SELECTION OF PROJECT ORGANIZATION STRUCTURE
For "project-driven" enterprises, the matrix form of
organizational structure is the best suited.
This is because the main activity of such enterprises
is project implementation and new project projects
are taken up once ongoing project/projects are
completed.
Construction companies and companies undertaking
turnkey projects are the organizations that can be
benefited by matrix organizational structure since
the resources would be put to effective and optimum
use.
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The choice of suitable project organizational structure
depends upon the frequency of new projects handled
by the organization and the duration of the projects.
If the organization handles long term projects and
also if the frequency of new projects is such that the
organizational resources can always be put to
maximum use, a matrix organizational structure will
give better results.
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In functional organizational structure, the integration
between the functional units is achieved by formal
rules, regulations, plans, budgets etc.
This form of organization is suitable for stable and
repetitive environments. For example, a project
involving construction of 5,000 similar houses can be
handled by a functional organizational structure
effectively without the use of a matrix structure of
organization
Other organizations that are not "project-driven" also
come across situations where they are to manage
projects. For example, consider an enterprise engaged
in the production of heavy machinery that proposes to
expand its manufacturing facilities.
Construction of additional buildings, purchase and
erection of new machinery, acquisition of new
technical know how etc., may form part of the
expansion plan.
Thus, the expansion plan is a new project for the
existing organization. Any organization will try to
utilize the existing resources as far as possible to
implement the new project.
Hence, it can be said in general terms that the
project organizational structure is to be chosen in
such a way that it satisfies the requirements of the
project management and also it does not disturb
the organizational structure of the parent
organization.
Departmental project management structure is
one that explains this aspect well.
Under this structure, section level personnel are
temporarily designated as project leaders and are
assigned with project responsibility. Once the
project is
completed, the project leaders will return back to
their former positions
Pure project organizational structure and matrix organizational
structure work better for the control of human resources and
hence these structures are more suited for labour intensive
projects.
Projects involving high complexity and requiring
huge resources can be better handled by a pure
project organization structure.
Project management involves integrating the
activities across functional boundaries and
ultimately it is the top management that decides
the authority structure that will
control the integration mechanism.
The authority structure ranges from pure functional
authority to product authority and finally to dual authority.
Under pure functional authority, the organizational structure
takes the form of a functional (or traditional)
organization; under product authority, the organizational
structure takes the form of a product (or market) organization;
under dual authority, the organizational structure takes the form
of a matrix organization.
The organizational forms are selected based on how much
authority the top management is prepared to delegate.
BREAKDOWN STRUCTURES
A) Work Breakdown Structure (WBS)
Work Break Down Structure is a process by which the whole
project is divided (i.e.,broken down) into various sub-projects,
the sub-projects into various 'tasks, the tasks into various sub-
tasks and finally the sub-tasks into work-packages. In the
process of building up WBS, the project manager, all connected
functional managers and all the connected staff work together
and analyze all aspects of the project so that their collective
wisdom will prevail.
Thus, we have the following stages or levels:
1. Project
2. Sub-project
3. Task
4. Sub-task
5. work-package
There is no hard and fast rule as to the number of
levels into which the project is
to be broken down. The number of stages (levels)
should be neither too few nor too many
If a project is broken into only one or two levels,
integration of activities may become difficult.
On the other hand, if a project is broken into too
many levels, it will make the analysis complex and
unproductive and will lead to additional cost and
time.
Work-package available is capable of giving a
good definition of the work content, the resources
required, the cost and time requirement.
The WBS and the constituent work-packages
become the basis for project planning, scheduling
and controlling.
Types of work breakdown structures: Work Break
down Structure can be of two
types, viz.,
• Product oriented WBS
• Functionally oriented WBS
Product oriented WBS: In this type of orientation,
the project is subdivided in to subprojects
on the basis of 'products'.
The sub-projects are again subdivided on the
basisof 'products' and so on till tiny work packages
are obtained.
Fig. below indicates the diagram of a product
oriented WBS for a hospital project.
Functionally oriented WBS: In this type of orientation,
the project is broken down on the basis of functional
departments (or functional tasks).
Fig. below indicates the diagram of a functionally
oriented WBS for the hospital project.
In practice, a combination of product oriented and a
functionally oriented WBS can be used, the only
requirement being that the project should be divided
into meaningful,
independent work packages.
B) Organization Breakdown Structure: (OBS)
The project organization (i.e., the personnel involved in project
implementation and control) can be broken up in to several
groups, sub-groups, individuals etc. The breaking down of
project organization is done in such a way that an individual or
a group of individuals can be identified with the work
packages arrived at as per WBS.
Fig. below shows the OBS of a hospital project.
Integrating WBS with OBS: The ultimate objective of break
down structures is to integrate the OBS with the WBS by
identifying the organizational groups, sub-groups,
individuals who have functional responsibility for each work
package of the WBS.
A product oriented WBS makes it easier to assign specific
responsibility to personnel and to hold them responsible and also
accountable for the specific units of work packages allotted to
them.
Integrating a product oriented WBS with OBS is comparatively
easier since in a functionally oriented WBS, each function would
have many sub-systems, components and products associated
with it, which must be broken down in to work contents so that
they can be matched and assigned with work packages of the
WBS.
Coding of the OBS. and WBS is essential in order to match the
smallest element of the WBS with the smallest element of the
OBS.
Once the WBS and OBS are integrated with systematic coding, the
code number of an element of the OBS wilI identify itself as a cost
centre along with the work package that is assigned to it and the
persons who are responsible for performing such work package.
Fig. below shows the diagrammatic way of representing the
integration between a products oriented WBS and OBS of the
hospital project.
The figure depicts the integration of OBS with only one
component of product oriented WBS (viz., Building: 01-01). The
diagram can be extended on similar lines to cover the remaining
WBS components.