Answer & Explanation:Research your current place of employment (I work for KING COUNTY in Seattle, WA) to determine the organization’s structure.Create an 12- to 16-slide presentation including detailed speaker notes or voiceover in which you do the following:Determine the organizational structure of your selected business.Explain how the structure of the organization might affect its performance. What is the relationship?Discuss the other forms of organizational structure.Contrast the structure of your selected organization with the other forms. Is the structure of your selected organization the best one?Format the assignment consistent with APA guidelines.
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Burke, R. & Barron, S. (2014). Project management leadership: Building creative teams (2nd ed.).
Hoboken, NJ: John Wiley & Sons.
Chapter 4
Project Organization Structures
Learning Outcomes
After reading this chapter you should be able to:
•
Understand the different types of organization structures used to manage projects.
•
Understand the advantages and disadvantages of the different organization structures.
• Understand how to lead a matrix organization structure.
Project organization structures include a number of special organization structures
within the human resource knowledge area that enable the project manager to lead and
manage multi-discipline projects. It is, therefore, essential that the project manager
understands the characteristics and features of project organization structures to be able
to manage the process effectively.
This chapter will explain how to manage the three main types of project organization
structure: functional organization structures, matrix organization structures and pure
project organization structures.
As the single point of responsibility, the project manager’s challenge is to develop a
project organization structure that reflects the needs of the client (business case), the
needs of the project (project charter), the needs of the project team members (team
charter) and, just as importantly, the needs of the stakeholders.
1. What is a Project Organization Structure?
An organization structure enables a company to group people in a controlled manner for the
purpose of performing work. In the project context, a project organization structure includes all
of the elements set out in Table 4.1.
Table 4.1: Project Organization Structure
Temporary
A temporary organization structure that can be set up to perform a project,
Organization
as outlined in the business case and project charter, and then disbanded
Structure
when the project is complete.
Reporting
Structure
Reporting structures that outline who reports to whom, identifying the
relationship between the project participants, together with defining their
duties, responsibilities, authority and lines of communication.
Assigning
Responsibility
A project organization structure that enables responsibilities to be
assigned to project participants to perform the work. In the project
context, the project manager is the single point of responsibility who will,
in turn, issue instructions to the resource providers.
Project
Coordination
A project organization structure that enables the work to be coordinated,
supervised, monitored and controlled, and guides the project towards
achieving the objectives.
Assigning
Authority
A project organization structure that enables authority to be assigned to
the project manager to issue instructions and use company resources.
Procedures
A project organization structure that provides the foundation on which to
apply the company’s standard operating procedures and practices.
Problem Solving
A project organization structure that enables team members and key
stakeholders to participate in the problem-solving and the decisionmaking processes.
Decision Making
A project organization structure that enables the project manager and team
members to make decisions that have collective support, and that align
with the project charter, the business case, the corporate requirements and
the corporate vision.
Interlinking People A project organization structure that interlinks the people working on a
project with both internal colleagues and external stakeholders.
Project Organization Structures: Due to the dynamic nature of projects it is possible to have a
number of organization structures running concurrently and, over the duration of the project, all
of the organization structures might be used at one time or another. These structures outline the
relationship between the various participants, the lines of responsibility, the lines of authority
and the lines of communication.
Within the organization structures used to manage projects there are a number of variants caused
mainly by the distribution of power (authority) between the project manager and the functional
manager(s) and the project manager’s access to resources.
On projects this relationship can be presented as a continuum of organization structures from
functional to pure project (see Figure 4.1).
Figure 4.1: Project Organization Structure Continuum – shows the balance of power from the
functional organization structure to the matrix organization structure, to the pure project
organization structure
•
Functional organization structure.
•
Matrix organization structure.
•
Pure project organization structure.
A characteristic of project management is that it relies on a number of functional departments
and subcontractors to supply the resources to produce the project, each appearing to act
autonomously and yet requiring strong communication links with each other. The project
manager needs to cut across organizational lines to coordinate and integrate specific resources
located in different departments. To achieve this the project manager must have appropriate
tools, in particular an information system that not only accommodates interdisciplinary tasks but
also has the cross-functional capability of retrieving data from the different departments.
Projects have traditionally been managed through a classic functional hierarchical type
organization structure but, with the increase in multi-discipline, multi-department, multicompany and multi-national projects, there has been a move towards management-by-projects,
project teams and matrix organization structures.
2. Functional Organization Structure
The most pervasive organization structure is the basic hierarchical structure which has been
handed down from the medieval kingdoms, the military and the church. The functional
organization structure groups people by specialization (production, marketing, accounts,
engineering, etc.). The principle behind the functional structure is that it is easier to manage
specialists if they are grouped together and supervised by an individual with similar skills and
experiences. This centralizes similar resources, gives an economy of scale, provides mutual
support by physical proximity and clearly defines line and staff divisions of responsibility and
authority.
Figure 4.2 outlines a typical functional structure with a number of functional departments
reporting to the general manager. This structure is ideal for projects within a department, and for
projects where the work of each department can be performed separately.
Figure 4.2: Functional Organization Structure – shows a functional organization breakdown
structure subdivided into civil, structural and mechanical
For example, on a construction project, the civil department would complete its scope of work
and then hand it over to the structural department, which, in turn, would complete its scope of
work before handing it over to the mechanical department (see Figure 4.3).
Figure 4.3: Gantt Chart – shows project work being performed sequentially as separate projects
2.1 Functional Organization Structure Advantages
Table 4.2 considers some of the advantages inherent in a functional organization structure,
particularly for projects within a department.
Table 4.2: Advantages of a Functional Organization Structure
Simple OBS
The functional department is a simple structure which is easy to understand
and easy to use.
Technical
Expertise
Functional departments provide a home for technical expertise and a
platform for continuing technical development.
Support
Functional departments provide good support for work carried out within the
department.
Flexibility
Functional departments can achieve a high degree of flexibility for projects
within the department, because people in the department can be assigned to
the project, then immediately reassigned to another project. Switching back
and forth between projects is easily achieved.
Career Path
Functional departments provide the normal career path within a company for
advancement and promotion.
Estimating
A functional department’s work is simpler to estimate and simpler to manage
as the scope of work is usually restricted to the department’s field of
expertise, and the functional database should contain information from
previous projects (closeout reports).
Communication Lines of communication within the department are short and well
established.
Reaction Time
There is a quick reaction time to problems within the department.
Team Building
As the functional department staff are continually working together, the team
building should be well developed in the performing phase (see Chapter 15
on Team Development Phases).
Consistent Work Some employees prefer working in a consistent work environment with
similar work routines, rather than the changeable and challenging work
environment of diverse multi-disciplined projects.
Responsibility
Functional departments clearly define the team member’s responsibility and
authority within a well-established chain of command.
These advantages clearly show that a functional organization structure is an efficient and
effective way of managing projects within the functional department.
2.2 Functional Organization Structure Disadvantages
Table 4.3 considers some of the disadvantages inherent in a functional organization structure,
particularly when being used to manage multi-disciplined projects.
Table 4.3: Disadvantages of a Functional Organization Structure
Single Point of
There is no single point of responsibility on multi-disciplined projects as
Responsibility
the project’s work moves from one department to another; this can lead
to coordinating chaos. Without a nominated project manager, the
coordinating and linking role must fall to the project sponsor. As projects
become larger and more complex, it becomes increasingly difficult for
senior management to coordinate the day-to-day problems of individual
projects.
Lines of
Communication
On multi-disciplined projects there are no formal lines of communication
between the workers in the different departments; like a funnel,
information flows straight up and down. Generally, the only formal line
of communication between departments is through the functional
managers, which lengthens the lines of communication and slows down
the response time. With these long communication cycles, problem
solving and decision making will be self-limiting. In practice, out of
necessity, informal links may be established between the people working
on the project.
Competition
Competition and conflict between functional departments could limit
effective communication of important project information.
Priority
Departmental work might take priority over project work. If there is a
resource overload, the department’s work will take preference over the
project’s work. If the activities are critical, the project’s schedule will be
pushed out, which could delay the handover to the next department and,
ultimately, delay the project’s completion.
Client
For functional managers the project’s work is not always their main focus
of concern, particularly when the work has moved to another department.
The client (project sponsor) might feel like a football being passed from
one department to another. Clients prefer to deal with one person; the
project manager.
Coordination
Without a clear project manager the project sponsor might actually end
up coordinating the different functional departments himself.
Responsibilities
The responsibility for external coordination with the client, contractors,
suppliers and other stakeholders might become muddled because of
overlapping, underlapping and inadequately defined responsibilities.
Department Focus
The department might myopically focus only on its scope of work in
preference to a holistic view of the project and, consequently, a
departmental solution might not result in the best solution for the project
as a whole. For example, the production department might want
standardization, while the marketing department might want to offer a
range of products to attract a wider market.
LimitedResources
Functional structures are not effective in a multi-project environment
because of the conflicts associated with assessing the relative importance
and priorities as each project competes for limited resources.
Decision Making
No single department is responsible for the overall project’s success; this
could lead to decision by committee.
Career Growth
Initially, the career growth for graduates could be quicker and more
focused within a functional department, but they could soon reach a limit
as they will be constrained by the department’s single field of expertise.
Horizontal
Coordination
Multi-discipline projects call for horizontal coordination, a characteristic
that is foreign to vertically orientated functional hierarchy structures.
3. Matrix Organization Structure
The topology of the matrix structure has the same format as a mathematical matrix (columns and
rows). In this case, the vertical lines represent the functional department’s responsibility and
authority, while the horizontal lines represent the project’s responsibility and authority, thus
giving the matrix structure its unique appearance and name (seeFigure 4.4).
Figure 4.4: Matrix Organization Structure – shows the project managers’ (project 1 and project
2) lines of responsibility and authority overlaid on the functional managers’ vertical lines of
responsibility and authority
The matrix structure is considered by many practitioners to be the natural project organization
structure, as it formalizes the informal links (mentioned in the previous section). On multidisciplined projects, employees need to communicate vertically within their department to
perform their tasks, and horizontally with other departments and the Project Management Office
(PMO).
The matrix structure is a temporary structure superimposed on the existing functional structure.
The matrix structure is created to respond to the needs of the project where people from the
functional departments are assigned to the project on a full-time or part-time basis. When the
project is complete, the matrix structure is removed and the functional structure remains intact.
The aerospace industry finds this structure works well on medium-sized projects, but for large
capital projects they prefer to use the pure project organization structure (see next section).
Table 4.4 considers some of the advantages inherent in the typical matrix organization structure.
Table 4.4: Advantages of a Matrix Organization Structure
Responsibility The project manager is the clear single point of responsibility.
Resources
The project can draw on the entire resources of the company. When several
projects are operating concurrently, the matrix structure allows a time-share of
expertise, which should lead to a higher degree of resource utilization.
Share
Equipment
By sharing the use of equipment the capital costs can be shared between
projects and functional departments.
Rapid
Response
The project manager communicating directly with the project sponsor achieves
a rapid response to the client’s needs.
Problem
Solving
Problem solving (brainstorming) can draw on a much wider input for ideas and
innovative solutions.
Trade-off
The needs of the project manager and functional manager can be addressed
simultaneously by negotiation and trade-off. The project manager is mainly
concerned with what and when (scope and planning), while the functional
manager is mainly concerned with who and how (resources and technical).
Experts
Teams of experts within the functional department are kept together as the
projects come and go.
Many
Experiences
The multi-disciplinary environment exposes people to a wider range of
experiences.
Career Path
By retaining their functional home, specialists keep their career path.
Table 4.5 considers some of the disadvantages inherent in the matrix organization structure.
Table 4.5: Disadvantages of a Matrix Organization Structure
Complex
The matrix organization structure is complex and more difficult to
understand than the simpler functional or pure project organization
structures.
Communication More communication links are required to keep the additional number of
managers informed and consulted.
Dual
Responsibilities
Dual responsibility and authority leads to confusion, divided loyalties,
unclear responsibilities and conflicts over priorities and allocation of
resources.
Costs
The cost of running a matrix organization is higher than a functional or pure
project organization because of the increased number of managers involved
in the administration and decision-making process.
Decision Making With functional projects and pure projects, it is clear who has the power to
make decisions, whereas with the matrix structure, the power would be
balanced between departments. This could cause doubt and confusion,
which means the productivity of the project might suffer.
Complex
Decisions
In the matrix structure the project manager controls the administrative
decisions, while the functional managers control the technical decisions.
Division of power and responsibility could lead to an overly complex
situation.
Two Bosses
Where the project and functional lines of influence cross there exists a twoboss situation, which is a recipe for conflict.
Team Selection
Functional departments are unlikely to give up their best personnel to the
project, so internal team selection might be self-limiting.
For the matrix organization structure to work successfully the functional departments might have
to make some major adjustments to the way they work on projects. The matrix structure
introduces new management interfaces and these will increase the potential for conflict. New
management skills will be required for the functional managers to accommodate conflicting
goals, priorities and resource demands.
The onus is on the project manager to practice an appropriate leadership style towards the
functional managers, which would certainly include negotiation to address the trade-off between
who controls the what, when, who and how.
A characteristic of the matrix organization structure is that it relies on the functional departments
for resources. Although the project and functional departments might appear to work
autonomously, for project success, they need strong communication links with each other. The
project manager needs to cut across organizational lines to coordinate and integrate specific
resources located in the functional departments. To achieve this the project manager must have
both a fully integrated information and control system and the means of addressing the
responsibility–authority gap (see Chapter 7 on Power to Influence).
3.1 Matrix Organization Structure Leadership
In the leadership role, when managing projects within a matrix organization structure, project
managers should consider the points outlined in Table 4.6.
Table 4.6: Considerations for a Matrix Organization Structure
Project Charter
Project managers should use the project charter to substantiate their
position and state how the project will be managed. This should
particularly outline the relationship between the project manager and
the functional managers. If there is no project charter, the project
manager should take the initiative and write the project charter and
have it signed off by the project sponsor.
Balance of Power
Matrix structures are usually categorized by the balance of power
between the project manager and the functional managers.
Flexibility
Because project managers do not have line authority over the
resources, they must be prepared to be flexible and adjust the project
schedules to fit in with the other functional departments’ planning.
Cooperation
Project managers m …
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