Project Management PowerPoint Slides for Week 03

1
Master of Project Management (MPM) Degree
Programme
Fundamentals of Project Management
PART II ADVANCED TOPICS IN PROJECT MANAGEMENT
2
Outline of Presentation Part II

• Brief Overview of Part II
• Introduction to Project Organization
• Organization Examples
• The Functional Organization Form
• Advantages and Disadvantages of the Functional
  Organization Form
• The Project Matrix Organization Form
• The Functional Project Matrix
• The Balanced Project Matrix
• The Strong Project Matrix
• Advantages and Disadvantages of the Strong
  Project Matrix Form
• Project Teams
• Advantages and Disadvantages of Project Teams
• Which Project Organization Form is Best?
• The Project-Based Organization

• Impact of Organizational Culture on Projects
• The Project Management Office (PMO)
• Functions, Advantages and Disadvantages of the
  PMO
• Introduction to Project Portfolio Manage-ment
• The Project Portfolio Management Process
• Portfolio Selection Qualitative Models
• Portfolio Selection Quantitiative Models
• Project Portfolio Management Software
• Issues in Project Portfolio Management
• The Project Management Methodology
• Review of Selected Project Management
  Methodologies
• PMBOK
• APMBOK
• IPMA Baseline
• PRINCE2

3
Projects in the Functional Organization Form
4
The Functional Form of Organization

• In the functional form of organization, work
  activities are structurally segmented according
  to their function i.e. their similarity of
  purpose. For example
• - Accounting Finance
• - Production
• - Research Development
• - Marketing
• IT Support
• Procurement
• - General Administration
• These are the typical functions one would expect
  to find in most commercial organizations.

5
(No Transcript)
6
(No Transcript)
7
(No Transcript)
8
(No Transcript)
9
(No Transcript)
10
University of Texas at Austin, USA
11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
Projects in the Functional Organization Form
Functional Area of the Organization (E.g. IT or
HR)
Staff
The functional form of organizing projects is
best suited for those projects whose scope of
work is basically confined to one functional area
of the organization only and for which there is
no (or only minimal) necessity for interaction
with separate functional areas.
Staff
Staff
Staff
HRIS Project
Staff
15
Projects in the Functional Organization Form
If more than one functional area is involved in a
project, the coordination of project activities
takes place through the hierarchy
Project Coordination
Functional Area A
Functional Area B
Functional Area C
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
16
Project Coordination in Functional Organizations
Corporation X
Project Coordination
Human Resources
Finance Administration
Marketing
Engineering
Procurement
Manufacturing
Purchasing
Receiving Inspection
Electronics Engineering
Software Engineering
Mechanical Engineering
Design
Customer Service
Domestic Sales
International Sales
Fabrication
Assembly
Testing
Production Scheduling
17
The Functional Form- Advantages

• No alteration in the existing structure and
  operations of the organization is necessary as
  functional units are already well established.
• The project simply avails the existing structure
  and diverse resources which are available in its
  functional areas in order to undertake the
  projects which it wants.

18
The Functional Form - Advantages

• The functional form of project organization
  offers high flexibility in assigning personell
  employed in the different functional units to
  work on projects.
• Functional employees can divide their time
  working on different projects and can be
  immediately reassigned to other projects once
  their work has been completed.

19
The Functional Form - Advantages

• The functional form of organiza-tion offers the
  possibility of (very) focussed utilisation of
  knowledge, expertise and experience on a pro-ject
  by employees in any given functional area. Also,
  as these em-ployees are familiar with each other,
  communication between them would normally be
  good, re-action time to issues quick, and
  authority and responsibility clear defined. The
  project work may be simpler to estimate because
  of past experience with similar projects.

20
The Functional Form - Advantages

• Functional employees work-ing on projects can
  maintain their normal career paths in their
  respective functional areas or home bases. This
  is important because it allows functional
  employees to keep abreast of developments
  concerning them in their respective areas, which
  they may not be able to do in a (dedicated)
  project team, and it does not jeopardize their
  promotional chances.

21
The Functional Form - Disadvantages

• If a project has a comparatively broad scope,
  and crosses several functional lines, the
  different functional areas may have different
  perceptions as to the priority level which should
  be accorded to the project. Hence, reluctance by
  one functional area to support the project and
  provide the resources needed for it may result in
  delays to the project.

22
The Functional Form - Disadvantages

• Inadequate integration across different
  functional areas is a common criticism of
  managing projects in the project functional form.
  Functional specialists tend to be concerned
  primarily with their specific part of the project
  work and not the whole project. Thus, a holistic
  perspective is often lacking and this is not a
  good way for managing projects, particularly of a
  complex kind.

23
The Functional Form - Disadvantages

• Functional staff working on a project may
  display a lack of identification with, and
  committment to the pro-ject. This is because
  project work is often seen as additional work
  which distracts them from their routine
  functional work (which for them usually has
  priority) and for which there may be no incentive
  or reward system. A sense of project ownership
  is frequently lacking and the high level of
  motivation usually found among (dedicated)
  project teams is absent.

24
The Functional Form - Disadvantages

• In cross-functional projects, project response
  and overall completion times tend to be higher
  due to the require-ment of channeling
  (poten-tially large amounts of) project
  information, as well as decision-making and

problem-solving through the normal management
channels. Lack of horizontal communication across
functional areas may require rework of work
performed. Conflict and rivalry bet-ween
functional areas may also impede communication.
Res-ponse times to clients and changing
environmental conditions are slow.
25
The Functional Form - Disadvantages

• A strong criticism of the functional form of
  organi-zing projects is that there is no
  individual who has full authority and
  responsibility for the project. Instead,
  authority and responsibility is shared between
  different individuals from different parts of the
  organization in which case no proper
  accountability fo the project can be expected.

26
The Project Matrix Organization
27
What is the Project Matrix Organization?
The Matrix organization is a form of project
organization within the framework of which
temporary horizontal (project) levels are applied
over the permanent vertical (functional) levels
of the organization. Project Management
defines three basic project matrix forms the
Functional Matrix, Balanced Matrix, and Project
Matrix. In practice, the matrix structure can
assume many different manifestations and these
may change over the course of the project
life-cycle.
28
The Project Matrix Organization Form
GENERAL MANAGER
Project Level
Functional Level A
Functional Level B
Functional Level C
Functional Level D
Project 1
FI
FI
FI
FI
Project 2
FI
FI
FI
FI
Project 4
FI
FI
FI
FI
Project N
FI
FI
FI
FI
Functional Interfaces
29
The Functional Project Matrix

• In the Functional or Weak Project Matrix, an
  individual is selected who will oversee and
  coordinate the project activities across the
  various involved functional levels of the
  organization.
• Functional managers are responsible for managing
  their respective segments of the project, decide
  who does what and when the project is to be
  completed, and evaluate the participants.
• Their influence is greater than that of the
  project manager, who has indirect authority to
  expedite and monitor the project.

30
The Functional (Weak) Project Matrix
Functional Manager
Functional Manager
Functional Manager
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Project Coordination
31
The Balanced Project Matrix

• In the Balalanced Project Matrix an individual
  is selected who will manage the project across
  the various functional levels of the organization
  and who will interact with the functional
  managers on an

equal basis and jointly approve technical and
operational decisions. The project manager
defines what needs to be accomplished and the
functional managers decide how and by whom it
will be accomplished within the plan, various
desig-nated functional inputs, standards and
schedules established by the project manager.
32
The Balanced Project Matrix
Functional Manager
Functional Manager
Functional Manager
Staff
Staff
Staff
Staff
Staff
Staff
PM
Staff
Staff
Staff
Staff
Staff
Project Coordination
33
The Strong Project Matrix

• In the Project or strong - Matrix a project
  manager is selected to oversee the completion of
  the project across the various involved
  functional levels of the organization.
• The project manager is ultimately is responsible
  for the projects completion, has final say on
  major project deci-sions and controls most
  aspects of the project, including the assignment
  of functional personell, what they do and when.
• The functional managers maintain title over
  their respective personell and have consultation
  rights.

34
The (Strong) Project Matrix
Functional Manager
Functional Manager
Functional Manager
Manager of Project Mgrs.
Staff
Staff
Staff
Project Manager
Staff
Staff
Staff
Project Manager
Staff
Staff
Staff
Project Manager
Staff
Staff
Staff
Project Manager
Project Coordination
35
Example of a Strong Project Matrix System
Senior Management
Lead Project Manager
ENGINEERING
MANUFACTURING
MARKETING
PA
E1
E2
E3
MA1
MA2
MA3
M1
M2
M3
PM X
1
2
1
3
2
1
PM Y
1
3
1
4
0,5
1
PM Z
0,5
1
3
7
2
0,5
36
The Strong Project Matrix - Advantages

• Resources are scarce in any organization! A big
  advantage of the matrix is that it allows for the
  sharing of diverse resources across multiple
  projects within the respec-tive functional areas,
  enabling the functional personell to flexibly
  divide their attention, effort and time among
  these projects and thereby reducing the costly
  duplica-tion of resources which is inherent in
  setting up (dedicated) project teams.

37
The Strong Project Matrix - Advantages

• The matrix ensures a strong project focus by
  having a project manager who performs a
  coordinating and integrating role across
  functional areas, enabling a more holistic
  approach towards undertaking the project than is
  possible in the purely functional form of project
  organization where the different functional areas
  are usually only concerned with their portion of
  the project work.

38
The Strong Project Matrix - Advantages

• By using a project matrix, the entire spectrum
  of the functional areas technology, expertise
  and experience which can be brought to bear on
  the project can easily be and flexibly be
  accessed since all project work is performed
  within the area.

39
The Strong Project Matrix - Advantages

• Functional personell can maintain close ties
  with their respective areas.
• They are not required to leave their home bases
  in the orga-nization which they may have to do if
  they are assigned to work on a project full-time
  as in a (dedicated) project team and hence they
  will feel more confident as they can keep abreast
  of developments directly concerning them and
  their future in the organiza-tion.

40
The Strong Project Matrix - Disadvantages

• A major criticism of the project matrix is that
  it explicitly violates the established
  hierarchical principle Unity of Command (Fayol,
  1916) which demands that an employee report to
  only one superior and not two as is the case in
  the matrix.
• Dual Reporting (i.e. to both a project and
  functional manager) may cause stress for the
  employee, especially when both managers do not
  get along and issue diverging or conflicting
  orders.

41
The Strong Project Matrix - Disadvantages

• In the matrix environment, there is a potential
  for conflict between project managers and
  functional managers due to diverging agendas,
  possibly unclear patterns of authority and
  accountability and so forth, and this may
  occasionally engender a personal animosity which
  will be detrimental for the project.

42
The Strong Project Matrix - Disadvantages

• Unhealthy competition over the sharing of
  project inputs, equip-ment, human resources and
  faci-lities etc. may arise in the matrix
  environment between project managers who each are
  endeavou-ring to acquire the best available
  inputs for their respective projects from the
  functional areas.
• Consequently, there is the possi-bility that
  underhand deals may be made between project and
  func-tional managers.

43
Problems With Matrix Organizations

• Failure to understand the key principles and
  roles in the matrix organizational environment
• Distrust in organizational forms which are not
  based on Fayols unity of command
• Apprehensions of functional managers over the
  apparent superority of the project goals over
  those of the functional entity
• Senior management shortcomings in terms of
  clearly delineating in writing the formal and
  reciprocal roles of all the key managers involved
  in the project

44
Problems With Matrix Organizations

• Lacking understanding by the project team to
  understand the role and responsibilities of the
  functional professionals and their managers
• Incompetent project and functional managers /
  project managers who manage less and coordinate
  more / decision referall by project managers to
  senior management
• Inadequate stakeholder management
• Lack of trust, integrity, loyalty and committment
  by project team members

45
Issues of Concern in the Project Matrix

• Visible and Sustained Commitment by Top
  Management
• Supportive Organizational Culture
• Tackling Resistance to Change
• Effective Project Prioritization System
• Commitment by Functional Managers and Employees
• Delineation of Roles and Responsibilities
• Decision-Making Conflicts between Project and
  Functional Areas
• Empowerment
• Communication, Cooperation and Coordination
• Professional Project Managers
• System of Rewards and Incentives
• Meeting Training Needs (e.g. in Teamwork,
  Interpersonal Skills, Conflict Resolution)
• Learning from Experience
• Institutional and Infrastructural Framework (e.g.
  PMO)

46
Case Study of a Project Matrix OrganizationAdtra
nz, Sweden
Students are required to read the Case Study
working paper Exploring the Multi-Project Matrix
Process Dynamics of a Projectified Organization
by Mats Engwall Anna Sjoegren Kaellqvist (2001)
47
The (Pure) Project-Based Organization
48
About the Project-Based Organization
In a project-based organization, most of the
work performed is project work and this is
reflected in the organizations structure which
is not based on the functional paradigm but
changes acccording to the projects which the
organization has in its portfolio. Project-based
organizations are often found in the defence and
construction industries, in the movie industry,
in some NGOs and in some outsourced industries.
49
The Project-Based Organization
Project Manager
Project Manager
Project Manager
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Project Coordination
50
Structure of a Project-Based Organization
Corporation X
Marketing
Human Resources
Other Projects
Other Projects
Finance and Administration
Legal
Project Manager (Project A)
Project Manager (Project B)
Engineering
Subcontractors (X, Y, Z)
Engineering
Manufacturing
Procurement
Manufacturing
Procurement