PROJECT

MANAGEMENT
The Managerial Process

CHAPTER THREE

Organization Strategy and Culture

Copyright © 2014 McGraw-Hill Education. All Rights Reserved.
PowerPoint Presentation by Charlie Cook
WHERE WE ARE NOW

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.

3–3
PROJECT MANAGEMENT
STRUCTURES (CONT’D)
• 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.

3–4
FUNCTIONAL ORGANIZATIONS

FIGURE 3.1

3–5
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

3–6
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.

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DEDICATED PROJECT TEAM

FIGURE 3.2

3–8
PROJECT ORGANIZATION:
DEDICATED TEAM
ADVANTAGES DISADVANTAGES
 Simple  Expensive
 Fast  Internal Strife (strong
 Cohesive (united and disagreement or
working together) fighting)

 Cross-Functional  Limited Technological

Expertise
Integration
 Difficult Post-Project
Transition

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PROJECTIZED ORGANIZATIONAL
STRUCTURE

FIGURE 3.3

3–10
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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MATRIX ORGANIZATION STRUCTURE

FIGURE 3.4

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DIVISION OF PROJECT MANAGER AND
FUNCTIONAL MANAGER RESPONSIBILITIES
IN A MATRIX STRUCTURE

Project Manager Negotiated Issues Functional Manager

What has to be done? Who will do the task? How will it be done?

When should the task be done? Where will the task be done?

How much money is available Why will the task be done? How will the project involvement
to do the task? impact normal functional activities?

How well has the total project Is the task satisfactorily How well has the functional
been done? completed? input been integrated?

TABLE 3.1

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DIFFERENT MATRIX FORMS
• Weak Form
– The authority of the functional manager predominates
and the project manager has indirect authority.
• Balanced Form
– The project manager sets the overall plan and the
functional manager determines how work to be done.
• Strong Form
– The project manager has broader control and functional
departments act as subcontractors
to the project.

3–14
PROJECT ORGANIZATION:
MATRIX FORM
ADVANTAGES DISADVANTAGES
 Efficient  Dysfunctional Conflict
 Strong Project Focus ( two or more parties
come to an agreement
 Easier Post-Project that is not beneficial to all
Transition involved.)
 Flexible  Infighting (hidden conflict
or competitiveness within
an organization.)
 Stressful
 Slow
3–15
• Strong matrix is likely to enhance project integration,
diminish internal power struggles, and ultimately
improve control of project activities and costs.
• On the downside, technical quality may suffer
because functional areas have less control over their
contributions.
• Finally, projects may emerge as the members
develop a strong team identity.

3–16
• The Weak matrix is likely to improve technical quality
as well as provide a better system for managing
conflict across projects because the functional
manager assigns personnel to different projects.
• The problem is that functional control is often
maintained at the expense of poor project integration.

3–17
• The Balanced matrix can achieve better balance
between technical and project requirements, but it is a
very delicate system to manage and is more likely to
succumb to many of the problems associated with the
matrix approach..

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WHAT IS THE RIGHT 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?

3–19
• If over 75 percent of work involves projects, then an
organization should consider a fully projectized
organization.
• If an organization has both standard products and
projects, then a matrix arrangement would appear to
be appropriate.
• If an organization has very few projects, then a less
formal arrangement is probably all that is required.
Dedicated teams could be created on an as-needed
basis and the organization could outsource project
work.

~–20
WHAT IS THE RIGHT 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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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.

3–22
10 primary characteristics which capture the essence of
an organization’s culture

~–23
KEY DIMENSIONS DEFINING AN
ORGANIZATION’S CULTURE

FIGURE 3.5

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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.

3–25
 ORGANIZATIONAL CULTURE DIAGNOSIS
WORKSHEET
Power Corp.
I. Physical Characteristics:
Architecture, office layout, décor, attire
Corporate HQ is 20 Story modern building—president on top floor. Offices are bigger in the top floors
than lower floors. Formal business attire (white shirts, ties, power suits, . . . ) Power appears to increase
the higher up you are.
II. Public Documents:
Annual reports, internal newsletters, vision statements
At the heart of the Power Corp. Way is our vision . . . to be the global energy company most admired for
its people, partnership and performance. Integrity. We are honest with others and ourselves. We meet
the highest ethical standards in all business dealings. We do what we say we will do.
III. Behavior:
Pace, language, meetings, issues discussed, decision-making style, communication patterns, rituals
Hierarchical decision-making, pace brisk but orderly, meetings start on time and end on time,
subordinates choose their words very carefully when talking to superiors, people rarely work past 6:00
P.M., president takes top performing unit on a boat cruise each year . . .
IV. Folklore:
Stories, anecdotes(real incident or persons), heroines, heroes, villains
Young project manager was fired after going over his boss’s head to ask for additional funds.
Stephanie C. considered a hero for taking complete responsibility for a technical error.
Jack S. was labeled a traitor for joining chief competitor after working for Power Corp. for 15 years.
FIGURE 3.6 3–26
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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CULTURAL DIMENSIONS OF AN ORGANIZATION
SUPPORTIVE OF PROJECT MANAGEMENT

FIGURE 3.7

3–28
• 3M has received acclaim for creating an entrepreneurial
culture within a large corporate framework.
• The essence of its culture is captured in phrases that have
been chanted often by 3Mers throughout its history:
“Encourage experimental doodling.” “Hire good people and
leave them alone.” “If you put fences around people, you get
sheep. Give people the room they need.”
• Freedom and autonomy to experiment are reflected in the
“15 percent rule,” which encourages technical people to
spend up to 15 percent of their time on projects of their own
choosing and initiative.

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KEY TERMS
Balanced matrix
Dedicated project team
Matrix
Organizational culture
Projectized organization
Project Office (PO)
Strong matrix
Weak matrix

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