Structuring the Project

Contents
 Introduction
 Organizational Structures
 Organizational Structures of Projects
 Work Breakdown Structure
 Combining the Organizational and Work
Breakdown Structures
 Management of Human Resources in Projects
Introduction

Focus of project management

 The breakdown of work
 The allocation of specific tasks to individual units
 The management and control during execution
 The integration of the parts into the pre-specified whole

 STRUCTURE OF ORGANIZATION FOR EFFICIENT AND

EFFECTIVE MANAGMENT
Introduction

Three types of “structure” are involved in the project

management:

1. The organizational structure of each unit participating in the project

(the client, the prime contractor, subcontractors, and possibly one or
more government agencies)
2. The organizational structure of the project itself. This specifies the
relationship between the organizations and people doing the work
3. The work breakdown structure of the project. This is the way the
work content is divided into small and manageable parts that can be
allocated to the participating units.
Organizational Structures

 To understand the organizational structure of a project, the structure

of the participating organizations must be first addressed.
 Departmentalization: Partitioning an organization into subunits to
arrive at an orderly arrangement of the interdependent components:
1. Functional: Based on distinct common specialties, such as
manufacturing, engineering, and finance
2. Product: Organized around and given responsibility for a major
product or product line
3. Customer: Formed to deal explicitly with a single customer
group, e.g. Department of Defense
4. Territorial: Defined along geographical lines, e.g. southern
Thailand sales zone.
5. Process: Based on flow of work, e.g. an oil refinery.
 Organizational Structures

1. Functional Organization
 The most widespread organizational structure found in
industry
 Each unit specializes in a specific functional area and
performs all the tasks that require its expertise
 Examples include engineering, manufacturing,
information systems, marketing, etc.
Organizational Structures
1. Functional Organization

President

VP VP VP
Engineering Manufacturing Marketing

Electrical Plant Promotion

Software QC Sales

Market
Meterial Inventroy
Research
Organizational Structures
1. Functional Organization
Problems:
 There is no strong central authority that is concerned about the
project
 Major decisions relating to resource allocation and budgets are
based on how they affect the strongest functional unit
 Project decision requires coordination and approval of all the
functional groups in addition to upper management
 Considerable time spent for an action
 No single point of interface to the customer
Organizational Structures
1. Functional Organization
Advantage s
Efficient use of collective experience and
facilities
Institutional framework for planning and
control
All activities receive benefits from most
advanced technology
Allocates resources in anticipation of future
business
Effective use of production elements
Career continuity and growt h for personnel
Well suited for mass production of items
Di sadvantages
No central project authority
Little or no project planning and reporting
Weak interface with customer
Poor horizontal communications across
functions
Difficult to integrate multidis plinary tasks
Tendency of decisions to favor strongest
functional group
Organizational Structures
2. Project Organization
 Based on assigning projects to each organizational unit
 Various functions are performed within each unit
 Duplication of resources, as similar activities and processes are
performed by different elements of the organization on different
projects
 Work assignments and reporting hierarchies are subject to
change due to the limited life span of projects
 Detrimental effect on morale of staff due to uncertainty in career
paths and professional growth
Organizational Structures
2. Project-oriented Organization
Organizational Structures
2. Project Organization
Advantage s
Strong control by a single project authority
Rapid reaction time
Encourage performance, schedule, and cost
tradeoffs
Personnel loyal to a single project
Interfaces well with outside units
Good interfac e with customer
Di sadvantages
Inefficient use of resources
Does not develop technology with an eye on
the fut ure
Does not prepare for future business
Less opportunity for technic al interchange
among projects
Minimal career continuity for project
personnel
Difficult in balancing workloads as projects
phase in and out
Organizational Structures
3. Product Organization
 Based on similarity among products, esp. mass production
environment
 Examples: Company of domestic appliances
a) a refrigerator division
b) a washing machine division
c) a small appliances division
 Facilitates the use of common resources, marketing channels,
and subassemblies for similar product
 Possible for mixed model lines and group technology cells to
achieve performance that are more efficient than designed for
each respective product
Organizational Structures
4. Customer Organization
 Few large customers, e.g. the defense industry
 Structuring the organization around its principal customer

5. Territorial organization
 Need to keep close contact to customers which are located in
different territories
 Need to improve logistic efficiency, plants or warehouses are set
up in the neighborhood of main facility
 Organizational Structures

Project-Functional Interface and Matrix Organization

 Projects are essentially horizontal
 Functional organization is vertical
 A project can be viewed as a small business within a larger enterprise
 Concerns of project and functional manager

Project Manager Functional Manager

What is to be done?
When will the task to be done?
What is the important of the task?
How much resource is available to do the
task?
How well has the total project been done?
How will the task to be done?
Where will the task be done?
Who will do the task?
How well has the functional input been
integrated int o the project?
 Organizational Structures

Matrix organization
 A project organization superimposed on a functional organization
with well-defined interfaces between project teams and functional
elements
 Duplication of functional units is eliminated by assigning specific
resources of each functional unit to each project
 Balancing the use of human resources and skills as people are
shifted from one project to another
Organizational Structures
Matrix organization
 Organizational Structures

Matrix organization: Benefits

 Better utilization of resources: The resources are allocated in the
most efficient manner because the resources can be utilized in all
projects. On project termination, the resources can be brought
back for use in the organization.
 State-of-the-art-technology: Functional units are link to all projects,
and become a up-to-date knowledge plus technology transfer units
from one project to other ones.
 Adaptation to changing environment: The functional units from a
skeleton that hold all resources and knowledge. Therefore, it is
not effected by changes, and resources can be reallocated and
reschedule as needed.
 Organizational Structures

Matrix organization: Difficulties

 Authority: Conflict of interest between two bosses “dual-boss-
phenomenon”, i.e. functional manager vs project manager.
 Technical knowledge: Project manager has to rely on functional
experts and managers for their input, but must take full responsibility
for the project outcome.
 Communications: Dual-direction communication, i.e. horizontal-
vertical, makes things difficult to develop, manage, and maintain.
 Goals: Different perspectives between two managers, i.e. functional
vs project, may create conflict and friction within an organization.
The project manager focuses on the short-term objectives whereas
the functional manager concentrates on the long-term goals.
 Organizational Structures

Matrix Organization
Functional Structure Project Structure

Functional Project
A “pure” orientation: orientation: A “pure”
functional one person a project team project
structure committed ... with functional structure
each project help

0 1 5 90 99 100

Percent of personnel fully committed to a single project

 Organizational Structures of Projects

Factors in Selecting a Structure

1. Number of projects and their relative importance:
 An organization dealing with projects infrequently, a functional
structure supported by ad hoc project coordinators may be best.
 Number of projects and relative importance increase, then a
matrix structure with a stronger project orientation should be
adopted.
2. Level of uncertainty in projects:
 It is easier to achieve tight control and to react faster to the
effects of uncertainty when each project manager controls all the
resources and gets all the information involved in the project.
Therefore, a project-oriented structure is preferred when high
levels of uncertainty are presented.
 Organizational Structures of Projects

Factors in Selecting a Structure

3. Type of technology used:
 Project is based on a number of different technologies.
 The effort required is not continuous in the project life cycle.
 Matrix Organization is preferred.
 Project is based on several technologies.
 The work content in each area requires at least one full-time
person.
 Project-oriented Structure is preferred.
 Organizational Structures of Projects

Factors in Selecting a Structure

4. Project complexity:
 High complexity requires very good coordination among the
project team.
 A project-oriented structure is preferred.

5. Duration of project:
 Short projects do not justify a special organization and are
best handled within the matrix organization.
 Long projects justify a project-oriented structure.
 Organizational Structures of Projects

Factors in Selecting a Structure

6. Resources used by projects:
 Expensive resources are limited.
or
 Each project does not need a fully devoted unit of a resource.
 A matrix arrangement with a functional orientation is preferred.

7. Overhead cost:
 By sharing facilities and services among projects, the overhead
cost of each project is reduced.
 A matrix organization is preferred.
 Organizational Structures of Projects

Factors in Selecting a Structure

8. Data requirement:
 Many projects have to share the same databases.
 Information generated by projects should be made
available to units not directly involved in those projects.
 A matrix arrangement with a functional orientation is preferred.

9. Similarity of structure to the client’s structure

 Efficiency of communication between both organizations.
 Organizational Structures of Projects

Project Manager
1. Leadership:
 Most essential attribute to a project manager.
 Dealing with any number of problems in the project life cycle.
 Usually lacks full control and authority over the project
participants.

2. Interpersonal skills:
 Dealing with his/her own superiors, the members of the project
team, the functional managers, arrays of clients, etc.
 Ability to develop and maintain good personal relationships with
all parties is crucial.
 Organizational Structures of Projects

Project Manager
3. Communication skills:
 The interaction in a project takes place through a combination
of verbal and written communication.
 Building reliable communication channels and using the best
channel for each application.

4. Decision-making skills:
 Ability to recognize problems and establish the procedures.
 Ability to evaluate alternative solutions, select the best action,
and implement the action.
 Fundamentals of project control.
 Organizational Structures of Projects

Project Manager
5. Negotiation and conflict resolution:
 Skills to minimize the occurrence of disputes and to resolve the
disputes satisfactorily when they arise.
 Sources of conflicts:
Scheduling, managerial and administrative procedures,
communication, goal or priority, resource allocation, reward
structure/performance appraisal or measurement, personality
and interpersonal relations, costs, technical opinion, politics,
poor input or direction from leaders, etc.
Organizational Structures of Projects

Project Manager
6. Trade-off analysis skills:
 “Should the project be delayed if extra time is required to
achieve the performance levels specified?”
 “Should more resources be acquired at the risk of a cost
overrun to reduce a schedule delay?”
 Trade-off analysis to reach a compromise solution.
 Work Breakdown Structure

Tasks in a project:
 Characterized by their length, work content, level of technology,
and cost.
 Complex and expensive, spanning months or years, or short and
present little difficulty.
 Break the longer tasks down into subtasks of shorter duration.
 Arrange all tasks and subtasks in a network.

 Project Work Breakdown Structure (WBS)

 Work Breakdown Structure

Work Breakdown Structure:

 A schematic presentation of the disaggregation-integration
process.
 The project manager plans from WBS to execute the project.
 The work content of a project has to be divided into tasks that can
be assigned and performed by one of the participating
organizational units.
 If such tasks cannot be defined, the project plan is not feasible.
 Work Breakdown Structure

IBM recommend that the following five levels should include in a

WBS:
 Level 1: Project
 Level 2: Deliverables such as software, manuals and training
courses.
 Level 3: Components which are the key work items needed to
produce deliverables, such as the modules and tests required to
produce the system software.
 Level 4: Work-packages which are major work items, or collections
of related tasks, required to produce a component.
 Level 5: Tasks which are tasks that will normally be the
responsibility of a single person.
 Work Breakdown Structure

Definition of a task at the lowest level of the WBS should include:

1. Objectives:
 What to be achieved by performing this task.
 Including tangible accomplishments such as the successful
production of a part.
 Possibly including non-tangible objectives, such as learning a
job.
 Work Breakdown Structure

Definition of a task at the lowest level of the WBS should include:

2. Deliverables:
 Part of the hardware and software used in the project.
 A report that documents the findings of an economic analysis.
 A recommendation made after analysis.

3. Schedule:
 Planned start time and planned finished time.
 Work Breakdown Structure

Definition of a task at the lowest level of the WBS should include:

4. Budget:
 A time-phased budget should be prepared for each task.
 Projected layouts should be synchronized with the planned
schedule and estimated cost of the respective task.

5. Performance measures:
 Used during project execution to compare actual and planned
performance in order to establish project control.
 Work Breakdown Structure

Definition of a task at the lowest level of the WBS should include:

6. Responsibility:
 The organizational unit responsible for on-budget and on-
schedule performance of each task has to be defined.
 This is done by associating a lower-level elements in WBS with
an organizational unit in the project organizational breakdown
structure (OBS).
Work Breakdown Structure
Examples of WBS:
1. An activity-based WBS
Project

Analyze Design Build

Data Design Process Design Physical Design

Relational Logical data

data design design
Work Breakdown Structure
2. An deliverables-based WBS Project

Software
Installed system User manuals Training course
components

Analyze Review Analyze Analyze

requirements requirements requirements requirements

Outline design Outline design Design manual Design course

Detailed design Detailed design Write test Write manual

Integrate system Code software Capture screens Print handout

Test system Test sofware Do page-layout Deliver course

Deliver system Print manuals

User testing
Combining Organizational Structure and WBS
Work Package:
 It is a result from combining WBS and OBS.
 Entity that consists of a task to be performed by an organizational
unit for a given schedule and budget.
 A specific lowest-level organizational unit is assigned a specific
task on the lowest-level WBS.
 The smallest unit used by the project manager for planning and
control.
 The person responsible for a work package is responsible for the
detailed scheduling, budgeting, and resource planning of its
components.

 WBS, OBS, and their combination provide the framework for

developing and integrating the tools need for scheduling,
budgeting, and control.
Management of Human Resources in Projects
Project Team:
 Workers from many disciplines.
 Transform a collection of individuals with different objectives and
experiences into a well-integrated group with the same goal.
 Clearly defined the project, its goals, its organizational structure,
and the procedures and policies.
 Project manager must reduce anxieties and uncertainty occurred
during the project life cycle.
 Project manager conduct regular team meetings throughout the
life cycle of the project.
Management of Human Resources in Projects
Encouraging Creativity and Innovation:
 One-time nature of projects requires solutions to problems that
have not been dealt with in the past.
 Creativity and innovation to solve the problems.
Management of Human Resources in Projects
Techniques used for encouraging innovation:
Organizational level
1. The search for new ideas is part of the organizational strategy.
2. Innovation is seen as a means for long-term survival.
3. Small teams of people from different functions are used frequently.
4. New organizational models are tested frequently.

Individual level
1. Creative and innovative team members are rewarded.
2. The importance of product quality, market leadership, and
innovation is stressed repeatedly and thus is well known to
employees.
3. Fear that status quo will lead to disaster is a common motivator for
individual innovation.
Management of Human Resources in Projects
Leadership of a project manager : Ability to influence a group and to
direct its activities. Seven levels of leadership:
1. A boss-centered leader who makes a decision and announces it.
2. A leader who makes decision and sells the decision to the group.
3. A leader who presents ideas and invites questions.
4. A leader who presents a tentative decision that is subject to
change.
5. A leader who presents a problem, gets suggestions, and makes a
decision.
6. A leader who presents a problem, defines limits, and asks the
group to make a decision.
7. A subordinate-oriented leader who sets limits and lets the group
members function within these limits.
Management of Human Resources in Projects
Leadership:

By adopting the right leadership style, the project manager can

stimulate teamwork and creativity among project team members.
However, a project manager cannot be a leader unless he/she has
authority.
Management of Human Resources in Projects
Authority: Power to command or direct other people. There are two
sources of authority:
1. Legal authority
 Based on the organizational structure and a person’s
organizational position.
 Delegated from the owners of the organization to the various
managerial levels and is usually documented.
2. Voluntarily accepted authority
 Based on personal knowledge, interpersonal skill, or a person’s
experience.
 Enable the project manager to exercise influence over and
above the legal authority.
 Good combination of legal and voluntarily accepted authority
Management of Human Resources in Projects
Ethical aspects of project management:

Code of Ethics
Article I: Project managers shall maintain high standards of personal
and professional conduct.
 Accept responsibility for their actions.
 Undertake projects and accept responsibility only if qualified by
training or experience, or after full disclosure to their employers or
clients of pertinent qualification.
 Maintain their professional skills at the state-of-the-art and
recognize the importance of continued personal development and
education.
 Advance the integrity and prestige of the profession by practicing
in a dignified manner.
Management of Human Resources in Projects
Ethical aspects of project management:

Article I: Project managers shall maintain high standards of personal

and professional conduct.
 Support this code and encourage colleagues and co-workers to
act in accordance with this code.
 Support the professional society by actively participating and
encouraging colleagues and co-workers to participate.
 Obey the laws of the country in which work is being performed.
Management of Human Resources in Projects
Ethical aspects of project management:

Article II: Project managers shall, in their work:

 Provided the necessary project leadership to promote maximum
productivity while striving to minimize costs.
 Apply state-of-the-art project management tools and techniques to
ensure schedules are met and the project is appropriately planned
and coordinated.
 Treat fairly all project team members, colleagues, and co-
workers, regardless of race, religion, sex, age, or national origin.
 Protect project teams from physical and mental harm.
 Provided suitable working conditions and opportunities for project
team members.
Management of Human Resources in Projects
Ethical aspects of project management:

Article II: Project managers shall, in their work:

 Seek, accept, and offer honest criticism of work, and properly
credit the contribution of others.
 Assist project team members, colleagues, and co-workers in their
professional development.
Management of Human Resources in Projects
Ethical aspects of project management:

Article III: Project managers shall, in their relations with employees

and clients:
 Act as faithful agents or trustees for their employers or clients in
professional or business matters.
 Keep information on the business affairs or technical processes of
an employer or client in confidence with employed, and later, until
such information is properly released.
 Inform their employees, clients, professional societies or public
agencies of which they are members or to which they may make
any presentations, of any circumstances that could lead to a
conflict of interest.
Management of Human Resources in Projects
Ethical aspects of project management:

Article III: Project managers shall, in their relations with employees

and clients:
 Neither give nor accept, directly or indirectly, any gift, payment, or
service of more than nominal value to or from those having
business relationships with their employers or clients.
 Be honest and realistic in reporting project cost, schedule, and
performance.
Management of Human Resources in Projects
Ethical aspects of project management:

Article IV: Project managers shall, in fulfilling their responsibilities to

the community:
 Protect the safety, health, and welfare of the public and speak out
against abuses in those areas affecting the public interest.
 Seek to extend public knowledge and appreciation of the project
management profession and its achievements.
Management of Human Resources in Projects
Legal aspects of project management:

 Contractual issues regarding clients, suppliers, and

subcontractors.
 Governmental laws and regulations.
 Labor relations legislation.

 Ability of project manager to establish good working relationship

with the client, suppliers, and subcontractors within the framework
of the contract is extremely important.
 The project manager should be familiar with government laws and
regulations in areas such as labor relations, safety, environmental
issues, patents, and trade regulations.