1. Organisational context of PM
Project Management

2. Organisation within the organisation
Company organisation
Project organisation
Project activities
Structure
Culture
Values and interests
Effectiveness
Efficiency

3. Organisational structures and projects
Hierarchical functional structure
Matrix structure
Pure project structure

4. Hierarchical functional structure (linear-functional structure)
Longest history
Heads of specialist functions report directly to the CEO
The CEO is responsible for co-ordinating the functions
Strict hierarchical chain

5. Advantages Tight control at the top
Logically represents the functions & maintains their power and prestige
Reduces duplication of functional effort
Concentrates functional skills
Simple reporting relations
High utilisation
Utilisation = (realised output) / (designed capacity)

6. Disadvantages Over-specialisation Parochialism of key personnel
Weak co-ordination between functions
It stifles the development of generalist leaders
Ineffecient in fast changing and diverse market environment
It imposes an increasing burden on the chief executive as the rate of change increases
It requires extremely detailed pre-production plans (extremely high rate of formalised work)
Parochialism = being narrow in scope & considering only tose part of an issue that is connected to the function

7. Problems arise when…
Jobs requires greater resources than a single function has.
Jobs cut across functional boundaries.
Chief executive is overburdened with co-ordination problems between functions.
The solution: project manager(s) & project team(s) PM Office (PMO)

8. Projects in a functional structure
Place in the structure
Staff (team): where do they come from?
Project manager
What if the project team is not enough?
Professional skills
Resources of one or more functions
Responsibility of the staff
Project team
Functional staff involved in the project

9. Project Management Offices
Centralized units that oversee or improve the management of projects
Resource centers for:
Technical details offloaded from manager
Expertise in project management skills
Repository of lessons learned, documentation
Center for project management excellence
Where to place it in the organizational structure?
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

10. Forms of PMOs Weather station – monitoring and tracking
Control tower – project management is a skill to be protected and supported
Establish standards
Consults on PM practice
Enforces the standards
Improves the standards
Resource pool – maintain and provide a cadre of skilled project professionals
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

11. Matrix structure without projects (true matrix)
Division of labor in a matrix structure
2 dimensions
Responsibilities
Dual reporting
Biggest advantages
Managing complexity
Managing changing environment
Greatest disadvantages
High number of conflicts
Low speed of decision making

12. Matrix organisation with projects
If there are (continuously) too many projects for the functional structure
One dimension of the division of labour is the project structure
= A project management function is created
The project management function group
Separation:
The staff members are organisationally disengaged from their previous positions
Physically (communication, atmosphere)
Double reporting:
Linear
Functional

13. Problems with the project-matrix structure
Latent responsibility and loyalty
It affects career
Dual reporting:
Confusion and conflicts on two levels
Problems arise at the CEO’s level
Temporary structure: uncertainty

14. A possible solution: strong corporate culture
Shared views (and values)
Different project teams
Functional managers

15. Advantages of the project-matrix structure
Rapid response to changes
Better balance between time, cost and resources
Independent policies and budgets for different projects
Clear definition of responsibility and authority (project managers)

16. Disadvantages of the project-matrix structure
Requires significant effort from the top management to:
Define policies, procedures, authorities for the whole organisation
Monitoring and controlling the balance of power between project and functional managers
Ensuring the shared view on company objectives (project and functional managers)

17. The true project structure
The usual business activity is in form of projects
Frequent only in some industries
Functions disappeared: skills are concentrated in project teams
Reserve staff (central pool of extra resources)
Project teams are not temporary

18. Advantages Clear project responsibilities and authorities
Clear and controlled project budgets
Better communication between project managers and the CEO
Generalists managers are developed who can manage change
Strong team loyalty and understanding
Management costs are identified
? subcultures

19. Readings
Lockyer – Gordon (2005) Chapter 2

20. Structure of projects

21. Organisation within the organisation
Company organisation
Project organisation
Project activities
Structure
Culture
Values and interests
Effectiveness
Efficiency

22. Project features affects its organisational form
Uncertainty
Uniqueness → diversity of projects
Temporary existence → diversity of projects
→ variations of the project organisations

23. Elements of the project organisation
Project sponsor
Project manager
(Project champion)
Project management team
Project team
Stakeholders

24. Stakeholders
Stakeholders are all individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development. Sets of project stakeholders include:
Internal Stakeholders
Top management
Accountant
Other functional managers
Project team members
External Stakeholders
Clients
Competitors
Suppliers
Environmental, political, consumer, and other intervenor groups

25. The project manager Appointed as early as possible
If not he/she will be committed to the former decisions.
If this problem exists, he/she must record and report it immediately and suggest modifications if possible.
Main task: team management
Additional source of difficulties: consortium project.

26. Desirable skills Technological understanding
Understanding of project economics
Personnel management
Incentive systems
Interviewing techniques
Personal leadership
Team building and motivation
Industrial economics and relations
Legal knowledge according to the project
Non-learnable skills and abilities: being a leader, honesty, integrity, vision etc. + OPTIMISM
Marketing (customer’s view)
System management
Planning and control
Financial skills
Competence in procurement
Communication skills

27. The project team Project team ≠ whole staff working on the project
Size depends on:
Project scope and size
Complexity
Needed speed
Assistance of functional specialists:
two supervisors
divided loyalty
multiple responsibility (who to turn to)
Integration of new members
Create a creative, innovative, problem-solving atmosphere
Maintain a monitoring and reporting system (formal and informal)

30. Readings
Lockyer – Gordon (2005) Chapter 3

31. Thanks for the attention!