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Organisational context of PM
Project Management
Organisation within the organisation
Organisational structures and projects
• Hierarchical functional structure
• Matrix structure
• Pure project structure
Hierarchical functional structure(linear-functional structure)
• Longest history
• Heads of specialist functions report directly to the CEO
• The CEO is responsible for co-ordinating the functions
• Strict hierarchical chain
Advantages
• Tight control at the top
• Logically represents the functions & maintains their power and prestige
• Reduces duplication of functional effort
• Concentrates functional skills
• Simple reporting relations
• High utilisation
Disadvantages
• Over-specialisation• Parochialism of key personnel• Weak co-ordination between functions• It stifles the development of generalist leaders• Ineffecient in fast changing and diverse market
environment• It imposes an increasing burden on the chief
executive as the rate of change increases• It requires extremely detailed pre-production plans
(extremely high rate of formalised work)
Problems arise when…
• Jobs requires greater resources than a single function has.
• Jobs cut across functional boundaries.• Chief executive is overburdened with co-
ordination problems between functions.
• The solution: project manager(s) & project team(s)PM Office (PMO)
Projects in a functional structure
• Place in the structure– Staff (team)– Project manager
• What if the project team is not enough?– Professional skills– Resources of one or more functions
• Responsibility of the staff– Project team– Functional staff involved in the project
Matrix structure without projects(true matrix)
• Division of labor in a matrix structure– 2 dimensions
• Responsibilities– Dual reporting
• Biggest advantages– Managing complexity– Managing changing environment
• Greatest disadvantages– High number of conflicts– Low speed of decision making
Matrix organisation with projects• If there are (continuously) too many projects for the
functional structure• One dimension of the division of labour is the
project structure = A project management function is created• The project management function group• Separation:
– The staff members are organisationally disengaged from their previous positions
– Physically (communication, atmosphere) • Double reporting:
– Linear– Functional
Problems with the project-matrix structure
• Latent responsibility and loyalty– It affects career– Dual reporting:
• Confusion and conflicts on two levels• Problems arise at the CEO’s level
• Temporary structure: uncertainty
A possible solution: strong corporate culture
• Shared views (and values)– Different project teams– Functional managers
Advantages of the project-matrix structure
• Rapid response to changes
• Better balance between time, cost and resources
• Independent policies and budgets for different projects
• Clear definition of responsibility and authority (project managers)
Disadvantages of the project-matrix structure
Requires significant effort from the top management to:
• Define policies, procedures, authorities for the whole organisation
• Monitoring and controlling the balance of power between project and functional managers
• Ensuring the shared view on company objectives (project and functional managers)
The true project structure
• The usual business activity is in form of projects
• Frequent only in some industries
• Functions disappeared: skills are concentrated in project teams
• Reserve staff (central pool of extra resources)
• Project teams are not temporary
Advantages
• Clear project responsibilities and authorities• Clear and controlled project budgets• Better communication between project
managers and the CEO• Generalists managers are developed who can
manage change• Strong team loyalty and understanding• Management costs are identified• ? subcultures
Readings
• Lockyer – Gordon (2005) Chapter 2
Structure of projects
Organisation within the organisation
Project features affects its organisational form
• Uncertainty
• Uniqueness → diversity of projects
• Temporary existence → diversity of projects
• → variations of the project organisations
Elements of the project organisation
• Project sponsor
• Project manager
• (Project champion)
• Project management team
• Project team
• Stakeholders
Stakeholders
Stakeholders are all individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development.
Sets of project stakeholders include:
Internal Stakeholders• Top management• Accountant• Other functional managers• Project team members
External Stakeholders• Clients• Competitors• Suppliers• Environmental, political, consumer,
and other intervenor groups
The project manager• Appointed as early as possible
• If not he/she will be committed to the former decisions.
• If this problem exists, he/she must record and report it immediately and suggest modifications if possible.
• Main task: team management– Additional source of difficulties: consortium
project.
Desirable skills• Technological understanding• Understanding of project economics• Personnel management
– Incentive systems
– Interviewing techniques
– Personal leadership
– Team building and motivation
– Industrial economics and relations
– Legal knowledge according to the project
• Non-learnable skills and abilities: being a leader honesty, integrity, vision etc. + OPTIMISM
• Marketing (customer’s view)• System management• Planning and control• Financial skills• Competence in procurement• Communication skills
The project team• Project team ≠
whole staff working on the project• Size depends on:
– Project scope and size– Complexity– Needed speed
• Assistance of functional specialists: – two supervisors – divided loyalty– multiple responsibility (who to turn to)
• Integration of new members• Create a creative, innovative, problem-solving atmosphere• Maintain a monitoring and reporting system (formal and
informal)
Readings
• Lockyer – Gordon (2005) Chapter 3
Thanks for the attention!