Lecture 2

Lecture 2
Organizational Structures
The technology revolution (complexity and
variety of products, new materials and
processes, and the effects of massive research)
Competition and the profit squeeze (saturated
Restructuring
markets, inflation of wage and material costs,
and production efficiency)
Necessity
The high cost of marketing
The unpredictability of consumer demands

(due to high income, wide range of choices
available, and shifting tastes)
• Management is satisfied
with its technical skills, but
projects are not meeting
time, cost, and other
project requirements.
• There is a high commitment
to getting project work
Traditional done, but great fluctuations
in how well performance
Weaknesses specifications are met.
• Highly talented specialists
involved in the project feel
exploited and misused.
Traditional Weaknesses
(Continued)
Particular technical groups or Projects are on time and to

individuals constantly blame specifications, but groups and
each other for failure to meet individuals aren’t satisfied with
specifications or delivery dates. the achievement.
Which Structure Is Best for
Project Management?
The Classical Management Structure
General
Manager
Adminis-
Director Level Engineering Production Sales Marketing Admin.
tration
Division Level
Department Level
Section Level Functional Responsibility

Functional Project Organization
Figure 2-3
Departmental Project Management
Division Manager
Department X Department Y Department Z
Project Leaders Project Leaders Project Leaders
Section Level Section Level Section Level

Project Coordinator-continue slide 8
DIVISION MGR.
LEGEND
FORMAL FLOW
PROJECT MGR.
INFORMAL FLOW
DEPT. MANAGER DEPT. MANAGER

Project Coordinator
Weaknesses
Upper-level management was not ready to cope with the problems arising from
shared authority.
Upper-level management was reluctant to relinquish any of its power and authority
to project managers.
Line-staff project managers who reported to a division head did not have any
authority or control over those portions of a project in other divisions; that is, the
project manager in the engineering division could not direct activities in the
manufacturing division.
Pure Project Structure-
independent
General Manager
Project A Project B Project C

Manager Manager Manager
ENG. MFG. ENG. MFG. ENG. MFG.

Pure Project Organization
Figure 2-2
The Matrix Management Structure
General
Manager
Engineering Operations Finance Others
Project Responsibility
Functional Responsibility
Project Mgr.
X
Project Mgr.
Y
Project Mgr.
Z
The Matrix Management Structure
(With a Director of Project Management)
General Manager
Director: Director: Director: Director:

Project Mgmt. Engineering Manufacturing Finance/Admin.
Project Mgr. X
Project Mgr. Y
Project Mgr. Z
Matrix Project Organization
Figure 2-4
THE OUT-OF-CONTROL MATRIX
When a matrix appears to be out of control
executives tend to revert to classical management.
This results in:
 Reduced authority for the project manager
 All project decision-making performed at executive levels
 Increase in executive meddling in projects
 Creation of endless job description manuals
This can often be prevented by asking for

authority/responsibility clarification and using a
responsibility assignment matrix (RAM).
Balancing Technical and Human Skills
Technical Skills
High
Low
Human Skills
Junior Senior Supervisor Middle Senior President

Team Member Team Member Manager Officer
The Multidimensional Matrix
Time, Dimension, or Space
Note: Each slice could be a different country.

Project vs. Functional Influences
Project Influence
Relative Influence
in Decision Making
Functional Influence Dual Influence

In Decision Making
Functional Matrix Project

Organization Organization Organization
Factors for Selecting an Organizational Form
PROJECT SIZE PROJECT LENGTH PROJECT PHILOSOPHY AND

MANAGEMENT VISIBILITY OF
EXPERIENCE EXECUTIVES
PROJECT LOCATION AVAILABLE UNIQUE ASPECTS OF

RESOURCES THE PROJECT
Strategic Business Unit
Project Management
SBU
SBU SBU
SBU SBU
SBU
Ford
Ford GM
GM Chrysler
Chrysler
Programs
Programs Programs
Programs Programs
Programs
Program
Managers
SBU Project Management
Using Platform Management
SBU
SBU SBU
SBU SBU
SBU
SBU
Platform Program
Project Managers
Management
Platform
Platform
Platform
Platform
Platform
Platform

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Lecture 2

Competition and the profit squeeze (saturated

The unpredictability of consumer demands

Particular technical groups or Projects are on time and to

Section Level Functional Responsibility

Department X Department Y Department Z

Project Leaders Project Leaders Project Leaders

Section Level Section Level Section Level

DEPT. MANAGER DEPT. MANAGER

Project A Project B Project C

ENG. MFG. ENG. MFG. ENG. MFG.

Engineering Operations Finance Others

Director: Director: Director: Director:

This can often be prevented by asking for

Junior Senior Supervisor Middle Senior President

Time, Dimension, or Space

Note: Each slice could be a different country.

Functional Influence Dual Influence

Functional Matrix Project

PROJECT SIZE PROJECT LENGTH PROJECT PHILOSOPHY AND

PROJECT LOCATION AVAILABLE UNIQUE ASPECTS OF

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