Chapter 13Types of Project

Organizations

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Learning Objectives

The characteristics of the three types of organization structures: - functional - project - matrix

The advantages and disadvantages of each

Real World Example Vignette: The Customer is Always Right NCR Financial Solutions Group Ltd., Dundee, Scotland The program management office (PMO) realized that they

were missing internal customer commitments and projects goals were not being met.

The PMO determined three levels of internal customer bases and four types of external customers. They started a rigorous training program for project managers to improve their skillset and receive PMI certification.

After making these improvements the PMO has seen a 30-40 % reduction in cycle time over a five-year period.

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Real World Example Vignette: What’s Your Organizational Quotient? It is critical to understand the collaborations, relationships,

and networks of the informal organization. “OQ” is the ability to balance both formal and informal power

structures Some of the issues that are common among most companies

are: Need for ways to energize a sluggish working

environment. Problem in grooming future leadership. Existence of poor social networks and communications

among executive leadership teams. Lack of informal social networks / ties between employee

teams.

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Solution: Companies:

need to resist the urge to try to micromanage employee relationships.

should not completely rely on power structure. senior executives and project managers should try to

create loose parameters around informal organizations that operate independently.

must locate the right people to place in project management positions.

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Functional-Type Organization Used in businesses that sell and produce

standard products. Groups consist of individuals performing the

same function. Periodically undertake in-house projects. Team members can be assigned to the

project. Team members continue regular functional

jobs. Project manager does not have complete

authority over team.6

FIGURE 13.1 Functional Organization Structure

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Project-Type Organization

Used in companies in the project business, not selling products.

Work on multiple projects at a time. Project team is dedicated to one project. Project manager has complete authority

over team. Each project team tends to be isolated.

FIGURE 13.2 Project Organization Structure

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Matrix-Type Organization A mix of functional and project

organization structures. Used in companies that work on multiple

projects at a time. Provides project and customer focus. Retains functional expertise. Individuals can be assigned to various

types of projects.

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Matrix-Type Organization (Cont.) Both project managers and functional

managers have responsibilities. The Project Manager is the intermediary

between customer and company. The Functional Manager decides how

tasks will be accomplished.

FIGURE 13.3 Matrix Organization Structure

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Functional Organization Advantages Reduces duplication and overlap of

activities. Provides specialization and functional

excellence.

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Functional Organization Disadvantages

Can be insular. Teamwork is not emphasized. Decisions may be parochial. Structure can slow communication,

problem solving and decision making. Lack of customer focus. Stronger allegiance to function than

project.

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Project Organization Advantages Team has full control over resources. Organization is highly responsive to

customer.

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Project Organization Disadvantages Can be cost inefficient.

Tendency to stretch out work during slow periods.

Potential for duplication on concurrent projects.

Low level of knowledge transfer. No functional “home”. People may be laid off at the end of the

project.

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Matrix Organization Advantages Allows efficient utilization of resources.

Individuals can be moved among projects. Provides a core of functional expertise. Facilitates information flow.

Learning and knowledge transfer. Improved communication. Customer focused.

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Matrix Organization Disadvantages Team members have a dual reporting

relationship. A proper balance of power must be

established between project and functional managers. Conflicts regarding priorities can arise

between managers.