Project Management
Building the Project
Organization
Topic 3 Objectives
• Investigate the various types of organizational
structure that exist, to understand the
advantages and disadvantages of each and to
determine the appropriate project context in
which each organization structure can be used.
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Project Management & Organizational Design
• 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
Forms of Organization Structure
• Functional organizations
– group people performing similar activities into
departments
• Project organizations
– group people into project teams on temporary
assignments
• Matrix organizations
– create a dual hierarchy in which functions and
projects have equal prominence
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Functional Organizations
FIGURE 3.1
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Functional Organization Structure
• 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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Advantages and Disadvantages of using Functional
Organization to Administer and Complete projects
• Advantages • Disadvantages
1. No change 1. Lack of focus
2. Flexibility 2. Poor integration
3. In-depth expertise 3. Slow
4. Easy post-project 4. Lack of ownership
transition
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Dedicated Project Team
FIGURE 3.2
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Dedicated Project Teams
• 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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Project Organizational Structure
FIGURE 3.3
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Strengths and Weaknesses of the Dedicated
Project Team Approach
• Strengths • Weaknesses
1. Simple 1. Expensive
2. Fast 2. Limited technological
expertise
3. Cross-functional
integration 3. Difficult post-project
transition
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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
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Matrix Organization Structure
• 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.
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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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Advantages and Disadvantages of Matrix
Management
• Advantages • Disadvantages
1. Efficient 1. Dysfunctional conflict
2. Strong project focus 2. Stressful
3. Easier post-project 3. Slow
transition
4. Flexible
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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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Topic 3 Learning Outcomes
• Explain the design of a functional, project and matrix
organizational structure.
• Evaluate the advantages and disadvantages of each
type of organizational structure from a project
management perspective.
• Determine the appropriate organizational structure for
a particular project context.
• Identify the criteria that will influence which type of
structure is used to manage a project
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