Management of Project

Based
Organizations
Agenda
Organization & Organizational Structures

Influence of Organizational Structure on Projects

Types of Organizational Structures

Emergence of PBO

PMO/PMU

Purpose of PMO

Forms of PMO

Implementing PMO
 What is an Organization….
an organized group of people with a particular purpose, such as a business or government department…..
what is organization: a group of people who work together in an organized way for a shared purpose: .

When two or more people get together and agree to coordinate their activities in order to achieve their common
goals is called an organization. 

Company is a voluntary association of persons formed for the purpose of doing business having a distinct name and
limited liability.

A company is Business organization in structure, where people work for only profits and pay taxes. They will use that
money for improving their business and share the profits. 
But in an Organization, people of same goals work together to achieve a particular mission
 Organizational Structure

• A System in which members are ranked according to relative status or authority

• Defines each job, its function and where it reports

• Hierarchical arrangement of lines of authority, communications, rights and duties

• Structure depends on the organization's objectives and strategy.

Influence of Organizational Structure on Projects
→ Helps or Hurts

 In allocation of resources

 In decision-making

 Shared values and norms

 beliefs and expectations

 Policies and procedures

 Authority relationships

 Work ethics and work hours

 Types of Organizational Structures

Management organizational structures –

1. Functional Organizational Structure

2. Projectised Organizational Structure

3. Matrix Organizational Structure

4. Hybrid Organizational Structure

 Functional Organizational Structure

◦ Most common type of organizational structure

◦ Divided into different functional areas

◦ Separate departments providing expert services

◦ An activity assigned to a department can not be assigned to another departments

Fully functional organizational structure
Advantages of Functional Organization

• Allows economies of scale within each department

• Enables in depth skill development

• Low Turnover rate

• Development of Refined, matured operations

 Disadvantages of Functional
Organization
• Slow to respond

• Poor horizontal communication

• Less innovative

• Each department may have only a limited perspective of organizational goals

• Difficult to grow the organization beyond a certain size.

• Functional areas may have difficulties working with other functional areas.
Projectised Organizational Structure
Also known as:
Project Organizations, (Enterprise Project Management),
(managing Organizations By Projects), (Project Oriented Firms)

◦ Structure in which PM has full authority.

◦ Reports directly goes to PM

◦ PM controls the budget, resource, and work assignment

◦ On Termination, project teams are disbanded and team members and other resources are

released
Projectized organization structure
Advantages of Projectized Organization
◦ Clear line of authority

◦ Strong communication with single reporting system

◦ Flexibility in trade-offs and decision making

◦ Fast responsiveness

◦ High preference to stakeholders’ concern

◦ Problem of multiple bosses ideally does not exist

 Threats to Projectized Organization
◦ Authority and power can be misused

◦ The work environment can be stressful because there is always a deadline (milestones)

◦ Resources may be duplicated

◦ Team members have sense of insecurity about their jobs

◦ If the project get elongated, cost of employee and equipment can go higher

◦ If the organization has multiple projects, then there is very poor communication and co-
operation among the different project teams
 Matrix Organizational Structure

◦ Employs best features of both Projectized and functional organization structure

◦ Ability to share knowledge and skills of the talented employees

◦ Relocation of employees to any team when and where their services are needed

◦ Shared resources between the project teams and the functional units
Fig 4. Example of Matrix Organizational Structure
 Types of Matrix Organization
STRONG MATRIX BALANCED MATRIX WEAK MATRIX

◦ Most authority and power lies with ◦ Power is shared between the ◦ The project manager has a part
the project manager. functional manager and the time role with very limited power
◦ Has a lot of common project manager and authority. His role will be more
characteristics of the Projectized ◦ The project manager has full like a coordinator or an expediter.
organization. time role, he has only part time ◦ Weak matrix structure is very close
◦ Project manager has a full time project management to the functional organization
role; he controls the project administrative staff under him. structure.
budget, and he has full time ◦ Both managers control the ◦ The functional manager controls
project management project budget. the project budget.
administrative staff under him.
 Advantages of Matrix Organization
◦ Flexible sharing of human resources across projects

◦ Better able to make complex decisions (wider range of input)

◦ Able to cope with a larger product range than a functional structure

◦ Provides more opportunity for functional specialization

◦ People can be selected based on skills and suitability

◦ Employees have job security

◦ Typically the efficiency of matrix organizations is higher

Disadvantages of Matrix Organization
• “No Man Can Serve Two Masters Honestly!” (Unclear lines of authority, Two bosses, dual
reporting)

• More time spent in meetings than other structures to resolve conflicts

• Requires mature, collegiate type employees

• Can fail if one side of the authority structure dominates the other

• Conflicts may arise between the bosses regarding the power and authority

• Confusion among employees regarding their roles and responsibilities

• Often project manager tells you what to do, but your raise comes from functional manager
Organizational Structure
 Nestlé Pakistan follows , matrix organizational structure 
The departments are divided function-wise and product-wise. All the products use different
functional departments, and all the functional departments have specific product departments within them. The
span of control is wide, as each department head has many direct and indirect reporting relations with his
subordinates. Also, as in a pure matrix form, nearly all employees have two or more departments to report
to, directly or indirectly. The Managing Director of Nestlé Pakistan reports directly to the Head Office in
Switzerland, and gets guidance and objectives from them.
 Hybrid Organization
"Hybrid organizations" are those that combine the three elements of people, workplace and technology in
equal measure.  A successful organization would be one that empowered its people to work in the way they
would be most productive, allowing them to be measured by outputs – empowered through innovative and
flexible workplace design and a range of technologies and tools that help them do their jobs more effectively.

"The Hybrid Organization" is a business concept created by Microsoft in 2010. Working with experts from the
fields of social change, workplace design, economics, technology and public sector development. Microsoft
identified several characteristics of businesses and organizations that are best placed to thrive in uncertain
times.
 Hybrid Forms
Firms combine matrix, functional, project features, custom design for their own organization.

COST CONTROL: Project matrix best, functional worst

SCHEDULE: project best, functional worst

TECHNICAL: functional worst

The Project Management Office (PMO)…
The Project Office…
The Program Management Office…
The Project Support Office…
The Project Management Office (PMO)
 Dedicated centralized office to improve the Practice and results of Project Management

 A management structure that standardizes the project-related governance processes

 Facilitates the sharing of resources, methodologies, tools, and techniques

 Provides Project Management support functions

 Responsibility for the direct management

 Centralized office of coordinated management practices

 Difference Between PMO & Project
Managers
 Natural liaison between the organization’s portfolios, programs, projects, and the corporate measurement systems

 Pursue different objectives and, are driven by different requirements

 The project manager focuses on the specified project objectives

 PMO manages major program scope changes

 The project manager controls the assigned project resources to best meet project objectives

 PMO optimizes the use of shared organizational resources across all projects

 The project manager manages the constraints (scope, schedule, cost, quality, etc.) of the individual projects

 PMO manages the methodologies, standards, risks/opportunities, metrics, and interdependencies

 PMO Structures

3 PMO Structures are:

→ Supporting

→ Controlling

→ Directive
 PMO Structures
→ Supportive:

 Consultative role to projects by Providing:

o Methodologies & Procedures

o Templates, best practices, trainings

o Access to information and lessons learned from other projects.

Serves as a project repository. The degree of control provided by the such PMO is low.
 PMO Structures
→ Controlling:

 Provide support and require compliance through various means

 Compliance may involve adopting project management frameworks or methodologies

 Use of specific templates, forms and tools, or conformance to governance

 The degree of control provided by the PMO is moderate

 PMO Structures
→ Directive:

 Leads the recruiting of project management staff

 Project selection in alignment with the organization strategy

 Cancelation of failed projects

 Resource management across projects

 Directive PMOs take control of the projects by directly managing them

 The degree of control provided by the PMO is high

 Implementing PMO
 Organizations can be different from one another in their

 needs, size, structure and project management maturity

 Selecting the right structure type is a key success factor

 To choose the right type of PMO structure, many factors must be considered

 Organization is profit or non-profit

 local or global

 Small or big

 its industrial sector

 technical disciplines , human cultures, among others.

 Implementing PMO
The right type of PMO structure is quite the challenge

To overcome this challenge, it is necessary to balance the

 supporting

 controlling and

 directive roles
 Implementing PMO
4 Steps to choose the right type of PMO structure for your organization

→ Gather Stakeholders to Assess Their Needs

→ Understand the Organization Size, Complexity and Culture

→ Assess Organization Project Management Maturity

→ Select a PMO Structure Type and Roles Aligned with Current Project Management Maturity
 The focus of the new PMO must be in
a Supporting role if:
•The organization lacks methodologies, procedures and project management tools.

•Project management practitioners lack knowledge and skills in project management standard practices (for
example if they have ample technical experience but no formal training in project management standards).

•Project Managers have knowledge and skills in project management standard practices, but are not using common
procedures and sharing knowledge.

•Lack of procedures specifically oriented to identify project management skills and competencies among project
manager candidates.

•Lack of training programs specifically oriented to develop project management knowledge and skills.
 The focus of the new PMO may be in
a Controlling role if:
•There is some level of project management mind-set in the organization.

•Project Managers have basic knowledge of project management standard practices.

•The organization is accustomed to work in multidisciplinary projects (no silo mentality).

•There is a clear support of senior executives to the implementation of standard project

management practices.

•The Supporting PMO has been or is currently being implemented.

 A PMO can assume a Directive role if:
•Progress has been made in implementing supporting and controlling PMO Roles.

•Changes have been made to the executive management structure, as functional managers must
give up some degree of control over resources management and project selection.

•The organization has adopted a project mind-set instead of a silo mentality.

•The project management profession has been established as a clear career path within the
organization.

•Metrics and controls have been established at the project, program and portfolio levels.
 Results of the research
PMO adaptations in the market

• Enterprise PMO should be either Controlling or

Directing
• Controlling level best suites Enterprise PMOs to have
a command on processes and policies and have a fair
amount of governing capabilities.

conducted by Aubry et al. from the University of Quebec and sponsored by PMI.
 References
◦ Project Management Institute http://www.pmi.org/

◦ Project Management for Beginners and Experts

http://www.project-management-podcast.com/

◦ PM Study Circle (PMSC) http://pmstudycircle.com

◦ Project Management Organizational Structures Paper

http://www.articlearn.com/project-management-organizational-structures-paper/