Project Organization

Project Organization

• Specialization of the human elements

• Functional division, 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

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

President

VP Finance VP Marketing VP Manufacturing

VP Engineering

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

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

Project Organization

• Project is separated from the rest of the parent system

• Becomes self contained unit

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

Project Organization

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t A

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t B

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t C

P re sid e n t

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”

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

Matrix Organization

PM1

PM2

PM3

Manufacturing Program Manager R&D Marketing

President

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

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

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

Mixed Organizational Systems

• Divisionalization – more flexible

• 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

Mixed Organization

P ro je c t M F in an ce E n g in e ering P ro je c t N

P re sid e n t

Staff Organization

• Set up like functional organization

• Adds a staff office to administer projects

• Used for small, short run projects

Staff Organization

Finance Manufacturing Engineering

President

Project S

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

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

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

Key Team Members

• Project Engineer

• Manufacturing Engineer

• Field Manager

• Contract Administrator

• Project Controller

• Support Services Manager

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

Typical Organization of Engineering Projects

F ie ld M a na g er

M a nu fa ctu rin g E n g in e er

P ro je ct E n g in e er

S u p po rt S e rvice s M a na g er

C o n tro l A d m in is tra to r

P ro je c t co n tro lle r

P ro je ct M an a g er

Staff Critical to Project Success

• Senior project team members

• Staffs whom the PM will require close communication

• Staffs with rare skills for project success

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

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

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

Major Sources of Conflict

Life cycle phase Conflict source

Project formation Priorities, procedures, schedules

Buildup phase Priorities, schedule, procedures

Main program Schedule, technical, manpower

Phase out Schedules, personality, manpower