Organisational context of PM Project Management seminar Organisation

Organisational context of PM Project Management (seminar)

Organisation within the organisation Company organisation • Structure • Culture Project organisation • Structure • Values and interests Project activities • Effectiveness • Efficiency

Organisational structures and projects • Hierarchical functional structure • Matrix structure • Pure project structure

Hierarchical functional structure (linear-functional structure) • Longest history • Heads of specialist functions report directly to the CEO • The CEO is responsible for co-ordinating the functions • Strict hierarchical chain

Advantages • Tight control at the top • Logically represents the functions & maintains their power and prestige • Reduces duplication of functional effort • Concentrates functional skills • Simple reporting relations • High utilisation

Disadvantages • • • Over-specialisation Parochialism of key personnel Weak co-ordination between functions It stifles the development of generalist leaders Ineffecient in fast changing and diverse market environment • It imposes an increasing burden on the chief executive as the rate of change increases • It requires extremely detailed pre-production plans (extremely high rate of formalised work)

Problems arise when… • Jobs requires greater resources than a single function has. • Jobs cut across functional boundaries. • Chief executive is overburdened with coordination problems between functions. • The solution: project manager(s) & project team(s) PM Office

Projects in a functional structure • Place in the structure – Staff (team) – Project manager • What if the project team is not enough? – Professional skills – Resources of one or more functions • Responsibility of the staff – Project team – Functional staff involved in the project

Matrix structure without projects (true matrix) • Division of labor in a matrix structure – 2 dimensions • Responsibilities – Dual reporting • Biggest advantages – Managing complexity – Managing changing environment • Greatest disadvantages – High number of conflicts – Low speed of decision making

Matrix organisation with projects • If there are (continuously) too many projects for the functional structure • One dimension of the division labour is the project structure = A project management function is created • The project management function group • Separation: – The staff members are organisationally disengaged from their previous decisions – Physically (communication, atmosphere) • Reporting: – Linear – Functional

Problems with the project-matrix structure • Latent responsibility and loyalty – It affects career – Dual reporting: • Confusion and conflicts on two levels • Problems arise at the CEO’s level • Temporary structure: uncertainty

A possible solution: strong corporate culture • Shared views (and values) – Different project teams – Functional managers

Advantages of the project-matrix structure • Rapid response to changes • Better balance between time, cost and resources • Independent policies and budgets for different projects • Clear definition of responsibility and authority (project managers)

Disadvantages of the project-matrix structure Requires significant effort from the top management to: • Define policies, procedures, authorities for the whole organisation • Monitoring and controlling the balance of power between project and functional managers • Ensuring the shared view on company objectives (project and functional managers)

The true project structure • The usual business activity is in form of projects • Frequent only in some industries • Functions disappeared: skills are concentrated in project teams • Reserve staff (central pool of extra resources) • Project teams are not temporary

Advantages • Clear project responsibilities and authorities • Clear and controlled project budgets • Better communication between project managers and the CEO • Generalists managers are developed who can manage change • Strong team loyalty and understanding • Management costs are identified • ? subcultures

Does the true project structure exist?

Readings • Lockyer – Gordon (2005) Chapter 2

Thanks for the attention!