Maximizing Project Organization Efficiency Through Strategic Planning

1. 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 Chapter 4 Project Organization

3. 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 Chapter 4 Project Organization

4. President VP Finance VP Marketing VP Manufacturing VP Engineering New Layout – Robot Line Project New Model Proton SURIE Functional Organization Chapter 4 Project Organization

5. 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 Chapter 4 Project Organization

6. 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 Chapter 4 Project Organization

7. Pure Project Organization • Project is separated from the rest of the parent system • Becomes self contained unit Chapter 4 Project Organization

8. 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 Chapter 4 Project Organization

9. Project Organization Chapter 4 Project Organization

10. 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” Chapter 4 Project Organization

11. 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 Chapter 4 Project Organization

12. Matrix Organization President Manufacturing Program Manager R&D Marketing PM1 PM2 PM3 Chapter 4 Project Organization

13. 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 Chapter 4 Project Organization

14. 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 Chapter 4 Project Organization

15. 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 Chapter 4 Project Organization

16. 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 Chapter 4 Project Organization

17. Mixed Organization Chapter 4 Project Organization

18. Staff Organization • Set up like functional organization • Adds a staff office to administer projects • Used for small, short run projects Chapter 4 Project Organization

19. Staff Organization President Project S Finance Manufacturing Engineering Chapter 4 Project Organization

20. 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 Chapter 4 Project Organization

21. 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 Chapter 4 Project Organization

22. 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 Chapter 4 Project Organization

23. Key Team Members • Project Engineer • Manufacturing Engineer • Field Manager • Contract Administrator • Project Controller • Support Services Manager Chapter 4 Project Organization

24. 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 Chapter 4 Project Organization

25. Typical Organization of Engineering Projects Chapter 4 Project Organization

26. Staff Critical to Project Success • Senior project team members • Staffs whom the PM will require close communication • Staffs with rare skills for project success Chapter 4 Project Organization

27. 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 Chapter 4 Project Organization

28. 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 Chapter 4 Project Organization

29. 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 Chapter 4 Project Organization

30. Major Sources of Conflict Chapter 4 Project Organization