GBEPM 610: MANAGEMENT OF PROJECTS

LECT. 5: PROJECT ORGANISATION

Prepared and presented by

Dr Alice Lungu, PhD

Copperbelt University, Kitwe
 LEARNING OBJECTIVES
 At the end of this theme, the student must be able to do
the following:
 describe the meaning of organisation
 know the principles of organisation
 describe project organisation
 The importance of project organisation
 Define an organisation structure
 describe the importance of organisational structures
 understand the types of organisation structures
 influences of organisational structures on the management
of projects
 CONTENTS
 Introduction
 What is an organisation?
 What is project organisation?
 What is an organisation structure?
 How to choose an appropriate structure?
 What are the types of organisation structures?
 How does organisation structure influence the
management of projects?
 References
 DETAILED CONTENTS
 Introduction
 Organising
 What is organising as a management function?
 Organisation Considerations
 What organising trends are changing the workplace?
 Project organisation
 What is project organisation?
 The importance of project organisation
 Organisational Structures
 What is an organisational structure?
 Types of organisation structures?
 New developments in organisational structures and operating systems?
 Influences of organisational structures on the management of
projects
 INTRODUCTION
 Organising is one of the core functions of management
identified by Henry Fayol.
 According to Fayol, the core functions of management are
forecasting, planning, organizing, commanding and controlling
(Brevis & Vrba, 2014).
 Benowitz (2001) lists them as Planning, organising, staffing,
leading, and controlling.
 Others have maintained only four core functions of management
as planning, organising, leading, and controlling (Daft, 2016;
Certo & Certo, 2016: Griffin, 2016).
 However, they all agree on the purpose of organising
which is to distribute the resources and delegate tasks to
personnel to achieve the goals established in the planning
stage.
 INTRODUCTION (Contd.)
 There are many management pioneers including
Henry Fayol, Mary Parker Follett, Frederick
Winslow Taylor, Henry Gantt, and others.
 Henri Fayol (1841–1925)
 A French engineer was the first to attempt classifying
managerial activities into specific functions.
 He identified 14 general principles of management
(Benowitz, 2001; Brevis & Vrba, 2014).
 Fayol also defined the core functions of management
as forecasting, planning, organizing, commanding and
controlling (Brevis & Vrba, 2014).
 ORGANISING
 What is organising?
 Organising is the process of delegating and coordinating
tasks and resources to achieve objectives (Lussier, 2019).
 Organising is the process by which managers establish the
structure of working relationships among employees to
allow them to achieve organizational goals efficiently and
effectively (Jones & George, 2019, p. 222).
 Organisation is the way we deliver projects
 Effective organisation is crucial to the successful delivery of
projects on time, to budget and to specification
 However, it is important to consider a number of aspects
when forming an organisation.
 Organisational Considerations
 Managers design formal structures to organise a
company’s resources, and structure influences
innovative entrepreneurial orientation (Lussier,
2019).
 Hence, the following are the organisational
considerations required:
 Mechanistic versus Organic Organisation and the
Environment.
 Strategy and Structure.
 Size.
 Technology.
 Organization Questions.
8
 Organisational Considerations (Contd.)
 Mechanistic versus Organic Organisation and the
Environment
Table 5.1: Mechanistic vs Organic Organisation Structures
Mechanistic Organization Organic Organization
A rigid and tightly controlled A highly flexible and adaptable
(bureaucratic) structure with: structure with:
 High specialization  Non-standardized jobs
 Rigid departmentalization  Fluid team-based structure
 Narrow spans of control  Little direct supervision
 High formalization  Minimal formal rules
 Limited information network (mostly  Open communication network
downward communication)  Empowered employees
 Low decision participation by lower-
level employees
 Organisational Considerations (Contd.)

 Strategy and Structure

 Achievement of strategic goals is facilitated by changes
in organisational structure that accommodate and
support change
 Size and Structure
 As an organization grows larger, its structure tends to
change from organic to mechanistic with increased
specialization, departmentalization, centralization, and
rules and regulations
 Organisational Considerations (Contd.)

 Organising questions
 at least six questions that you need to answer when
organizing. These are listed in table

Table 5.2: Organising Questions

Questions for Managers Principle

To whom should departments and individuals report? Chain of command; organisation chart
How many individuals should report to each manager? Span of control
How should we subdivide the work? Division of labour
How do we get everyone to work together as a system? Coordinator
At what level should decisions be made? Centralisation/ decentralisation of authority
How do we organise to meet our mission and strategy? Departmentalisation

Source: adapted from Lussier (2019)

 Organisational Considerations (Contd.)

 Technology and Structure

 Organisations adapt their structures to their technology
 E.g. Woodward’s classification of firms based on the
complexity of the technology employed:
 Unit production of single units or small batches
 Mass production of large batches of output
 Process production in continuous process of outputs
 Routine technology = mechanistic organisations
 Non–routine technology = organic organisations
 Principles of Organisation
 Any organisation is underpinned by the
following principles:
 Unity of Command and Direction.
 Chain of Command.
 Span of Management.
 Division of Labor
 Coordination.
 Balanced Responsibility and Authority.
 Delegation.
 Flexibility
 Principles of Organisation (Contd.)
 14 Principles of Administration/
Management by Henri Fayol
 Division of Work
 Authority and Responsibility
 Discipline
 Unity of Command
 Unity of Direction
 Subordination of Individual Interest
 Fair Remuneration
 Centralisation of power and authority
 Scalar Chain
 Order
 Equity
 Stability of tenure of personnel
 Initiative
 Esprit de Corps (union is strength)
 What Is Involved In Organisation?
 Identifying all key roles and in particular defining
their responsibilities (i.e. not just your own element).
 Defining crystal clear terms of reference and
accountabilities for all key roles and bodies; e.g.
sponsor; steering committee, etc.
 Defining clear supplier/ partner/ customer interfaces,
at all levels, and their specific responsibilities.
 Defining ‘ways of working' for your team, describing
how you will work with key partners, supplier and the
customer(s).
 Challenges to Organising Projects
 The uniqueness and short duration of
projects relative to ongoing longer-term
organizational activities
 i.e. in functional and matrix structures
 The multidisciplinary and cross-functional
nature of projects creates authority and
responsibility dilemmas.
 i.e. in matrix structures
 ORGANISATIONAL STRUCTURE
 The increase in project complexity requires organizations to
design more responsive structures to meet their expanding
project needs.
 Organisation structure refers to the way tasks are divided
up and the patterns of coordination, communication, power
distribution and workflow associate with this.
 Refers to rules, relationships, communication channels, and
duties.
 Rules are typically summarized in written documents.
 Has a strong influence on strategic decision-making by the
top management team.
 Organisational charts show relationships, communication
channels, job duties (Scandura, 2019).
 Organisational structures change over time.
17
 What Is Organisational Structure?
(Contd.)
 Organisational structure:
 the formal system of task and job reporting
relationships that determines how employees use
resources to achieve organisational goals (Jones &
George, 2019, p. 222).
 According to contingency theory, managers design
organisational structures to fit the factors or
circumstances that are affecting the company the most
and causing them the most uncertainty
 Thus, there is no one best way to design an
organisation
 Importance of Organisational
Structure
 An OS is not simply an organisation chart. The structure
defines how all the pieces and processes join up, relate to
one another, and work together (Arora & Baronikian, 2013,
p. 71).
 Individuals connected through organizational structure are called
direct reports.
 Number of direct reports each person has is referred to as their
span of control.
 Dotted-line connections
 Are used to indicate communication channels that exist without a direct
power relationship.
 Occur when employee provides useful information to a manager in a
different part of an organization’s structure (Scandura, 2019).
 Importance of OS (Contd.)
 Governance (Scandura, 2019; Daft, 2016).
 Shows who makes decisions in the project
 Shows who supervisors and subordinates are in the project
 Defines the firm’s formal reporting relationships, procedures,
controls, authority, decision-making and key processes.
 Structure provides the pattern of communication and coordination
Sound structure stimulates creative thinking and initiative among
organisational members by providing well defined patterns of
authority.
 Rules for operation
 Structure provides members clear guidelines for how to proceed.
 A clearly-established structure gives the group a means to
maintain order and resolve disagreements.
 Importance of OS (Contd.)
 Identity
 Structure binds members together.
 It gives meaning and identity to the people who join the
group, as well as to the group itself.
 Provides the foundation on which organisational culture and
operations rest.
 Distribution of Work
 Clearly show the division of labour.
 The distribution can be formal or informal
 If properly designed, it can help improve teamwork and
productivity by providing a framework within which the
people can work together most effectively.
 Importance of OS (Contd.)
 Facilitates Capacity building
 By clearly apportioning the work tasks, it becomes easy
to identify members who need assistance to improve
their performance.
 Additionally, it is easy for project managers to identify
potential leaders from members who could be given an
increased level of authority.
 Determinants of the Type of
Organizational Structure
 From an organisational perspective, these are:

Figure 5.1: Determinants of Type of Organizational Structures

Source: Jones and George (2019, p. 225)
 Determinants of the Type of
Organizational Structure (Contd.)
 The best system balances the needs of the project
with the needs of the organization (Gray & Larson,
2017).
 Organization (Form) Considerations
 How important is the project to the firm’s success?
 What percentage of core work involves projects?
 What level of resources (human and physical) are available?
 Project Considerations
 Size of project
 Strategic importance
 Novelty and need for innovation
 Need for integration (number of departments involved)
 Environmental complexity (number of external interfaces)
 Budget and time constraints
 Stability of resource requirements
 Elements of Organisation Structures

 These include the following:

 Work/ job specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization and decentralization
 Formalization
 Work Specialization
 Refers to the degree to which the overall task of the
organization is broken down and divided into smaller
component parts (Griffin, 2016).
 Involves dividing work activities into separate job tasks and
depend on unique expertise
 Division of labor concept
 makes efficient use of the diversity of skills that workers
have (Robbins & Coutler, 2018).
 Employees perform only the tasks relevant to their
specialized function
 Jobs tend to be small, but they can be performed efficiently
 (see Daft, 2016; Scandura, 2019)
 Work Specialization (Contd.)
 The benefits of work specialization are:
 Since workers are performing small, simple tasks will become very
proficient at each task.
 Transfer time between tasks decreases.
 The more narrowly defined a job is, the easier it is to develop
specialized equipment to assist with that job.
 Ease of replacing and training someone new at relatively low cost.
 The downside of specialization are:
 Workers may become bored and dissatisfied
 Increase in absenteeism
 the quality of the work may suffer
 (See Griffin, 2016)
 Departmentalization
 Common tasks grouped into departments for easy
coordination and integration (Robbins & Coutler, 2018).
 Departmentalization can be grouped into (see Daft, 2016;
Robbins & Coutler, 2018):
 Functional Departmentalization - Groups Jobs According to Function
 Product Departmentalization - Groups Jobs According to Product Line
 Geographical Departmentalization - Groups Jobs According to
Geographic Region
 Process Departmentalization - Groups Jobs on the Basis of Product or
Customer Flow
 Customer Departmentalization - Groups Jobs on the Basis of Specific
and Unique Customers Who Have Common Needs
 Chain of Command
 Refers to the line of authority extending from
upper organizational levels to the lowest levels,
which clarifies who reports to whom (Robbins &
Coutler, 2018).
 Authority means the rights inherent in a managerial
position to tell people what to do and to expect them
to do it.
 It defines how much authority a manager has.
 Unbroken line of authority that links all persons in
an organization
 Chain of Command (Contd.)
 Chain of Command is associated with two
underlying principles:
 Unity of Command
 One of Henry Fayol’s 14 management principles
 states that a person should report to only one manager.
 Scalar Principle
 There should be a clear definition of authority in the
organization.
 This authority flows down the chain of command from the top
level to the first or lowest level in the organization (Montana &
Charnov, 1993).
 Span of Control
 Span of Control is important to a large extent
as it defines the amount of control a
manager has over the employees/
specialist, and resources.
 One of Henry Fayol’s 14 management principles
 states that a person should report to only one
manager.
 Centralization and Decentralization
 Centralization: when most or all key decisions are
made by an organization’s top leadership rather
than by the managers or employees of individual
work units
 The extent to which the power and authority is
retained at the top vs. delegated to lower levels.
 Factors influencing…
 Size of the organization
 Geographic dispersion
 Technological complexity
 Environmental uncertainty
 Formalization/ Standardization
 Formalization refers to the extent to which jobs
within the organization are standardized.
 Also referred to as Standardization: when work is
performed in a routine manner, following the
same steps each time
 the amount of rules, regulations, and procedures
an organization requires its employees to follow
 explicit job descriptions
 organizational regulations, and
 clearly defined procedures and processes.
 Fundamentals of an Organisation
Structure
 Two fundamentals of an organisation’s structure, are
differentiation and integration.
 Differentiation means that the organization is composed
of many units that work on different kinds of tasks, using
different skills and work methods.
 Division of labour into distinct tasks. Note that this leads to
specialisation.
 Integration means that the work of these differentiated
units is coordinated into an overall product.
 Coordination of that labour so workers are able to work in concert
to accomplish the organisation’s goals.
 Coordination occurs through: Informal communication, formal
hierarchy, and standardisation.
 Types of Organisational Structures

 There are mainly four types of

organisation structures (for now!).
 These are:
 Functional organisation structure (FOS)
 Matrix organisation structure (MOS)
 Projectised or Dedicated Teams Organisation
Structure (POS/ DTOS)
 Network organisation structure (NOS)
 Functional Organisation Structure
 FOS, also known as the traditional or classical structure is
a very common form of organization.
 Employees are grouped hierarchically, managed through
clear lines of authority, and reporting ultimately to one
top person.
 Different segments of the project are delegated to respective
functional units.
 Co-ordination is maintained through normal management
channels.
 Used when the interest of one functional area dominates
the project or one functional area has a dominant interest
in the project’s success (Gray & Larson, 2017).
 Functional Organisation Structure (Contd).
 Most popular organizational structure in the business
world — probably 65% to 75% of companies use the
functional Structure, because it’s basic and it makes
sense.
 Functional Structures create a high degree of stability and
efficiency within an organization, but this structure type
has its disadvantages, as well (Fontaine, 2007).
 Its distinguishing features are as follows:
 It has clear hierarchical lines of authority.
 An organization is divided by function, department or area of
specialization
 Each employee reports to only one superior.
 Employees tend to perform a specialized set of tasks
 See Figure 2 below
 Functional Organisation Structure (Contd.)

Figure 5.2: Functional Organisational Structure

 When to Use the Functional Organisation
Structure

 The functional structure is used when there is need for a

business to capitalize on the use of specialized skills,
facilities and equipment.
 Appropriate for organisations that produce standardized
goods and services at large volume and low cost (e.g.
manufacturing cars).
 It is poor at recognizing or supporting project work,
especially if the work must involve multiple departments.
 If a project arises, an ad hoc arrangement could be made, with a
functional manager being asked to coordinate project work, relatively
informally, with colleagues from other departments.
 Typically, it becomes difficult to assign overall accountability for a project.
 Advantages of Functional
Organisation Structure
 It fosters stability and efficiency
 Everybody knows what his job is
 No structural change in the parent organisation
 projects are completed within the basic functional structure of the
parent organisation (Larson & Gray, 2017).
 Flexibility
 maximum flexibility in the use of staff.
 Appropriate specialists in different functional units can temporarily
be assigned to work on the project and then return to their
normal work.
 Efficient use of resources
 Skill specialization development
 Advantages of Functional
Organisation Structure (Contd.)
 Top management control
 Excellent coordination
 Quality technical problem solving
 Easy Post-Project Transition
 normal carrier paths within a functional division
are maintained.
 [See Daft (2016); Arora & Baronikian (2013);
Larson & Gray, 2017]
 Disadvantages of Functional
organisation Structure
 Lack of Focus
 each functional unit has its own core routine work to do. Project
responsibilities may be pushed aside.
 Poor Integration across functional units
 specialists tend to be concerned only with their segment of the
project and not what s best for the total project.
 Slow
 projects take longer to be completed; slow response time
 Lack of ownership
 employees assigned to a project may view the project as an
additional burden not directly linked to the their professional
development or advancement.
 [See Daft (2016); Arora & Baronikian (2013); Larson & Gray (2017)]
 Matrix Structure
 Many organizations have moved toward the matrix
structure, which tends to alleviate many of the functional
form’s deficiencies.
 “A Matrix organizational structure is a blend of functional
and projectized characteristics and can incorporate the
best of both worlds” Arora & Baronikian (2013, p. 81).
 Employees report to multiple managers, such as a
functional manager and a project manager.
 For example, an engineer working on project alpha might be
required to report to the leader of the engineering department
and the operational manager of project alpha simultaneously
 [See Larson & Gray (2017); Arora & Baronikian (2013)]
 Matrix Structure (Contd.)
 A Matrix structure organisation contains teams of people
created from various sections of the business.
 These teams will be created for the purposes of a specific project
and will be led by a project manager.
 The matrix arrangement is based on two or more channels
of reporting, two lines of budget authority, and two sources
of performance and reward: one set that runs through the
functional manager and one set through the PM.
 At the same time, employees are assigned to one or more
projects from their home base in a functional area.
Consequently, they would be reporting to two (or more)
supervisors: their FM and one or more PMs.
 [See Larson & Gray (2017); Arora & Baronikian (2013)]
 Matrix Structure (Contd.)

Figure 5.3: Matrix Structure

 How a Matrix Structure Works
 The manager of each project has no staff at all.
 His job is to assemble his staff from the functional
areas of the organization in order to see his project
through from conception to completion.
 The project manager, in other words, must borrow
his staffing from each department.
 The challenge is that each department has a finite
staff, and the demands of each project are not
equal- so one project may require more staffing
than the others (Fontaine, 2007).
 Four points making the Matrix
Structure Popular
 First, the matrix allows companies to focus on multiple
business goals with equal focus.
 The bigger the companies become, the more goals they tend to
have.
 The matrix enables companies to pursue multiple business goals.
 Second, the matrix facilitates the management of
information.
 Markets are operating at Internet speed.
 In this constant and fast changing environment, information is
critical for company survival and prosperity.
 (Sy and Cote, 2004).
 Four points making the Matrix
Structure Popular (Contd.)
 Third, the matrix enables companies to establish
economies of scale.
 As companies grow, there tends to be an increase in human and
capital resource requirements.
 With size, there is an increasing complexity to share resources.
 Through the matrix structure, companies can better share and
leverage resources.
 Fourth, companies can respond more rapidly to the
demands of the environment.
 The matrix organization can more easily form and dissolve groups
as demands change
 Challenges in Using Matrix Structure
 First, business goals and objectives are difficult to align in
the matrix, and this misalignment tends to increase
competition.
 Second, roles and responsibilities are often unclear or
misunderstood across levels in the organization.
 Third, decisions are untimely and of potentially lower quality
because decisions often lack commitment or accountability
for execution, are revisited repeatedly, and lack sufficient
information resulting from a limited search or exclusion of
knowledgeable others from other parts of the organization.
 Fourth, communication and cooperation among employees
tend to be poor because employees tend to be silo-focused.
 Variants of Matrix structures
 Functional Form
 also called Weak or Lightweight form
 the authority of the functional manager predominates
 the project manager has indirect authority.
 Balance Form
 Also referred to as Middleweight 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 (Heavyweight) Form
 Resembles a project team in which the project manager has
broader control and functional departments act as
subcontractors to the project.
 (see Larson & Gray, 2017)
 When to use a Matrix Structure
 A successful matrix implementation (irrespective
of the matrix type) requires alignment of
strategy, structure, rewards, communications and
people.
 The matrix structure is suited to organizations
with a large number and range of projects.
 Many of these organizations have or develop a
“split authority” way of life, with FMs and PMs
sharing power in connection with projects.
 Advantages of Matrix Structure
 Efficient
 resources can be shared across multiple projects and within
functional divisions.
 Strong Project Focus
 having a designated project manager responsible for coordinating
and integrating contributions from different units (Larson & Gray,
2017; Mantel, et al. 2011).
 Easier Post-Project Transition
 since the project organisation is overlaid on the functional divisions,
specialists maintain ties with their functional group, thus they still
have a place to return to (Larson & Gray, 2017).
 Flexible
 The matrix form is flexible in the way it can interface with the parent
organization.
 It has access to any or all of the parent organization’s resources,
expertise and technology (Mantel, et al., 2011).
 Disadvantages of Matrix Structure
 Little control
 In a matrix, the PM controls administrative decisions while the functional
heads control resource decisions. The PM’s ability to negotiate anything
from resources to technical assistance to deliver the project successfully
is limited and depends on the goodwill of the FMs (Mantel, et al., 2011).
 Dysfunctional Conflict
 tensions may arise between functional managers and project managers
 Infighting emanates from sharing common resources (Larson & Gray,
2017; Mantel, et al., 2011).
 Stressful
 The matrix structure violates of Unity of Command Principle since
employees have to report to multiple supervisors/ bosses.
 Employees may be required to perform conflicting tasks (Mantel, et al.,
2011).
 Slow
 decision making may take longer as agreements must be sought across
multiple functional groups.
 Projectised Structure
 May also be called Dedicated teams
 Teams operate as separate units under the leadership of a
full-time project manager.
 In a projectised organisation where projects are the
dominant form of business, functional departments are
responsible for providing support for its teams
 It facilitates the work of an organisation that is primarily
concerned with planning, organising and executing
projects (though there can still be back office operations,
such as accounting, that are still functional in nature).
 Most of the organisation’s resources are allotted to project
work.
 Projectised Structure (Contd.)
 Typically, these are organisations which deliver projects to external
clients.
 A completely projectised organisation structure is a relatively less
common entity than either functional or matrix organisations.
 Found in predominantly project-oriented organisations where work is
for the benefit of external clients.
 E.g. Consulting companies, construction contractors and international development
organisations.
 Project and program managers are common and have a great deal of
authority over budget, work assignments, etc..
 Presence of an actual project team, staffed with various specialized
resources.
 The project team reports to the Project Manager
 Projectised Structure (Contd.)

Figure 5.4: Projectised Structure

 Features of Projectised Structure
 Self-directed work teams
 Teams organised around work processes
 Very flat span of control
 Very little formalisation
 Usually found within divisionalised structure
 When to use the Projectised Structure

 The structure is extremely effective:

 for projects that are difficult to plan accurately
and
 where resource requirements and allocation
levels cannot be accurately established
beforehand.
 It is also well-suited to larger, more
complex and longer-duration projects.
 Advantages of Projectised Structure
 Simple
 specialists from the project drawn from functional divisions. Team
operates independently
 Fast
 project tends to move more quickly: team is dedicated and not
distracted.
 Cohesive
 a high level of motivation and cohesiveness emerges within the
team – burden of proof!
 Cross-Functional Integration
 specialists from different units work closely together with proper
guidance, and become committed to optimising their respective
areas of expertise.
 Disadvantages of Projectised
Structure
 Expensive
 creation of a new management system entails additional costs for the
organisation.
 Internal Strife
 as dedicated teams take on an entity of their own, there tends to be a
strong we-they divisiveness in the parent organisation. Projectitis – The
Dark Side
 Limited Technological Expertise
 creating self-contained teams inhibits maximum technological expertise
being brought to bear on the problems. Technical expertise is somewhat
limited to the talents of people assigned to the project.
 Difficult Post-Project Transition
 prolonged absence from original functional parent department may result
in people losing touch with recent developments in their functional area.
 Network Organisation Structure
 Also called virtual network structure or strategic alliances
(Archer, 2004).
 Can be a temporary or permanent arrangement of otherwise
independent organizations or associates, forming an alliance
to produce a product or service by sharing costs and core
competencies.
 Come in a variety of forms and structures such as:
 Joint ventures,
 Minority equity alliances,
 Joint R&D and production,
 Co-marketing,
 Licensing,
 Long-term supply agreements, and
 Consortia, among others.
 Network Organisation Structure (Contd.)

 So, what is a network organisation structure?

 An alliance of several organizations for the purpose of
creating products or services.
 A “hub” or “core” firm with strong core competencies
outsources key activities to a collaborative cluster of satellite
organizations (Larson & Gray, 2017).
 Construction projects have long been associated with
network arrangements (Archer, 2004).
 Network organisations are also common in new
product development, and production process
innovations.
 Network Organisation Structure (Contd.)

 How does a network organisation work?

 It involves a great deal of outsourcing.
 It is created around a central organisation called the
hub or core that has relationships with some other
organisations, to perform functions like designing,
manufacturing, marketing, etc. for the central
organisation, on a contractual basis (see Figure 5).
 Each associate of the network focuses on its core
competency and performs some portion of the
activities necessary to deliver the products and services
of the network as a whole.
 Network Organisation Structure (Contd.)

 How does a network organisation work? (Contd.)

 Networks promote interdependence.
 Three types of interdependence:
 Pooled or generalized interdependence
 each partner renders a discrete contribution to the whole, and each is
supported by the whole.
 Sequential interdependence
 where the activities of each partner are distinct and serial, so the
activities of one partner precede the other
 Reciprocal interdependence
 organizations work together and exchange simultaneous outputs.

 Higher levels of interdependency also lead to greater

complexity in joint projects. (see Archer, 2004)
 Network Organizations (Contd.)

Figure 5.5: Network Organisation Structure

 Advantages of Network Organizations
 Network structures are lean and streamlined.
 They help organizations stay cost-competitive by reducing overhead
and increasing operating efficiency.
 High Level of Expertise
 Through outsourcing strategies and contracting out of specialized
business functions.
 Flexible
 Organisations are no longer constrained by their own resources but
can pursue a wide range of projects by combining their resources
with talents of other companies.
 Knowledge Transfer
 Pooled interdependence fosters Knowledge Transfer.
 (See Schermerhorn, et al., 2018; Larson, 2007)
 Disadvantages of Network
Organisations
 Breakdowns in Coordination
 Difficult to control and coordinate the network of contracts and
alliances (Larson, 2007).
 Loss of control over contracted activities (Larson, 2007).
 Lack of loyalty among contractors who are used infrequently
rather than on a long-term basis (Schermerhorn, et al.,
2018).
 Conflict
 Networked projects are prone to interpersonal conflict - different
participants do not share the same value, priorities, and culture.
 Trust, which is essential to projects, can be difficult to forge when
interactions are limited and people come from different organisations
(Larson, 2007).
 INFLUENCE OF ORGANISATION
STRUCTURES ON PROJECT MANAGEMENT

 A company's organisational structure may:

 Dictate the level of project management,
 Dictate who makes ultimate project decisions,
 Dictate the communication of project goals, and tasks
 Dictate how the project manager works with his team.
 Influence the availability of resources and affect how
projects are conducted.
 Functional Structure and Project
Management
 Projects in functional organisations are most likely to be
implemented to improve systems, procedures, or
processes, and tend to be internal rather than external in
scope.
 They are smaller in scale, less frequent and relatively less
complex.
 The relationship between project management and
functional organisation can be described in the following
terms:
 First, communications across functional department boundaries
are rarely as simple as most firms think they are.
 When technological assistance is needed from another division, it may or may
not be forthcoming on a timely basis.
 Functional Structure and Project
Management
 Second, the project is rarely a high-priority item in the life
of the division.
 functionally organized projects often get short shrift from their sponsoring
divisions
 Third, Project Managers have little or no formal authority.
 There may not even be any designated Project Managers in the
organization at all.
 Fourth, ongoing and efficient output is the organisation’s
primary objective.
 Project team members may well be part-time and may have little
dedication to their project
 PMs can have limited career opportunities, as career paths are tied to
function rather than projects or to project management as a discipline.
 Matrix Structure and Project
Management
 Project management within a matrix structure, to some extent,
offers the best of both the projectized and functional
structures.
 Multiple bosses can lead to conflicting requirements and
loyalties.
 Clear, frequent communications, in every direction, are
essential to minimize conflicts or confusion.
 Each project organisation can operate independently. Policies
and procedures can be set up independently for each project.
 Team members will always have a “home” after project
completion.
 PM has a great deal of authority and control.
 Matrix Structure and Project Management
(Contd.)
 There is a more defined career path for PMs. Project team
members can work on a variety of projects across functional
boundaries, making for a more stimulating and challenging
environment. Knowledge can be shared across projects.
 Given organisational politics, the balance of power between PMs
and FMs must be monitored.
 The PM and FM share responsibility for assigning priorities and
directing the work of individuals.
 Competing demands between different functions and projects can
exhaust resources, affecting morale and project performance.
 Project team members can have difficulty re-integrating into
functional units after a long absence.
 Projectised Structure and Project
Management
 The PM is “all-powerful”, with a great deal of authority, power and
independence.
 PM has strong control of the project and oversight of the project team.
 PM also manages the budget, rewards and team performance evaluations.
 PMs are generally drawn from a resource pool or one of several
specialized pools, e.g. organised by industry knowledge, as is done in
management consulting firms.
 PMs and project team members are ‘assigned to’ and ‘released from’
projects.
 The team is disbanded after completion of the project and the individuals return to their
pool, from which they will be allocated to the next project.
 Project participants work directly for the PM.
 Members of the project team do not have functional loyalties.
 Both PM and team members may have concerns about their next assignment as their
project is ending.
 There may not be a project to which that individual can be assigned in a timely way.
Organisational Structure
Influences on Projects
 Organisational Structure Influences on
Projects (Contd.)
Project Organizational Structure Type
Characteristics
Functional Matrix Project
Weak Matrix Balanced Strong
Matrix Matrix
Project manager’s Little or none Limited Low to Moderate High to
authority Moderate to high almost total
Percent of Virtually none 0-25% 15-60% 50-95% 85-100%
performing
organization’s
personnel assigned
full-time to project
work
Who controls the Functional Functional Mixed Project Project
project budget manager manager manager manager
Project manager’s Part-time Part-time Full-time Full-time Full-time
role
Common title for Project Project Project Project Project
project manager’s Coordinator/ Coordinator/ Manager/ Manager/ Manager/
role Project Leader Project Project Program Program
Leader Officer Manager Manager
Project Part-time Part-time Part-time Full-time Full-time
management
administrative staff
PMBOK Guide, 2000, 19, and PMBOK Guide 2004, 28.
Information Technology Project Management, Fourth Edition
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