Organizing is the function of dividing and grouping
the activities of the organization and authority-responsibility relationship
between them. Organizational structure is concerned with the allocation of task
and establishment of authority-responsibility relationship between the members
of the organization. (Nagarajan, 2008).
Organizational Structure can be of three
types;
·
Functional Organization
·
Product Organization
·
Matrix Organization
Disadvantages
of Functional Organizational Structures
It is difficult to fix accountability.
It is difficult to judge the
performances of its members
When product line increases, there is
the possibility of ineffective control
Possibility of avoiding responsibility
when there is lack of coordination between each department.
Product
Organization – This type of organization
structure is best suited for organization with a longer product line. The
advantages of the product organizational structure is that all the activities,
skills and expertise required producing and marketing a particular product or a
group of related products are grouped together under a single head. From the
example below, we can observe that a manager of a particular product is in
charge of all activities relating to that particular product.
In a product organizational structure,
the job can be better coordinated and a higher level of performance can be
achieved. Another major advantage of this form of organization is that
accountability of each division is clearly made known.
A disadvantage of such a structure is
that divisional managers may place the interest of their division of department
above the interest of the organization as a whole. Also managers of each
department may take advantages of any short-term benefits or gains in the short-term
over the long-run benefit of the organization.
Matrix
Organization – Is an organization that attempts
to combine the merits of the functional and product forms together. This form
of organization is ideally suited for enterprises that are project driven.
In a Matrix Organization, the project
manager defines what has to be done while the functional manager decides how to
do it. The basis of matrix form of organization is to create synergy through
mutual shared responsibility between project managers and functional manager.
For the successful functioning of a
matrix organization;
·
The project manager and
the functional manager must coordinate with each other and must be willing to
negotiate for resources keeping the overall interest of the organization in
view.
·
Both functional and project
manager must provide input to the planning process
·
Though there are two
lines of control (vertical line of control by the functional departments and
horizontal line of control from project departments), the horizontal line of
control must be allowed to operate freely as a separate entity except for
administrative purpose.
Advantages
of Pure Matrix Form of Organization
1. The
project manager is able to have maximum control over the project.
2. There
is haring of authority and responsibility between project managers and
functional managers that can result in synergy.
3. Project
managers who are generalists (or technical specialists) acquire knowledge about
specific functional areas while functional heads who are specialists in their
areas acquire all round knowledge about the project.
4. The
project manager is authorized to commit resources of the organizations for the
project, the only condition being that the scheduling of his project does not
cause conflicts in resource sharing with other ongoing projects.
5. All
the personnel are involved, motivated and are prepared to face the challenge
6. Top
management is freed from organizing and coordinating resources and can hence
devote more attention and planning.
7. Resource
utilization is optimized.
Disadvantages
of Pure Matrix Form of Organization
1. Since
project managers have an edge over functional managers, it is likely that the
functional managers might become biased which will create conflicts and power
struggles between the project department and the functional department.
2. There
is the danger of dual reporting since the personnel are under the dual control
of project and functional managers.
3. Since
each project wing operates independently, there are chances for duplication of
efforts.
4. Managers
and employees are made more susceptible to role ambiguity which results in more
discussions than actions.
5. It
is costly to implement matrix form of organization since more people than
otherwise required are employed.
6. Emergence
of conflicts and resolution of conflict will be a continuous process and this
may require the continuous support of a person who is a specialist in
inter-personnel relationships and organizational development.
Pure
Project Organizational Structure
A pure project organizational structure
is one in which the project manager is in total control of all other
department. See example below.
This form of organisational structure is
suited if the organization has a complex project whose resource requirement are
large. In such situations, all the resources required for the project are left
at the disposal of the project manager. The project manager has full complete
authority and full control over all resources (both physical and human
resources) assigned to the project.
With pure project organizational
structures, there is flexibility in determining cost, schedule and performance
trade-offs since all the required resources are at the disposal of the project
manager. One major drawback of such an organizational structure is that it is a
costly affair for the parent organization since separate human and physical
resources are to be assigned and maintained for each project.
Selection
of Project Organization Structure
How do you choose which structure is
suitable for a given project?
1. For
‘project driven’ enterprises, the matrix form of organizational structure is
the best suited because the main activity of such enterprises is project
implementation and new project are taken up once ongoing project is completed.
2. In
functional Organizational structure, the integration between the functional
units is achieved by formal rules, example regulations. Plans, budgets etc.
3. Other
organizations are not project driven also come across situations where they are
to manage projects. Example Enterprise engages in heavy machinery to expand a processing
facility.
4. Pure
Project organizational structure and matrix work better for control of HR
5. High
Complexity Project with huge resources can be better handle by Pure Project
Organizational Structure.
6. Project
Management involves integrating activities across functional boundaries and
ultimately it is the top management that decides the authority structure that
will control the integration mechanism. The authority structure ranges from pure
functional authority to product authority and finally to dual authority.
Break Down Structures
Modern
methods of project management use breakdown structures for work and
organization.
Work Breakdown Structure
- Work break down structure is a process by which the whole project is divided,
that is broken down into various sub-projects, the sub-projects into various
tasks, the tasks into various sub-tasks and finally the sub-tasks into
work-packages. In the process of building up WBS, the project manager, all
connected functional managers and all connected staff work together and analyse
all aspects of the project so that their collective wisdom will prevail. See
the following stages;
1. Project
2. Sub-project
3. Task
4. Sub-task
5. Work-package
The
number of structure will depend on how far WBS can go however, a good WBS is
the cost and time requirement which would also become the basis for project
planning, scheduling and controlling.
Numbering System for WBS
– The numbering system is such that it follows the work break down structure.
The project is represented by the number “01”. The sub-project is identified by
the second number. The number “01 – 01” for a sub-project represents
sub-project “01” of project “01”; “01 – 05” represent “05” of project “01”. The
third number identifies the task. The number “01 – 02 – 03” represents the
third task of the sub-project.
Fig 11.7
taken from Nagarajan (2008) Project Management 3rd Edition
Types
of Work Breakdown Structures can be of two types;
1. Project Oriented WBS
– Under Project Oriented WBS, the project is subdivided in to sub-projects on
the basis of ‘products’. The sub-projects are again subdivided on the basis of
‘products’ and so on till tiny work packages are obtained.
2. Functional Oriented WBS
– In this type of orientation, the project is broken down on the basis of
functional departments or functional tasks.
Students
are encouraged to read Chapter 11 of Project Management 3rd Edition
Nagarajan, (2008) New Age
Please note all the illustrations and
examples are taken from Project Management 3rd Edition, Nagarajan
(2008) Chapter 11. Students are encouraged to read through this chapter 11.
Source: Project Management 3rd
Edition, Nagarajan (2008) (New Age)
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