Unit III: Project Organization and Team Building (7)

3.1 System view of an organization

3.2 Pure functional organization

3.3 Matrix organization

3.4 Advantages and limitations of matrix organization

3.5 Project team building

3.6 Barriers to Project Team Development

3.7 Leadership in the project environment

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 System View of an Organization
 Project organization is the arrangement of a project team to achieve its objectives. It includes defining

who does what (roles and responsibilities), how team members communicate, and how decisions are made.

 Good project organization is essential for completing projects on time, staying within budget, and meeting

quality standards.

 Project organization refers to the structure and framework established to manage resources, tasks, and

responsibilities effectively for the successful completion of a project.

 It defines how activities are coordinated, how decisions are made, and how communication flows within

the project team and with external stakeholders.

 Management philosophies and organizational theory have undergone a steady change in recent decades

with the emergence of the system approach in management. Systems theory attempts to solve by looking at
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the total picture rather than through an analysis of the individual components.
 A system is an interrelated and interdependent set of elements working together to accomplish common goals and
objectives in a dynamic environment. The system is goal-directed.
 It is a group of elements, either human or non-human, that is organized and arranged in such a way that the elements can
act as a whole toward achieving some common goals, objectives, or end. Systems have inputs, processes, outputs, and
outcomes with continuous feedback among various components (subsystems).
 A system can be man-made or artificial, or natural. A man-made system is developed by man in order to accomplish a
task or an objective. The purchasing system involves purchase officers, vendors, materials, specifications, general
purchase conditions, and purchase orders.
 A system can be either open or closed. An open system is one that responds to its environment on a continuous basis in
order to obtain the resources and information needed to function effectively. A closed system is isolated and does not
respond to its environment.
 The organization is an open system that dynamically interacts with its environment. An organization takes inputs such as
raw materials, human resources, capital, technology, informational resources, and so on from the environment: processes
and transforms these inputs by adding value into outputs in the form of goods and services, financial results (profits or
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08/31/2025 Assistant Professor Dinesh Pant
 Characteristics of Organization as a System
 An organization as a system has the following characteristics:

a. Involves a Process: An organization is a process of managing all kinds of resources; men, money, materials,

machines, methods, and information (5Ms &Ⅰ), processes them into outputs to achieve the objectives. The

output may be products, services, profits, greater satisfaction, increased productivity, or superior quality. A

project mobilizes the inputs, processes them, and produces a result or an output.

b. Has a Structure: All similar activities in an organization are grouped to avoid duplication, increase

productivity, reduce wastage, and save costs. This grouping of activities leads to the division of work as work is

divided into jobs and tasks. These tasks and jobs are assigned to appropriate personnel at different levels and

hierarchy. The tasks and jobs are governed by rules and regulations. The structure facilitates the flow of

instructions and directives from top-level management to the subordinates. The problems, grievances, feedback,

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performance reports flow from lower-level management
Assistant to superiors at the top-level management.
Professor Dinesh Pant
c. Operates in an Environment: An organization interacts and operates in a continuously changing environment. The

environment consists of the internal, task, and external environments. The management will analyze the different

environments and adjust polices and strategies according to the changing environment to reduce the risks and uncertainty.

d. Goal-Oriented: An organization is established to achieve certain goals. The goals may be a product, service, increase

market share, higher profit, increased productivity, and superior quality. Sometimes, goals may be multifaceted and

conflicting.

e. Includes Resources: An organization is a social framework within which work is performed. It is a process of getting the

work done through the efforts of others. Therefore, it includes human resources with varying skills, expertise, and

experience. It involves interactions and relationships among different people working at different levels. It also includes non-

human resources. All materials are organized and managed to achieve organizational goals.

f. Utilizes Technology: The organization utilizes various kinds of technologies in order to process other resources and achieve

its goals. The technologies may be in the form of machines, equipment, skills, and technical know-how to perform the work.

g. Provides Feedback: As an organization involvesAssistant

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Professorvarious
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 Pure Functional Organization
 Functional-organizational structure is a traditional type of structure. F.W. Taylor developed the functional organization
structure, which is characterized by specialization, standardization, division of work, and functional foremanship. In a
functional organizational structure, all activities of an enterprise are divided into a number of functions, and each
function is entrusted to a specialist. This is useful for small projects.
 The authority delegated to each specialist is known as functional foremanship. The functional organizational structure
consists of functional units or departments, such as marketing, production, human resources, and research and
development, organized in a hierarchical order. Authority is divided into line and staff.
 Persons with line authority make decisions, and those with staff authority provide advice. One of the main features of
the functional organization is that a functional manager can exercise functional authority, not only over his/her own
subordinates but also over subordinates in all other functional departments of the enterprise related to his/her function.
 It is based on the subdivision of product lines or disciplines, divided into separate departments with a vertical
hierarchy. In this structure, the work is centralized. The project activities are confined to a particular department.
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Functional organizational structure is very effective within the department.
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 Advantages of Functional Organization Structure
 The major advantage of the functional organization structure is that each functional group has complete
control over its segment of the project, enforcing in this way the application of standards across the project. It
realizes the benefits of specialization from a regular function. Additional benefits of the functional
organizational structure are:

1. Support: The department provides all kinds of support as the project work is carried out as a departmental
activity. The department provides technical and other support for the project’s success.

2. Flexibility: The people can be assigned to project work, and as the project is completed, they can be
assigned to other work in the department. This switching back and forth in the functional organizational
structure facilitates a high degree of flexibility.

3. Opportunities: It provides better career advancements and promotion opportunities for the employees.
Most of the employees also prefer to work with a consistent routine instead of facing the challenges of
diverse project work.
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5. Simpler: The work in a functional structure is limited to the functional area of the concerned
department. This makes work much simpler.

6. Effective Communication: The lines of communication in a functional organizational structure are

short and well-established. Problems can be solved quickly as the project activities are carried out
within the department.

7. Responsibility and Authority: The responsibility and authority within the functional organizational
structure are clearly defined.

Disadvantages of Functional Organization Structure

The major disadvantages of functional organizational structure are those of speed, flexibility, and

communication when attempting cross-functional projects. Functional blocks delay project work.
Similarly, shared responsibility negatively hampers the project work. Other disadvantages of functional
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organizational structures are:
1. No Single Point of Responsibility: In the absence of a project manager, the scope of the project switches from
one department to another. The general manager is concerned with the overall corporate objectives and not with
just project operations and objectives.

2. Difficulty in Coordination: As the projects become larger and complex, it becomes difficult for senior
management to coordinate efforts and solve problems.

3. Long Lines of Communication: In real life, the information and communication flow up and down within the
same department. When more than one department is involved in project activities, the formal lines of
communication become longer, and response time to solve a problem is slow. This requires establishing informal
lines of communication.

4. Ineffective Communication: The competition and conflict between functional managers may hinder the
communication of important project information. This may be deliberate.

5. Priority: The departmental work is given priority, and project work tends to get neglected. It is compounded if
there is a resource burden. The project schedule cannot be followed and resulting in cost overrun and delay in
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 Matrix Organization
 Matrix organization structure is a combination of functional and pure project organization. Matrix design
superimposes pure project structure on functional project structure. The project manager heads the project. In the
matrix organization structure, the personnel engaged in the project activities belong to one or more functional units
(departments). For project-related tasks, the project team members report to the project manager, whereas for
business-related issues, the project team members report to the corresponding functional managers.

 This organization is a special type of organizational structure. In this organizational structure, a new temporary
group is created to solve complex problems. The group brings together individuals with multiple skills to solve
complex problems that cannot be solved by a formal organizational setup.

 An organization with a matrix structure has two types of structures existing simultaneously: functional and project.
A matrix organization brings all the resources of diverse disciplines together and integrates them into a task force.
In matrix organization, authority flows vertically within functional departments while authority of projects flows
horizontally, crossing the vertical lines. This means the authority is shared between the project manager and
functional managers. The two-way flow of authority
08/31/2025 createsDinesh
Assistant Professor a grid
Pant or matrix.
 Matrix organization structure is a special type of problem-solving form of an organization. Generally, matrix
organization is formed to complete various types of projects of a specific and unique nature.
 In a matrix structure, a major project is assigned to the project manager, and he is given a team of specialists from
different disciplines. The team members may be from various functional areas such as research and development,
production, finance, marketing, etc. This team provides support to the project manager to complete the project in a
given time frame. In a general sense, matrix organization is a combination and interaction of functional and project
managers.
 In a matrix organizational design, a product-based form of departmentalization is superimposed on existing
functional arrangements. Employees in a matrix are members of a functional department and a project team. The
matrix structure, often called a multiple command system, is the combination (hybrid) that takes the benefits and
avoids the drawbacks of both line and line and staff structures. In practical terms, the matrix design combines
functional and product departmental bases.
 Matrix organization is often useful in construction (building, dams, roads), aerospace, marketing (advertising
campaign for new products), electronic data processing,
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Assistant Professor Dinesh Pant consulting firms in which professional
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 Advantages of Matrix Organization Structure
 The main advantage of the matrix organization structure is that it retains the benefits of both functional and project

organization structures. It also facilitates effective resource allocation to different projects. It is considered the most

effective structure for implementing and managing projects. Additional benefits of the matrix structure are:

1. Coordination: In a matrix organizational structure, better coordination is achieved, and emphasis is given to

better quality work and timely completion of project work.

2. Minimum Formal Authority: In a matrix organizational structure, decisions can be taken at a lower level of

management. This minimizes the use of formal authority from top-level management.

3. Decision-making: Matrix organization facilitates the involvement of all project-related functional managers to

participate in the decision-making process.

4. Interaction: Specialized skills and knowledge are available to all the departments and projects on an equal
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basis. Sometimes, specialists can be transferred from one project to another.
5. Develop Teamwork: Many employees work together to accomplish a given task. The continuous group work

promotes and develops teamwork and team spirit. Employees in a matrix organizational structure have the

opportunity to develop their skills and upgrade their knowledge.

6. Efficient use of Resources: Matrix organization profitably employs all available resources. Each division can share

the benefits of specialized staff and materials with other units.

7. Technical Excellence: It facilitates the sharing of knowledge and skills. For example, computer specialists discuss

the pros and cons of electronic data processing with a financial or accounting expert while developing software

packages.

8. Cost Saving: Matrix organizational structure provides the enterprise with cost-saving mechanisms. This is done by

avoiding duplication.

9. Relief Top Executives: Matrix organizational structure is a useful vehicle for decentralization. Once the day-to-day

operations
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are delegated, top management canAssistant
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its attention
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to long-range planning, diversification in terms of
 Limitations of Matrix Organization Structure
 The major disadvantage of the matrix organization structure is the potential for conflict between the project

manager and functional managers. Disadvantages of matrix organization structure are:

1. No Unity of Command: It is difficult to maintain a balance between the authority of functional managers and
the project managers. There is a dichotomy/clash in the relationship and reporting. particularly if they are
assigned to a functional and a project manager at the same time. The dual relationship creates conflicts for
project managers and disregards the principle of unity of command.

2. Over-Specialization: Matrix organization stresses specialization. This creates problems for regular functional
activities. Some managers view matrix structure as a form of anarchy in which they have unlimited freedom to
do anything they wish.

3. Under-utilization of Resources: Matrix organization pools all kinds of resources from different departments.
Such resources may not be utilized fully. Matrix organizational structure requires managers to maintain effective
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human relationships.
4. Time-consuming: In a matrix organization, more time is taken for coordination between different
managers for task-related activities.

5. Difficulty in Coordination: The project authorities insist on the timely completion of work. All
efforts of both functional managers and project managers are focused on it. But in actual practice, it
results in uncoordinated efforts.

6. Insecurity: In a matrix organization, when the projects are completed, some workers are laid off. The
employment may be for a short duration. So, the experts in the projects feel insecure about their pay,
bonuses, advances, promotion, and even employment.

7. High costs: The matrix structure is costly to implement and maintain. Overheads are heavy.

8. Duplication of Activities and Facilities: The Project can duplicate the efforts of line departments.
Resources may be inefficiently used. Built-in Power Struggle: There is a built-in conflict between line
management
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Assistant Professor Dinesh Pant There is a complex authority and
 Project Team Building
A project team means several people who work together to achieve a set of common goals. The team

members enhance their creativity, innovativeness, problem-solving capabilities, decision-making, and

improve their performance through interaction.

 Teams are formal groups in the organization. The team is built with the combination of the letters

TEAM: Together, Everybody: Achievement and More. If all members of the team work together with
mutuality, then goal achievement is possible.

A team is a group of people who share a common name, mission, history, set of goals or objectives, and

expectations. A strategy that can help groups develop into real teams is teambuilding, the process needed
to create, maintain, and enrich the development of a group of people into a cohesive unit.

 Team building is the process of taking a collection of individuals with different needs, backgrounds, and
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 Team building is a continuous process in project management, and teamwork is critical for project success. It

is a process by which a group of persons interact continuously to share information and decision-making to

enhance the performance of each team member. It is important to understand a work group and a work team.

 People join groups or teams for several reasons. Some people join a formal organization for employment or

to make a living. Here they are part of the work team. Some others join the organization to practice their own

profession, like Doctors, Chartered Accountants, Lawyers, Managers, and Engineers. When people join a

formal organization, they spontaneously form an informal group and are part of a work group.

 A work group is a group that interacts to share information and make decisions to help each member. The

performance is the total of what each member does in a group. A work team is a group whose individual

efforts result in a positive synergy through coordinated efforts. Its performance is greater than the total of

what its members perform as individuals.

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Using groups and teams in an organization is the most common phenomenon in an array of
organizations around the world. Teams are increasingly becoming the primary means of organizing
and performing work in contemporary organizations. The groups and teams are the foundation for
project organization.
Groups are common in organizations. The group is two or more individuals interacting are
interdependent and come together to achieve particular common objectives. There are formal and
informal groups in organized settings.
 A team is a group of two or more people having complementary and multiple skills. judgment and
experience interacting, working together in an interrelated, interdependent, and coordinated fashion,
putting synergistic effort to achieve common goals and objectives.
Project activities involve several people from different areas like production, marketing, engineering,
finance, human resources, and so on. Teamwork
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Assistant Professor Dinesh Pant to achieving the results of projects.
 Project Team Characteristics
a. Result-Oriented: The project is executed in a controlled environment: allocated budget, stipulated time,

and standard performance. The efforts of all the team members are focused on achieving certain specific

project objectives. This provides a sense of direction in the group activities.

b. Change Oriented: The project team is always concerned with coping with the change and managing

change. This helps to develop positive attitudes among the teammates.

c. Good Communication and Language Ability: The project team members share all kinds of information

continuously with regard to the project activities, progress, and problems. They also communicate openly

with their teammates. This requires language abilities to communicate ideas, progress, and problems.

d. Creative and Innovative: The project team seeks ways and means to do things in a better way. The

teammates also conceive productive ideas for project effectiveness. This makes the team members creative
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and innovative.
e. Capacity for Conflict Resolution: The project team includes people from various disciplines. This often leads
to conflict among the teammates. But the pressure of the constraints of budget, time, and specified quality
performance assumes priority, and the project team members focus more on project objectives. Therefore, they
resolve their differences and help other members to sort out their differences at work workplace.

f. Goal Congruence: The project goals and individual goals are similar. The project team gives priority to
completing the project on time and making it successful. This also makes the team successful and helps to fulfill
individual needs.

g. High Commitment: The project team members have a very high level of commitment to project success. This
facilitates a high level of task efficiency. This also promotes high energy and a level of enthusiasm among the
teammates. It promotes a strong sense of belonging and fulfilment of shared needs.

h. High Level of Trust and Enthusiasm: The project team works with a high level of trust and confidence among
the members. Each member also works with greater level of enthusiasm, becomes more creative and result
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oriented. This builds up high motivation andAssistant
morale Professor Dinesh Pant
of the team.
 Stages in Team Building
Teams usually go through different stages or phases as they develop into a cohesive unit. Not every
team goes through every stage. Some stages may be passed through quickly, while others may take
a longer time. Each team is different. The following is a brief description of different stages:

a. Forming: This is the initial stage, and the individual members are not used to the concept of
team. They try to acquaint and learn about each other’s attitudes, backgrounds, and personalities.
Establish their identities.

b. Storming: This is a critical stage in team formation, and conflicts can occur. The teams can fall
apart or disintegrate during this stage. Each member begins to bargain with other members about
what he or she wants. The individual members reveal personal aspirations and goals. This may
lead to personal differences and hostilities among the team members. This may disturb the initial
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relationship.
c. Norming: The team begins to develop ways to sort out their differences and work together
to achieve the project objectives. At this stage, the work is divided, assigned to different
members, and responsibility is fixed. They develop the working rules and code of conduct
for the team members. This means the team becomes more mature.

d. Performing: This is the stage at which teams begin to work. The team becomes mature at
this stage as it can define its tasks and work on them. The team's work at this stage will
have far-reaching implications. If the team becomes successful, it will continue facing
various challenges and become successful. On the other hand, if the fails, the future
becomes very discouraging.

e. Adjourning: This is the stage where the team gets dissolved or disbanded as the project
gets completed. The team membersAssistant
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mayProfessor
be brought
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in for a new task or project at a later
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 Types of Teams
The teams can be of the following types:

1. Problem Solving Team: Problem-solving team is a group of 5 to 12 members from the same
department who meet for a few hours each week to discuss ways of improving quality,
efficiency, and the work environment.

2. Cross-Functional Team: Cross-functional team is a group of employees from about the same
hierarchical level, but from different work areas, who come together to accomplish a task.

3. Self-Managed Team: Self-managed work team is a group of 10 to 15 people who take

responsibility for their former supervisors.

4. Virtual Team: A Virtual team based on the use of information and communication technology
(ICT) to tie together physically dispersed members to achieve a common goal.
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 Barriers to Project Team Development
 The project team struggles to perform effectively due to a lack of trust, fear of conflict, lack of commitment,
avoidance of accountability, and inattention to results. These issues cause delays in completing tasks, personality
clashes, inconsistent work effort, difficulty in reaching consensus, and higher costs. Collectively, these challenges
are referred to as project team pitfalls.

 Building a cohesive project team is essential for achieving project success and minimizing these pitfalls. Team
building does not happen automatically; it requires deliberate effort and skill. Project managers must overcome
several barriers to team development, as outlined below:

1. Divergent Outlooks, Priorities, and Interests: The project team is composed of heterogeneous people. The
professional outlooks and priorities of team members may differ from project objectives and priorities. Different
actors in the project may view things differently, which negatively affects the project team.

2. Unclear Project Objectives: Different actors may have a different understanding of the project goals, objectives,
and outcomes. Thus, unclear goals, objectives, and outcomes create power struggles and conflicts among team
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members. Similarly, role ambiguities and role conflicts also hamper team development.
3. Team Leadership Definition and Structure: Team leadership should be strong. Poor leadership may
suffer trust, credibility, and commitment. The team structure may lack an effective reporting system.
Team responsibilities may not be clearly defined.

4. Poor Selection of Team Members: A poorly selected team member creates a lot of problems in the
project. In real-life situations, the project manager may have picked team members from available
members of the organization or the people assigned by the functional managers. Poor selection of team
members results in low levels of motivation, dissatisfaction, conflicts, and a lack of commitment. Lack
of commitment or poor team commitment of team members is due to various reasons. Some reasons are:

i. Feelings of job insecurity in the project, and interpersonal conflicts within the team.

ii. Lack of clarity on the nature of the reward for good performance.

iii. Undue attention towards certain team members by the project manager, by ignoring others.

iv. Failure to maintain commitment over theAssistant

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project life cycle
Professor Dinesh Pant
5. Communication Problems: Poor communication is a major barrier to team development. Communication

breakdown can happen between team members, between the project manager and team members, between

the project team and top management, and between the project manager and the other project actors. Poor

communication negatively hampers project team development by weakening project control, coordination,

and workflow. It results in low team morale, lack of attention to project work, and low level of motivation.

6. Lack of Top Management Support: Top management support may further strengthen the project life cycle

and vice versa. Top management may lack proper attention to project performance. Insufficient attention

negatively affects the creation of a proper project environment. It creates apathy among team members, a low

level of creativity, and poor commitment towards the project.

 The project manager should be aware of the barriers to effective team building and development and should

work towards removing the above-mentioned barriers and build an effective team to get the best project results.

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 Leadership in the Project Environment
 Organized activities have been led by the foundation of leadership. Leadership in the political, social, military, legal,

economic, and technological environment has been well established in the past. With the emerging new arena of

management, modern organizations’ activities are based on the management-leadership function.

 Project management is also part and parcel of the management-leadership function. Management is about coping with

complexity, whereas leadership is about coping with change. In this context, it is better to have certain basic discussions

about the concept, functions, and approaches of leadership.

 Leadership is critical for the project's success. Leadership is the process of directing and influencing the task-related

activities of group members. It is the process of influencing the activities of an individual or a group in efforts toward goal

attainment in a given situation and is the process of use of non-coercive influence to shape the group's or organization's

goals, motivate behavior toward the achievement of those goals and help to define a group or organization culture and a

property, the set of characteristics attributed to individuals who are perceived to be leaders. Thus, it is the art or process of

influencing people so that they will strive willinglyAssistant

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Professor Dinesh Pant toward the achievement of group goals.
 Thus, leadership is a function of the leader, the followers, and the situation.

a. Leader: A leader is a person who can influence the behaviors of others without having to rely on force: a
person accepted by others as a leader. In the project, the project manager is the leader.

b. Followers: Followers who will obey and accept the authority and influence of the leader. In the project, team
members are the followers.

c. Situation: Leadership is situation-specific. The project environment of change, risk complexity, importance,
and customer focus are variables of the situation in the project.
 Leadership is directly associated with power, politics, and authority in an organizational setting. Power is the
ability to affect the behavior of others. In other words, it is the ability of a person or group to bring about desired
outcomes.
 Leadership is the capacity to exert influence, whereas authority is the right to exert influence. Authority is based
on perceptions and obligations associated with particular positions in an organization or social system. In a similar
way, politics is the process of accumulating and exercising power. Politics is the study of power in action.
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 There are five kinds of powers that affect organized activities:

i. Legitimate Power: Power granted through the organizational hierarchy. It is power defined by the organization
that is to be accorded to the people occupying particular positions.

ii. Reward Power: The power to give or withhold rewards, such as salary increases, bonuses, promotions, praise,
recognition, and interesting job assignments.

iii. Coercive Power: The power to force compliance by means of psychological, social, emotional, or physical
threat.

iv. Referent Power: The personal power that accrues to someone based on identification, imitation, loyalty, or
charisma.

v. Expert Power: The personal power that accrues to someone based on his/her information or expertise.

 Therefore, leadership is a complex task having ingredients of power, fundamental understanding of people, ability

to inspire followers to apply the leader’s style, and

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Professor Dinesh Pant of a conducive organizational culture.
 Roles of a Project Leader
a. Establishing project scope: Set clear boundaries for the project to understand what is included and what is not.

b. Allocating resources: Assign the necessary time, budget, and personnel required to meet the project goals.

c. Prioritizing tasks: Determine which tasks are most important and allocate resources to those first.

d. Developing and maintaining project schedules: Create schedules with timelines and monitor the project's
progress.

e. Managing project risks: Identify possible risks and develop strategies to address them.

f. Facilitating communication: Ensure that team members and stakeholders communicate effectively throughout
the project.

g. Making decisions: Make timely decisions to keep the project moving forward.

h. Motivating and inspiring the team: Encourage and support the team to create a positive and effective work
environment.
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 Leadership Skills for Project Managers
a. Communication: Being able to share ideas clearly and effectively to build relationships and solve
issues.

b. Team Leadership: The skill to guide and inspire a group to work well together and achieve goals.

c. Conflict Resolution: The ability to address disagreements in a way that resolves issues positively.

d. Motivation: Encouraging team members to perform their best and stay engaged.

e. Problem-Solving: Identifying issues and finding effective solutions.

f. Decision-Making: Choosing the best course of action quickly and wisely, especially under pressure.

g. Adaptability: Being flexible and adjusting to new situations and challenges as they arise.

h. Emotional Intelligence: Recognizing and understanding your own emotions and those of others to
improve interactions and relationships.
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 Leadership Styles in Project Management

a. Authoritative: The leader makes decisions independently and gives clear instructions
to the team.

b. Democratic: The leader collaborates with the team, involving members in the decision-
making process.

c. Laissez-Faire: The leader takes a hands-off approach, allowing the team to manage
themselves with minimal guidance.

d. Transactional: The leader motivates the team by using rewards for good performance
and punishments for poor performance.

e. Transformational: The leader inspires and motivates the team by promoting a shared
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 Very Short Questions (2 Marks Each)
a. Define the system view of an organization in project management.

b. What is meant by a pure functional organization?

c. List any two advantages of matrix organization.

d. Mention any two common barriers to project team development.

e. State one key leadership quality required in a project environment.

Long Analytical Questions (6 Marks Each)

f. Explain the concept of the system view of an organization. How does it help in effective project management?

g. Compare pure functional organization with matrix organization. Provide suitable examples.

h. Discuss the major advantages and limitations of a matrix organization.

i. Describe the process of project team building. Why is it critical for project success?

j. Analyze the role of leadership in the project environment. How can effective leadership overcome barriers in
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Case Study-1

TechNova Pvt. Ltd., a growing software development company in Nepal, recently secured a prestigious
government contract to design and implement a digital education platform that had to be completed within
one year. The project carried significant importance because it aimed to provide online learning resources for
thousands of students in both rural and urban areas of the country. To achieve this ambitious goal, the
company formed a diverse team consisting of software engineers responsible for building the platform’s core
functions, graphic designers to develop an attractive and user-friendly interface, content developers to prepare
high-quality study materials, and marketing specialists to promote the platform among schools and other
stakeholders.

In the initial phase, the company adopted a pure functional organizational structure where each department
worked independently under its own functional head. However, this arrangement soon created problems. The
engineers and designers faced difficulties in coordinating their tasks, which led to mismatched designs and
frequent delays. At the same time, the content developers felt that their contributions were ignored during the
early stages of development. As a result, deadlines
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Assistant Professor missed
Pant repeatedly, and overall productivity declined.
In response, the management decided to introduce a matrix organizational structure by appointing a project
manager to coordinate work across different departments. While this new system improved collaboration to
some extent, it also created new challenges. Employees became confused about authority since they had to
report both to their functional heads and the project manager. Conflicts soon emerged regarding the
allocation of limited resources, particularly when designers were pulled into multiple tasks. Some
employees began to hesitate in taking responsibility, preferring to wait for explicit instructions rather than
showing initiative. At the same time, motivation levels dropped, and team spirit weakened, as certain
employees felt overburdened while others remained passive.

Recognizing these challenges, the newly appointed project manager understood that the success of the
digital education project would depend not only on having the right organizational structure but also on
effective leadership and team-building strategies. It became clear that building trust, clarifying roles,
improving communication, and creating a sense of shared purpose among the diverse team were essential.
Without these efforts, there was a high risk that the project would fail to meet its deadline and objectives,
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undermining both the company’s reputation and the government’s educational goals.
Questions (3 Marks Each)

a. What problems did TechNova Pvt. Ltd. face under the pure functional organizational structure?

b. How did the shift to a matrix organizational structure improve the situation, and what new difficulties
arose?

c. Identify the barriers to project team development visible in the case of TechNova Pvt. Ltd.

d. Suggest leadership and team-building strategies the project manager can apply to motivate the team
and ensure project success.

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Case Study-2

Nepal Smart Infrastructure Pvt. Ltd. (NSI), a rapidly growing technology and engineering firm, recently
secured a prestigious government contract to design and implement a Smart City Traffic Management
System in Kathmandu. The main objective of the project was to reduce traffic congestion, enhance road
safety, and ensure smoother vehicle movement across the city by using advanced technology and data-
driven solutions. The government expected this project to set an example for other urban centers in Nepal.

To achieve this goal, NSI brought together a highly diverse team of experts. Software engineers were
assigned to design and program AI-based adaptive traffic signal systems that could respond to real-time
traffic flow. Civil engineers were responsible for the physical infrastructure, such as the installation of
roadside sensors, signal posts, and monitoring equipment. Data analysts were included to process large
amounts of traffic data and generate insights for system optimization. Meanwhile, government officials and
regulators acted as key stakeholders, ensuring the project complied with public policy, safety standards, and
legal frameworks. With such varied roles and responsibilities, effective coordination was vital for success.
08/31/2025 Assistant Professor Dinesh Pant
In the initial phase, NSI adopted a pure functional organizational structure. Each specialist team reported
directly to its own departmental head. This structure had some advantages: team members could focus on
their technical expertise, departments had clear authority, and accountability was straightforward. However,
problems soon emerged. Coordination between departments was weak because each unit worked in
isolation, leading to poor communication. For example, civil engineers installed certain devices without
timely input from software engineers, which caused mismatches in system integration. Decision-making
was also slow, as every major issue had to pass through multiple departmental levels. These inefficiencies
created significant delays in the implementation schedule.

To address these problems, NSI’s senior management decided to adopt a matrix organizational structure.
Under this new system, specialists maintained their link to their functional managers while also reporting to
the project manager for project-related tasks. This dual authority was intended to improve collaboration
across departments, encourage teamwork, and ensure timely completion of tasks. In theory, the matrix
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structure allowed both technical excellence and project integration.
However, the shift to a matrix organization was not smooth. Many engineers were uncomfortable working
outside their traditional departments. They feared a loss of professional identity and believed their authority
would be undermined. Some resisted assignments from the project manager, insisting that only their functional
head had the right to allocate tasks. Conflicts soon arose between the functional managers and the project
manager, especially regarding resource allocation, decision-making power, and prioritization of tasks. These
tensions slowed progress and created barriers to effective project team development.

Faced with these challenges, the role of the project manager became crucial. Beyond coordinating technical
work, the project manager had to focus on team building and leadership. Recognizing the resistance, the project
manager applied several strategies. First, he motivated the team by highlighting the national importance of the
Smart City project and the opportunities it would create for professional growth. Second, he promoted open
communication by holding regular meetings where every team member could share opinions and concerns.
Third, he actively mediated conflicts between functional managers and project members by negotiating fair
compromises. Finally, he provided a clear vision and common goal, reminding everyone that success depended
on collective effort rather than departmental boundaries.
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 Gradually, these leadership efforts helped reduce resistance and improve collaboration. Team members
began to work more cohesively, sharing expertise across disciplines. The project started gaining
momentum, demonstrating how effective leadership, proper organizational structure, and strong team-
building practices can overcome structural barriers in large-scale initiatives. This case emphasizes that
technical knowledge alone is not enough in project management; organizational design and leadership play
an equally critical role in ensuring project success.

Questions (3 Marks Each)

a. How does the system view of an organization apply to the NSI Smart City Traffic Management project?

b. Compare the experiences of NSI under a pure functional organization and a matrix organization.

c. Identify the barriers to project team development that emerged after NSI adopted the matrix structure.

d. Discuss the leadership strategies applied by the project manager to overcome conflicts and build team
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cooperation.