Ch 4

Project Organization

“Organize - to form into an

association for a common purpose
or arrange systematically”

Chapter 4 Project Organization 1

Project Organization
 Specialization of the human elements
 Different types = functional, product
line, geographical location, production
process, type of customer, subsidiary
organization, time, vertical or horizontal
organization
 How to tie project to the parent firm
 How to organize the project itself

Chapter 4 Project Organization 2

Project as Part of Functional
Organization
 E.g. new technology project – under
vice president of engineering
 Introduction of new product line –
under vice president of marketing
 Project assigned to the functional unit
that has most interest

Chapter 4 Project Organization 3

 President

VP Finance VP Marketing VP VP
Manufacturing Engineering

New Layout –
Robot Line
Project New
Model Proton
SURIE

Functional Organization
Chapter 4 Project Organization 4
Major Advantages
 Maximum flexibility in the use of staff
 Individual experts can be utilized by many
different projects
 Specialist in the division can be grouped to
share knowledge and experience
 Functional division serves as a base of
technological continuity
 Functional division contains normal of
advancement

Chapter 4 Project Organization 5

Disadvantages
 The client is not the focus of activity and
concern
 Tend to be oriented towards functional
activities
 No individual is given full responsibility for the
project
 Slow response to client’s needs
 Tendency to sub-optimize the project
 Motivation of project team is weak
 Does not facilitate a holistic approach to the
project Chapter 4 Project Organization 6
Pure Project Organization
 Project is separated from the rest of the
parent system
 Becomes self contained unit

Chapter 4 Project Organization 7

Advantages
 PM has full line authority over the project
 All project workforce directly responsible to
the PM
 Lines of communication are shortened
 Maintain permanent group of experts
 High level of commitment
 Ability to make swift decisions
 Unity of command
 Simple and flexible structure
 Support holistic approach to the project
Chapter 4 Project Organization 8
 Project Organization
President

Vice President Project A Vice President Project B Vice President Project C

Finance Manufacturing Finance Manufacturing Finance Manufacturing

Chapter 4 Project Organization 9

Disadvantages
 Duplication of effort
 Stockpile equipment and technical
assistance “just in case”
 Lack of expertise in high technology
project
 Foster inconsistency and cutting corners
 Project takes on a life of its own
 Worry about “life after project ends”
Chapter 4 Project Organization 10
Matrix Organization
 Combination of functional and pure
project organizations
 Matrix project is not separated from
parent organizations
 Individuals come from respective
functions divisions and are assigned to
the project full time or part time

Chapter 4 Project Organization 11

 Matrix Organization

President

Manufacturing Program Manager R&D Marketing

PM1

PM2

PM3

Chapter 4 Project Organization 12

Matrix Organization
 Cross-functional team members
 Draw temporarily on technological expertise
of relevant functions
 High technology areas – integrate functional
specialties
 Iterations in adapting “over the wall”
approach
 Systems approach – integrity of product
design
 Close coordination and communication among
all parties Chapter 4 Project Organization 13
Advantages of Matrix
Approach
 The project is the point of emphasis
 Reasonable access t pools of technical talents
 Less anxiety about what happens after
project completion
 Rapid response to client needs
 Access to administrative units of the parent
firms
 Better balance of company resources in
multiple projects
 Flexibility in control
Chapter 4 Project Organization 14
Disadvantages
 Delicate balance of power
 Movement of resources – conflict
 Projects resist death
 Complex division of authority and
responsibility
 Violates the principle of unity of
command

Chapter 4 Project Organization 15

Mixed Organizational Systems
 Divisionalization – breaking down large
organization into smaller more flexible units
 Spin-off the large projects as subsidiaries or
independent operations
 Allow formation of venture team
 Hybrid leads to flexibility
 Dissimilar groupings encourage overlap,
duplication and friction

Chapter 4 Project Organization 16

Mixed Organization

President

Project M Finance Engineering Project N

Chapter 4 Project Organization 17

Staff Organization
 Set up like functional organization
 Adds a staff office to administer
projects
 Used for small, short run projects

Chapter 4 Project Organization 18

Staff Organization

President

Project S

Finance Manufacturing Engineering

Chapter 4 Project Organization 19

Choosing an Organizational
Form
 Functional form – major focus on in-depth
technology, require large capital investment
 Pure project – large number of similar
projects
 Matrix organization – require integration of
inputs from several functional areas and
involves reasonably sophisticated technology
and several projects must share technical
expertise
 Matrix organizations are complex
Chapter 4 Project Organization 20
Selection of Project
Organization
 Define the project / objectives
 Determine the key tasks
 Arrange key tasks by sequence and
decompose them into work packages
 Determine project subsystems
 List special characteristics – level of
technology, probable length, resource
requirements, level of outsourcing

Chapter 4 Project Organization 21

Project Team
 Project office – control center, chart
room (focus of all project activity)
 Close location to project manager
 Co-location of external parties
 Reduce physical distance
 Better communication
 Pressure to complete tasks

Chapter 4 Project Organization 22

Key Team Members
 Project Engineer
 Manufacturing Engineer
 Field Manager
 Contract Administrator
 Project Controller
 Support Services Manager

Chapter 4 Project Organization 23

Work Organization
 Project engineer (technical performance) and
project controller (budget) report to PM
 PM forecast of personnel needs
 Prepare WBS to determine exact nature of
tasks
 Skills requirements are assessed and
aggregated
 Outsourcing of certain tasks

Chapter 4 Project Organization 24

Typical Organization of
Engineering Projects
Project Manager

Project Engineer Project controller

Manufacturing Engineer Control Administrator

Field Manager Support Services Manager

Chapter 4 Project Organization 25

Staff Critical to Project
Success
 Senior project team members
 Staffs whom the PM will require close
communication
 Staffs with rare skills for project success

Chapter 4 Project Organization 26

Human Factors
 Technical problem with a human dimension
 Perfectionist – can cause delay
 Motivation – recognition, achievement,
responsibility, advancement, the work itself
 Interpersonal conflict
 Management by Objectives (MBO) – allows
worker to take responsibility for design and
performance of a task

Chapter 4 Project Organization 27

Advantages of MBO
 Participative mechanism
 Allow professionals to design their own
method
 Team members know what is expected of
them
 Members have the opportunity to participate
in deciding their own responsibilities
 Members get timely feedback on their
performance
 Project manager is provided a tool for
evaluating and controlling performance
Chapter 4 Project Organization 28
MBO
 Superior set objectives in consultation
and agreement with subordinates
 Subordinate develops action plan, a
detailed plan and scheduled that will
result in achieving the objective
 Final plan becomes a contract

Chapter 4 Project Organization 29

 Major Sources of Conflict
Life cycle phase Conflict source

Project formation Priorities, procedures,

schedules
Buildup phase Priorities, schedule,
procedures
Main program Schedule, technical,
manpower
Phase out Schedules, personality,
manpower
Chapter 4 Project Organization 30