Chapter

Project Teams and

Organizational Relationships

Role of Project Manager and Team

Client

Top
Management
Project Manager

Subcontractors
Project Team
Regulating
Organizations

Functional
Managers

This structure is what makes being a project manager

both very interesting and very challenging!
2

Responsibilities of a Project Manager

To the organization and top management
Meet budget and resource constraints
Coordinate with functional managers
To the project team
Provide timely and accurate feedback
Keep focus on project goals
Manage personnel changes
To the client
Communicate in a timely and accurate manner
Provide control over scope changes
Maintain quality standards
To the subcontractors
Provide information on overall project status

Comment: Its a long list, and requires prioritization. 3

Characteristics of a Successful PM

Innovation

Maintain Stability

See the big picture

Encourage individuals but stress team

Proactive

Business perspective

Time management

Politician

Networking

Understanding of organizational culture

Optimist

Leader vs. Manager

A manager copes with complexity while a leader copes with change

4

Project Team

What is a project team?

A group of people committed to achieving a
common set of goals for which they hold
themselves mutually accountable
Characteristics of a project team
Diverse backgrounds/skills
Need to work together effectively, often under
time and cost pressures
May not have worked together before
Have a sense of accountability as a unit (but
perhaps only temporarily)

Sources of Conflicts within Projects

Scheduling and sequencing
Administrative procedures
Staffing issues
Budget and cost issues
Personality conflicts
Project priorities
Trade-off between technical performance and
business performance
Source: H.J. Thamhain and D.L. Wilemon, 1971

Artistic Viewpoint
I design user interfaces to please an audience of one.
I write them for me. If Im happy, I know some cool
people will like it As for schedules, Im not interested
in schedules; did anyone care when War and Peace
came out?
Developer, Microsoft Corporation
As reported by MacCormack and Herman, HBR Case 9600-097: Microsoft Office 2000

However, is this comment a reasonable one for most

project management environments?
7

Group Harmony and Project

Performance
What is the relationship between the design of
multidisciplinary project teams and project success?
Two schools of thought:
Humanistic school -- groups that have positive
characteristics will perform well
Task oriented school -- positive group harmony detracts
from group performance

Group Harmony and Project

Performance
Experiment conducted with MBA students at U. of
Washington and Seattle U., using computer based
simulation of a nuclear power plant.
14 project teams with a total of 44 team members;
compared high performance (low cost) teams vs low
performance (high cost) teams
Measured:
Group harmony
Individual contributions to group
Speed of decision making

K. Brown, T.D. Klastorin, J. Valluzzi. 1990. Project Management

Performance: A Comparison of Team Characteristics, IEEE
Transactions on Engineering Management, 37, 2, 117-125.

Organizational Issues
What administrative and control relationships should
be established between the project and the existing
organization?
How much autonomy and authority should be given to
the project?
What management practices and systems should be
used to manage the project, and how should they
differ from those used in the existing organization?

10

Fundamental Approaches

Project as a Distinct Entity: In order to maximize the chances of

success, it is better to organize the project as an entity
distinct from the rest of the organization. This minimizes
interdependencies between the project and the rest of the
organization.
Project Integrated into Existing Structure: When an organization
undertakes a new project, strong pressures favor the
integration of the project into the existing structure and
management systems and practices.

But, what is the overall company objective?

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Autonomous Projects Tend to be

More Successful
Because their results are more visible and attract more
management attention
Motivation level tends to be higher
Because they suffer less from conflicts over priorities than
functionally managed projects, which facilitates time and
cost control
Because maintaining relationships between the project and
the organization creates complex coordination problems

So, why arent all projects managed as autonomous

units?
12

Organizational Pressures for

Project Integration
Upper management may resist special status for projects,
because this creates additional risks and setup costs as well as
jealousy
Functional managers like to believe that the project falls within
their departments jurisdiction
Department managers may feel threatened by losing some of
their best resources to the project
Personnel may resist transfer to the project, especially for risky
projects and when reintegration after the project could be
difficult
Personnel and accounting functions strive for standardized
methods and procedures across the organization
Managers of autonomous projects choose methods and materials
to optimize locally, not globally

13

Project Organization Types

1. Functional: The project is divided, and assigned to appropriate
functional departments. The coordination of the project is
carried out by functional and high-level managers.
2. Functional matrix: A manager is designated to oversee the
project across different functional areas.
3. Balanced matrix: A manager is assigned to oversee the project,
and interacts on an equal basis with functional managers.
4. Project matrix: A manager is assigned to oversee the project as
an independent entity, and is responsible for the completion
of the project. There may be a project team, but part time.
5. Project team: A manager is put in charge of a team drawn from
several functional areas who are assigned to the project full
time.

14

Matrix Organization

Motivated by conflicting incentives in the organization:

functional managers typically want to optimize scope
and product performance and design, project managers
focus more on the cost and schedule of the project
Matrix organization became widely used in the 1970s and
early 1980s
More recently, has evolved into many different forms
(based on reporting structure, level of standardization,
sharing of responsibility and authority)

15

A Business School as a
Matrix Organization
Dean

Associate Dean for

Undergraduate
Programs

Associate Dean for

MBA Programs

Director of
Doctoral Program

Management Science
Department Chair

Larry

Zelda

Diane

Marketing
Department Chair

Curly

Bob

Barby

Finance Department
Chair

Moe

Gloria

Leslie

Comments: bureaucratic, confusing, stressful

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Organizational Structure & Project

Success
Studies by Larson and Gobeli (1988, 1989)
Sent questionnaires to 855 randomly selected PMI
members
Asked about organizational structure used
Perceptual measures of project success: successful,
marginal, unsuccessful with respect to:
Meeting schedule
Controlling cost
Technical performance
Overall performance

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Study Data
Classification of 547 respondents (64% response rate)

30%
16%
26%
18%

project managers or directors of PM programs

top management (president, vice president, etc.)
managers in functional areas (e.g., marketing)
specialists working on projects

Industries included in studies

14% pharmaceutical products

10% aerospace
10% computer and data processing products
others: telecommunications, medical instruments, glass products, software
development, petrochemical products, houseware goods

Organizational structures:

13% (71): Functional organizations

26% (142): Functional matrix
16.5% (90): Balanced matrix
28.5% (156): Project matrix
16% (87): Project team

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ANOVA Results by
Organizational Structure An exception
occurs here

Controlling
Cost
Mean (SD)

Functional
Organization

71

1.76 (.83)

1.77 (.83)

2.30 (.77)

1.96 (.84)

Functional Matrix

142

1.91 (.77)

2.00 (.85)

2.37 (.73)

2.21 (.75)

Balanced Matrix

90

2.39 (.73)

2.15 (.82)

2.64 (.61)

2.52 (.61)

Project Matrix

156

2.64 (.76)

2.30 (.79)

2.67 (.57)

2.54 (.66)

Project Team

87

2.22 (.82)

2.32 (.80)

2.64 (.61)

2.52 (.70)

Total Sample

546

2.12 (.79)

2.14 (.83)

2.53 (.66)

2.38 (.70)

10.38*

6.94*

7.42*

11.45*

Organizational Structure

F-statistic
Scheffe Results

Meeting
Schedule
Mean (SD)

Technical
Overall
Performance
Results
Mean (SD)
Mean (SD)

A,B < C,D,E

E<D
A,B < C < D,E A,B < C,D,E A,B < C,D,E

The results are statistically significant at the p<0.01 level

Higher values represent greater success

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Summary of Project
Organization Structure
Project structure is significantly related to project success
Projects that use a traditional functional organization have the worst
cost, time and scope performance
Projects using either a project matrix or a project team were more
successful in meeting their schedules than those using the
balanced matrix
Projects using the project matrix were better able to control costs
than those using the project team
Overall, the most successful projects used a balanced matrix, project
team, or--especially--project matrix. But, were these the most
successful organizations?

20

Principles for Determining Autonomy Level in New

Projects (Organizational Factors)
Ready availability of resources facilitates the
establishment of autonomous projects
The less the organizations information system and
administrative policies and procedures are able to
serve a project, the more the project needs specific
and dedicated systems
The more the firms culture differs from the desired
project management culture, the more autonomous a
project should be

21

Principles for Determining Autonomy Level in New

Projects (Project Factors)
The greater the strategic importance for an organization and the
larger the size of the project, the more autonomous the
project should be
The more a project is interdependent (integrated) (e.g., there
is a need for frequent project meetings), the more
autonomous it should be
The higher the complexity, and the more the projects success
depends on its environment, the more autonomous it should
be
The greater the need to meet severe budget/time constraints
(especially time, from Larson and Gobeli), the more
autonomous the project should be
The more stable the resource loading, the more economical it is
to dedicate resources to the project and run it as an
autonomous unit

22

Subcontracting Issues
What parts of a project will be subcontracted?
What type of bidding process will be used? What type of
contract?
Should you use a separate request for bids for each task or
use one for all tasks?
What is the impact of subcontracting on the expected
duration of the project?
Should you offer incentives, such as a bonus for finishing
early? Or require penalties for finishing late?
How does subcontracting impact risk?

23

Advice for Choosing a

Subcontractor
Talk to at least three potential subcontractors
Use referrals where possible
Face-to-face meetings are essential
Tradeoff between quality and price needs to be considered
Present candidates with test scenarios
Communicate your needs and expectations in detail
Establish benchmarks for performance
Establish guidelines for contract termination

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