little or none Limited Low to Moderate Moderate to high High to almost total Percent of performing organization’s personnel assigned full-time to project work Virtually none 0-25% 15-60% 50-95% 85-100% Who controls the project budget Functional manager Functional manager Mixed Project manager Project manager Project manager’s role Part-time Part-time Full-time Full-time Full-time Common title for project manager’s role Project Coordinator/ Project Leader Project Coordinator/ Project Leader Project Manager/ Project Officer Project Manager/ Program Manager Project Manager/ Program Manager Project management administrative staff Part-time Part-time Part-time Full-time Full-time PMBOK® Guide, 2000, 19, and PMBOK® Guide 2004, 28.
  • 18. When to use a Functional Organization  Projects with high degree of certainty, stability, uniformity and repetition.  Requires little communication  Role definitions are clear  The more people on the project, the more need for a formal structure  Project manager insists on a previously successful structure
  • 19. When to Use a Project or Matrix Organization  Project with degree of uncertainty  Open communication needed among members  Roles are defined on project basis  Requirements change during development  New technology develops during project
  • 20. 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?  What level of resources (human and physical) are available?
  • 21. 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
  • 22. Steps in choosing an Organizational form  steps 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
  • 23. Steps in 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

Editor's Notes

  1. We are using several heuristics that have worked well in previous project courses. Give the size of this project, it does not necessarily mean that they are successful in this project.