BUS603: Managing People

Dusan Dobera, the writer of the famous article "Project Management Organizations", described the pure project organizations as standing on the other extreme of the possibilities for project management. This approach provides self-contained divisions for managing projects separated from the home organization. The project divisions become an independent segment with its own specialized technical and administrative staff for managing the projects. This structure provides several advantages to projects including delegating full authority to project managers with full leadership over the project activities. The project staff reports directly to the project manager and the advice from top management and functional department is not always necessary. Communication lines are shortened because functional departments are bypassed, and the project manager communicates directly with top management. As the authority is centralized at the project manager level, decisions are taken rapidly with prompt response to customer requests thus improving the lead-time to market and quality of output. The structure itself is simple and easily applicable and understandable. Such types of structures have a tendency to support the holistic approach of the projects. Kerzner and Kerzner authors of a book, project management "A system Approach to Planning, Scheduling and Control", utilized the result of a mail survey sent to 50 aerospace companies in the US adopting project-based structures. The survey included questions on how well the project-based organization met its desired objectives with the available structure. The results of the survey showed that the companies achieved significant improvement in profitability and customer relations. However, adopting this approach incurs high costs for the organizations and may result in duplication of both efforts and resources. There is a high possibility that project teams develop more loyalty to the project than the mother organization resulting in severe competition among the organizations' projects themselves. Moreover, at the end of each project, project teams worry about their destiny as well as the mother organization need to deal with the consequences of reducing its work portfolio.

Kerzner argued that matrix structure is an attempt to combine the advantages of both the functional and the project-based structure. Therefore, the form that the matrix might take depends on whether it looks more project-based or more functional. Larson and Gobeli referred to three types of matrix- the functional (weak), balanced and project (strong). Each type provides a different level of authority to project managers. Functional weak form: Matrices in which the functional manager has more authority than the project manager. Balanced form: the matrices where both the functional and project managers share the authority and accountability for managing projects. Normally the project manager sets the overall plan and the functional manager determines how work will be accomplished. The strong project form: the project manager has more authority than the functional manager. Functional departments act as a subcontractor for projects. The strong matrix structure provides project managers with more control over projects enabling quick response to clients' needs. However, shutting down projects can be as bad as in the case of project-based structure. Furthermore, projects putting a lot of emphasis on the consultation of the functions might delay the decision-making process. The weak functional matrix allows project managers to have access to the technology and skills of the functional departments, thus avoiding duplication associated with pure project structures. However, the very limited authority provided to the project managers causes lots of conflicts and internal confusion. The balanced matrix structure allows staff to develop strong attachment to the project while remaining a part of the functions. Sharing resources and equipment across projects ensures efficient use of organizational resources. Furthermore, communication is improved both vertically and horizontally. However, this structure usually violates the unity of command principle where the project team members have at least two bosses, the functional and the project manager. This creates a lot of frustration and confusion among the staff who get stuck between functional requirements and demanding projects.