Chapter 5

The Project
in the
Organizational Structure
Textbook’s Organization
Project Management
Ch. 1: Projects in
Contemporary Organizations

Project Initiation Project Planning Project Execution

Ch. 2: Strategic Management Ch. 6: Project Activity Ch. 10: Monitoring and
and Project Selection and Risk Planning Information Systems

Ch. 7: Budgeting, Estimating

Ch. 3: The Project Manager Ch. 11: Project Control
Costs and Risks

Ch. 4: Managing Conflict

Ch. 8: Scheduling Ch. 12: Project Auditing
and the Art of Negotiation

Ch. 5: The Project in the

Ch. 9: Resource Allocation Ch. 13: Project Termination
Organizational Structure

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Overview

l This chapter discusses the issues concerning

the way projects are organized in relation to
the organization of the parent firm.

l In response to the same factors that have

caused the rapid growth in the use of
projects
– Many firms have adopted the “enterprise project
management” form of organization.

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Enterprise Project Management

l A new kind of organization structure has appeared in

growing numbers

l This is called “project organization,” or “enterprise

project management”:
– Also known as “managing organization by projects,” or
“project-oriented firm”

l Such organizations apply “project management

practices and tools across an enterprise”

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Why
Enterprise Project Management?
l Managing multiple projects or programs

l Challenge with integrating all these projects into a cohesive

picture/structure for senior management

l Trouble in juggling project priorities and allocating resources to

meet competing demands
l The need for an integrated, consistent framework for project
planning and control across organizations

l That is why organizations of all shapes and sizes are turning to the
emerging discipline of Enterprise Project Management (EPM).

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EPM in a Nutshell

l A disciplined approach to project

management and resource management:
– that looks at all the project (and sometimes
non-project) work in an organization as a
collective whole.

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EPM Often Involves
l Consistent project management methods and processes across the
organization
l Scaling or tailoring the PM process based on project type, size, risk,
complexity or other factors
l Establishing an enterprise-level Project Management Office (ePMO)
to establish and support standard processes and tools, and to establish a
unified framework for enterprise project reporting and resource/cost
analysis
l Establishing a project life-cycle model and stage-gate processes to
guide and control projects through the life cycle
l Establishing strategic project control and governance processes to
decide on project investments and resource allocation
l Promoting consistency and supporting project data integration by
selecting and deploying enterprise level project management tools

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Project-Oriented Organizations Growth

l Many reasons exist for the rapid growth of

project-oriented organizations
l The reasons can be included in 4 general
areas:
– Need for speed, market responsiveness, and product
flexibility
– Need for broader areas of knowledge in developing new
products and services
– Rapid expansion of technology
– Management inability to understand and control large
numbers of activities

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Projects-Related Organizational Issues

l How to tie project to parent organization

l How to organize the project
l How to organize activities common to
multiple projects

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Traditional Forms of Organization

1. Functional
2. Projectized
3. Matrix
4. Composite

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Projects in a
Functional Organization

l Make it a part of one of the functional

divisions
– More than one choice may exist
– If support from other areas is needed, they
are expected to help support the project
l Another way is to assign the work to all
divisions with the top management
overseeing the effort

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Functional Organization

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 Including Project In Traditional Forms

Figure 5-1 University of California organization chart 5-13

ADVANTAGES

l Unity of command – only one “boss” is giving

instructions
l Workers learn from each other and keep skills
sharp
l Continue to report to the same functional
manager
l Share resources among multiple small projects

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DISADVANTAGES

l Slow communications across multiple

functions
l Technical difficulty in incorporating input
from other disciplines
l Long communication channels make for slow
decision making and slow response to
change

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Projects in a
Projectized Organization

• Projects can be freestanding entities with

a full complement of the functions needed
for their operation.

• In this form, projects have their own

administrative and logistical support
resources.

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Projectized Organization

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 Projects in a
Projectized Organization

Figure 5-2 The projectized organization

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ADVANTAGES

l Traditional department barriers are

reduced
l Unity of command
l Communication response times are
fast
l Co-location – team members are
physically close

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DISADVANTAGES

l Cost of assigning members to one part-time

project
l Team work methods may differ from those
of the organization
l Teams may fail to communicate lessons
learned
l Discipline-specific competence may suffer

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Matrix Organization

l Project manager and functional manager

share authority
l Team members report to both managers
l Combination:
– task focus à projectized organization
– technical capability à functional
organization

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Matrix Organization

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ADVANTAGES

l Shared resources between departments and

projects
l Reduced duplication
l Cooperation between departments
l High-quality decisions are well received
l Continued development of discipline specific
knowledge
l Effective integration
l Lessons learned shared effectively
l Flexibility – weak, balanced, or strong matrix
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DISADVANTAGES

l Each employee has two “bosses”

l More sources of conflict
l More meetings
l More challenges to control

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Strong Matrix
l Reporting
– PM may report to a program manager, or a
functional manager
l Control
– PM controls when and what employees
assigned to them do
– Functional managers control
l who will be assigned to the project
l how the work will be done

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 Strong Matrix

Figure 5-3 The matrix organization

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Weak Matrix

l Project might have only one full-time

person, the project manager
l Functional departments devote capacity
to the project
l Primary task of the project manager is to
coordinate project activities carried out by
the functional departments

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Balanced Matrix

l It is in between the weak and strong

matrix
l May not be evenly balanced between
them

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Progression of Organizational Form

Functional Manager Who has power? Project Manager

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Virtual Projects
The projects in which:

l Project team crosses time, space,

organizational, or cultural boundaries
l Facilitated by the use of the Internet
l Often organized as a matrix

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Virtual Project Rules

l Challenging and interesting projects

l Use volunteers
l Include few people who know each other
l Create an online resource to learn about
each another
l Encourage frequent communication
l Divide work into independent modules

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 Projects in Composite Organizational
Systems

• Different forms of project organizations may coexist in the same

firm.
• A variant would be setting up a staff organization that administers
all projects. This variant is called a “project office.”

Figure 5-4 A functional/projectized composite organization

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Organizational Culture and Its
Impact on Projects
— Shared values, social rituals, and symbols
— Implemented through rituals
◦ Meetings, training, ceremonies
— Implemented through symbols
◦ Work layout, dress code
“Values serve as a moral compass to guide us
and provide a frame of reference to set priorities
and determine right or wrong.” Craig Johnson

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Culture of the Parent Organization

l What is the corporate culture in general?

l What are the ascribed values?
l Are there standard project management practices and
policies?
l How is the organization viewed by others in terms of living
the values?
l How does the organization communicate?
l How does the organization support project management?

A successful project manager needs to understand the

organizational culture.
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 Types of Power

l Power culture – formal authority

Everyone tries to please “the boss”
l Role culture
Everyone follows designated roles
l Task culture
Getting the job done is most important

l Personal culture
Interest in worker development/needs

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Selecting a Project Form

l Firms typically do not set out to pick an

organizational form
l The structure evolves over time
l The structure is not static
– It changes as the organization, its goals,
and its environment changes

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Functional Form Best for…

l There are no hard and fast rules for

choosing an appropriate project
organizational form.
l The text describes the following guidelines:
– In-depth application of a technology
– Large capital investment, especially when that
investment is concentrated in one functional
area

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Project Form Best for…

l Handling a large number of similar

projects
l Handling a one-time project that requires
much control, but is not focused on one
functional area

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Matrix Form Best for…

l Projects that require inputs from several

functional areas
l Projects that use technology from several
functional areas

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Project Management Office (PMO)

l Project Management Offices (PMOs) are more

frequently being established to meet the need
for consistent application of project
management standards and methods.

l 60% of organizations have PMOs

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Project Management Office (PMO)

l No project has ever been completed

precisely as it was planned
l Successful execution of a project is a
complex managerial task
– Requires the use of planning, budgeting,
scheduling, and control tools
– Contractual, administrative, and reporting
duties must be performed in accord with
the law

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 Functions of the
Project Management Office (PMO)

i) Establishing and promoting good project

management practices.
ii) Identifying and distributing lessons learned from
the past projects.
iii) Improving the success rate of projects.
iv) Reducing project cycle times.
v) Providing consistent status data on projects.
vi) Developing and maintaining an “enterprise
project management” system.
continued
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Purposes of the
Project Management Office (PMO)

l Establish project administrative

procedures
l Ensures the firm’s project portfolio
supports its overall goals and strategies
l Gradual assimilation of project
management practices into the entire firm
l Facilitator of projects, not the doer of
projects
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Forms of the
Project Management Office (PMO)

Different forms of PMOs exist.

Some organizations may even form multiple PMOs; each
to deal with projects in different areas of the organization.

l Information center
l Establish procedures and practices
l Establish a resource database and monitor inter-project
dependencies

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Tasks of the
Project Management Office (PMO)

l Establish and enforce good practices

l Improve maturity
l Improve project management systems
l Offer training
l Help with administrative details
l Establish a process for dealing with risk
l Determine if a project is a good fit
l Identify impact of changes on projects
Continued
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Tasks of the
Project Management Office (PMO)

l Conduct project reviews and audits

l Maintain and store project archives
l Serve as a champion to pursue project
management
l Serve as a home for project managers
l Collect and disseminate lessons learned
l Assist in project termination

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Project Management Maturity

l Project management competency is one

of the key factors in project management
success
l Includes the standardization of project
management techniques

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Project Management Maturity Levels

l Initial: no formal process

l Repeatable: procedures in place for planning,
scheduling, tracking, and estimating
l Defined: the firm has integrated system for
tracking and managing, but they are not
routinely used or understood
l Managed: systems are installed and used
l Optimizing: integrated databases used to track
historical projects to help obtain continuous
improvement
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 Five Steps for PMO Success

1. Identify quantifiable measures to prove

accomplishments
2. Set a realistic time frame for results
3. Have resources needed to achieve
goals
4. Establish credibility throughout the
organization
5. Get the best people for the PMO
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The Project Team
l A typical engineering project might have in its core
team:
– Systems Architect,
– Development Engineer,
– Test Engineer,
– Field Manager,
– Contract Administrator,
– Project Controller, and
– Support Services Manager.
Additional resources would be provided from the
functional organizations as needed to accomplish all the
tasks.
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Human Factors and the Project Team

l All projects are composed of inter-connected

groups
l These groups can form teams
l It is not enough to have an effective team
– The team must also be working towards the good of
the project

l Need to avoid “us versus them” mentality

Continued

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Human Factors
l Some of the problems that prevent a team from
performing effectively:
– Internal conflict
– Member frustration
– Wasting time
– Poor decision making
– Team members are more concerned with finishing
the job than doing a good job
l Project teams need to work together as a
system

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Participative Management

l Individual workers should play a role in how work

is accomplished
l This empowers the team
l Advantages of empowerment:
– Harnesses ability of team
– Professionals don’t like micromanagement
– Team members know they are accountable
– Synergy
– Team members get timely feedback
– PM given tool to evaluate team’s performance
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