2.4 Organizational Influences on Project Management

The organizational culture, style, and structure influence how projects are performed.

An organization’s degree of project management maturity and its project management systems can also influence the project.

When a project involves external entities as part of a joint venture or partnering, the project will be influenced by more than one enterprise.

The following sections describe organizational characteristics and structures within an enterprise that are likely to influence the project.

2.4.1 Organizational Cultures and Styles

The culture of the performing organization and other groups or companies involved will affect both the project manager and the project, so it’s important to know and understand the cultures involved.

Organizational or corporate culture is the collection of values, beliefs, assumptions, and behavior that a group holds.

Every group has a culture, and its influence can range from weak to strong, and there can even be group subcultures within the same organization.

But culture is not easy to identify because many of its elements are invisible and unspoken, nor is culture easy to change.

An important work by Edgar Schein, an expert in this subject, theorizes that organizational culture is made up of outer levels that are fairly visible and easy to identify, working inward to core layers that are values and fundamental assumptions, which an outsider to the organization would not see right away.

It is the inner layers that are the true culture of the organization.

Among many other things, culture thus affects an organization’s comfort with risk, innovation, change, its strategy, its unofficial reporting structure and power relationships, loyalty, and work ethics.

All of these factors can have unexpected repercussions on a project if the project manager and team aren’t aware of them and don’t adjust their project approach accordingly and properly manage cultural effects.

2.4.2 Organizational Structure

The hierarchical structure of the performing organization directly impacts the project team and the level of authority a project manager has.

We need to understand this effect and utilize our interpersonal and leadership skills to successfully manage a project in whatever organizational structure is present.

One of the first steps newly assigned project managers should take is to determine how much authority he or she has within the organization for managing the project.

The perfect opportunity to address this question is with the sponsor while establishing the project charter.

Once determined, the project manager needs to develop a strategy for fulfilling his or her responsibilities as a project manager with that authority.

Organizational reporting structures can be categorized into three basic types: functional, projectized, and matrix, along with one special type called composite.

2.4.2.1 Functional Organization

This structure is based on departmental, specialty, or business lines, such as accounting, marketing, sales, customer service, information systems, and so on.

This is the most common organizational structure, and it’s where each person reports to one superior and functional managers are in charge of personnel.

Being organized along functional lines has its benefits.

From a business and human resources standpoint, it’s usually the most cost-effective and the easiest to manage.

Functional managers are responsible for their lines of business and employees, and their direct reports receive feedback and performance criteria directly from their supervisor or manager, so employees have a solid sense of belonging and loyalty to their business unit.

But there are drawbacks to a functional organization.

They can lean toward bureaucracy as decisions must be made and approved through subsequently higher levels of management.

Employees may also become “siloed,” or focused primarily on their functional unit and not on enterprise-level issues.

In projects involving team members across different departments, getting resources allocated can be difficult for the project manager because project team members will rarely be devoted full-time to a project.

And since the project manager is focused on the priorities of the project and the functional manager is focused on the needs of his or her functional unit, it can be difficult to reconcile the two competing objectives.

The project manager is also likely to face difficulties in motivating performance since the personnel is most loyal to the functional manager, not the project manager.

The most important drawback for us to keep in mind is that project managers have the least amount of authority and least amount of control in a functional organization.

Project managers in a functional organization are often referred to as project leader, project coordinator, project administrator, or project expeditor.

Project managers have the same responsibilities and professional expectations in a functional organization, so these drawbacks do not imply that functional organizations cannot successfully manage projects.

But rather than the project manager is more likely to have to rely heavily on his or her interpersonal skills and on power bases other than formal to negotiate for resources and priorities, address risk, quality, and procurement issues, and work harder to motivate the project team members.

2.4.2.2 Projectized Organization

Projectized organizations are the opposite of a functional structure.

A projectized reporting structure is centrally based around projects, so reporting structures fluctuate based on those projects.

Projectized organizations derive their revenue from providing services to others, so common projectized organizations include accounting, architectural, construction, engineering, and other professional services firms, but they aren’t necessarily limited to these examples.

Members of a projectized organization report to a project manager and there’s likely a project management office which will serve as a resource manager and will itself have full- or part-time support staff.

Projectized organizations will still usually have some management structure and staff based on business units or departments, but these are usually operational in nature and provide only support services to the business or to the project organization.

From a project manager’s perspective, he or she has the most authority and full control over resources in a projectized organization.

Projectized structures also lead to greater productivity among the project team since they are not likely to be distracted by other priorities or non-project events, and project communication is strongest in a projectized structure.

But projectized organizations also present management challenges. Since team members will report to several different project managers over the course of time, it can be difficult to provide overall performance feedback, and because of the temporary nature of projects, the project manager must work hard to develop loyalty and trust among the team.

And since these organizations generally have a strong project culture, it can be difficult for employees to feel part of the larger enterprise organization.

2.4.2.3 Matrix Organization

Matrix organizations are a mix between a functional and projectized organization, and they may range from a weak to a balanced to a strong matrix.

Matrix organizations are still vertically arranged by departments, business units, or expertise.

But they have an additional alignment by projects, products, or similar classification that stretches beyond the vertical alignment.

This second alignment can either be horizontal (usually seen in a weak matrix structure) or vertically (usually seen in a strong matrix structure).

In a weak matrix structure, the project manager has very little authority, particularly in performance and personnel issues involving the project team because team members still report to their functional manager first and to the project manager second.

This situation closely resembles what a project manager faces in a functional organization, and he or she is most likely serving as project coordinators.

The project manager faces the same obstacles in a weak matrix as in a functional organization, so resource availability, prioritization, loyalty, and performance are likely obstacles.

In a strong matrix, the project managers have a much greater authority over the project team, and team members report first to the project manager and secondly to the functional manager.

But the functional manager is still responsible for the human resource administration of his or her direct reports.

The project manager may also have full- or part-time support staff available.

For many project managers, this could be considered the best structure because it enables him or her to have a high level of control over the project team but not have to get bogged down in personnel administration.

A balanced matrix is somewhere between a weak and strong matrix, and there are no definite indicators as to what constitutes a balanced matrix because there are many possible combinations an organization could make.

But the overriding goal of a balanced matrix is to provide the project managers with sufficient authority to successfully manage projects while leaving the functional manager and its structure in place for all of the benefits it provides.

2.4.2.4 Composite Structure

A composite structure is not a permanent shift in the organizational structure, but only a temporary shift for a particular project.

For example, a functional organization may choose to structure a mission-critical project as if it were projected, giving the project manager full control of the project and the resources necessary to accomplish it.

2.4.3 Organizational Process Assets

Organizational process assets include any or all process-related assets, from any or all of the organizations involved in the project that can be used to influence the project’s success.

These process assets include formal and informal plans, policies, procedures, and guidelines.

The process assets also include the organization’s knowledge bases such as lessons learned and historical information.

Organizational process assets may include completed schedules, risk data, and earned value data.

Updating and adding to the organizational process assets as necessary throughout the project are generally the responsibility of the project team members.

Organizational process assets may be grouped into two categories:

  1. Processes and Procedures
  2. Corporate Knowledge Base

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