13

Project Management
Organizational Structures

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Chapter Concepts

• The characteristics of the three types of

organizational structures
• The advantages and disadvantages of each
• The role of a project management office

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Learning Outcomes

• Explain the three types of project management

organizational structures
• Discuss the advantages and disadvantages of each
type of project management organizational structure
• Describe the role of a project management office in a
matrix organizational structure

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Project Management Project Integration Management
Knowledge Areas from Project Resource Management
PMBOK® Guide

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Functional Organizational Structure

• Typically used in businesses that primarily sell and produce

standard products
• Work groups consist of individuals who perform the same
function
• Team members may be assigned to the project either full-time
or part-time
• The project manager does not have complete authority over
the project team
• Project manager regularly updates the other functional
managers in the company on the status of the project

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Industrial Business Example: Functional
Organizational Structure

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Autonomous Project Organizational Structure

• Companies with this organization are in the projects business;

they do not produce standard products
• Company works on multiple projects at any given time;
usually high dollar value and long term projects
• As projects are completed, the company hopes to get new
contracts for projects
• Each project team is dedicated to only one project
• Each project is operated like a mini-company
• There is little opportunity for members of different project
teams to share knowledge or technical expertise

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Rapid Transit Project Business Example:
Autonomous Project Organizational Structure

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Matrix Organizational Structure
• Multiple projects are in progress at any given time, and these projects
vary in size and complexity
• Hybrid structure—a mix of both the functional and autonomous
project organizational structures
• Provides for effective utilization of company resources
• Employees assigned to the project for the length of time they are
needed
• Pursue career development through assignment to various types of
projects
• Have a dual reporting relationship—a (temporary) project manager and
a (permanent) functional manager
• Project manager is the intermediary between the company and the
customer
• Checks-and-balances and fast response upon problem identification
© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Custom Computer-Based Automation Systems
Example: Matrix Organizational Structure

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Advantages and Disadvantages of
Organizational Structures

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Critical Success Factors
• In a matrix organization, it is important to delineate the
project management responsibilities and the functional
management responsibilities.
• When implementing a matrix organizational structure,
operating guidelines should be established to assure proper
balance of power between project managers and functional
managers.
• Project teams should be kept as small as feasible throughout
the project.

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
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Summary
• The three most common structures used to organize people to work
on projects:
• The functional organizational structure is typically used in businesses
that primarily sell and produce standard products. The advantages of a
functional organizational structure are no duplication of activities and
functional excellence. Disadvantages include insularity, slow response
time, and lack of customer focus.
• The autonomous project organizational structure is used by companies
that are working on multiple projects at any one time and do not
produce standardized products. The advantages of the autonomous
project organizational structure are control over resources and
responsiveness to customers . Cost inefficiency and low level of
knowledge transfer among projects are its disadvantages.

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Summary (continued)
• The matrix organization is a hybrid of both the functional and the
autonomous project organizational structures. The advantages of a
matrix organizational structure include efficient utilization of
resources, functional expertise available to all projects, increased
learning and knowledge transfer, improved communication, and
customer focus. Its disadvantages are the dual reporting
relationships and the need for a balance of power.
• In the matrix structure, the project manager is the intermediary
between the company and the customer.
• The project management office in the matrix organizational
structure oversees and coordinates multiple projects.

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.