5. Organizing Human Resources ................................................................................ 71-84
5.4 Organization Structures
For efficient and effective working of any project, it is essential that organizational structure must be set up. Organizational structures demonstrate the project manager’s authority. By virtue of this structure the delegation of powers, responsibility and accountability is automatically established. The working personnel know clearly to whom to report and therefore bypassing of
Self-Actualization Esteem Needs
Social Needs Safety Needs Physiological Needs
authority is eliminated. The general flow of authority can be explained with the help of pyramid and the block diagram shown below:
Fig. 5.2 Organization structures
The flow of authority in an organization structure is in downward direction while flow of responsibility is in upward direction. Traditional form of organization is not suitable for project work since there is no means of integrating different departments levels below the top management. It does not facilitate effective communication, co-ordination and control. When several functional departments with different professional backgrounds and orientation are involved in project work under time and cost pressures, it may call for overlap of development, design procurement, construction and commissioning work.
The project managers in different organizations may function differently because of range of possibility for authority sharing. There is a need for entrusting an individual or group with the responsibility for integrating the activities and functions of various departments and external organizations involved in project work. Such an individual may be either project manager or project co-ordinator. Depending upon the authority given to person responsible for project following structures are possible.
5.4.1 Line and Staff Organization
The simplest form of organization is a line organization, which is preferred for a small setup.
Fig. 5.3 Line and staff organization Foreman First Line Supervisor Workers Superintendents
Departmental Heads General Manager
LABORER SECTION DEPARTMENT
DIVISION DIRECTOR VICE PRESIDENT
PRESIDENT
PROJECT DRIVEN
NON- PROJECT DRIVEN TOP MANAGEMENT
MIDDLE MANAGEMENT
LOWER MANAGEMENT
DIVISIONAL MANAGER
PROJECT MANAGER
Departmental Manager
Departmental Manager LEGEND
FORMAL AUTHORITY FORMAL Or INFORMAL AUTHORITY Or INFORMATION FLOW
This overcomes the drawbacks of a pure line organization (which centralizes all work) and functional organization (diffuses work responsibility too much). Staff is a group of people with expert knowledge who are expected to provide advice and service at the time of attainment of objectives to line members. Project co-ordinator acts in a staff position to facilitate the co- ordination of the management in functional departments. He does not have authority and direct control, but he serves as focal point for receiving project related information and seeks to promote the cause of project by rendering advice, sharing information and providing assistance.
He may gently coax line executives to strive for fulfillment of project goals.
This is a weak form of organization, because co-ordinator is unable to exert pressure, may feel unsure of his role and this form may be employed mostly for small projects. He acts as a link to Chief Executive who might be willing to control project directly but cannot devote much time to keep track of details. The advantages of line and staff organization include its usefulness for medium and large corporations and availability of experts. The disadvantages of line and staff organization are: organization structure is complex, co-ordination in different levels may be poor, cost of operation is high and more conflicts possible at different levels.
5.4.2 Consultant as Project Manager
Chief executive may appoint a consultant who may be an outsider to advise in project implementation. He will not have any authority but will collect information, analyzes it and communicates it to the chief executive. The advantage is a source of authentic, reliable and impartial information. The disadvantage of delegation may be outcome of both the above structures as there is no project manager in either arrangement.
5.4.3 Project Management as Specialized Staff Function
Fig. 5.4 Staff functions
Most companies tend to use this arrangement when project management is used for first time in the company, as this does not require much change in the working of the organization.
A specialist in project management can be hired under this system who is well versed with the tools and techniques of project management. His task will be to advise on various functions like schedules, budgets, and techniques but the final decision will rest with functional groups.
The specialist may act as single focal point regarding communication between various functions and company. He may carry out services like collection and transmission of data, maintain records, measure progress, analyze and prepare progress reports.
Project Management Division
Chief Executive
Commercial Division Engineering Division
Project Manager -projectX Project Manager -projectY
Civil Mechanical Electrical
The limitation in this arrangement is that the project manager is not entitled to direct or issue instruction to workforce and he is expected to take the responsibility without any authority.
The direct communication with the workforce should be encouraged to take advantage of this arrangement.
5.4.4 Matrix Organization
The pure matrix organization evolves from above setup when arrangement of sharing authority between project manager and functional manager is formalized. In this structure different projects (rows of matrix) borrow resources from functional areas (columns).
Senior management decides whether the project manager has little, equal or more authority than functional managers with whom they negotiate for resources. The personnel working on project have a responsibility to their functional superior as well as project manager, which means that the authority is shared between project manager and functional manager.
The project manager integrates the contribution of personnel in various functional departments towards realization of project objectives. The matrix form of organization is incongruent with the traditional organization theory since there is dual sub-ordination, responsibility and authority are not commensurate, and the hierarchical principal is ignored. The matrix form of organization involves greater organizational complexity and creates inherently conflictive situation. Yet it is effective for simultaneous pursuit of twin objectives: efficient utilization of resources and effective attainment of project objectives.
Fig. 5.5 Matrix organization
Some of the advantages of a pure matrix organization are as follows. It enables project control over all resources, including cost and personal. Policies can be set up independently provided that they do not contradict company policies. Authority to commit company resources by scheduling rests with the project manager. Rapid responses are possible to changes, conflicts and needs. Each person can be shown a career path even at the end of project. Key people can be shared thereby minimizing the costs. Strong technical base can be developed with knowledge being available for all projects on an equal footing. Better balance is possible between time, cost, and performance. Rapid development of specialists and generalists occurs. Authority and responsibility are shared.
Some of the disadvantages of a pure matrix organization are as follows. It enables multidimensional informational flow and work flow. Reporting to multiple managers with continuously changing priorities. Management goals may differ from project goals. Functional
President
V.P. President
Manager
Senior Manager
Engineer
V.P. Engineering V.P. Marketing V.P. Administration
X Y Z
A1 A2 A3
B1 B2 B3
C1 C2 C3 A B C F
PM
Functional Manager
Project Manager
managers may be biased according to their own set of priorities. Potential for continuous conflict due to ambiguous roles requiring full time attention. Difficulty in monitoring and control.
Each project organization operates independently so duplication of efforts possible. Balance of time, cost, and performance must be monitored.
In addition to above-mentioned disadvantages, Davis and Lawrence have identified nine matrix pathologies which include power struggles, anarchy, groupitis, collapse during economic crunch, excessive overload, decision strangulation, sinking, layering, navel gazing.
5.4.5 Task Force Organization
This structure avoids confusion, mal-operation of matrix between project manager and functional manager by clearly giving authority to project manager. The project manager is delegated full authority to make decisions for the project but within the functional organization policies and procedures.
Personnel from functional organization are assigned to the task force, on either a full time or priority basis and may function under different roles. In all cases they continue to receive administrative support from their home organization. In some activities task force personnel are in effect on loan to the project manager. They operate completely under his direction and management and are not required to operate according to their functional organization policies.
Fig. 5.6 Task force organization
In another mode, while under obligation to the project manage for all project direction, they are constrained to follow home organizations policies and procedures. If project manager directions are asking violation of functional policies, the task force notifies both functional head and project manager. The dotted lines in figure indicate relationship between functional staff and functional manager, while other lines show project manager authority. Large and complex project involvement of multiple specialists from same discipline, while in small projects one specialist may cater for multiply disciplines.
5.4.6 Totally Projectized Organization
This structure evolves from task force, when project is long and complex. In such situation task force communication from parent functional organization is completely cut off. Such arrangement is desirable when project is either large and complex or graphically so located that there is no way of managing it without granting autonomy to team handling project. So it is like a mini-company in which project manager is chief executive and different senior functional
Chief Executive
Project Engineering Procurement Construction
Central Construction Central
Procurement Task Force
Construction Task Force
Engineering
Task Force Procurement Central Engineering
specialists who are capable to function independently without any support. The project manager should be a very senior person to justify delegation of so much authority by the company.
Besides it may help to project manager to spend more time on administrative work besides main core activities. Therefore either total projectization or task force arrangement appear to be best arrangement for executing most projects, as project objectives get primary attention and project manager is delegated authority commensurate with the responsibility he has to undertake.
Fig. 5.7 Totally projectised organization
Advantages of project organization form:
• It provides complete line authority over the project through a single project authority.
• Direct involvement of personnel helps to identify unprofitable project lines, develop strong communication channels and rapid reaction time.
• Expertise on a given project without sharing of key project personnel.
• Loyalty to the project with better morale due to identification.
• Flexibility in determining time, cost, and performance trade-offs.
• Interface management becomes easier as unit size is decreased allowing more for time for decision-making.
Disadvantages of project organization form:
• It is a costly preposition for a multi-product company due to duplication of effort, facilities and personnel
• Tendency to retain personnel on a project long after they are needed.
• Without strong functional groups technology suffers because policy of improvements for new programmes does not exists
• Control of functional specialists requires top-level co-ordination.
• Lack of opportunities for technical interchange between projects.
• Lack of career opportunities for project personnel.