Econ106 Lecture-Discussion No. 4

Organizational StructuresA firm, if successful, tends to grow, adding resources

and people, developing an organizational structure.Commonly, the focus of the structure is specialization

of the human elements of the group.As long as its organizational structure is sufficient to

the tasks imposed on it, the structure tends to persist.When the structure begins to inhibit the work of the

firm, pressures arise to reorganize along some other line.

The underlying principle will still be specialization, but the specific nature of the specialization will be changed.

Project-oriented OrganizationsIn the past decade or so, there has been the development

of applying project management practices and tools across an enterprise (sourced from the software industry)“enterprise project management”“managing organizations by projects”

Reasons for growth: demands of speed and market responsiveness need for ad hoc specialists for development of new products,

services, processes rapid expansion of technological possibilities tend to

destabilize the structure of organizations many senior managers rarely feel much confidence in

understanding and control of many activities in their organizations

Organizational IssuesA decision must be made about how to tie the

project to the parent firm.A decision must be made about how to

organize the project itself. A decision must be made about how to

organize activities that are common to other projects

1. Projects in a Functional OrganizationMake it as part of one of the functional

divisions of the firm, usually the function that has the most interest in ensuring its success or can be most helpful in implementing it.

Another way is to assign the work to all the relevant functional divisions with either top management overseeing the effort or someone else assigned to coordinate their efforts.

JPES Initiating Structure (2010-11)

JPES Organizational Structure (from JPES-USLS Constitution)

Proposed Functional Structure 2012-13

Pros and ConsAdvantages DisadvantagesMaximum flexibility in the

use of staff Individual experts can be

utilized for different projectsSpecialists in functional

division can be grouped to share knowledge and experience

Functional division serves as base for technological and overall continuity

Functional division contains normal advancement; functional field is professional home

Client is not the focus of activity and concern; functional unit has own work to do

Functional division tends to be oriented toward the activities particular to its function; not problem-oriented

Occasionally, no individual is given full responsibility and accountability

May have lack of coordinated efforts making response to client needs and concerns slow

Tendency to sub-optimize the project

Motivation of people assigned to the project tends to be weak

Does not facilitate a holistic approach to the project

2.Projects in a Projectized Organization

12th YEC Visayas Convention Project

Basis for “Projectizing” Administrative mandateCommon convention needsDraft MOA requirements

(pls. refer to “Responsibilities and Tasking Word file)

Pros and ConsAdvantages Disadvantages PM has full line authority over the

project All members of the project work

force are directly responsible to the PM

When the project is removed from the functional division, the lines of communication are shortened

When there are several successive project of a similar kind, the projectized organization can maintain a more or less permanent cadre of experts who develop considerable skill in specific technologies

A project team that has a strong and separate identity of its own tends to develop a high level of commitment from its members

If parent organization takes on many projects, considerable duplication of effort

Tendency to stockpile technological knowledge and skills; experts are hired when available not when needed, very expensive when coupled with previous point

Functional expertise may not be readily accessible to project team

Inconsistency in the way policies and procedures are carried out; administrative corner-cutting

Project takes on a life of its own: projectitis develops, which may distort relationships in parent organization

Advantages DisadvantagesAbility to make swift

decisions greatly enhanced

Unity of command exists: better quality of life for subordinates with one and only one boss

Structurally simple and flexible, easy to understand and implement

Supports a holistic approach to the project

Worry about “life after the project”

3. Projects in a Matrixed Organization

PresidentProgram Manager

Manufacturing

Marketing Finance R&D Personnel

PM1 3 1.5 0.5 4 0.5

PM2 1 4 0.25 1.5 0.25

PM3 0 0.5 3 0.5 1

1. PM controls when and what people will do.2. FM controls who will be assigned and how the work will

be done.

Pros and ConsAdvantages Disadvantages Project is the point of emphasis Reasonable access to the

technical expertise of the functional divisions

Less anxiety about what happens when the project is completed

Response to client needs is as rapid as standalone project

Access to representatives from the administrative units of parent firm

Better companywide balance of resources

May be strong or weak matrices: more flexible

Delicate balance of power between FM and PM

Movement of resources from project to project may foster political infighting

Projectitis for strong matrices

Negotiating ability of PM is crucial

Violates management principle of unity of command with more than 1 boss: split loyalties and confusion

4. Virtual ProjectsWork on the project team crosses time,

space, organizational and cultural boundariesCreates overlapping and shared

responsibilities for work (especially between PM and FM)

Virtual positions – “task processes, the performance of which requires composite membership” (Kalu, 1993) in both project and functional organizations

Guidelines for Successful Virtual ProjectsOnly use virtual teams for projects that are challenging and

interesting. Also be sure the project is meaningful to the company as well as the team.

Solicit volunteers as much as possible– they’ll be more enthusiastic and dedicated to the success of the project.

Include a few members of the team who already know each other, and make sure 1 of every 6 or 7 are “boundary spanners” with outside contacts.

Create an online resource for team members to learn about each other (especially how they prefer to work), collaborate, brainstorm and draw inspiration.

Encourage frequent communication, but not social gatherings (which will occur at more natural times anyway).

Divide the project work into geographically independent modules as much as possible so progress in one location isn’t hampered by delays in other locations.

Guidelines for Selecting a Project Form Define the project with a statement of the objective(s) that identifies

the major outcomes desired. (see “Responsibilites and Tasking” Word file again.)

Determine the key tasks associated with each objective and locate the units in the parent organization that serve as functional “homes” for these types of tasks.

Arrange the key tasks by sequence and decompose them into work packages.

List any special characteristics or assumptions associated with the project: Level of technology needed Probable length and size of the project Any potential problems with individuals who may be assigned to the

work Possible political problems between different functions involved Parent firm’s previous experiences with organizing projects Anything else that seems relevant

In light of the above and full cognizance of pros and cons associated with each structural form, choose a structure.

Key Project Management ChallengesA primary task of the PM is to acquire the resources,

technical skills, knowledge and whatever else is needed by the project, dependent on PM’s negotiating skills.

Uncertainty is a way of life; need for risk managementThe successful execution of a project is a complex

managerial task and requires the use of planning, budgeting, scheduling and control tools with which the neophyte PM may not be completely familiar.

There are contractual, administrative and reporting duties that must be performed in accord with the law, the wishes of the client, and the rules of the organizational home of the project.

Project Management Office (PMO)Purposes:

To deal with the managerial and administrative issues in a way that meets the parent organization’s rules for management and administration

To help manage fast-multiplying forms of getting work done

Many names: Project Office, Program Management Office, Project Support Office

Best PMOs have common characteristics (Baker, 2007):Like best businesses (a business plan, focused,

emphasis on results)Enjoy strong executive supportFuture-oriented learning organizationsOffer best project leadership in the organization

Tasks (Block, 1999) Establish and enforce good

project management processes such as procedures for bidding, risk analysis, project selection, progress reports, executing contracts and selecting software

Assess and improve the organization’s project management maturity

Develop and improve an enterprise project management system

Offer training in project management and help project managers become certified

Identify, develop and mentor project managers and maintain a stable of competent candidates

Offer consulting services to the organization’s project managers

Help project managers with administrative details such as status reports

Establish a process for estimation and evaluation of risk

Determine if a new project is a good “fit” for the changing organization

Identify downstream changes (market, organization) and their impact on current projects

Review and manage the organization’s project risk portfolio

Conduct project reviews and audits, particularly early in each project’s life cycle, and report project progress relative to the organization’s goals

Tasks (continued)Maintain and store project archivesEstablish a project resource database and

manage the resource poolServe as a champion to pursue project

management excellence in the organization and encourage discussion in the value of individual projects in the firm

Serve as a “home” for project managers to communicate with each other and with PMO staff

Collect and disseminate information, techniques and lessons learnedas reported in project evaluations that can improve project management practices

Assist in project termination

Key Factors in Managing Project TeamsPM’s high level of political sensitivity, negotiating and

communicating skills, leadershipMeeting schedule and cost goals without sacrificing

performance – a technical problem with a human dimension

Motivating project team members to accomplish the work of the project even with little control on economic rewards and promotions Judicious use of “thank you” notes with copies to relevant

functional departmentsUse of participative management: workers play significant

roles in what means should be employed in meeting desired ends, and in finding better ways of accomplishing things

Handling interpersonal conflict