Project Organization

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Ch 4 Project Organization“Organize - to form into an association for a common purpose or arrange systematically”

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Project OrganizationSpecialization of the human elements Different types = functional, product line, geographical location, production process, type of customer, subsidiary organization, time, vertical or horizontal organization How to tie project to the parent firm How to organize the project itself

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Project as Part of Functional OrganizationE.g. new technology project – under vice president of engineering Introduction of new product line – under vice president of marketing Project assigned to the functional unit that has most interest

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Functional OrganizationProject New Model Proton SURIENew Layout – Robot Line

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Major AdvantagesMaximum flexibility in the use of staff Individual experts can be utilized by many different projects Specialist in the division can be grouped to share knowledge and experience Functional division serves as a base of technological continuity Functional division contains normal of advancement

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DisadvantagesThe client is not the focus of activity and concern Tend to be oriented towards functional activities No individual is given full responsibility for the project Slow response to client’s needs Tendency to sub-optimize the project Motivation of project team is weak Does not facilitate a holistic approach to the project

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Pure Project OrganizationProject is separated from the rest of the parent system Becomes self contained unit

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AdvantagesPM has full line authority over the project All project workforce directly responsible to the PM Lines of communication are shortened Maintain permanent group of experts High level of commitment Ability to make swift decisions Unity of command Simple and flexible structure Support holistic approach to the project

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Project Organization

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Disadvantages Duplication of effort Stockpile equipment and technical assistance “just in case” Lack of expertise in high technology project Foster inconsistency and cutting corners Project takes on a life of its own Worry about “life after project ends”

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Matrix OrganizationCombination of functional and pure project organizations Matrix project is not separated from parent organizations Individuals come from respective functions divisions and are assigned to the project full time or part time

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Matrix OrganizationPM1PM2PM3ManufacturingProgram ManagerR&DMarketingPresident

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Matrix OrganizationCross-functional team members Draw temporarily on technological expertise of relevant functions High technology areas – integrate functional specialties Iterations in adapting “over the wall” approach Systems approach – integrity of product design Close coordination and communication among all parties

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Advantages of Matrix ApproachThe project is the point of emphasis Reasonable access t pools of technical talents Less anxiety about what happens after project completion Rapid response to client needs Access to administrative units of the parent firms Better balance of company resources in multiple projects Flexibility in control

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DisadvantagesDelicate balance of power Movement of resources – conflict Projects resist death Complex division of authority and responsibility Violates the principle of unity of command

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Mixed Organizational SystemsDivisionalization – breaking down large organization into smaller more flexible units Spin-off the large projects as subsidiaries or independent operations Allow formation of venture team Hybrid leads to flexibility Dissimilar groupings encourage overlap, duplication and friction

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Mixed Organization

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Staff OrganizationSet up like functional organization Adds a staff office to administer projects Used for small, short run projects

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Staff OrganizationFinanceManufacturingEngineeringPresidentProject S

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Choosing an Organizational FormFunctional form – major focus on in-depth technology, require large capital investment Pure project – large number of similar projects Matrix organization – require integration of inputs from several functional areas and involves reasonably sophisticated technology and several projects must share technical expertise Matrix organizations are complex

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Selection of Project OrganizationDefine the project / objectives Determine the key tasks Arrange key tasks by sequence and decompose them into work packages Determine project subsystems List special characteristics – level of technology, probable length, resource requirements, level of outsourcing

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Project TeamProject office – control center, chart room (focus of all project activity) Close location to project manager Co-location of external parties Reduce physical distance Better communication Pressure to complete tasks

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Key Team MembersProject Engineer Manufacturing Engineer Field Manager Contract Administrator Project Controller Support Services Manager

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Work OrganizationProject engineer (technical performance) and project controller (budget) report to PM PM forecast of personnel needs Prepare WBS to determine exact nature of tasks Skills requirements are assessed and aggregated Outsourcing of certain tasks

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Typical Organization of Engineering Projects

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Staff Critical to Project SuccessSenior project team members Staffs whom the PM will require close communication Staffs with rare skills for project success

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Last Updated: 8th March 2018

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