Pr o je c t Ma n a g eme n t

THE MANAGERIAL PROCESS Clifford F. Gray

Eric W. Larson
Third Edition

Chapter 3

Organization: Structure and Culture

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Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–2
3–2
 Project Management Structures
• Challenges to Organizing Projects
– The uniqueness and short duration of projects relative to
ongoing longer-term organizational activities
– The multidisciplinary and cross-functional nature of
projects creates authority and responsibility dilemmas.
• Choosing an Appropriate Project Management
Structure
– The best system balances
the needs of the project
with the needs of the
organization.

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 Project Management Structures
• Organizing Projects: Functional organization
– Different segments of the project are delegated to
respective functional units.
– Coordination is maintained through normal
management channels.
– Used when the interest of one functional area
dominates the project or one functional area has a
dominant interest in the project’s success.

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 Functional Organization of Projects
• Advantages • Disadvantages
– No Structural Change – Lack of Focus
– Flexibility – Poor Integration
– In-Depth Expertise – Slow
– Easy Post-Project – Lack of Ownership
Transition

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 Functional Organizations

Delta Manufacturing, Inc.

President
Coordination

HRM Finance/Adm

Marketing Engineering Manufacture Purchase

Electronic Software Machinary Receive/

Design Purchase
Engineer exam

Customer Domestic International Production

Production Processing TEST
Service Sale Sale Schedule

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 Project Management Structures (cont’d)
• Organizing Projects: Dedicated Teams
– Teams operate as separate units under the leadership
of a full-time project manager.
– In a projectized organization where projects are the
dominant form of business, functional departments are
responsible for providing support for its teams.
assembly

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 Project Organization: Dedicated Team
• Advantages • Disadvantages
– Simple – Expensive
– Fast – Internal Strife
– Cohesive – Limited Technological
Expertise
– Cross-Functional
Integration – Difficult Post-Project
Transition

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 Dedicated Project Team

Zeus Electronics, Inc.

President

HRM Finance/Adm

Marketing Engineer/Design Manufacture Purchase

PM Manager

Project Team

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 Project Management Structures (cont’d)
• Organizing Projects: Matrix Structure
– Hybrid organizational structure (matrix) is overlaid on
the normal functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both functional
and project managers.
– Matrix structure optimizes the use of resources.
• Allows for participation on multiple projects while performing
normal functional duties.
• Achieves a greater integration of expertise and project
requirements.

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 Different Matrix Forms

• Functional (also Weak or Lightweight) Form

– Matrices in which the authority of the functional manager
predominates and the project manager has indirect
authority.
• Balance (or Middleweight) Form
– The traditional matrix form in which the project manager
sets the overall plan and the functional manager
determines how work to be done.
• Strong (Heavyweight) Form
– Resembles a project team in which the project manager
has broader control and functional departments act as
subcontractors to the project.
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 Project Organization: Matrix Form
• Advantages • Disadvantages
– Efficient – Dysfunctional Conflict
– Strong Project Focus – Infighting
– Easier Post-Project – Stressful
Transition
– Slow
– Flexible

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 Matrix Organization Structure

President

HRM Finance

Project Manufacture Marketing

Engineering
Director

PM Design Electronics Software Mechanical Technical Assemply Test Quality Customer Domestic International
engineering engineering engineering engineering documentation service sales sales

P-A
Manager 1 2 1 2 1 2 1/2 1

Project B
project 1 3 1 1 1 1 1 1 1 1 2 1
manager

Project C
project 1/2 1 1/2 2 2
manager

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 Project Management Structures (cont’d)
• Organizing Projects: Network Organizations
– An alliance of several organizations for the purpose of
creating products or services.
• A “hub” or “core” firm with strong core competencies
outsources key activities to a collaborative cluster of satellite
organizations.

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 Project Organization: Network Form
• Advantages • Disadvantages
– Cost Reduction – Coordination of
Breakdowns
– High Level of
Expertise – Loss of Control
– Flexible – Conflict

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 Project Organization Structure

Central Engineering Systems, Inc.

President

Marketing HRM

Finance/Adm Legal Office

Other Projects Other Projects

Alpha Project Beta Project

Manager Manager

Engineering Manufacture Purchase Engineering Sub-contract

Electrical Fabrication Systems Subcontractor X
Mechanical Assembly Hardware Subcontractor Y
Software Test Software Subcontractor Z
Manufacturer Purchase

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 Choosing the Appropriate Project
Management Structure

• Organization (Form) Considerations

– How important is the project to the firm’s success?
– What percentage of core work involves projects?
– What level of resources (human and physical) are
available?

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 Choosing the Appropriate Project
Management Structure (cont’d)

• Project Considerations
– Size of project
– Strategic importance
– Novelty and need for innovation
– Need for integration (number of departments involved)
– Environmental complexity (number of external
interfaces)
– Budget and time constraints
– Stability of resource requirements

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 An Example Structure
President
VP International VP VP VP VP VP

Project Office Schools Divisions, Centers

P-1
P-2
P-3
P-4

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 Organizational Culture
• Organizational Culture Defined
– A system of shared norms, beliefs, values, and
assumptions which bind people together, thereby
creating shared meanings.
– The “personality” of the organization that sets it apart
from other organizations.
• Provides a sense of identify to its members.
• Helps legitimize the management system of the organization.
• Clarifies and reinforces standards of behavior.

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 Identifying Cultural Characteristics

• Study the physical characteristics of an

organization.
• Read about the organization.
• Observe how people interact within the
organization.
• Interpret stories and folklore surrounding the
organization.

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 Implications of Organizational Culture
for Organizing Projects
• Challenges for Project Managers in Navigating
Organizational Cultures
– Interacting with the culture and subcultures of the
parent organization
– Interacting with the project’s clients or customer
organizations
– Interacting with other organizations
connected to the project

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 Key Terms

Balanced matrix
Dedicated project team
Strong matrix
Matrix
Organizational culture
Weak matrix
Projectitis
Projectized organization
Network organization
Project Proposal Sample

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