PROJECT

ORGANIZATIONS
Organization structure
✓Represents the management hierarchy:
✓Reporting relationships who report to whom
✓The official chain of control or authority, which deals of official
activities, such as firing, hiring, and promotion etc.
✓Organization can be grouped into major subdivisions on
the basis of a number of frameworks.
✓Responsibilities & type of work for each subdivision
✓Official lines of authority & communication
Informal organization also important and can exist in parallel to the official organization,
communication of the informal is socially motivated.
2
Types of Project Organization

Project
Organizations

Functional Pure Project Matrix Mixed

3
 FUNCTIONAL
ORGANIZATION
4
Functional (Pure Line) Organization
✓ The organization is broken into different sections based upon specialty.
E.g. sales, customer service, finance, HR etc. and one supervisor deal
with escalated problems.
✓ Most common type of structure
✓ Works best in small organizations in which the different sections are
geographically close together and which provide only a small number
of goods and/or services.
✓ The project manager's role is to ensure smooth execution of processes
and projects; however, the functional manager has the most power
and makes the final decisions.
✓ Examples : Finance department, IT department, Sales, Marketing
department etc.
5
Functional Organization
Examples of Functional Projects
✓ Geographical Differentiation
✓ Product Differentiation
✓ Process Differentiation
✓ Customer Differentiation

7
Functional Organization - Advantages
✓ Reduced overhead, as no additional project team members have to be
hired
✓ Provides clearly marked career paths for hiring and promotion
✓ Employees work alongside colleagues who share similar interests,
therefore the expertise of the team members stays within their
departments
✓ No structural change for running the project required
✓ Flexibility for changes in the project scope
✓ Easy post-project transition as the project team members simply
continue doing their line job again

8
Functional Organization - Disadvantages
✓ Co-ordination of functional tasks is difficult as little reward for co-
operation with other
✓ Provides scope for different department heads to pass off company
project failures as being due to the failures of other departments
✓ Slow reaction time due to long communication lines within the project
✓ Difficulty in fixing responsibility
✓ Conflict among supervisory staff of equal ranks of different functions
✓ Ignorance towards overall organizational objective

9
 PURE PROJECT
ORGANIZATION
10
Projectized Organization
✓ Project Manager fully responsible for the group of specialist (Project
Team).
✓ Structure set up to support absolute authority to project manager
✓ Project team consists of mix of permanent, temporary or task only
hired specialists
✓ Team works for full time for projects & reporting is clear
✓ Examples : Engineering Services providers, Film Studios, Consultancies,
Legal firms, marketing & advertising firms

11
Organizing projects as dedicated team
Pure Project Organization
Projectized Organization - Advantages
✓ Simple and fast, as the project manager has full line authority over the
project and all members of the project team are reporting directly to
the project manager
✓ The lines of communication are shortened; the ability to make a swift
decision is enhanced
✓ A cross-functional integration is supported as a pure project
organization can maintain a permanent cadre of experts who develop
skills in specific technologies
✓ A project team that has a strong and separate identity and develops a
high level of commitment from its members
✓ The organizational structure tends to support a all approach to the
project
14
Projectized Organization - Disadvantages
✓ Expensive : Each project has to be fully staffed which can lead to a
duplication of staff numbers
✓ Project managers tend to stockpile equipment and technical assistance
as this represents the importance of their project within the
organization
✓ Limited Tech expertise : Staffs’ Learning expertise in other technical
areas falls behind. ‘We-they’ syndrome limits consulting & sharing of
knowledge.
✓ Inconsistency in the way in which policies and procedures are carried
out
✓ Difficult Post project transition : Project team worried about the
future career scope post completion of project
15
MATRIX ORGANIZATION
16
Matrix Organization
✓ Recently emerged innovation in last 35 years
✓ Hybrid form of organization generally for larger projects.
✓ Horizontal project management structure is overlaid on normal
functional hierarchy
✓ Two chain of command : Project line & Functional line
✓ If Matrix is strong then Power more resides with Project Line
✓ If Matrix is weak then Power more resides with functional Line
✓ Examples : Engineering Services providers, Film Studios, Consultancies,
Legal firms, marketing & advertising firms

17
Matrix Organization
Matrix Organization - Advantages
✓ Better Coordination & Control
✓ Adaptable to Dynamic Environment
✓ Ease in Cross functional communication
✓ Effective Utilization of resources due to flexibility
✓ Proper focus on project activities
✓ Relatively less expensive than Pure Project Organization
✓ Development in team work
✓ Easier post project transitions
✓ Examples :

20
Matrix Organization - Disadvantages
✓ Complexity difficult to manage
✓ Dysfunctional conflicts : Higher level of confusion if communication
between project & functional lines is weak
✓ Conflict of Loyalty of resources between Project & functional
managers
✓ Infighting : Clashes over sharing of resources like material, equipment,
staff even within Project lines & functional lines itself
✓ Sluggishness in execution due to necessity of multiple reporting &
approval
✓ Lack of commitment towards projects

21
SELECTION PROJECT
ORGANIZATION
23
Choosing the Project Organization
Step 1: Definition of the project
✓ Size of project
✓ Strategic importance, how important is the project to the firm’s
success?
✓ Integration requirements (departments involved)
✓ Complexity (number of external interfaces)
✓ Budget and time constraints
✓ What level of resources (human and physical) is available?
✓ Stability of resource requirements

24
Choosing the Project Organization
Step 2: Determination of the key tasks which are linked with every sub-
goal or objective and identification of the specialist

Step 3: Breaking down the project into tasks and determining which
organizational units are required to carry out the work packages and
which units will work particularly closely with which others
Step 4: List of any special characteristic or hampering factor associated
with the project.
Step 5: With the findings gained from steps 1- 4 and the knowledge of all
advantages and disadvantages choice of structural organization form.

25