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Projects & Organizations Environment (1)

The Functional Organization The activities constituting a project are performed respectively by the relevant functional unit of the organization. In this case, coordination of project activities are undertaken by the higher functional levels of management The Functional Matrix An individual is selected who will oversee and coordinate the project activities across the various functional levels of the organization. Functional managers are responsible for managing their respective segments of the project, decide who does what and when the project is to be completed, and evaluate the participants. Their influence is greater than that of the project manager, who has indirect authority to expedite and monitor the project
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Projects & Organizations Environment (2)

The Balanced Matrix An individual is selected who will manage the project across the various functional levels of the organization and who will interact with the functional managers on an equal basis and jointly approve technical and operational decisions. The project manager defines what needs to be accomplished and the functional managers decide how it will be accomplished within the plan, various designated functional inputs, standards and schedules established by the project manager The Project Matrix

A project manager is selected to oversee the completion of the project in the functional levels of the organization. He or she is ultimately is responsible for
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Projects & Organizations Environment (3)

the projects completion, has final say on major project decisions and controls most aspects of the project, including the assignment of functional personell, what they do and when. The functional managers maintain title over their respective personell and have consultation rights The (dedicated) Project Team A project manager is selected to head a core group of personel from several functional units of the organization and who are all assigned to work full-time on the project in question

Example of a Typical Functional Organization

Project Coordination

Corporation X
Human Resources Finance & Administration

Marketing

Engineering

Manufacturing

Procurement

Electronics Engineering

Software Engineering

Mechanical Engineering

Design

Purchasing

Receiving & Inspection

Customer Service

Domestic Sales

International Sales

Fabrication

Assembly

Testing

Production Scheduling
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Advantages of the Functional Approach

No major alteration in the enterprises existing organizational structure is necessary as functional units are already established Flexibility in assigning personell in different functional units and within one functional unit - to work on projects Focussed utilisation of expertise by a functional unit if the project scope is narrow Maintainence of normal career paths in a functional division or in the divisions where the specialists working on a project are based

Disadvantages of the Functional Approach

If a project has a comparatively broad scope, the functional units may have different priority perceptions

Inadequate integration across functional units because functional specialists may be concerned primarily with their specific part of the project work and not the whole project
Project completion times tend to be higher due to the requirement of channeling project information and decisionmaking through the normal management channels. Also, the lack of horizontal communication may lead to rework as actions performed may require correction Weak motivation of the functional personell working on projects. Projects may be viewed as additional burdens not directly linked to professional development or advancement. Lack of identification with, and committment to the project
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Example of a Dedicated Project Team

Corporation X
Human Resources Finance & Administration

Marketing

Engineering

Manufacturing

Procurement

Project Manager

Project Team
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Advantages of the Dedicated Approach

No structural impact on the functional organization only

temporary siphoning away of functional specialists

Project completion time is comparatively smaller due to project personel devoting their efforts to the project in question full-time and also because the flow of information and decision-making is generally not hindered by hierachies Motivation, feeling of identification and cohesiveness are strong in the project. Project personell share a common goal and have a collective responsibility towards ensuring realization of this goal Cross-functional cooperation is strongly encouraged and promoted

Disadvantages of the Dedicated Approach

Larger expense is involved because resources are assigned to the

project on a full-time basis. Across projects, this may result in a duplication of infrastructure and work

Projectitis project personell evolve a collective identity encapsulating themselves from the enterprise, giving rise to a nonconstructive us (project personell) and them (rest of the enterprise) outlook. In some cases this not only undermines the integration of the project effort back into mainstream operations but also the subsequent assimilation of project personell back into their respective functional units
The project may become overdependent on the gamut of skills, expertise and experience held by the project personel and may not seek to incorporate skills, expertise and experience held by individuals and organizational entities outside the project

Assimilation of project personel back into their respective functional units

may prove difficult due to their prolonged absence from their units and the challenge of keeping up with the developments which have taken place in the functional units during the project period

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The Projecticized Organization

Project Coordination Chief Executive Project Coordination

Project Manager

Project Manager

Project Manager

Staff

Staff

Staff

Staff

Staff

Staff

Staff

Staff

Staff

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Example of a Projecticized Organization

Corporation X
Marketing
Other Projects Finance and Administration
Project Manager (Project A)

Human Resources Legal Other Projects

Project Manager (Project B) Subcontractors (X, Y, Z)

Engineering

Manufacturing

Procurement

Engineering

Manufacturing

Procurement

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The Functional Matrix Organization

Chief Executive

Functional Manager

Functional Manager

Functional Manager

Staff
Project Coord.

Staff
Project Coord.

Staff

Staff

Staff

Staff

Staff

Staff

Staff
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The Balanced Matrix Organization

Chief Executive

Functional Manager

Functional Manager

Functional Manager

Staff
Project Coord.

Staff
Project Coord.

Staff

Staff

Staff

Staff

Project Manager

Staff

Staff
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The Strong Matrix Organization

Chief Executive

Functional Manager

Functional Manager

Functional Manager

Manager of Project Managers

Staff Project Coordination

Staff

Staff

Project Manager Project Manager Project Manager

Staff

Staff

Staff

Staff

Staff

Staff

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The Project Matrix Orgaization Form

General Manager

Lead Project Manager Project Manager 1 Project Manager 2 Project Manager 3 Project Manager 4

Functional Manager A

Functional Manager B

Functional Manager C

FI

FI

FI

FI
FI

FI
FI

FI FI

FI

FI

FI
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Example of a Project Matrix Organization

General Manager
Lead Project Manager

ENGINEERING

MANUFACTURING

MARKETING

PA

E1

E2

E3

MA1

MA2

MA3

M1

M2

M3

PM X

PM Y

0,5

PM Z

0,5

0,5
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Advantages of the Matrix Organization

Sharing of resources across multiple projects and within functional divisions, enabling functional personell to divide their attention across multiple projects and reducing duplication of resources which is observed in dedicated project teams Stronger project focus by having a project manager who performs a coordinating and integrating role across functional units, and thereby enabling a more holistic approach to problem-solving than is normally possible in the purely functional environment Flexible use of the enterprises resources and expertise

Accessibility of the entire spectrum of the functional environments technology, expertise and experience Functional personell maintain close ties with their respective units
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Disadvantages of the Matrix Organization

Violation of the established hierarchical principle unity of command and stress arising from issuance of diverging or conflicting orders Conflict potential between project managers and functional managers can be high due to diverging agendas, unclear patterns of authority, accountability etc., occasionally engendering a personal animosity Unhealthy resource-sharing competition over equipment, experts etc. may arise between project managers who each are endeavouring to acquire what they consider as being best for their respective project(s) Difficulty facing project managers in getting agreements across functional delineations
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Characteristics of a Weak Matrix Organization (1)

Failure to understand the key principles and roles in the matrix organizational environment Distrust in organizational forms which are not based on Fayols unity of command Apprehensions of functional managers over the apparent superority of the project goals over those of the functional entity Senior management shortcomings in terms of clearly delineating in writing the formal and reciprocal roles of all the key managers involved in the project

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Characteristics of a Weak Matrix Organization (2)

Lacking understanding by the project team to understand the role and responsibilities of the functional professionals and their managers Incompetent project and functional managers / project managers who manage less and coordinate more / decision referal by project managers to senior management Inadequate stakeholder management Lack of trust, integrity, loyalty and committment by project team members

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Appropriate empowerment for dedicated project managers, unambiguous role definition and clear patterns of leadership, responsibility and accountability

Prerequisites for a Successful Matrix Organization

Prevalence of well-established lines of communication and broad endorsement of free communication throughout the enterprise, especially in regard to projects and project stakeholders Explicit understanding of the interdependant roles of both functional as well as project managers regarding pursuit of projects Functional managers endorse and are committed to the matrix organizational design and the corresponding allocation of functional resources for projects Prevalence of an organizational culture that encourages and supports the matrix organizational form

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Org. Structure Project Characteristics Project Managers Authority Resource Availability Who Controls Project Budget Project Managers Role Project Management Administrative Staff

Functional

Weak

Matrix Balanced

Strong

Projecticized High to Almost Total High to Almost Total Project Manager Full-Time

Little or None Little or None Functional Manager Part-Time

Limited

Low to Moderate Low to Moderate Mixed

Moderate to High Low to Moderate Project Manager Full-Time

Limited

Functional Manager Part-Time

Full-Time

Part-Time

Part-Time

Part-Time

Full-Time

Full-Time

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Factors Influencing the Project Management Organizational Environment

The projects size The projects strategic importance The projects innovation requirement The projects level of required integration across functional delineations The project environments complexity The project budget and time constraints The project resource requirement level of stability

In general the higher the level of these factors, the greater is the requirement of autonomy and authority for the project manager and his team in order to ensure Success (project matrix or dedicated project team)

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Empirical Assessment of the Respective Project Organization Forms

Empirical research suggests that the Project Matrix and Project organization modes are the most effective means of undertaking projects
Very Effective

Effective

Ineffective

Very Ineffective

Construction New Product

Functional Functional Balanced Project Project Organization Matrix Matrix Matrix Organizaton Clifford F. Gray / Erik W. Larson, Project Management: The Managerial Process, 2. ed., 2003, p. 71
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