ORGANISATION STRUCTURE

PROJECT MANAGEMENT STRUCTURES

• Organizations are struggling to integrate
management of projects while conducting
ongoing business
• Reasons:
• Organizations typically set up to deal with every day,
repetitive work
• Projects are multidisciplinary whereas most
organizations are functional in nature with clearly
delineated boundaries and managerial roles
Copyright © 2006 The McGraw-Hill
McGraw-Hill/Irwin 3–3
Companies. All rights reserved.
Functional Organizations

FIGURE 3.1
FUNCTIONAL ORGANISATIONS
• Project implemented within existing
organizational hierarchy
• Different parts of the project are given to the
relevant divisions – management through normal
channels
• Advantages:
• No change to the organization
• Effective use of qualified personnel
• Can focus more effectively through expertise
• Maintain existing career paths
FUNCTIONAL ORGANISATIONS

• DISADVANTAGES:
• Lack of focus and prioritization
• Lack of integration across functions
• Longer to complete projects - slower
communication
• Poor motivation amongst staff
Copyright © 2006 The McGraw-Hill
McGraw-Hill/Irwin 3–6
Companies. All rights reserved.
Dedicated Project Team OR Projectized Organization

FIGURE 3.2
DEDICATED TEAMS
• Independent teams acting separate to the rest of the organization
• Separate project manager – independence and freedom varies
• Advantages:
• Minimum disruption to the organizational structure
• Projects get completed more quickly
• High levels of motivation
• Potential for cross-functional integration
• Disadvantages:
• Expensive
• Projectitis (teams see themselves as distinct from the
organization)
• Only selective expertise brought to bear on problems
• Reintegration of teams members into the organization
Copyright © 2006 The McGraw-Hill
McGraw-Hill/Irwin 3–8
Companies. All rights reserved.
Matrix Organization Structure

FIGURE 3.4
MATRIX STRUCTURE
• Horizontal structure laid on top of hierarchy

• Project team members report to both the

project manager and functional manager
Different Matrix Forms
• Functional (also Weak) Form
• Matrices in which the authority of the functional manager
predominates and the project manager has indirect authority.
• Balance Form
• The traditional matrix form in which the project manager sets the
overall plan and the functional manager determines how work to be
done.
• Strong Form
• Resembles a project team in which the project manager has
broader control and functional departments act as subcontractors
to the project.
MATRIX STRUCTURE
• Advantages:
• Sharing of resources on an as-needed basis
• Stronger project focus
• Access to full expertise of the organization
• No difficulty in reintegration

• Disadvantages:
• Conflict between project and functional managers
• Competition for scare resources
• Lack of clear authority – employees report to multiple bosses
• Difficult to reach consensus across multiple divisions
CHOOSING THE APPROPRIATE
STRUCTURE
• HOW IMPORTANT IS PROJECT MANAGEMENT TO
THE ORGANISATION?
• HOW MUCH WORK IS PROJECT BASED?
• WHAT IS THE RESOURCE AVAILIBILITY?
• SEVEN FACTORS HAVE BEEN ESTABLISHED TO
DETERMINE THE TYPE OF ORGANISATION (THE
HIGHER THE LEVELS, THE MORE THE NEED FOR
AUTONOMOUS PROJ MANAGEMENT
• Project size; Strategic Importance; Novelty and Need for
Innovation; Need for Integration (number of departments involved);
Environmental Complexity (external interfaces); Budget and Time
Constraints; Stability of Resource Requirements.
Influence of organizational structure on
Project