Projet Management

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Comparison Of Organizational Structures

SOHAIL KHAN (S004-BEE-010)

Assignment submitted to: Mr.

TAUQEER SHAMS

Subject: Project Management

Comsats Institute of Information Technology Abbottabad, Pakistan March 21, 20

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COMPARISON OF THREE BASIC ORGANIZATIONAL STRUCTURES There are three basic types of organizational structures a) Functional organization b) Projectized organization c) Matrix organization The comparison strategy is to discuss the facts that are common among them and those that make them distinct.

FUNCTIONAL ORGANIZATION It is traditional form of organization. Organizational design is splitted in defined activities like human resource department, finance department, administration department, production department etc

Advantages 1. They are simple to understand because specific tasks and responsibilities are assigned to separate departmental staff 2. Staff can specialize in a particular business area such as production or marketing and follow well-defined career paths 3. Easy budgeting and cost control are possible 4. Better technical control is possible like a. Specialists can be grouped to share knowledge and responsibility b. Personnel can be used on many different projects c. All projects will benefit from the most advanced technology (better utilization of scarce personnel) 5. It provides flexibility in the use of manpower 6. It provides a broad manpower base to work with. 7. It provides continuity in the functional disciplines; policies, procedures, and lines of authority are easily defined and understandable 8. It readily admits mass production activities within established specifications 9. It provides good control over personnel, since each employee has one and only one person to report to 10. Communication channels are vertical and well established 11. Quick reaction capability exists, but may be dependent upon priorities of the functional managers

Disadvantages 1. This type of organization is prone to interdepartmental conflict 2. Coherence and good communication are particularly hard to achieve between virtually independent functions 3. Technology suffers because, without strong functional groups, outlook of the future to improve company's capabilities for new programs would be hampered (i.e., no perpetuation of technology). 4. Control of functional (i.e., organizational) specialists requires top-level coordination 5. There is a lack of opportunities for technical interchange between projects 6. There is a lack of career continuity and opportunities for project personnel

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PROJECTIZED ORGANIZATION The Projectized organization typically includes dedicated, full time team members with different Skill sets that stay together, as a cohesive unit, for the life of the project. The project manager has the most authority in the Projectized organization. Any organizational structure in which the project manager has full authority to assign priorities, apply resources, and direct the work of persons assigned to the project. Projects have their own cost centers, and project Managers have direct control of resources and associated budgets. Projects are strategic, and organization goals are accomplished as the aggregate of project objectives.

Advantages 1. 2. 3. 4. 5. 6.

Clear lines of authority, the project manager has full authority Response to customer and stakeholder issues is faster and clearer Skilled project team can support several successive projects of the same type Timely decision-making Organizational structure is simple, flexible, and easy to understand. Project is managed holistically

Disadvantages 1. 2. 3. 4. 5.

Expensive approach because of the duplication of personnel Equipment and personnel may be horded to ensure access to those resources Team members lose access to a repository of functional or technical expertise Policies and procedures are often applied inconsistently Team members may be anxious about post-project work

MATRIX ORGANIZATION Matrix form of organizational structure can be regarded as early form of “network” structure. Under matrix management, all people who do one type of work are in a pool. For example, all engineers may be in one engineering department and report to an engineering manager. These same engineers may be assigned to different projects and report to a project manager while working on that project. Therefore, each engineer may have to work under several managers to get his or her job done. They focus on project teams, bringing skilled individuals together from different parts of the organization. Individuals are made responsible both to their functional manager and the project manager involved. Project managers must work closely with other managers and workers in order to complete the project. The functional managers may have different goals, objectives, and priorities than the project managers, and these would have to be addressed in order to get the job done.

Advantages 1. It allows team members to share information more readily across task boundaries 2. It allows for specialization that can increase depth of knowledge and allow professional development and career progression to be managed 3. It is easier for a manager to loan an employee to another manager without making the change permanent. It is therefore easier to accomplish work objectives in an environment when task loads are shifting rapidly between departments 4. Better solution to client needs 5. Better reconciliation of technology requirements 6. Better for complex projects 7. Better integration across functional departments

4 8. More effective departmental communication 9. More efficient use of corporate resources 10. Better development of project managers 11. Better retention of functional specialties 12. Stronger problem solving base 13. Better job satisfaction 14. Reduced Bureaucracy (hopefully!)

Disadvantages 1. Potential conflict of management and project goals 2. Conflict over priorities 3. Potential for conflict generally 4. Conflict effect corporate management 5. “Two bosses” over the individual 6. Increased organizational complexity 7. Less focused, so not always cost effective 8. Duplication of effort 9. Slower response to clients 10. Multidimensional information flow 11. Multidimensional workflow 12. Dual reporting 13. Continuously changing priorities 14. Management goals different from project and/or process goals 15. Potential for continuous conflict and conflict resolution 16. Difficulty in monitoring and control 17. Employees can become confused due to conflicting loyalties 18. Company-wide, the organizational structure is not cost-effective because more people than necessary are required, primarily administrative 19. Each project and/or process organization operates independently. Care must be taken that duplication of efforts does not occur 20. More effort and time are needed initially to define policies and procedures, compared to traditional form 21. Functional managers may be biased according to their own set of priorities. 22. Balance of power between functional and project and/or process organizations must be watched 23. Balance of time, cost and performance must be monitored 24. Although rapid response time is possible for individual problem resolution, the reaction time can become quite slow 25. Employees and managers are more susceptible to role ambiguity than in traditional form 26. Conflicts and their resolution may be a continuous process (possibly requiring support of an organizational development specialist) 27. People do not feel that they have any control over their own destiny when continuously reporting to multiple managers

5 Matrix organization is further divided in three kinds that are  Strong matrix  Weak matrix  Balanced matrix Strong matrix Weak matrix  Project manager is  A project manager (often called primarily responsible a project administrator under for the project this type of organization) with only limited authority is  Functional managers assigned to oversee the crossprovide technical functional aspects of the expertise and assign project resources on an asneeded basis.  The functional managers maintain control over their  There can be conflicts resources and project areas. between the project manager and the  This matrix still retains most of functional manager the problems associated with a over resource functional organization assignment.  The project administrator’s role  The functional is to attempt to alleviate manager has to staff communication issues between multiple projects with functional managers and track the same experts overall project progress

When to use matrix    

When projects lead to complex products When a complicated design calls for innovation When a diverse mix of skill is required When changes in market place are rapid

Balanced matrix  A project manager is assigned to oversee the project  Power is shared equally between the project manager and the functional managers.  this is the most difficult system to maintain as the sharing of power is a very delicate proposition