Projectand

Organizational Structure

PREPARED BY

PRAJWAL ACHARYA (067BCT527)

RAVI AGRAWAL (067BCT531)

SAGAR SHARMA (067BCT534)

SAWAL MASKEY (067BCT539 )

Background Project Organization - A structure that facilitates the coordination and implementation of project activities.

Helps to create an environment that fosters interactions among the team members with a minimum amount of disruptions, overlaps and conflict.

Main objectives of the structure is to reduce uncertainty and confusion that typically occurs at the project initiation phase.

Defines the relationships among members of the project management and the relationships with the external environment

The design of an organizational structure should consider◦ Organizational Environment◦ Project Characteristics◦ Level of authority of Project Manager

System View of Project Management

A big picture system perspective is harder as there are many details that must be handled for successful completion of project.

Inputs Project Management Process

Outputs

Feedback

Inputs, Outputs and FeedbackInputs Outputs Feedback

• Raw Materials• Physical resources• People’s efforts• Their knowledge and know-

how• Standards, methods,

specifications• Other informations such as key

success indicators

• Finished Products• Whether tangible objects

or facilities• Or otherwise systems or

services• Transformation of the

resources• Intermediate deliverables

Essential feature of a good systemGoals:External -> EffectivenessInternal -> Efficiency

Effectiveness – How well the product measures up to fulfilling the need

Efficiency – How well the process is doing the transformation with minimum effort and waste

Organizational Structure A hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim.

An organization can be structured in many ways and styles, depending on their objectives and ambiance

Determines the modes in which it operates and performs

Allows the expressed allocation of responsibilities for different functions and processes to different entities (such as branch, department, workgroup and individual)

Types of Organizational StructuresThere are three primary project management organizational structures –

1. Functional Organizational Structure2. Projectised Organizational Structure3. Matrix Organizational Structure

Functional Organizational Structure◦ Most common type of organization structure, best suited for small organizations

◦ A system of organization in which functional departments are created at all levels to

deal with the problems

◦ The organization is broken up into different structures based on specialty in the

functional organization.

◦ It provides expert service at each functional department.

◦ An activity allotted to each department can-not be allotted to another departments.

Fig 2. Fully functional organizational structure

Advantages of Functional Organization• Staff is managed by a person with experience in their same specialty who can adequately

understand and review their work.

• Staffers have the opportunity to move up within their functional areas, which gives a reason

for them to stay long term. The company gets the advantage of their expertise and company

knowledge over time.

• Staffers work with others in their field, which allows for knowledge sharing and lateral job

moves to learn new skills.

Disadvantages of Functional Organization• Functional areas may have difficulties working with other functional areas.

• As the company grows larger, the functional areas can become difficult to manage due to

their size. They can become almost like small companies on their own, with their own

cultures, facilities, and management methods.

• Functional areas may become distracted by their own goals and focus on them, rather than

on overall company objectives

Projectised Organizational Structure◦ An organizational structure in which the project manager has full authority to assign

priorities, apply resources, and direct the work of persons assigned to the project.

◦ Project team member report to the project manager.

◦ The project manager controls the budget, resource, and work assignment.

◦ When the project ends, project team is disbanded and team members and other resources

are released.

Fig 3. Projectized organization structure

Advantages of Projectized Organization◦ Clear line of authority.

◦ Strong communication with single reporting system.

◦ Flexibility in trade-offs and decision making.

◦ Fast decision making.

◦ Usually responses to stakeholders’ concern are very fast.

Disadvantages of Projectized Organization◦ Authority and power can make project manager arrogant.

◦ The work environment can be stressful because there is always a deadline (milestones).

◦ Resources may be duplicated.

◦ Team members have sense of insecurity because once the project finishes, they may lose

their jobs.

◦ If the project get elongated, cost of employee and equipment can go higher.

◦ If the organization has multiple projects, then there is very poor communication and co-

operation among the different project teams.

Matrix Organizational Structure◦ Employs best features of both projectized and functional organization structure

◦ The knowledge and skills of the talented employees could be shared between the functional

departments and the project management teams, as needed.

◦ Exists in large multi-projects organizations so that they can move or relocate employees to

any team wherever their services are needed.

◦ Employees are considered to be shared resources between the project teams and the

functional units.

Fig 4. Example of Matrix Organizational Structure

Types of Matrix OrganizationSTRONG MATRIX

◦ Most authority and power lies with the project manager.

◦ Has a lot of common characteristics of the projectized organization.

◦ Project manager has a full time role; he controls the project budget, and he has full time project management administrative staff under him.

BALANCED MATRIX

◦ Power is shared between the functional manager and the project manager

◦ The project manager has full time role, he has only part time project management administrative staff under him.

◦ Both managers control the project budget.

WEAK MATRIX

◦ The project manager has a part time role with very limited power and authority. His role will be more like a coordinator or an expediter.

◦ Weak matrix structure is very close to the functional organization structure.

◦ The functional manager controls the project budget.

Advantages of Matrix Organization

◦ The main benefit of matrix organization is that highly skilled and capable resources can be shared

between the functional units and important strategic projects.

◦ Communication is smooth across the boundaries.

◦ It is a good environment for professionals to develop their career.

◦ Project team can get the highly skilled personnel they require.

◦ People can be selected based on skills and suitability.

◦ Employees have job security.

◦ Typically the efficiency of matrix organizations is higher.

Disadvantages of Matrix Organization

◦ Employees may have to report to two bosses, which can add confusion, and conflicts may arise,

particularly in the balanced matrix environment where both bosses have equal authority and power.

◦ Conflicts may arise between the bosses regarding the power and authority.

◦ Employees may become confused regarding their roles and responsibilities, especially when they are

assigned to a task which is somewhat different than what they were doing.

◦ Sometimes unclear priorities may also confuse the employees.

◦ Generally matrix organizations have more managers, which make overhead cost very high.

◦ Many times in matrix organizations, workload is high. Employees have to do their regular work, along

with the additional project related tasks.

How to overcome disadvantages of the Matrix structure

◦ Well-defined and strong communication is very important to gain support from executives, managers,

and employees. Organizations must communicate their vision, objectives and goal with the employees.

◦ There must be close cooperation between the project manager and the functional manager to avoid

confusion and conflicts.

◦ Conflict between the project manager and the functional manager must resolve as early as possible, and

in private.

◦ Roles and responsibilities must be documented and clearly communicated to avoid the confusion.

Organizational Structure influence on Projects

Organizational structure can help or hurt project success.

From the allocation of resources to where the decision-making authority lies is all embedded in an organization's characteristics.

Most organizations have developed unique and desirable cultures that are reflected in numerous factors such as

◦ Shared values, norms, beliefs and expectations◦ Policies and procedures◦ View of authority relationships◦ Work ethic and work hours

References:◦ PM Study Circle (PMSC) http://pmstudycircle.com◦ Education Portal http://education-portal.com◦ Project Management Organizational Structures Paper

http://www.articlearn.com/project-management-organizational-structures-paper/