ORGANIZING

FOR PROJECT
MANAGEMENT

CHAPTER 3
 VARIOUS FORMS OF PROJECT
ORGANIZATION
1. THE FUNCTIONAL ORGANIZATION:

The activities constituting a project are performed respectively by

the relevant functional unit of the organization. In this case,
coordination of project activities are undertaken by the higher
functional levels of management.

2. THE FUNCTIONAL MATRIX:

An individual is selected who will oversee and coordinate the

project activities across the various functional levels of the
organization.

3. THE BALANCED MATRIX:

An individual is selected who will manage the project across the

various functional levels of the organization and who will interact
with the functional managers on an equal basis and jointly approve
technical and operational decisions.

2
4. THE PROJECT MATRIX:

A project manager is selected to oversee the completion of the

project in the functional levels of the organization. He or she is
ultimately responsible for the project‘s completion, has final say
on major project decisions and controls most aspects of the
project, including the assignment of functional personell, what
they do and when.

5. THE (DEDICATED) PROJECT TEAM:

A project manager is selected to head a core group of personell

from several functional units of the organization and who are all
assigned to work full-time on the project in question.

3
 EXAMPLE OF A TYPICAL
FUNCTIONAL ORGANIZATION
Corporation X
Project Coordination

Human Finance &

Resources Administration

Marketing Engineering Manufacturing Procurement

Electronics Software Mechanical Receiving

Design Purchasing
Engineering Engineering Engineering & Inspection

Customer Domestic International Fabrica- Production

Assembly Testing
Service Sales Sales tion Scheduling

4
 THE PROJECT MATRIX
ORGANIZATION FORM
General Manager

Lead Project Functional Functional Functional

Manager Manager A Manager B Manager C

Project
Manager 1 FI FI FI

Project
FI FI FI
Manager 2

Project FI FI FI
Manager 3

Project FI FI FI
Manager 4
5
 THE PROJECT MATRIX ORGANIZATION FORM
„A TYPICAL EXAMPLE“

General Manager

Lead Project
ENGINEERING MANUFACTURING MARKETING
Manager

PA E1 E2 E3 MA1 MA2 MA3 M1 M2 M3

PM X 1 2 1 3 2 1

PM Y 1 3 1 4 0,5 1

PM Z 0,5 1 2 0,5
 EXAMPLE OF A DEDICATED PROJECT
TEAM
Corporation X

Human Finance &

Resources Administration

Marketing Engineering Manufacturing Procurement

Project Manager

Project Team
 Some Real Examples of Project
Organization in Scientific Projects
Project Related with Engineering
Geographical Organization
of a Project
Board Display
 THE FUNCTIONAL APPROACH TO
PROJECTS-THE PROS AND CONS
PROS

- NO MAJOR ALTERATION IN THE ENTERPRISE‘S EXISTING

ORGANIZATIONAL STRUCTURE IS NECESSARY

- FLEXIBILITY IN ASSIGNING PERSONELL

- FOCUSSED UTILISATION OF EXPERTISE

- MAINTAINENCE OF NORMAL CAREER PATHS IN A FUNCTIONAL

DIVISION

CONS

• IF A PROJECT HAS A COMPARATIVELY BROAD SCOPE, THE

FUNCTIONAL UNITS MAY HAVE DIFFERENT PRIORITY
PERCEPTIONS

• INADEQUATE INTEGRATION ACROSS FUNCTIONAL UNITS

• PROJECTS MAY BE VIEWED AS „ADDITIONAL BURDEN“

14
 THE DEDICATED PROJECT APPROACH
PROS

• PROJECT COMPLETION TIME IS COMPARATIVELY SMALLER DUE TO PROJECT

PERSONELL DEVOTING THEIR EFFORTS TO THE PROJECT IN QUESTION FULL-
TIME.

• MOTIVATION, FEELING OF IDENTIFICATION AND COHESIVENESS ARE STRONG

IN THE PROJECT.

• CROSS-FUNCTIONAL COOPERATION IS STRONGLY ENCOURAGED AND

PROMOTED

CONS

• LARGER EXPENSE IS INVOLVED BECAUSE RESOURCES ARE ASSIGNED TO THE

PROJECT ON A FULL-TIME BASIS.

• PROJECTITIS – PROJECT PERSONELL EVOLVE A COLLECTIVE IDENTITY

ENCAPSULATING THEMSELVES FROM THE ENTERPRISE, GIVING RISE TO A
NON-CONSTRUCTIVE „US“ (PROJECT PERSONELL) AND „THEM“ (REST OF THE
ENTERPRISE) OUTLOOK.

• ASSIMILATION OF PROJECT PERSONELL BACK INTO THEIR RESPECTIVE

FUNCTIONAL UNITS MAY PROVE DIFFICULT DUE TO THEIR PROLONGED
ABSENCE.

15
 THE MATRIX ORGANIZATIONAL
APPROACH
PROS

• SHARING OF RESOURCES ACROSS MULTIPLE PROJECTS AND WITHIN

FUNCTIONAL DIVISIONS.

• MORE HOLISTIC APPROACH TO PROJECT THAN IS NORMALLY POSSIBLE IN

A PURELY FUNCTIONAL PROJECT.

• FLEXIBLE USE OF THE ENTERPRISE‘S RESOURCES AND EXPERTISE.

• ACCESSIBILITY OF THE ENTIRE SPECTRUM OF THE FUNCTIONAL

ENVIRONMENT‘S TECHNOLOGY, EXPERTISE AND EXPERIENCE

• FUNCTIONAL PERSONELL MAINTAIN CLOSE TIES WITH THEIR RESPECTIVE

UNITS

CONS

• VIOLATION OF THE ESTABLISHED HIERARCHICAL PRINCIPLE „UNITY OF

COMMAND“.

• CONFLICT POTENTIAL BETWEEN PROJECT MANAGERS AND FUNCTIONAL

MANAGERS.

• DIFFICULTY FACING PROJECT MANAGERS IN GETTING AGREEMENTS 16

ACROSS FUNCTIONAL DELINEATIONS
 EMPIRICAL ASSESSMENT OF THE
RESPECTIVE ORGANIZATION FORMS
EMPIRICAL RESEARCH SUGGESTS THAT THE „PROJECT MATRIX“
AND „PROJECT ORGANIZATION“ MODES ARE THE MOST EFFECTIVE
MEANS OF UNDERTAKING PROJECTS
Very
Effective

Effective

Ineffective

Construction
Very New Product
Ineffective

Functional Functional Balanced Project Project

Organization Matrix Matrix Matrix Organizaton
Clifford F. Gray / Erik W. Larson