IISc MG 286 Project Management Organisation - PowerPoint PPT Presentation


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IISc MG 286 Project Management Organisation


This ppts describes the organisational aspects of the MG 286 Project Management Course, as taught by Prof Parameshwar P Iyer at the Indian Institute of Science – PowerPoint PPT presentation

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Title: IISc MG 286 Project Management Organisation

  • Module 3
  • Project Organization

Project Organisation
The Right Organisation Will Have The Right People
Doing The Right Things In The Right Place At The
Right Time.
Organizations are partly described by their
  • Formal organizational structure as published in a
    chart, gives a fundamental overview of the
    organizational elements or units. It describes
    the normative superior subordinate relationship,
    chain of commands, sub-division etc.
  • Informal organizational structure comprises of
    relationships evolved through interactions of
    people grouping, authority figures, communication
    lines, etc.

Organizations are partly described by their
There is no one best way to structure project
organizations, but there are structural patterns
and specific roles that enhance project
performance. Though project managers are seldom
involved in organization design decisions, they
should understand the kinds of organizational
designs used in project management, and their
relative advantages and disadvantages.
Project Organisation
  • Explain formal and informal organisation
  • Examine various forms of organisation structures
  • Evaluate requirements-project organisations
  • Establish merits / demerits of pure / matrix
  • Elucidate the criteria for selecting a suitable
    project organisation form .

Formal organization Structure published in a
  • Range of activities in which the organization is
  • Management hierarchy and reporting relationships
  • Major sub-divisions of the organization
  • Type of work and responsibility of each division
  • Official lines of authority and communication

NASA Organization Chart ISRO Organization
Chart DEIL (Matrix) Organization Chart
Project Organization Design
  • There is no best kind of organization structure.
    The most appropriate structure depends on
  • The organizations goals
  • The type of work
  • The environment

Project Organization Design
Organization structures typically develop through
a combination of planned and evolutionary
responses to ongoing problems and areas of work.
Organizations create specialized roles and units.
As organizations grow or as the environment
changes, additional subdivisions and new
groupings are implemented to handle emerging
problems better.
Project Organization Design
E.g Organization increases product line -
manufacturing units are subdivided into product-
oriented divisions. As organizations expand sales
territory marketing force is subdivided
geographically. Differentiation is subdivision
into specialized areas . Integration is when sub
units interact, coordinate and mutually adjust
returns to fulfill the organizations goals.
Traditional forms of Organization
  Basis for Differentiation   Functional
Geographic Product Customer
Process Project (new form)
Traditional Organisation Structure
  • Merits
  • Works well in repetitive, stable environments (
    mass production )
  • Low level of integration can get job done
  • Easier budgeting and cost control
  • Broad manpower base, flexible personnel
  • Well-defined levels of authority, responsibility,
    and communication channels

Traditional Organisation Structure
  • Demerits
  • Absence of clear project responsibility
  • Difficult to integrate activities across
    functional lines ( conflict between groups).
  • Lack of customer focal point wrt the project
  • Slow and tedious decision-making process
  • Lack of flexibility and organic dynamism.

Typical Functional Form of Organization Structure
(Industrial Gadgets/Instrument Co)
  • Works well in repetitive and stable environments.
  • Most prevalent basis for organization structure

Geographic Differentiation
  • Regional subunits operate relatively autonomously
  • Within each subunit there is functional
  • Easily monitored through standardized accounting
    and reporting procedures.

Geographical Organisation Structure
  • Merits
  • Personalized services in different regions
  • Regional unit- market oriented and focussed
  • Can tap more business opportunities
  • Greater career opportunities and challenges

Geographical Organisation Structure
  • Demerits
  • Communications may be time-consuming, hence
    difficult to manage.
  • If regional units are organized via traditional
    o.s., all those demerits accrue.
  • Higher overheads due to replication of technical
    skills amd facilities.
  • Us versus them syndrome( Branch vs. HQ).

Product differentiation and process
  • Each major product subdivisions designs,
    manufactures and markets its own product line
  • Low level of integration,
  • Financial reporting rules and procedures

Customer differentiation
Proposal, contracting and product specifications
differ. Eg Defense applications and corporate
clients. Figure 3-1 - A typical
traditional/functional organization
structure Figure 3-2 A typical geographical
organization structure Figure 3-3 A typical
product organization structure
Drawbacks of traditional forms of organizations
  • Can address only certain anticipated classifiable
    kinds of problems
  • Reacts to changes by further differentiating
    subunits and by adding more rules, procedures and
    levels of management.
  • Assume that problems can be neatly classified and
    resolved within subunits, which work independently

Requirements of Project Organizations
  • Each project is a new undertaking to satisfy a
    new goal. Sub units must work together to
    estimate resource requirement, combine them into
    a coordinated plan and work accordingly
  • Project organizations must be organic
  • Highly differentiated to accommodate a large
    variety of potential problems
  • Highly integrated to respond rapidly to problems
    involving multiple subunits
  • Highly flexible to alter structure as goals

Two essential properties required of project
  • They integrate subunits into horizontal relations
  • Their organization structures are specific to
    problems or environment

Integration of subunits in projects
  • Liaison roles, task forces and teams through a
    specialized person linking two departments or
    groups at lower levels E.g. Inventory Controller
    links assembly and purchases.
  • Interdisciplinary task force of a group of
    representatives from several areas is set up to
    solve a problem
  • Interdisciplinary teams with representatives from
    various departments coordinate decisions about
    changes in market conditions
  • Project expeditors manage a team within a single
    functional area with no formal authority over
    team members. Eg. Marketing.
  • Project coordinators manage a multifunctional
    team with representatives from other departments.

Pure project Organization
  • It is suitable for projects that entail a high
    level of complexity, major resource commitments
    and high stake in outcome.
  • It is a separate organization almost like another
  • A project manager who has full authority over all
    people and physical resources assigned to the
    project heads it and thus has maximum control.

3 Types
  • Project Centre The parent organization remains
    the same except for the addition of a separate
    project arm and a project manager. E.g. For the
    functional organization of Industrial Instrument
    Co. a project organization can be added as
  • Figure 3-5 A typical pure project organization
  • Stand Alone project An organization created
    for accomplishing the project especially for
    large-scale government or public sector projects.
  • Partial project Function critical to the
    project like construction or engineering may be
    assigned to the project manager while other
    support-oriented functions remain with functional

Demerits of Pure project Organization
  • It is an additional cost to the parent
    organization since it should be adequately
  • Resources must be acquired in advance
  • Outplacement of personnel on completion of the
  • Pure project organizations are strictly temporary

Matrix Organization
  • Matrix Organization is set up when the need
    capability arises in multi project organizations
    to quickly create large project groups, without
    the personnel and cost disadvantages of pure
    project organization
  • Matrix organization is a grid like structure of
    authority and reporting relationships
  • created by the overlay of a project
    organization on a traditional functional
  • organization
  • The functional part provides the repository for
    technical expertise and physical resources

Matrix Organization
  • Staff is assigned to different projects to enrich
    the expertise of people in functional areas.
  • When individual assignments are fulfilled, staff
    goes back to their functional houses for a new
  • Large fluctuations in work force and staff
    replacement are reduced.
  • The primary role of project manager (also called
    matrix manager) is integration

Problems with matrix form of organization
  • The combination of vertical and horizontal
    structure is the root cause of problems in the
  • Matrix is just not a structure but a whole new
    way of doing things
  • It needs efficient information systems and human
    behavior that support two dimensional information
    flow and dual reporting relationship
  • Can induce conflict without coordinating decision
    making It violates the traditional principle of
    single and scalar chain of command.

Selecting a project Form
  • The four basic criteria for selecting project
    organization forms are
  • Frequency of projects how often and to what
    degree is the parent company involved in the
    project related activity
  • Duration of project - how long a typical project
  • Size of project level of human, capital and
    material resources in relation to other
    activities in the company
  • Complexity of relationships number of
    functional areas involved in the project and
    degree of interdependency

Applicability of A Project
  • The approximate applicability of different
    project organization forms depending on the
    referred-to criteria is as shown below
  • For small, less complex projects - a single
    function task force or team
  • For medium size and complexity projects If
    infrequent, task force for short duration and
    temporary matrix for long duration. If frequent
    task force or permanent matrix
  • For large size or high complexity partial
    project or pure project depending on frequency.

Figure 3-6 A Project Organization
continuum Figure 3-7 Using some criteria for
selecting project organization structure
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