TOPIC 12: PROJECT ORGANISATION
1. Meaning of a Project Organisation Structure
2. Importance of Project Organisation Structure
3. Types of Project Organisation Structure
4. Factors to consider in Choosing a Project Organisation Structure
MEANING OF A PROJECT ORGANISATION STRUCTURE
A project organization is a structure that facilitates the coordination and implementation of project activities. Its main reason is to create an environment that fosters interactions among the team members with a minimum amount of disruptions, overlaps and conflict.
IMPORTANCE OF PROJECT ORGANISATION STRUCTURE
Structure Allows For Better Communication
Since the flow of information is essential to an organization’s success, the organizational structure should be designed to with clear lines of communication in mind. For example, the financial planning and analysis department might report to the Chief Financial Officer and the Senior Vice President of Marketing, because both of these members of the top management team depend on information and reports provided by financial planning.
Clear Reporting Relationships
Reporting relationships must be clear so all members of the organization understand what their responsibilities are and know to whom they are accountable; otherwise, responsibility for a task may fall through the cracks. These clear relationships make it easier for managers to supervise those in lower organization levels. Each employee
benefits by knowing whom they can turn to for direction or help. In addition, managers are aware of who is outside the scope of their authority, so they do not overstep their bounds and interfere with another manager’s responsibilities.
Growth And Expansion
Companies that grow rapidly are those that make the best use of their resources, including management talent. A sound organization structure ensures that the company has the right people in the right positions. The structure may suggest weak spots or deficiencies in the company’s current management team.
As the company grows, the organization structure must evolve with it. Many times more layers of management are created, when one department head has too many individuals reporting to him at one time to give each employee the attention and direction needed for the employee to succeed.
Efficient Task Completion
A well-designed organization structure facilitates the completion of projects. Project managers can better identify the human resources available to them if the scope of each department’s responsibility – and each team member’s capabilities – are clear. A project to develop a new product would require market research, for instance. The project
manager needs to know who in the organization can provide this research, and whose permission must be obtained for the research to be done.
Fits Company’s Needs
Companies in different industries require different mixes of talent and a relatively greater emphasis on certain management functions. A software company often has a large development staff, for example. Structuring the reporting relationships within the development team so creativity and productivity are maximized, and deadlines are met, is vital to that type of company’s success.
Companies often have to go through a reorganization phase in which individual positions or even whole departments are repositioned on the organization chart in an effort to better utilize the company’s human resources and make the operation run more smoothly.
What Can Go Wrong?
Poorly structured organizations find that critical deadlines are not met because there were not sufficient human resources in each department to accomplish all parts of a given task, or because it was not clear whose ultimate responsibility the project was. If individuals are not sure whom they report to, they may find they are given conflicting assignments by two or more managers above them.
TYPES OF PROJECT ORGANISATION STRUCTURE
Functional Organization
The Functional Organization groups workers based on their area of specialization. This structure is an extension of the Line Organization. The functional manager leads the team and manages all the operations or businesses.
The Functional Organization manager enforces directives within a clearly defined scope of authority. This concept originated with Fredrick W. Taylor.
Here you classify workers according to their functional roles and department. Some of the general departments under this are
– Finance
– HR
– Sales
– Customer service
– Supply Chain, etc.,
The organization’s head is the president, followed by the vice president, and the chain goes on. Furthermore, the leaders of departments foresee their departmental performance. So they collectively help the organization control quality and uniformity.
The structure positions departments vertically and disconnected from others. Hence the name “silos.” The department heads manage communication between the top management and his subordinates.
The project manager has a minimal role to play or may not have a designated position.
Generally, you’ll play the role of an expediter or work as a coordinator. While as a functional manager, you’ll deal with
– Budget allocation
– Resource allocation, and
– Decision making.
This type of organization is suitable for manufacturing or engineering companies. It supports ongoing operations and practices for producing standard products.
Advantages
Clear Line of Command
Project teams within a functional structure benefit from clearly defined reporting relationships. Functional structures are managed through a coherent top-down approach, with employees generally reporting to only one manager. Fewer layers of management means employees are more likely to know what is expected of them, and
from whom.
Autonomy
Another main advantage of projects performed inside a single department is that the unit has complete control over the results. Project goals are determined internally, not by an external project owner, and thus are better suited to meet departmental need.
Additionally, an atmosphere driven by self-government fosters a supportive environment in which growth and skill development thrive.
Quick Decision Making
Lamar University’s website notes that “people who approach problems from the same perspective can often make decisions more quickly and effectively than can people whose perspectives differ.” Under the functional structure, project decision making is swift and authoritative. Although conflicts may still arise, similar backgrounds and
perspectives generally facilitate quicker turnaround times and less wasteful deliberation.
Knowledge Sharing
As with quick decision making, clustering people together according to professional similarities also fosters communication and knowledge sharing between co-workers.
Instead of reliance on costly seminars and workshops, more experienced project team members serve as mentors to colleagues with less experience. Effective application of this knowledge results in a stronger, more productive project team.
Easier Supervision
Functional structures create a clear career ladder for project members to follow. Project managers within a functional structure are usually experts within their particular unit who have been promoted to that role due to high performance. These leaders possess a superior skill level that helps make their job easier and makes them better equipped to monitor the individual performance of their team members to distribute recognition,
rewards and punishments accordingly.
Disadvantages
Lack of Coordination
In some instances, managers of other functional groups may not respond helpfully or in a timely way because “it’s not our problem.” By the time the need for cooperation has been established, the moment when cooperation would have been most effective may already have passed.
Territorial Disputes
A further disadvantage of a functional organization closely related to the failure of functional groups to cooperate with one another is the possibility of territorial disputes.
These disputes may have to do with disagreements over goals, budgetary competition or any number of issues that stem from a clash of egos that occur when each department has its own separate functional structure or where a strong sense of a common purpose is lacking.
Work takes place in a silo, which might mean you don’t have access to people outside your functional division.
People on the project team might be more loyal to their department or team manager than to their work on the project, which can create conflicts.
A large project can end up with a functional project manager for each function. It can result in work falling through the cracks if all project managers don’t work harmoniously together.
Functional work can be isolating in that you don’t have an opportunity to network widely with the company. Maintaining a strategic focus can be harder.
Project Organization
Dedicated teams are put together to work on projects in a project organizational structure. The project manager probably has line management responsibility for the project team members. Examples of this would include large construction builds, but also corporate initiatives that require a dedicated team. The project manager has
ultimate authority, reporting to the project sponsor and the project board. The individuals on the team work directly for the project manager.
As a project manager, you can use allotted resources until completion and closeout.
Albeit you’re accountable for all the activities and timely completion of the project. In other words, you must spend based on the project budget.
The manager assigns clearly defined tasks to each of the team members, along with the complete schedule.
These types of organizations are useful when:
– The project scope is complete, and objectives are clearly defined
– Project is unique and independent
Advantages
The obvious advantage of a project structure is that you have more control over the team, but other advantages are in place, too:
Teams can have a strong sense of identity. It is the easiest structure within which to create a strong team culture.
The whole team is focused on the team’s goals, so conflict of loyalty exists with the day job for the people working on the project. Their day job is the project.
Resources are dedicated to the project, so it’s much easier to schedule work.
You’ll know when the team members are available and there’s no risk they’ll be pulled off at short notice to business-as-usual work for another manager.
Projects run in this structure are great environments for improving your project management skills as well as more technical leadership skills.
Manage resources efficiently and effectively
Disadvantages
Having a team dedicated to one project is an expensive commitment. It tends to be an option only on big projects.
If you remove people from their functional jobs, they might find it difficult to go back, especially if the project is long. Project work stretches you, so returning to your previous role after working in a multidisciplinary environment on a new, challenging project, isn’t an appealing prospect for many people. Thus, managing the transition of the team when you close a project becomes even more important.
Sometimes closing a project can mean losing your job if the business has moved on and another role isn’t available for you.
By their nature, dedicated teams suck up resources to work on just one thing.
They can limit the number of projects the company can do at any one time, especially when different projects require the same skills.
Project managers in this type of structure do line management for their teams, too, which means spending time and effort on human resource tasks you wouldn’t have to do in other structures. If you enjoy this element of working
with people, this factor could be an advantage.
Matrix Organization
This one is the combination of a projectized and functional organization. Resources are shared across both business-as-usual work and project work. It might mean having two managers or “dotted-line” responsibility to a project manager as well as to the team manager. The functional management line structure is normally in place first, and the
project manager takes the dotted line.
This structure splits power and authority between the functional or division team manager and the project manager. You’ll need to use your negotiating skills to their full power.
Advantages
Matrix structures are very common because they allow managers to make flexible choices with how people spend their time. You’ll likely work in a matrix environment at some point in your career. The advantages of this structure are:
Resources are used efficiently and can move around between projects as needed.
You can work on lots of different things, sometimes in parallel—although this point can be argued as a disadvantage as well.
Teams and individuals can be very responsive. If a new project comes along that has to take priority, it’s easy enough to pivot and suddenly focus on something else. You can’t do that easily in a project structure, which takes longer to disband and regroup.
The structure requires that everyone use the same project management lifecycle and methodology, so moving between projects is easy. People can join a project team with relatively little onboarding required when the terminology and processes are common.
Disadvantages
As with all setups, this one has its pitfalls, too. Despite it being a common structure, not many modern workplaces have cracked the problems of overload. Giving individuals too much to do can be easy if you don’t have systems in place to manage and monitor the entirety of their workload. Other disadvantages are:
The conflict between projects is common because you might be fighting for the same resources as another project.
The other project might have ring-fenced the best resources—the most appropriate people with the right skills—or their line manager might not make them available for project work.
There can be some conflict between business-as-usual tasks and project work for individuals, especially when both managers are giving them different priorities.
Resources might have a conflict about what development path they take for their future careers. Although you might know you want to stay in project management, you may have the option of progressing into a more senior
functional role or a more project-oriented role. But having lots of career options is a good thing, even if it does make for difficult decisions.
A virtual organization is a recent development that involves different locations. When your team executes a project in one area, you can manage it from any other place. So you can distribute resources to your project team regardless of location.
You can connect all the locations virtually. The other names for this organizational structure are:
– Digital organization
– Network organization, or
– Modular organization
ICT (Information and Communication Technology) is the backbone of virtual organizations. This organization is a social network without vertical and horizontal boundaries.
Resources aren’t tied to a particular workstation (desk). Also, you can work from any mobile device. You can manage every project activity, including meetings, virtually.
The team reports digitally except on a few occasions that need physical meetings.
Hence, it’s common to hear of virtual offices, virtual teams, and virtual leadership
This setup is most suitable for software or IT companies.
Advantages
Faster and cost-effective as there are no boundaries to work and communication.
Lower operating costs as no permanent set up required (no need for office premises)
Have several options like flexitime, part-time work, job-sharing, and home-based working, hence increased
Employee satisfaction and efficiency
Can have a larger talent pool
Disadvantages
No physical contact or communication, thus, lacks team integrity
Difficult to restrict information sharing as your locations are different
You have to spread resources across various locations and time zones
Resources require training for virtual interaction
Different time zones cause delayed responses
FACTORS TO CONSIDER IN CHOOSING A PROJECT ORGANISATION STRUCTURE
Strategy
Technology
People
Tasks
Decisions
Size
Environment
