Project Management “Project Organization” Lecture 6 Resource Person: M. Adeel Anjum

M. Adeel Anjum2 Project Organization A Firm if to be successful, tends to grow by adding resources & people and develop its organizational structure. And the major focus of structure is the specialization of human elements. The popular structure arrangements are, by Product Line, By Geographic Location, By Production Process, By type of Customers and by type of virtual elements etc. The same concept is applied on the Projects, Projects can have many Structural Arrangements & these are called “Project Organization”. Most common Project structures are; –Functional Organization –Pure Project Organization –Matrix Organization

M. Adeel Anjum3 Functional Organization This project organizational form consists of many Functional Areas / Elements or Divisions. E.g: Administration, Finance, MIS, HR, Marketing Etc. The Project is carried out by utilizing human elements of these functional areas.

M. Adeel Anjum4 Functional Organization

M. Adeel Anjum5 Advantages of Functional Organizational Form Maximum flexibility in the use of staff. experts can be temporarily assigned to the project, make their required contributions & immediately be reassigned to their normal duties. Individual experts can be utilized by many different projects. Specialists can be grouped to share knowledge & experience. Functional division also serves as a base of technological continuity. Functional Division contains normal path of advancement for individuals.

M. Adeel Anjum6 Disadvantages……. Client is not the focus of the activity & concern. Functional Division tends to be oriented toward the activities particular to its function. In this form no individual is given full authority. Lack of coordinated efforts. Tendency to sub-optimize the project. Motivation of people assigned to the project is tend to be weak. This organizational arrangement does not facilitate holistic approach to the project.

M. Adeel Anjum7 Pure Project Organization The project is separated form the parent system. Project becomes a self contained unit with its own technical administration, tied to the parent firm by tenuous strands of periodic progress reports etc. Full autonomy under oversight of parent organization.

M. Adeel Anjum8 Pure Project Organization

M. Adeel Anjum9 Advantages Project Manager has full authority over the project. All members of project’s work force are directly responsible to PM. Shortened line of communication. Motivation of workforce is high. Centralized authority & swift decision making. Unity of Command. Pure Project structure is simple & flexible. It supports holistic approach.

M. Adeel Anjum10 Disadvantages Duplication of efforts (Dual Functional Efforts) Costs Technical Implications It fosters inconsistencies in the way the policies and procedures are carried out. Projectitis. Anxiety.

M. Adeel Anjum11 The Matrix Organization Matrix organizational structure is the combination of “Functional & Pure Project” organizational forms. It combines the advantages & disadvantages of both.

M. Adeel Anjum12 Matrix Organization

M. Adeel Anjum13 Choosing the Organizational Form Experienced practitioners find it difficult to explain how one should choose organizational structure for Projects. Choice is usually determined by situation Anyhow, few accepted principles to select project design are; –Nature of the potential project –Various organizational options (advantages & disadvantages of each) –Cultural preferences of parent organization E.g: In-depth application of technology requires functional form.

M. Adeel Anjum14 If the firm is engaged in large number of similar projects (Construction), the pure project form is preferred. When the project requires the integration of inputs from several functional areas & involves sophisticated technologies, matrix organizational is preferred.