Chapter 4 Project Organization1 Ch 4 Project Organization “Organize - to form into an association for a common purpose or arrange systematically”

Chapter 4 Project Organization2 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 Organization3 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 Organization4 President VP FinanceVP MarketingVP Manufacturing VP Engineering Functional Organization Project New Model Proton SURIE New Layout – Robot Line

Chapter 4 Project Organization5 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 Organization6 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 client’s 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 Organization7 Pure Project Organization Project is separated from the rest of the parent system Becomes self contained unit

Chapter 4 Project Organization8 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 Organization9 Project Organization

Chapter 4 Project Organization10 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”

Chapter 4 Project Organization11 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

Chapter 4 Project Organization12 Matrix Organization PM1 PM2 PM3 ManufacturingProgram ManagerR&DMarketing President

Chapter 4 Project Organization13 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

Chapter 4 Project Organization14 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

Chapter 4 Project Organization15 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

Chapter 4 Project Organization16 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

Chapter 4 Project Organization17 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