Chapter 4 Project Organization

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Ch 4 Project Organization

“Organize - to form into an association for a common

purpose or arrange systematically”

Chapter 4 Project Organization 2

Project Organization Specialization of the human elements Different types = functional, product

line, geographical location, production process, type of customer, subsidiary organization, time, vertical or horizontal organization

How to tie project to the parent firm How to organize the project itself

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Project as Part of Functional Organization E.g. new technology project –

under vice president of engineering

Introduction of new product line – under vice president of marketing

Project assigned to the functional unit that has most interest

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President

VP Finance VP Marketing VP Manufacturing

VP Engineering

Functional Organization

Project New Model Proton SURIE

New Layout – Robot Line

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Major Advantages Maximum flexibility in the use of staff Individual experts can be utilized by

many different projects Specialist in the division can be grouped

to share knowledge and experience Functional division serves as a base of

technological continuity Functional division contains normal of

advancement

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Disadvantages The client is not the focus of activity and

concern Tend to be oriented towards functional

activities No individual is given full responsibility for the

project Slow response to client’s needs Tendency to sub-optimize the project Motivation of project team is weak Does not facilitate a holistic approach to the

project

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Pure Project Organization Project is separated from the rest

of the parent system Becomes self contained unit

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Advantages PM has full line authority over the project All project workforce directly responsible to

the PM Lines of communication are shortened Maintain permanent group of experts High level of commitment Ability to make swift decisions Unity of command Simple and flexible structure Support holistic approach to the project

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Project Organization

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t A

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t B

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t C

P re sid e n t

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Disadvantages Duplication of effort Stockpile equipment and technical

assistance “just in case” Lack of expertise in high technology

project Foster inconsistency and cutting

corners Project takes on a life of its own Worry about “life after project ends”

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Matrix Organization Combination of functional and pure

project organizations Matrix project is not separated

from parent organizations Individuals come from respective

functions divisions and are assigned to the project full time or part time

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Matrix Organization

PM1

PM2

PM3

Manufacturing Program Manager R&D Marketing

President

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Matrix Organization Cross-functional team members Draw temporarily on technological expertise

of relevant functions High technology areas – integrate functional

specialties Iterations in adapting “over the wall”

approach Systems approach – integrity of product

design Close coordination and communication

among all parties

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Advantages of Matrix Approach The project is the point of emphasis Reasonable access t pools of technical talents Less anxiety about what happens after

project completion Rapid response to client needs Access to administrative units of the parent

firms Better balance of company resources in

multiple projects Flexibility in control

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Disadvantages Delicate balance of power Movement of resources – conflict Projects resist death Complex division of authority and

responsibility Violates the principle of unity of

command

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Mixed Organizational Systems Divisionalization – breaking down large

organization into smaller more flexible units

Spin-off the large projects as subsidiaries or independent operations

Allow formation of venture team Hybrid leads to flexibility Dissimilar groupings encourage overlap,

duplication and friction

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Mixed Organization

P ro je c t M F in an ce E n g in e ering P ro je c t N

P re sid e n t

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Staff Organization Set up like functional organization Adds a staff office to administer

projects Used for small, short run projects

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Staff Organization

Finance Manufacturing Engineering

President

Project S

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Choosing an Organizational Form Functional form – major focus on in-depth

technology, require large capital investment

Pure project – large number of similar projects

Matrix organization – require integration of inputs from several functional areas and involves reasonably sophisticated technology and several projects must share technical expertise

Matrix organizations are complex

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Selection of Project Organization Define the project / objectives Determine the key tasks Arrange key tasks by sequence and

decompose them into work packages Determine project subsystems List special characteristics – level of

technology, probable length, resource requirements, level of outsourcing

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Project Team Project office – control center, chart

room (focus of all project activity) Close location to project manager Co-location of external parties Reduce physical distance Better communication Pressure to complete tasks

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Key Team Members Project Engineer Manufacturing Engineer Field Manager Contract Administrator Project Controller Support Services Manager

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Work Organization Project engineer (technical performance)

and project controller (budget) report to PM

PM forecast of personnel needs Prepare WBS to determine exact nature

of tasks Skills requirements are assessed and

aggregated Outsourcing of certain tasks

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Typical Organization of Engineering Projects

F ie ld M a na g er

M a nu fa ctu rin g E n g in e er

P ro je ct E n g in e er

S u p po rt S e rvice s M a na g er

C o n tro l A d m in is tra to r

P ro je c t co n tro lle r

P ro je ct M an a g er

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Staff Critical to Project Success Senior project team members Staffs whom the PM will require

close communication Staffs with rare skills for project

success

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Human Factors Technical problem with a human dimension Perfectionist – can cause delay Motivation – recognition, achievement,

responsibility, advancement, the work itself Interpersonal conflict Management by Objectives (MBO) – allows

worker to take responsibility for design and performance of a task

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Advantages of MBO Participative mechanism Allow professionals to design their own

method Team members know what is expected of

them Members have the opportunity to participate

in deciding their own responsibilities Members get timely feedback on their

performance Project manager is provided a tool for

evaluating and controlling performance

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MBO Superior set objectives in

consultation and agreement with subordinates

Subordinate develops action plan, a detailed plan and scheduled that will result in achieving the objective

Final plan becomes a contract

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Major Sources of ConflictLife cycle phase Conflict source

Project formation Priorities, procedures, schedules

Buildup phase Priorities, schedule, procedures

Main program Schedule, technical, manpower

Phase out Schedules, personality, manpower