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Designed to help those that are preparing to take the PMP or CAPM Certification Exam, each post within this series presents a comparison of common concepts that appear on the PMP and CAPM exams. Your approach to project management may vary based on the type of organization that you are working within. Organizations may be structured in a traditional or functional manner or a projectized structure. Depending on the organizational structure, your project management authority and availability of resources will vary. Functional OrganizationsA functional organization is a traditional structure where the organization is divided based on the functions performed by that particular group of people, such as Human Resources, Information Technology, Marketing, Service, etc. The resource assigned as the “project manager” is usually a team member within a functional area and does not have the title of project manager. The functional manager will control the budget and the “project manager” will act more as a coordinator or expediter of project activities rather than having true project management responsibilities. Resources for the project will need to be negotiated for with the functional managers and the accessibility of those resources will be based on business conditions. Any type of escalations of issues would need to be made to the functional manager. Because the “project manager” has little to no authority, the project can take longer to complete than in other organizational structures and there is generally no recognized project management methodology or best practices. However, the depth of subject matter knowledge is much greater because the resources that will contribute to the project reside within the functional areas. Projectized OrganizationsIn projectized
organizations, the majority of the organization’s resources are involved in project work and the project work is generally completed for the benefit of an external customer. The project manager has increased independence and authority and is a full-time member of a project organization and has project resources available to them, such as project coordinators, project schedulers, business analysts, and plan administrators. ExampleArizona Construction Company is a projectized organization: the majority of their resources are allocated against delivering projects for external customers, although they do have a few back-office workers who process the timecards, issue payroll, etc. Each foreman is a project manager and has authority over the project resources assigned to him or her. AAJ Grocery is a functional organization: the company’s resources are structured by the function that they perform: front-end, bookkeeping, stock rotation, grocery, personal care and pharmacy, dairy, meat, etc. There is not a defined “project” organization nor are there defined “project managers”. SummaryThe organizational structure will dictate the level of power, authority, and resources available to a project manager. A traditional functional organization gives the project manager very little, if any, authority, whereas a projectized organization will provide the project manager with significant authority.
See all posts in our PMP Concepts Learning Series There are three broad structures by which an organization can be organized: functional, matrix, and projectized. These structures represent a continuum, from structures where the project manager has very little authority (functional) to those where project managers have very broad power (projectized) (See Figure 2-1). There have been many studies about the impact that organizational structure has on project success, and it is not uncommon for corporations to change their organizational structure in order to increase their relative success in executing projects on time and within budget. This type of change takes great effort and may take a long period of time to fully implement. Instead of changing their entire structure, an organization may elect to create a dedicated project team in order to carry out a critical project without reorganizing the entire enterprise. This way, they can get many of the same benefits of the projectized organization without reorganizing the enterprise. This approach is not without risk, as we’ll explore in the section on dedicated project teams. Figure 2‑1: Project Manager Authority and Organization TypeFunctional OrganizationsPerhaps the least project-focused type of organization is functional organizations. Large organizations are traditionally organized by function into various departments, with staff in each department reporting to a departmental manager or head of department. This allows for groupings of specialists within the organization where they can work together, share knowledge and prioritize their work. Traditional functional departments might include:
These functional units work independently of each other, and the functional managers serve as conduits for communications and collaboration (See Figure 2-2). This type of structure is very efficient for operations management where continuous process improvement can be conducted on all regular departmental operations. However, it is not optimal for the completion of projects. Projects often require work across disciplines. In the functional organization, with staff isolated inside their departmental “silos,” communication is directed through the functional managers. These managers often have differing priorities, which can make communications slow and error-prone in a functional organization. Figure 2‑2: Functional Organization StructureThe success of projects within a functional organization depends on functional managers working together and cooperating. While someone maybe designated as the project manager for a particular project, that person may not have much authority (See Figure 2-3). Often titles such as Project Coordinator, Project Scheduler, or Project Expediter will be used instead. Regardless of title, those in charge of projects are often put in the role of simply trying to maintain a schedule of what is happening. Figure 2‑3: A “Project Manager” in a functional organizationPMI identifies the following project characteristics for projects conducted in functional organizations:
Projectized OrganizationsProjectized organizations are at the opposite end of the organizational spectrum from functional organizations. Organizational energy and resources are focused on completing projects rather than ongoing operations. In a projectized organization, operations are minimal and the project manager has great authority over resources and personnel decisions. Projectized organizations may have organizational units called departments and these groups either report directly to the project manager or provide support services to projects. In the project-based structure, personnel are specifically assigned to the project and report directly to the project manager (See Figure 2-4). The project manager is responsible for the performance appraisal and career progression of all project team members while on the project. As you can imagine, employees in this type of environment are able to focus their loyalty to a project rather than their particular discipline. Not all people can succeed in such an organization, as they must adapt to the leadership styles and organizational skills of different project managers. This is the most efficient organizational type for conducting projects, and it is used in those types of organizations that bid on and undertake large projects—military, industrial, scientific, etc.— that may last several years. Examples of project-based organizations include construction companies, aeronautical manufacturers such as Lockheed Martin, and many software development companies. This type of organizational structure can put additional stress on employees as they have no home to return to once their project is over, if they are not selected for a subsequent project. But it is generally considered ideal for project management since there is a significant reduction in the layers of bureaucracy that a project manager must navigate. PMI identifies the following project characteristics for projects conducted in projectized organizations:
Matrix OrganizationsWhile the functional structure may work well in times of little change, it has some serious limitations when the success of a company depends on being adaptable. A matrix structure tries to combine the strengths a functional organization provides for operations management with the strengths a projectized organization provides for project management. In a matrix organization, the functional and project manager share authority and responsibility. This can lead to several negatives:
However, there are several advantages to a matrix structure in terms of projects:
PMI recognizes three types of matrix structures, as described below (See also Figure 2-5).
Dedicated Project TeamMany functional organizations find that they often need to carry out important projects but do not want to change their entire organizational structure. Recognizing the advantages that are achieved by giving authority to a project manager, functional organizations often organize dedicated project teams where a project manager can have authority over the staff assigned to that particular project. The project manager and project team members are sometimes located in a special office, away from the desks and duties that they normally have within the functional organization (See Figure 2-6). This can be a very effective way to complete projects. However, some difficulties can arise:
A classic case of the use of a dedicated project team—and the problems it can cause to the functional organization—was when Steve Jobs picked the best and brightest engineers from Apple to work on the development of the Macintosh computer. The project was very successful, but there was a lot of tension between the project team and the functional organization. In what type of organization does the project manager have little or no authority?1. In what type of organization does the project manager have little or no authority? Although a weak matrix provides a project manager with limited authority, only the functional organization provides the project manager with little or no authority.
What organization gives a project manager the least authority?Of the three primary organizational structures -- functional, project management-focused and matrix -- project managers have the least amount of authority and influence in a matrix organization.
Which type of project manager would have the most authority over budget?The project manager has little authority or project power to make decisions. The functional managers have more authority than the project manager. The functional manager controls the project budget.
In which organizational structure does the project manager have the most authority?Strong Matrix Structure
Strong matrix organizations are closer to a projectized organization. The project managers have the highest authority, control over the budget, and a full-time team reporting to them.
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