Resource Management
5.2 Project Organization
5.2.1 Types of Organization
All types of organization have their advantages and disadvan- tages. The best choice of project organizational form needs to take into consideration the nature of the project, its characteristics, and prior experience for projects undertaken by this company or other similar organizations.
Whether one is a project director, an employee of a client firm engaged in the project or a project team member, a clear under- standing of basic organizational types, their advantages and dis- advantages is indispensable. In addition, by knowing advantages in every organization, you have the motivation and driving forces, which will be used to control the individuals who work with you.
This kind of awareness also strengthens the individual's motiva- tion and driving force working in the project environment, and can be used to bolster the conviction and motivation of other members of the project team, Head Office etc.
The principal types of organization are as follows:
5.2.11 Project Organization as Part of the Company
This organizational form is used often for small projects that are within the company itself, such as industrial projects that entail
increasing the product line, expanding the plant, or creating a new production line.
In this case, the project manager eeds to define the departments that are responsible for the project. This organization is also used in a type of project that contains new technology, such as buying a new advanced machine in which the supervision of the proj- ect rests and operation will be with the engineering management responsibility.
According to this schema, one of the departments will manage the project. This department will have daily work performed by individuals, and the department shall be responsible for the proj- ect and report to senior management of the company. Now let us consider what the advantages and disadvantages are to this type of organization.
The most important features can be summarized as follows:
• We can easily transport the personnel to and from the project. This greatly simplifies the processes whereby experiences are exchanged and modern technology is transferred to the largest audience among company employees.
• Being already part of the company, the workforce is readily deployable for project tasks
• Individuals working on the project are operating in the same functions that they normally would, and therefore their presence in the project will enhance the promotion of individuals
• Increasing the experience of individuals who work in the project will increase the benefit to each individual and the company as a whole.
The disadvantages to this type of organization are as follows:
• The department is in charge not only of the project but also of the daily departmental routine, which may have negative impacts on how much time is reserved for implementing the project.
• Although technical problems may be solved relati- vely easily as personnel are working in their usual job function, but they usually avoid the administrative work as they unfamiliar on it.
• Project lines of accountability and departmental lines of accountability may fail to be adequately distin- guished or synchronized. This organization, in most cases, will not be given responsibility for a specific individual, where that work will be responsible from the whole department, so may be two persons work in the same activity in the project. So, may be one of them busy in the department regular activities or in vacation, so the work may be reviewed by more than one person, all that will cause a loss of accountability in the project.
• If or when senior management consider the project just an extension of their usual routine work, the moti- vation of a working group towards completing project objectives may not be able to play its proper role.
5.2.1.2 Independent Project Organization
This organizational structure functions as an independent unit separate from the company.
This form of organization in industrial projects facilitates corpo- rate supervision for enterprises that enterprises that have not large number of projects at any one time.
There are some disadvantages and advantages of this organiza- tion. The most important characteristics are:
• The project manager has full authority to manage the project and reports to the Executive Director in the organization.
• Everyone in the team reports directly to the project manager.
• A separate working group is given a sense of inde- pendence, which creates a high level of commitment, including commitment to precision, in work.
• In this organization, understanding of work orders and the implementation are direct and not complex.
• There will be powerful, fast decision-making and vitality throughout the project.
• Communication between individuals in the project and the people who work in the company head office will be reduced to minimum or eliminate.
Some disadvantages of this "independence" model include:
• In the case of more than one project in the organiza- tion, the teamwork being built into each project may give rise to a certain duplication of effort, thus tending to increased costs of administrative services if these services have to be duplicated for each project.
• In the case of projects that need special technology, the less communication there is between the proj- ect and technical divisions, the more difficult it is to transfer expertise from the company organization to the project.
• As a result of the independence from the head office, the staff will be fear about their career in future when they return back to the head office, and they usually have a questions about their promotion.
• Failure to balance properly the independence of opera- tion of individual projects with the overriding author- ity of Head Office may create unintended clashes among managers working on individual projects and administrators at Head Office.
This kind of organization has defects that can be prevented if an appropriate project manager is selected.
5.2.1.3 Matrix Organization
The matrix organization is commonly used by construction com- panies or consultancy firms running more than one project at a time. This type of organization is also useful for special projects in the field of advanced technology. One of its most desirable key strengths is its inbuilt tendency to encourage integration of different experiences from multiple projects and its enabling the ready sharing of such experiences across multiple projects.
The main strengths of this organization are as follows:
• At any point in time, while more than one project is being executed, functional departments have exper- tise available (technical engineers or other specialists).
• Upon completion of the project, no further responsi- bility for the careers of individuals who work in the project devolves upon the organization.
Chairman
Projects Dept.
_| Project (A)
Procurement Dept.
_| Project (B)
_J Project (C)
Financial Dept.
Engineering Dept.
HSE Dept.
Figure 5.1 Matrix organization.
• There is strong communication between members of the project and between the functional departments in the main office.
• Individual projects enjoy considerable flexibility to operate as separate units. At the same time, expertise not normally attached to some particular project can be engaged from another project currently utilizing that expertise.
• With good planning, and coordination, a balance can be struck over the allocation of the common resources.
The main disadvantages are:
• The individuals in this organization enjoy no employ- ment security at the end of the project, although job security is usually less of a concern than in the independent project organization model.
• The project manager controls the administration, while managers of the departments at the Head Office are managing only the technical aspects. Where a technically-informed decision might have undesired impacts on the project's cost or time targets, this might cause confusion between the project manager and functional department heads.
• Everyone has two managers.
• Potential for conflicts lurks in the overlap between the project manager and directors of different departments.
• A burden rests with the planning department at Head Office in the distribution of resources commensurate with each project's requirements.
Such disadvantages can be minimized or avoided by an expe- rienced project manager, or by selected individuals whose project experience is commensurate with the challenge of achieving the necessary balance between the requirements of the project manager and the functional department at Head Office.