Organisational context of PM

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Organisational context of PM

• Project Management
• (seminar)

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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

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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 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 decisions
• Physically (communication, atmosphere)
• 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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Does the true project structure exist?
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Readings

• Lockyer Gordon (2005) Chapter 2

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Thanks for the attention!