PA 114 – PROJECT MANAGEMENT

MODULE
Roderick Tuling Olivar, MPA (CAR), CHRA

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CHAPTER 5
Project Management Organizational Structure
Objectives
At the end of this chapter, the learner will be able to:

Differentiate a program manager from a project manager;

Identify a project organizational structure;
Compare and contrast the different forms of organizational structures used in organizing projects;
Select the best organizational structure in organizing projects based from their advantages and
disadvantages;
Categorize the different forms of matrix organizational structure based on the authority of the
functional and project manager;
Design an optimal organizational structure for a project.

Structure involves an organization. People who work in an organization are clustered in order that
their efforts can be guided for utmost efficiency. There are numerous new organizational structures that
materialized in the last couple of decades. Project managers continue to search for organizational techniques
that make possible teamwork, can take full advantage on the use of restricted resources, efficiency and high
quality in the manner a project is accomplished and how goals and objectives are realized.
Program Manager vs. Project Manager
A program manager synchronizes groups of related projects instead of just manage individual
projects. The program manager supervises horizontally across the functional projects involved with the
program. From a business point of view this manager makes certain that cross-project work endeavor stays
viable and recognizes gains. In order to accomplish strategic outcomes the goal is to leverage return on
investment (ROI) and control which is not obtainable from managing projects individually. This is rather a
change from being a project manager. The change means moving to leadership skills and business
knowledge that is beyond technical expertise.
For several project managers, the next step in their careers is the move up to program manager.
Nevertheless many practitioners do not know the true role and the skills needed for the career promotion.
While the roles of the project and project manager vary from company to company, there are some
unique characteristics that characterize the two.
A lot of project managers look up to program managers and aspire to be in their shoes one day. In
order to be able to get to that level, project managers, as well as their organizations, must clearly understand
the general responsibilities that are expected from each role. Organizations can then communicate them to
their employees, allowing them to train themselves and set goals accordingly. Even though there are many
similarities between the project manager and program manager roles, being able to tell what sets them apart
can help companies be more productive and deliver better results.

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Table 9 Project Manager vs. Program Manager

Factors of Comparison Project Manager Program Manager

Focuses Content Scope, schedules, Context people, politics and
resources negotiating
Manages Projects Portfolios
Performs More technical tasks More strategic tasks
Handles Risk Management Change management (program
and environmental changes)
Deals Project requirements Business strategies and
objectives
Responsible Ensuring projects get completed Maximizing ROI and value
on time, within budget delivery
Source: http/www.onedesk.com/
The Project Organizational Structure
A project organization is a structure that facilitates the coordination and implementation of project
activities. Its major basis is to form an environment that encourages good relations between the team
members with a least amount of troubles, overlaps and conflict. The form of organizational structure that
will be employed for the project is one of the vital decisions in project management.
Many business firms have extended great effort with forming a system for organizational structure
while at the same time supervising ongoing operations. The reason for this effort is that projects oppose
basic design principles related with traditional organizations.
Every project is exclusive because it is a one-time effort with definite start and end. Each project
has its distinctive characteristics. The organizational situation, the project characteristics in which it will
function, and the level of authority the project manager is provided ought to be reflected on in designing
the blueprint of an organizational structure.
One of the key objectives of the organizational structure is to lessen uncertainty and disorder that
usually transpires at the project initiation stage. The structure delineates the interactions amongst members
of the project management and the dealings with the external environment. The structure also identifies the
authority by way of a graphical diagram named an organization chart.
It is necessary to project success having an appropriately devised project organization chart. Where
each person is placed in the project structure is shown in an organization chart. Drawn in pyramid format
an organization chart illustrates that individuals located nearer to the peak of the pyramid have greater
authority and responsibility compared to members positioned to the bottom. The locations of the individuals
on the organization chart specify the working relationships. In addition, the lines linking the boxes designate
official supervision and lines of communication involving the individuals.
It is the responsibility of the project manager to create a project structure that will match the various
project requirements at different phases of the project. The structure cannot be devised to be too rigid or
too lose. This is for the reason that the project organization's purpose is to make easy the interaction of
people to reachi the project vital goals despite restrictions in scope, schedule, budget and quality. The
intention in drawing a project structure is to afford a proper environment that the project manager can utilize
to persuade team members to do their best in carrying out their assignments and duties. The structure needs
to be planned to increase cooperation between individual team members, all in a cost effective manner with
a least of repetition of effort and overlaps.

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Forms of Project Organizational Structure
A project structure can be in different forms. Every form has its own advantages and disadvantages.
There are often varied project organizational structures that are used in the organization. These structures
are at times informal and often overlap and sometimes even oppose each other. The different types of
organizational structures utilized for projects can often be described as follows:
Organizing Projects within a Functional Organization
The functional structure is the oldest yet the most effective organizational technique. This strategy is best
suited for routine functions. However, it doesn't work effectively when used in complex projects.

Source: Project Management: Project, Technology and Practice, 2013 by Ganesh Vaidyanathan

Figure 5 Organizational Chart of a Functional Organization

The division of labor in a functional structure is not from the type of product or project supported
but based on the kind of work perform (see Figure 5). Functionally organized projects are embedded in the
functional division in which the project will be carried out successfully. Employees of the organization
routinely work on numerous projects or support multiple product lines. A project could also be assigned to
all relevant functional divisions with the top management supervising and then have a project manager or
a facilitator for proper coordination. A setting up of new production machine in an operating production
line where the old machine is detached and new machine included into the production system is an example
of functionally organized project.
Table 10 Advantages and Disadvantages of Projects in a Functional Organization

Advantages Disadvantages
1. There is a maximum flexibility in the use The client is not the focus of activity and concern
of staff.
2. Individual experts can be utilized by many The functional division tends to be oriented toward
different projects. the activities particular to its function.
3. Specialists in the division can be grouped In functionally organized projects, no individual is
to share knowledge and experience. given full responsibility for the project.
4. The functional division also serves as a The lack of coordinated efforts tends to make
base of technological continuity when response to client needs slow and difficult.

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individuals choose to leave the project and
even the parent firm.
5. The functional division contains the There is tendency to suboptimize the project
normal path of advancement for
individuals whose expertise is in the
functional area.
The motivation of people assigned to the project
tends to be weak
This organizational arrangement does not facilitate
a holistic approach to the project.
Source: Project Management: A Managerial Approach, 8 th edition, 2012 by Jack R. Meredith and Samuel
J. Mantel
Organizing Projects within a Projectized Organization
Projectized organization is a structure that is particularly created for executing projects. It is really
principally tailored to meet the demands of complex projects by isolating exclusive function and
maintaining a strong focus on completing the project. When the project is completed, this structure
disbands. This structure is powerful in maintaining dedicated resources all through the life of the project.
In this form of organization, there are no formal departments. Sometimes management forms
minor departments to serve existing projects. Here the project manager has the extensive authority for
budgets, personnel and other decision making instead of a functional manager.

Figure 6 Organizational Chart of a Projectized Organizationn

There are a number of advantages in using the projectized organization. However, the design also
has several disadvantages (see Table 11)

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Table 11 Advantages and Disadvantages of Projects in a Projectized Organization

Advantages Disadvantages
1. The project manager has full line authority When the organizations takes on several projects,
over the project. it is common for each one to be fully staffed
2. All members of the project work force are The need to access to technological knowledge and
directly responsible to the project skills results in an attempt by the project manager
manager. to stockpile equipment and technical assistance in
order to be certain that it will be available when
needed.
3. When the project is removed from the Though individuals engaged in projects develop
functional division, the lines of considerable depth in technology of the project,
communication are shortened. they tend to fall behind in other areas of their
technical expertise.
4. When there are several successive projects Projectized project teams seem to foster
of a similar kind the Projectized inconsistency in the way in which policies and
organization can maintain a more or less procedures are carried out.
permanent pool of experts who develop
considerable skills in specific
technologies.
5. The project team that has a strong and Team members form strong attachments to the
separate identify of its own tends to project and to each other known as projectitis.
develop a high level of commitment from
its members.
6. Because authority is centralized, the ability The worry on “life after project ends” of members.
to make swift decisions is greatly
enhanced.
7. Unity of command exists.
8. Projectized organizations are structurally
simple and flexible which makes them
relatively easy to understand and to
implement.
9. The organizational structure tends to
support a holistic approach to the project.

Organizing Projects within a Matrix Organization

Matrix organization is actually a project management structure that combines the very best
components of functional organization and project organization structures besides the recognition of
intrinsic defects inside these two structures. When properly coordinated this model functions very well in
multiple projects. The staffing, training, job assignment and evaluation of the project's personnel are
supervised by the functional managers. In order to best achieved objectives of individualized projects via
the optimal use of resources the functional specialists are assigned one or more projects.
There are two distinctive levels of responsibility that are present in this type of organizing (see
Figure 7). Departments such as manufacturing and finance exist under the vertical functional hierarchy.
While, alongside are the horizontal structures created by the projects that have some access to functional
departments' resources. Project manager directs when and what the team members perform. While, the head
of the functional group is in charge of project assignments and the technologies most appropriate to be used.

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Figure 7 Organizational Chart of a Matrix Organization
Just like any other forms of organizational structure, the matrix organization has its own set of
unique advantages and disadvantages (See table 12).
Table 12 Advantages and Disadvantages of Projects in a Matrix Organization

Advantages Disadvantages
1. The Project is the point of importance Oftentimes there is apparent tension between
functional manager and project manager which has
the tendency to become personal.
2. Because the project organization is placed There is conflict and competition in the sharing of
on top on the functional divisions, getting scarce resources.
labour and talent from them for the time
being, the project can make use of the
whole pool of technology in all functional
division.
3. There is less worry about what happens Matrix management violates the unity of command
when the projects is finished than a principle with two bosses – functional head and
projectized organization because team project manager.
members are still close to their functional
organization.
4. Response to client need is rapid and Decision making can get delayed because
flexible. agreements with multiple functional groups have to
be considered.
5. With matrix management, the project has
access to representatives from the
administration of the parent firm.
6. With simultaneous projects, matrix
organization permits a better

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companywide balance of resources to
accomplish the differing time, cost and
scope of each project.
7. The matrix organization covers a wide
range of what are between the functional
and projectized organizational structures.
Source: Project Management
There are several forms of matrix organization based on the authority of the functional and project
manager, specifically (see Table 13):
1. Functional, lightweight or weak matrix - The balance of authority in this form supports the functional
manager.
2. Middleweight or balanced matrix -This form resembles the traditional matrix arrangement in which
both parties work closely together and jointly approve technical and operational decisions.
3. Project, heavyweight or strong matrix - The balance of authority in this form is strongly inclined on
the side of the project manager.
Table 13 Forms of Matrix Organization

Form of Matrix Authority of the Functional Authority of the Project

Manager (FM) Manager (PM)
Weak Matrix FM calls most of the shots and A PM act as a staff assistant
decides who does what and who draws the schedules and
when the work is completed. checklists, collect information
on status of work and facilitates
project completion.

PM has indirect authority to

expedite and monitor the
project.
Balanced Matrix FM is concern for assigning The PM establishes the overall
personnel and executing their plan for completing the project,
segment of the project integrates the contribution of
according to the standards set the different disciplines, sets
by the project manager. schedules, and monitors
progress.

Strong Matrix The FM is consulted on need The PM controls most aspects

basis especially with regard to of the project including scope
personnel. trade-offs and assignments of
functional personnel.

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Organizing Projects within a Virtual Organization
The use of the Internet and other modern communication technologies paved the way to the rise of
virtual projects. A virtual project has project team that may work in different time zones, in geographically
dispersed places, in different organizations, and in different cultures. In this form of organization, the
project team is often formed in a matrix type of structure. Here are some of the guidelines for the success
of an organization in using virtual form of organization:
1. Challenging and interesting projects are appropriate for virtual teams, but make sure that the project has
meaning for both the company and the team.
2. If possible request volunteers to be part of the team because they are more enthusiastic and dedicated to
the success of the project.
3. Each team must be composed of six to seven members only with outside contacts. Make sure a few
members of the team are familiar with each other.
4. Form an online resource for team members to learn about each other on how they choose to work
collaborate, brainstorm and draw inspiration.
5. Promote regular communication among team members.
6. If possible divide the project work into geographically independent components to avoid hindering one
location for delays of other places. \
There are four types of electronic communication being used help in beating the lack of formal and
informal personal contact between members of the project team. These manners of electronic
communication have been extensively even before by managers of virtual projects.
1. The Internet – It provides a faster and cheap mode of communication worldwide. This is a necessary
ways of contacting all participants in virtual project especially with virtual project manager who depends
on emails to exchange project data with his dispersed team. Email is an effective, easier and faster tool for
exchanging information updates of project activities.
2. The pager – Each member has a paging system with individual pager number. A particular team member
can be "paged" whenever an issue surface that requires the person's attention. This mode of communication
is good for quick response to problems and issues. A culture though must be developed by the team to
respond quickly every time the pager rings.
3. Teleconferencing – This mode of electronic communication allows all essential persons to share
conversation and resent their view in real time. The absence of visual though needs the one speaking to
make proper identification when participating in the discussion via this telephony technology.
4. Videoconferencing – This manner of communication saves time and money for the geographically
dispersed team for periodic face-to-face meeting
When important issues could ne be discussed and resolved with email, teleconferencing and voice
contact, the use of teleconferencing must be appropriately utilized.

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Selecting the Optimal Organizational Structure
The best project organizational structure balances the needs of the project with the needs of the
organization. Selecting the correct project structure type is a key success factor that can create better
business results and achieve the competitive advantage and value that the organization visualized. The
choice of the organizational form in managing a project rarely lies on the project manager. It is the senior
management who is responsible for this job. The preference is determined by the situation and to some
extent instinctive.
There is no step by step procedure for shaping the kind of structure required and how it can be
constructed. Some projects need firm controls while others necessitate innovative solutions. Managing a
standard construction project has a different type of organizational structure compared to developing a
product design. The best thing to do is to think of the nature of the potential project, the features of the
different organizational alternatives and their advantages and disadvantages, the cultural preferences of the
parent organization and create the greatest compromise.
Here are some basic considerations that may influence the selection of the organizational structure
for project management:
1. Project size-a project could be small, medium and large.
2. Project length - number of calendar periods it takes from the time the execution of element starts to the
moment it is completed.
3. Experience with project management organization - familiarity with other organizations' way of handling
projects.
4. Philosophy and visibility of upper level management - the beliefs and the presence of support of top
management.
5. Project location - the geographic location using the street address, nearest major city, or the latitude and
longitude.
6. Available resources - the accessibility of needed resources.
7. Unique aspects of the project the best control of human resources. Classified as labour-intensive and
capital intensive; labour intensive projects need a formal structure while capital intensive may use informal
organizational form.

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