Organisational context of PM

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Organisational context of PM

• Project Management

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Organisation within the organisation
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Organisational structures and projects

• Hierarchical functional structure
• Matrix structure
• Pure project structure

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Hierarchical functional structure(linear-function
al structure)

• Longest history
• Heads of specialist functions report directly to
  the CEO
• The CEO is responsible for co-ordinating the
  functions
• Strict hierarchical chain

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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

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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)

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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)

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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

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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

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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

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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 CEOs level
• Temporary structure uncertainty

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A possible solution strong corporate culture

• Shared views (and values)
• Different project teams
• Functional managers

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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)

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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)

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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

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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

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Readings

• Lockyer Gordon (2005) Chapter 2

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Structure of projects
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Organisation within the organisation
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Project features affects its organisational form

• Uncertainty
• Uniqueness ? diversity of
  projects
• Temporary existence ?
  diversity of projects
• ? variations of the project organisations

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Elements of the project organisation

• Project sponsor
• Project manager
• (Project champion)
• Project management team
• Project team
• Stakeholders

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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

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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.

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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 (customers view)
• System management
• Planning and control
• Financial skills
• Competence in procurement
• Communication skills

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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)

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Readings

• Lockyer Gordon (2005) Chapter 3

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Thanks for the attention!