Ch 4

Project Organization
Organize - to form into an
association for a common purpose
or arrange systematically

Chapter 4 Project Organizatio

n

Project Organization

Specialization of the human elements

Different types = functional, product
line, geographical location, production
process, type of customer, subsidiary
organization, time, vertical or
horizontal organization
How to tie project to the parent firm
How to organize the project itself
Chapter 4 Project Org

Project as Part of
Functional Organization

E.g. new technology project

under vice president of
engineering
Introduction of new product line
under vice president of marketing
Project assigned to the functional
unit that has most interest
Chapter 4 Project Org

President

VP Finance

VP Marketing

VP
Manufacturing

New Layout
Robot Line

VP
Engineering

Project New
Model Proton
SURIE

Functional Organization

Chapter 4 Project Org

Major Advantages

Maximum flexibility in the use of staff

Individual experts can be utilized by
many different projects
Specialist in the division can be grouped
to share knowledge and experience
Functional division serves as a base of
technological continuity
Functional division contains normal of
advancement
Chapter 4 Project Org

Disadvantages

The client is not the focus of activity and

concern
Tend to be oriented towards functional activities
No individual is given full responsibility for the
project
Slow response to clients needs
Tendency to sub-optimize the project
Motivation of project team is weak
Does not facilitate a holistic approach to the
project

Chapter 4 Project Org

Pure Project Organization

Project is separated from the rest

of the parent system
Becomes self contained unit

Chapter 4 Project Org

Advantages

PM has full line authority over the project

All project workforce directly responsible to
the PM
Lines of communication are shortened
Maintain permanent group of experts
High level of commitment
Ability to make swift decisions
Unity of command
Simple and flexible structure
Support holistic approach to the project
Chapter 4 Project Org

Project Organization
P r e s id e n t
V ic e P r e s id e n t P r o je c t A

V i c e P r e s id e n t P r o je c t B

V ic e P r e s id e n t P r o je c t C

F in a n c e

F in a n c e

F in a n c e

M a n u f a c t u r in g

M a n u f a c t u r in g

Chapter 4 Project Org

M a n u f a c t u r in g

Disadvantages

Duplication of effort
Stockpile equipment and technical
assistance just in case
Lack of expertise in high technology
project
Foster inconsistency and cutting
corners
Project takes on a life of its own
Worry about life after project ends
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Matrix Organization

Combination of functional and pure

project organizations
Matrix project is not separated from
parent organizations
Individuals come from respective
functions divisions and are assigned
to the project full time or part time
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Matrix Organization
President
Manufacturing

Program Manager

R&D

Marketing

PM1
PM2
PM3

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Matrix Organization

Cross-functional team members

Draw temporarily on technological expertise of
relevant functions
High technology areas integrate functional
specialties
Iterations in adapting over the wall approach
Systems approach integrity of product design
Close coordination and communication among
all parties
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Advantages of Matrix
Approach

The project is the point of emphasis

Reasonable access t pools of technical talents
Less anxiety about what happens after
project completion
Rapid response to client needs
Access to administrative units of the parent
firms
Better balance of company resources in
multiple projects
Flexibility in control
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Disadvantages

Delicate balance of power

Movement of resources conflict
Projects resist death
Complex division of authority and
responsibility
Violates the principle of unity of
command
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Mixed Organizational
Systems

Divisionalization breaking down large

organization into smaller more flexible
units
Spin-off the large projects as subsidiaries
or independent operations
Allow formation of venture team
Hybrid leads to flexibility
Dissimilar groupings encourage overlap,
duplication and friction
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Mixed Organization
P r e s id e n t
P r o je c t M

F in a n c e

E n g in e e r in g

Chapter 4 Project Org

P r o je c t N

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Staff Organization

Set up like functional organization

Adds a staff office to administer
projects
Used for small, short run projects

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Staff Organization
President

Project S
Finance

Manufacturing

Chapter 4 Project Org

Engineering

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Choosing an
Organizational Form

Functional form major focus on in-depth

technology, require large capital investment
Pure project large number of similar
projects
Matrix organization require integration of
inputs from several functional areas and
involves reasonably sophisticated
technology and several projects must share
technical expertise
Matrix organizations are complex
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Selection of Project
Organization

Define the project / objectives

Determine the key tasks
Arrange key tasks by sequence and
decompose them into work packages
Determine project subsystems
List special characteristics level of
technology, probable length, resource
requirements, level of outsourcing
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Project Team

Project office control center, chart

room (focus of all project activity)
Close location to project manager
Co-location of external parties
Reduce physical distance
Better communication
Pressure to complete tasks
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Key Team Members

Project Engineer
Manufacturing Engineer
Field Manager
Contract Administrator
Project Controller
Support Services Manager
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Work Organization

Project engineer (technical performance)

and project controller (budget) report to
PM
PM forecast of personnel needs
Prepare WBS to determine exact nature of
tasks
Skills requirements are assessed and
aggregated
Outsourcing of certain tasks
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Typical Organization of
Engineering Projects
P r o je c t M a n a g e r
P r o je c t E n g in e e r

P r o je c t c o n t r o lle r

M a n u f a c t u r in g E n g in e e r

C o n t r o l A d m in is t r a t o r

F ie ld M a n a g e r

S u p p o r t S e r v ic e s M a n a g e r

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Staff Critical to Project

Success

Senior project team members

Staffs whom the PM will require
close communication
Staffs with rare skills for project
success

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Human Factors

Technical problem with a human dimension

Perfectionist can cause delay
Motivation recognition, achievement,
responsibility, advancement, the work
itself
Interpersonal conflict
Management by Objectives (MBO) allows
worker to take responsibility for design and
performance of a task
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Advantages of MBO

Participative mechanism
Allow professionals to design their own method
Team members know what is expected of them
Members have the opportunity to participate in
deciding their own responsibilities
Members get timely feedback on their
performance
Project manager is provided a tool for
evaluating and controlling performance

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MBO

Superior set objectives in

consultation and agreement with
subordinates
Subordinate develops action plan, a
detailed plan and scheduled that
will result in achieving the objective
Final plan becomes a contract
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Major Sources of Conflict

Life cycle phase
Project formation

Buildup phase

Conflict source
Priorities,
procedures,
schedules

Priorities, schedule,
procedures
Main program
Schedule, technical,
manpower
Phase out
Schedules,
Chapter 4 personality,
Project Org
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