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Organizational Structure Gover

This document discusses different organizational structures for managing projects within a company. It describes a continuum from projects managed within a hierarchical structure to a fully projectized structure. In between is a matrix structure where projects draw resources from different functional departments. The document provides an example of how projects can be categorized and mapped to organizational structures. It also lists some advantages and challenges of managing projects within a traditional hierarchical structure.

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57 views3 pages

Organizational Structure Gover

This document discusses different organizational structures for managing projects within a company. It describes a continuum from projects managed within a hierarchical structure to a fully projectized structure. In between is a matrix structure where projects draw resources from different functional departments. The document provides an example of how projects can be categorized and mapped to organizational structures. It also lists some advantages and challenges of managing projects within a traditional hierarchical structure.

Uploaded by

chinedu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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208 G o w e r H a n d b o o k o f P r o j e c t M a n a g e m e n t

BOARD OF
DIRECTORS

Management team Corporate


project portfolio
CEO steering committee
PMO

Functional Business
Portfolio B unit unit
Portfolio A
steering Portfolio B Portfolio A steering group
Group
PMO PMO

Unit Unit Unit Unit


Program B Program A
Program B Program A
steering group steering group

Project
Project A steering group

Figure 13.2 Example of governance structures in a project-based organization

The four governance paradigms should help guiding the governance structure (Chapter
30):

• Flexible economist;
• Versatile artist;
• Conformist;
• Agile pragmatist.

Structuring for Projects

Structuring the Projects (Categorization System)

In a simplified approach, strategy management includes two major components: strategy


formulation and strategy implementation. Following strategy formulation, several high-
level initiatives or projects form the organization’s overall project portfolio. This set
of projects represents the overall investment in bringing in new products/services, or
processes. Usually, these investments are divided into a number of parts based on the
specific organizational logic (business units, strategic objectives, products and the like).
Categorization of projects in unique projects, programs and portfolios is a major milestone
in the structuring of project-based organizations (Crawford, Hobbs, and Turner, 2005).
O r g a n i z i n g f o r P r o j e c t s 209

The following attributes can be used to categorize projects in a hierarchical, parallel or


composite system:

• Strategic importance;
• Application area (business units, functional unit, etc.);
• Scope of the projects (cost, risks, complexity, etc.);
• Deliverables (information system or technology, construction, processes, etc.).

The categorization system must then be mapped along with the organizational structure.
A decision must be made concerning how each specific project, program and portfolio
will best fit within the organizational structures. The following is largely inspired from
Hobbs and Ménard (1993).

Organizational Structures

The differentiation between operations and projects is now generally well understood. It
results from the pressures placed on organizations to accelerate their pace of innovation,
through new products or services or greater process efficiency. A limited number of projects
can easily be handled through the operational structure. However, large, complex and
multiple concurrent projects require specific coordination mechanisms that deviate from
normal operations. The inspiration for project structuring came from the field of innovation
where creativity and invention gave rise to organic-type structures in contrast to the more
repetitive operations of a hierarchy system (Burns and Stalker, 1961). Experimental forms
of organization have been tried (cellular, network, spaghetti, etc.), yet the hierarchy form
persists along with a variety of project structures (Pettigrew et al, 2003).
Different approaches have since been proposed to position projects within the
organizational structure in a way that allows room for innovation and the emergence
of projects. A variety of organizational structures are used for projects. In a sample
approach, this variety can be represented as a continuum where projects are carried out
subject to strong decision-making authority within a hierarchical organization on the

Project in a Matrix types of structure Projectized


hierarchical organization
unit
Decision- Decision-
making making
authority in authority in
the hierarchy the project

Figure 13.3 Project structuring continuum


210 G o w e r H a n d b o o k o f P r o j e c t M a n a g e m e n t

one hand or a strong decision-making authority within a projectized organization on


the other (Figure 13.3).
This approach is often mentioned in the literature (Hobbs and Ménard, 1993; Hobday,
2000; Larson, 2004; Kerzner, 2006) and in the project management bodies of knowledge
(for example, Project Management Institute, 2012). Three basic types of structure can be
identified based on the major focus of where the projects are conducted:

• Projects in the hierarchy (extreme left);


• Projects in matrix-types of structure (center position);
• Project structure (extreme right).

Bear in mind that a large number of variations exist between these three basic
organizational forms. Moreover, in large organizations, all three basic forms could easily
coexist, adding to the complexity of the project function.

Projects Within a Hierarchy

In this type of structure, the project is carried out within the limits of a hierarchical unit,
whether a functional unit, a business unit or a regional unit and so on. Project decision-
making authority within this type of structure is held almost exclusively in the hands of
the hierarchical entity’s managers. The advantages and disadvantages of this approach
are shown in Table 13.1.

Table 13.1 Main advantages and challenges of the hierarchical structure for
projects

Main advantages Major challenges


Development of technical excellence High interdependence
Clear objectives and priorities Coordination difficulty between hierarchical entities
Careers for specialist Conflicting priorities between hierarchical entities
Supervision by specialists No one responsible for multi-entities projects
Synergy among specialists Contribution to overall performance difficult to
measure
Stable relations Adhesion to the point of view of the hierarchical
entities
Control of quality and performance The subordination of managerial objectives to
(within the unit) technical objectives

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