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In the past 10 years there has been a growing interest in techniques and
approaches for the management of temporary projects (in contrast to the
management of on-going operations). There has been an explosion of
literature dealing with various techniques and strategies for project
management. More recently, we have seen the beginnings of organized
academic research on various aspects of project management.
However, in discussions and in the literature we still seem to have confusion
over the meaning of terms. This is particularly true in the area of alternative
organizational approaches for the management of projects. This paper will
define the Functional, Projectized, and Matrix types of organization and
describe the strengths and weaknesses of each.
Project Organizations
The opposite of the hierarchical, functional organization is the single-purpose
project or vertical organization. In a projectized organization all of the
resources necessary for the accomplishment of a specific objective are
separated from the regular functional structure and set up as a self-contained
unit headed by a project manager. The project manager is given considerable
authority over the project and may acquire resources from either inside or
outside the overall organization. All of the personnel on the project are under
the direct authority of the project manager for the duration of the project. In
effect, a large organization sets up a smaller, temporary, special purpose
structure for the accomplishment of a specific objective. It is interesting to note
that the internal structure of the project organization is functional. That is, that
the project team is divided into various functional areas (Figure 2).
FIGURE 2
Please note that our term for this is “project organization” not “project
management”. You can manage projects with all three types of organizational
structures. The advantages of the project organization come from the
singleness of purpose and the unity of command. An esprit de corps is
developed through the clear understanding of and focus on, the single
objective. Informal communication is effective in a close-knit team. The project
manager has all the necessary resources under his direct control.
The project organization is not, however, a perfect solution to all project
management problems as has been suggested. Setting up a new, highly
visible temporary structure upsets the regular organization. There is also
duplication of facilities arid inefficient use of resources. Another serious
problem with the project organization is the question of job security upon
termination of the temporary project. Oftentimes the project personnel lose
their “home” in the functional structure while they are off the project.
The functional, hierarchical organization is organized around technical inputs
such as engineering and marketing. The project organization is a single
purpose structure organized around project outputs such as a new dam or a
new product. Both of these are uni-dimensional structures in a multi-
dimensional world. The problem in each of these organizational structures is
to get a proper balance between the long term objective of functional
departments in building technical expertise and the short term objectives of
the project (Figure 3).
FIGURE 3
Matrix Organization
The matrix organization is a multi-dimensional structure that tries to maximize
the strengths and minimize the weaknesses of both the project and the
functional structures. The matrix organization combines the standard vertical
hierarchical structure with a super-imposed lateral or horizontal structure of a
project co-ordinator (Figure 4).
The major benefits of the matrix organization are the balancing of objectives,
the co-ordination across functional department lines and the visibility of the
project objectives through the project co-ordinator’s office. The major
disadvantage is that the man in the middle is working for two bosses.
Vertically, he reports to his functional department head; horizontally, he
reports to the project co-ordinator or project manager. In a conflict situation he
can be caught in the middle.
The project manager often feels that he has little authority with regard to the
functional departments. On the other hand, the functional department head
often feels that the project co-ordinator is interfering in his territory.
The solution to this problem is to clearly define the roles and responsibility and
authority of each of the actors. The project co-ordinator specifies what is to be
done and the functional department is responsible for how it is to be done
(Figure 5).
FIGURE 5
The same is true for the choice of an organizational structure. What we need
then is a list of key factors that will help us to choose the right organizational
structure for the given conditions on a specific project with a given
organization and particular environment. A set of such factors is listed in
Figure 6. The use of this table will help you to decide which structure is best
for your situation. For example, an organization developing many new projects
consisting of small projects with standard technology would most likely find a
functional structure best. On the other hand, a company with a long, large
complex and important project would find that the project organizational
structure would be best. A company in the pharmaceutical business with
many complicated technologies would probably find a matrix structure best.
FIGURE 6
It is possible to use all three structures in the same company on different
projects. It is also possible to use all three structures on the same project at
different levels. For example, an overall matrix structure for the project, with a
functional substructure in engineering and a project organization in another
funcitonal sub-area.
Before we can make a final choice, however, we must consider the following
additional factors:
a. What is the relationship between organizational design, the skills of the
project manager and the project planning and reporting system?
b. Are there ways that we can improve co-ordination and commitment in the
functional structure without moving to a project or matrix structure?
c. What are the different variations of the matrix structure and what are the
advantages of each variation?
Project Manager
It is not possible to make the organizational design decision without also
considering decisions on the selection of the project manager and on the
design of the planning and reporting systems (Figure 7). These decisions are
closely interrelated. For example, a successful project organization requires a
project manager with the broad skills of a general manager. He usually must
combine technical knowledge of the subject matter with management abilities
for the leadership of the entire project team. It makes no sense to select a
project organization form if such a project manager is not available.
FIGURE 7
The planning and reporting system in a project organization can be fairly
simple because the team is in close proximity. The opposite is true in the
management of projects through a functional organization. Information in the
form of plans, schedules, budgets, and reports is the key medium for
integrating a functional organization. Therefore, a more sophisticated planning
and reporting system is required with a functional organization than with a
project organization.
The bottom line of Figure 8 shows that a weak matrix has a part-time co-
ordinator and the matrix gets stronger as you move from full-time co-ordinator
and then to a full-time project manager and finally to a project office that would
include personnel such as systems engineers, cost analysts, and schedule
analysts. The difference between a co-ordinator and a manager is the
difference between mere integration and actual decision making.
On the far right we have the project organization. Ordinarily, there is a clear
distinction between a strong matrix in which most of the work is still being
performed in the functional departments contrasted with a project organization
where the majority of the personnel are on the project team.
It is rare that a project organization would have all of the personnel on its
team. Usually some functions such as accounting or maintenance would still
be performed by the functional structure.
Some persons have taken issue with the use of the term “strong matrix.” They
say that a strong matrix comes from an even balance of power between the
functional departments and the project office. That may be true in some
instances but not in all situations.
Strong and weak are not used in the sense of good and bad. Rather, they
refer to the relative size and power of the integrative function in the matrix.
Conclusion
There is no one perfect organizational structure for managing projects. The
functional, the projectized, or any of the various forms of matrix structures
each have strengths and weaknesses. The final choice depends on a
weighing of the various factors of the nature of the task, the needs of the
organization and the environment of the project.
The functional structure will work for many projects in many organizations, if
lateral communications can be improved through integrating mechanisms and
procedures short of a matrix coordinator.
When a matrix approach is chosen, it takes a good deal of effort of the entire
organization to make it work. In particular, the project coordinator or project
manager in the matrix must be carefully chosen and trained. His interpersonal
skills are more important than his technical knowledge.
In many situations, a projectized organization may appear to be the simplest
solution from the viewpoint of the project manager. However, from the
viewpoint of the functional managers or top management a projectized
organization may not be the best longer range or strategic decision.
References
Delbecq, Andre; Filley, Alan. Program and Project Management in a Matrix
Organization: A Case Study.Bureau of Business Research and Service,
Graduate School of Business, University of Wisconsin — Madison.
Filley, Alan. Interpersonal Conflict Resolution. Scott, Foresman & Company,
1975.
Galbraith, Jay. Designing Complex Organizations. Addison-Wesley Publishing
Co., Inc., 1973.
Lawrence, Paul; Lorsch, Jay. Organization and Environment. Harvard
Business School 1967.
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