This document discusses organizational structures for managing projects. It describes how firms typically develop organizational structures as they grow, with a focus on specialization. Functional, projectized, and matrix organizational structures are described and their pros and cons for managing projects are discussed. The document also discusses challenges for project managers, including acquiring resources and dealing with uncertainty. It introduces the concept of a Project Management Office to help manage administrative and process issues for projects. Key factors in managing project teams such as political skills, motivation, and conflict resolution are also covered.

1. Econ106 Lecture-Discussion No. 4

2. Organizational Structures
A firm, if successful, tends to grow, adding resources and
people, developing an organizational structure.
Commonly, the focus of the structure is specialization of
the human elements of the group.
As long as its organizational structure is sufficient to the
tasks imposed on it, the structure tends to persist.
When the structure begins to inhibit the work of the firm,
pressures arise to reorganize along some other line.
The underlying principle will still be specialization, but
the specific nature of the specialization will be changed.

3. Project-oriented Organizations
In the past decade or so, there has been the development of
applying project management practices and tools across an
enterprise (sourced from the software industry)
 “enterprise project management”
 “managing organizations by projects”
Reasons for growth:
 demands of speed and market responsiveness
 need for ad hoc specialists for development of new products,
services, processes
 rapid expansion of technological possibilities tend to destabilize
the structure of organizations
 many senior managers rarely feel much confidence in
understanding and control of many activities in their organizations

4. Organizational Issues
A decision must be made about how to tie the project
to the parent firm.
A decision must be made about how to organize the
project itself.
 A decision must be made about how to organize
activities that are common to other projects

6. 1. Projects in a Functional
Organization
Make it as part of one of the functional divisions of
the firm, usually the function that has the most
interest in ensuring its success or can be most helpful
in implementing it.
Another way is to assign the work to all the relevant
functional divisions with either top management
overseeing the effort or someone else assigned to
coordinate their efforts.

7. JPES Initiating Structure (2010-11)

8. JPES Organizational Structure
(from JPES-USLS Constitution)

9. Proposed Functional Structure
2012-13

10. Pros and Cons
Advantages
Disadvantages
 Maximum flexibility in the use
 Client is not the focus of activity and
of staff
 Individual experts can be
utilized for different projects
 Specialists in functional division
can be grouped to share
knowledge and experience
 Functional division serves as
base for technological and
overall continuity
 Functional division contains
normal advancement;
functional field is professional
home
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concern; functional unit has own work to
do
Functional division tends to be oriented
toward the activities particular to its
function; not problem-oriented
Occasionally, no individual is given full
responsibility and accountability
May have lack of coordinated efforts
making response to client needs and
concerns slow
Tendency to sub-optimize the project
Motivation of people assigned to the
project tends to be weak
Does not facilitate a holistic approach to
the project

11. 2.Projects in a Projectized
Organization

12. 12th YEC Visayas Convention
Project

13. Basis for “Projectizing”
 Administrative mandate
Common convention needs
Draft MOA requirements
 (pls. refer to “Responsibilities and Tasking Word file)

14. Pros and Cons
Advantages
Disadvantages
 PM has full line authority over the
project
 All members of the project work force
are directly responsible to the PM
 When the project is removed from
the functional division, the lines of
communication are shortened
 When there are several successive
project of a similar kind, the
projectized organization can maintain
a more or less permanent cadre of
experts who develop considerable
skill in specific technologies
 A project team that has a strong and
separate identity of its own tends to
develop a high level of commitment
from its members
 If parent organization takes on many
projects, considerable duplication of
effort
 Tendency to stockpile technological
knowledge and skills; experts are
hired when available not when
needed, very expensive when coupled
with previous point
 Functional expertise may not be
readily accessible to project team
 Inconsistency in the way policies and
procedures are carried out;
administrative corner-cutting
 Project takes on a life of its own:
projectitis develops, which may
distort relationships in parent
organization

15. Advantages
Disadvantages
Ability to make swift
Worry about “life after the
decisions greatly enhanced
Unity of command exists:
better quality of life for
subordinates with one and
only one boss
Structurally simple and
flexible, easy to understand
and implement
Supports a holistic approach
to the project
project”

16. 3. Projects in a Matrixed
Organization
President
Marketing
Finance
Program
Manager
Manufacturi
ng
R&D
Personnel
PM1
3
1.5
0.5
4
0.5
PM2
1
4
0.25
1.5
0.25
PM3
0
0.5
3
0.5
1
1. PM controls when and what people will do.
2. FM controls who will be assigned and how the work will be done.

17. Pros and Cons
Advantages
Disadvantages
 Project is the point of emphasis
 Reasonable access to the technical
expertise of the functional divisions
 Less anxiety about what happens
when the project is completed
 Response to client needs is as rapid as
standalone project
 Access to representatives from the
administrative units of parent firm
 Better companywide balance of
resources
 May be strong or weak matrices: more
flexible
 Delicate balance of power
between FM and PM
 Movement of resources from
project to project may foster
political infighting
 Projectitis for strong matrices
 Negotiating ability of PM is
crucial
 Violates management principle
of unity of command with more
than 1 boss: split loyalties and
confusion

18. 4. Virtual Projects
Work on the project team crosses time, space,
organizational and cultural boundaries
Creates overlapping and shared responsibilities for
work (especially between PM and FM)
Virtual positions – “task processes, the performance
of which requires composite membership” (Kalu,
1993) in both project and functional organizations

19. Guidelines for Successful Virtual
Projects
 Only use virtual teams for projects that are challenging and
interesting. Also be sure the project is meaningful to the company as
well as the team.
 Solicit volunteers as much as possible– they’ll be more enthusiastic
and dedicated to the success of the project.
 Include a few members of the team who already know each other, and
make sure 1 of every 6 or 7 are “boundary spanners” with outside
contacts.
 Create an online resource for team members to learn about each other
(especially how they prefer to work), collaborate, brainstorm and
draw inspiration.
 Encourage frequent communication, but not social gatherings (which
will occur at more natural times anyway).
 Divide the project work into geographically independent modules as
much as possible so progress in one location isn’t hampered by delays
in other locations.

20. Guidelines for Selecting a Project
Form
 Define the project with a statement of the objective(s) that identifies the
major outcomes desired. (see “Responsibilites and Tasking” Word file again.)
 Determine the key tasks associated with each objective and locate the units in
the parent organization that serve as functional “homes” for these types of
tasks.
 Arrange the key tasks by sequence and decompose them into work packages.
 List any special characteristics or assumptions associated with the project:
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Level of technology needed
Probable length and size of the project
Any potential problems with individuals who may be assigned to the work
Possible political problems between different functions involved
Parent firm’s previous experiences with organizing projects
Anything else that seems relevant
 In light of the above and full cognizance of pros and cons associated with each
structural form, choose a structure.

22. Key Project Management
Challenges
A primary task of the PM is to acquire the resources,
technical skills, knowledge and whatever else is needed by
the project, dependent on PM’s negotiating skills.
Uncertainty is a way of life; need for risk management
The successful execution of a project is a complex
managerial task and requires the use of planning,
budgeting, scheduling and control tools with which the
neophyte PM may not be completely familiar.
There are contractual, administrative and reporting duties
that must be performed in accord with the law, the wishes
of the client, and the rules of the organizational home of
the project.

23. Project Management Office (PMO)
Purposes:
 To deal with the managerial and administrative issues in a
way that meets the parent organization’s rules for
management and administration
 To help manage fast-multiplying forms of getting work done
Many names: Project Office, Program Management
Office, Project Support Office
Best PMOs have common characteristics (Baker, 2007):
 Like best businesses (a business plan, focused, emphasis on
results)
 Enjoy strong executive support
 Future-oriented learning organizations
 Offer best project leadership in the organization

24. Tasks
(Block, 1999)
 Establish and enforce good project
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management processes such as
procedures for bidding, risk analysis,
project selection, progress reports,
executing contracts and selecting
software
Assess and improve the organization’s
project management maturity
Develop and improve an enterprise
project management system
Offer training in project management
and help project managers become
certified
Identify, develop and mentor project
managers and maintain a stable of
competent candidates
 Offer consulting services to the
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organization’s project managers
Help project managers with
administrative details such as status
reports
Establish a process for estimation and
evaluation of risk
Determine if a new project is a good “fit”
for the changing organization
Identify downstream changes (market,
organization) and their impact on
current projects
Review and manage the organization’s
project risk portfolio
Conduct project reviews and audits,
particularly early in each project’s life
cycle, and report project progress
relative to the organization’s goals

25. Tasks (continued)
Maintain and store project archives
Establish a project resource database and manage the
resource pool
Serve as a champion to pursue project management
excellence in the organization and encourage discussion in
the value of individual projects in the firm
Serve as a “home” for project managers to communicate
with each other and with PMO staff
Collect and disseminate information, techniques and
lessons learnedas reported in project evaluations that can
improve project management practices
Assist in project termination

27. Key Factors in Managing Project
Teams
PM’s high level of political sensitivity, negotiating and
communicating skills, leadership
Meeting schedule and cost goals without sacrificing
performance – a technical problem with a human dimension
Motivating project team members to accomplish the work of
the project even with little control on economic rewards and
promotions
 Judicious use of “thank you” notes with copies to relevant
functional departments
 Use of participative management: workers play significant roles in
what means should be employed in meeting desired ends, and in
finding better ways of accomplishing things
Handling interpersonal conflict