BUSINESS PLANNING AND PROJECT

MANAGEMENT

Faculty Name : Dr. Supriya Kamale

Unit No:2

Introduction to Project
Management and
Project Organisation
Project Organization

Learning Objectives:

[Link] the various functions represented on a project.

[Link] and evaluate the influence of organization structure on project functions.

[Link] a project organizational chart for various project complexity profiles.

3 Introduction – Project Organisation

Project Organization

Introduction:

The Choice of proper form of organization is crucial for the success of a business
enterprise.
It is an important entrepreneurial decision.
It is influenced by the socio-cultural norms and the prevailing environment.
The decision about an organization depends on a number of variable factors like;
Type of business – service, trade, manufacturing
Selection of industry
Scope of operation, value of business, size of the market
Amount of capital funds required / working capital
Possibility of raising resources
Comparative tax advantage

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Project Organization

Introduction:

Size of the risk

Continuity of the enterprise

By and large, the final organizational choice should be most suitable to

entrepreneurs needs.

Choice of the organization also depends on the entrepreneurial skills and vision.

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Project Organization

Introduction:

The project organization defines the human infrastructure of the project. This task is
designed to define the project organization chart, the roles, and the relationships of
the project team.

The organizational structure clearly identifies roles and responsibilities of each

position, augmenting the existing role definitions where necessary to cover all of the
responsibilities.

The project organization technique that is used in this step provides a standard set
of roles and responsibilities which can be customized for a particular project. This
should cover all personnel resources required, both full and part time.

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Meaning / Definition of Organization

James Mooney defines organization as “ the form of every human association for
the attainment of common purpose.”

According to Louis Allen ,” Organization is the process of identification, grouping the

work to be performed, defining and delegating responsibility and authority and
establishing relationship for the purpose of enabling people to work most effectively
together in accomplishing objectives.”

Organization is a structure which acts as a base for the conduct of business activities
efficiently and in an orderly manner.

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Meaning / Definition of Organization

Organization as a structure implies the following 4 elements:

a)Intentionally created
b)Provides a framework
c)Use of charts
d)Provides formal picture

An organization structure defines relationship among the members and external

environment.

The structure defines the authority by means of a graphical illustration called an

organization chart.

A properly designed organization chart is essential to project success.

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Organizational Work Flow

Steps in the process of organizational work flow:

It means to define and delegate authority and responsibility and arranging them in
an orderly manner. It aims at making rational division of work into group of activities
so as to create well coordinated structure for attaining the objectives.

The steps are :

[Link] organizational objectives:
Each and every organization needs to have well defined and specific goals.
Organizations can not be thought without goals.

2. Determination of activities to achieve goals:

Management has to determine which activities are required to achieve the goals.
Activities include quality control, research & development, market research, sales
promotion etc.

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Organizational Work Flow

3. Enumeration of activities:
Related or similar activities can be grouped into departments so as to take benefits
of specialization and better co-ordination. E.g. production activities can be grouped
together.

4. Arranging for resources:

There is a need for right person for right job depending upon their experience,
qualifications and ability. Other resources like, funds, materials, machineries etc. to
be arranged efficiently and smoothly.

5. Allocation of duties:
Activities if not assigned properly, lead to ineffective achievement of goals. Each
person responsible for completion of job has to be allocated with specific duties.

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Organizational Work Flow

6. Delegating authority:
Authority enables to get the work done from subordinates. Delegation establishes
relationship in the organization structure. For this, superior- subordinate
relationship should be clearly defined. There should be balance between authority
and responsibility.

7. Establishment of relationship:
There should be proper relations between superior – subordinates, between
different departments and also at different levels of organization.

8. Co-ordination:
Co –ordination means interlinking of various activities of organization. Activities are
coordinated at each level.

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Types of Organizational Structure

1. Functional Organizational Structure

2. Project based Organizational Structure

3. Matrix Organizational Structure

4. Virtual Organizational Structure

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Types of Organizational Structure

1. Functional Organizational Structure

In this form of organization, all activities of the enterprise are grouped and divided
according to functions like Production, Marketing, Finance, HR and others.

Each department is in the charge of a specialist who is called functional Mgr.

Once the project begins the operation, various components of the project are taken
by the functional units.

Functional area plays a dominant role in completion of the project.

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Types of Organizational Structure

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 Advantages
 Maximum Flexibility in the use of staff – technical and functional personnel required by
project can be provided.

 Individual experts can be utilized by many different projects and after completion of the
work they can go back to the original work.

 Specialists in the division can be grouped to share knowledge and experience

 Functions can be used as the basis for maintaining the continuity of the project.

 Functional department provide normal career path for professionals.

 Minimal duplication of efforts: In this type of organization unnecessary duplication of
efforts is eliminated. For example, the function of finance is only carried out by the
finance department. There is no need to establish two or more departments. It makes it
possible to utilize the human and other resources effectively.

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 Disadvantages
 The Project is not the focus of activity and concern.

 Tend to be oriented towards functional activities.

 Such organization has difficulties in interdepartmental co-operation and

exchanges.
 Difficulty in fixing responsibility—because of multiple authority, responsibility for
poor performance cannot be fixed easily on a particular person
 Motivation of project team is weak.

 No individual is given full responsibility of the project.

 Does not facilitate a holistic approach to the project.

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 Types of Organizational Structure

2. Project Based Organizational Structure

A project organization structure is where a self contained team works full time on the
project. Its an independent project team.

It is a project focused organizational structure where project manager has the

final authority over the project to make project decisions, priorities, acquire and
assign resources.

Sometimes these team members are permanent, and sometimes they are hired as
temporary workers to help with the project until its completion.

As a project manager, you have the responsibility to take authority, rather than
waiting for someone to give you the authority.

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Project Based Organizational Structure

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Advantages
• PM has full authority over the project.

• All project workforce directly report to the PM. They are responsible for the
completion of the project.

• Lines of communication are shortened

• High level of commitment

• Ability to make swift decisions

• Unity of command

• Simple and flexible structure

• Ability to cope with environmental influences

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Disadvantages

• Duplication of efforts – each company has several projects- each project has its
own separate team

• Stockpile equipment and technical assistance “ just in case”.

• Lack of expertise in other areas of technical knowledge.

• Foster inconsistency in the way in which policies and procedures are carried out.

• Project takes on a life on its own

• Worry about life after project ends – individuals find it difficult to return to their
original functions.

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 Types of Organizational Structure

3. Matrix Organizational Structure

It is a combination of functional and project organization.

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.

-Matrix management is a type of organizational management in which people with

similar skills are pooled for work assignments.

It is mainly used in the management of large projects or product development

processes.

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Types of Organizational Structure

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Advantages
 Cross functional team members

 The use of a project team which is dynamic and able to view problems in
different way as specialists have been brought together in a new environment.
 Better coordination and control: - This structure is very much suitable to coordinate
and control the functional activities and project activities. Project manager has got
responsibility to establish better coordination and control system in organization.
Functional authority flows downwards and project authority flows horizontally which
enables to establish better control and coordination.

 Effective utilization of resources: - Project structure makes very much effective

utilization of resources available. The whole staff along with project manager is
specialists in various areas. And has to make maximum utilization of resources. They
know better hoe to utilize project capacity and time, how to utilize human and
financial resources.

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Advantages

 Particular management: - In this type of organizational structure people work in project as a team. They participate
in decision making and problem solving activity. They make joint team effort. They have authority to carry out day
to day activity. Frequent sharing of ideas and opinion with project manager is common.

 Rapid response to client needs, decision making is flexible.

 Better balance of company resources in multiple projects.

 This type of organization is most useful when workers must share available resources. The combination achieves
high efficiency and better usage of available resources. Also, they adapt better to the changing trends.

 Staff members can communicate with each other across boundaries.

 Pleasant environment/

 It has a clear career graph and job security; hence, members would be more loyal to the organization

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 Disadvantages
 A disadvantage of the matrix structure is complexity, which can be difficult to manage.

 For example, if the functional manager and the project manager do not communicate well, the team members can be caught
in the middle, causing confusion.

 A conflict of loyalty between line managers and project managers over the allocation of resources.

 Projects can be difficult to monitor if teams have a lot of independence.

 Costs can be increased if more managers (i.e. project mangers) are created through the use of project teams.

 Unclear lines of authority, Two bosses, dual reporting.

 Chaos, confusion more common

 Often project manager tells you what to do, but your raise comes from functional manager

 Violates the principle of unity in command.

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 4. Virtual Organisation

 A virtual organization is a recent development that involves different locations.

When your team executes a project in one area, you can manage it from any other
place. So you can distribute resources to your project team regardless of location.

You can connect all the locations virtually. The other names for this organizational
structure are:
- Digital organization
- Network organization, or
- Modular organization

ICT (Information and Communication Technology) is the backbone of virtual

organizations. This organization is a social network without vertical and horizontal
boundaries.

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 Virtual Organisation

Resources aren't tied to a particular workstation (desk). Also, you can work from any
mobile device. You can manage every project activity, including meetings, virtually.

The team reports digitally except on a few occasions that need physical meetings.
Hence, it's common to hear of virtual offices, virtual teams, and virtual leadership.

This setup is most suitable for software or IT companies.

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 Advantages

• Faster and cost-effective as there are no boundaries to work and communication.

• Lower operating costs as no permanent set up required (no need for office
premises)

• Have several options like flexitime, part-time work, job-sharing, and home-based
working, hence increased Employee satisfaction and efficiency

• Can have a larger talent pool

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 Disadvantages

• No physical contact or communication, thus, lacks team integrity

• Difficult to restrict information sharing as your locations are different

• You have to spread resources across various locations and time zones

• Resources require training for virtual interaction

• Different time zones cause delayed responses

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Conclusion
 With the different types of organization structures, it’s easy to know what you
need. Though each structure has limitations, large and complex organizations
adopt the matrix organization.

 In any case it is necessary to consider the nature of the potential project,

characteristics of different projects, advantages and disadvantages of every
organizational form, different preferences in the culture of the home
organizations well as to reach the best possible compromise.

 It is generally considered that the functional model will be the best choice for
the projects where focus is more on the qualitative technology application
and not on cost minimization.

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Thank You