What is Project Organisation? Forms and Charting

What is Project Organisation?

The project organisation establishes a clear human framework for the project team members. This task is designed to define the project organisational chart, the roles, and the relationships of the project team members to ensure that they all work towards the same goals.

The organisational structure identifies the roles and responsibilities of each job position, augmenting the existing role definitions where necessary to cover all of the responsibilities. The project organisation technique used in this step provides a standard set of roles and responsibilities that can be customised for a particular project. This framework should include all necessary personnel resources, including both full-time and part-time staff members.

Forms of Project Organisation

Some of the organisational structures that a project manager can consider are:

Various Forms of Project Organisation are listed below:

  1. Line and Staff Project Organisation
  2. Divisional Project Organisation
  3. Functional Project Organisation
  4. Project Organisation
  5. Matrix Project Organisation

Line and Staff Organization

The line and staff organization is one in which two types of authority relationships co-exist. They are direct or line authority as well as advisory authority. The advisory authority relationships are known as staff relationships. Staff authority means the authority to advise, to support and to serve. In a line and staff organization, most managers continue to have line authority to decide and do things as in a line organization. However, a few specialized staff positions are created for certain advisory and supportive functions.

The line authority flows downward and staff authority flows upward. The general manager exercises line authority over his subordinates – all the functional managers both heading line and staff departments. Staff managers tender their advice about the problems in their respective areas to the general manager who gives orders to his subordinates concerned to put advice into action. However, a staff manager (for example, a personnel manager) has line authority over his subordinate (personnel officer).

Differences between Line Manager and Staff Manager

Line Manager Staff Manager
Line managers take care of the revenue-generating departments. Staff managers are in the departments which are revenue consumers.
The line manager’s responsibility is to oversee the everyday work performance of their departments within the organisation. The staff manager’s responsibility is to provide support and expertise to the line managers and their teams.
Line managers play an important role in the accomplishment of the actual work of the organization. The staff manager supports the organization so that it can function as intended.
Line managers have authority over the employees of their departments or lines. Staff managers have authority only within their functional area rather than direct operational control.
Line authority is formed or legitimate authority created by organizational hierarchy, Staff authority is a more abstract concept and may take a variety of forms such as advisory and functional authority.
Line managers focus on achieving the organisational goals and objectives by effectively operating their departments. Staff managers focus on supporting the organisational objectives by providing their expert advice and services to the line departments.
Line managers work directly towards organizational goals. Staff managers advise and assist within the organisation.
Line managers have the authority to give orders to employees as they are responsible for the functioning of their departments.  Staff managers can only advise the employees within the department as they don’t have direct supervisory authority and responsibility.
Examples of staff managers are the Project Manager, Branch Manager or Sales Manager. Examples of staff managers are the Human resources Manager, Legal Manager or Payroll Manager.

Advantages of Line and Staff Project Organisation

The advantages of line and staff organization are given below:

1) Line authorities are not autocrats as they are to take advice from the experts or staff position.

2) In the line and staff authority all the officials have independence to make decisions.

3) This results in greater efficiency as the line managers are to devote much of their time to line functions. The line managers function more efficiently as they get support from staff positions.

4) In this organization line authorities concentrate on the execution of work and are relieved from thinking function.

5) This organization ensures coordination automatically as the line manager works along with staff officers.

Disadvantages of Line and Staff Project Organisation

The disadvantages of line and staff organization are as follows:

1) Staff officers may not give proper advice, as they are not to be responsible for the accomplishment of the job.

2) The power of concern is with the line official but the staff dislikes it as they are the ones more in mental work.

3) It creates friction between line executives and staff executives. The success of this organisation largely depends on the proper understanding of the two.

4) Line and staff concerns have to maintain the high remuneration of staff specialists. This proves to be costly for a concern with limited finances.

5) The line authorities are to depend on staff executives. This results in too much dependency. Too much dependence on staff will loss of creative thinking and initiative.

Divisional Project Organisation Structure

When a company expands to supply goods or services to a variety of customers, offers a variety of different products or is engaged in business in several different markets, the company could adopt a divisional organizational structure.

A divisional structure organizes its divisions based on specific needs and demands of markets, products, or customers. In contrast to a functional organizational structure, the company conducts activities to satisfy the needs of markets, customers,  and products.

The divisional structure focuses on a higher degree of specialisation within a specific division, so that each division is given the resources, and autonomy, to swiftly react to changes in their specific business environment.

As a result, each division often has all the necessary resources and functions within it that are required to satisfy the demands placed upon it.

Advantages of Divisional Project Organisation Structure

The following are the advantages of a divisional organization structure:

1) The divisional structure works well in competitive markets where local managers can quickly adapt their business strategies.

2) When a company has a wide range of products or services for different market segments then it is more beneficial to implement a divisional structure.

3) The divisional structure allows decentralized decision-making in the organization, which may enhance their ability to easily adapt themselves to local market conditions.

4) The divisional structure is designed to create a culture at the divisional level that closely meets the demands of the local market.

5) Delegation of authority makes it much easier to assign responsibility for actions and their corresponding results.

Disadvantages of Divisional Project Organisation Structure

The following are the disadvantages of a divisional organization structure:

1) When there are several functional areas spread among many divisions, then the efficiency of each functional area is compromised. 

2) The different divisions may lack the motivation to work together, and in some cases, may even work against each other, as some managers undercut the efforts of other divisions to secure benefits for their area.

3) Each division may have its departmental objectives which may not align or create barriers in the strategic direction of the company.

4) Skills and best practices are often compartmentalized within divisions, which makes it challenging to transfer knowledge within the organization.

5) The company as a whole may not be able to take advantage of economies of scale unless purchases are integrated across the entire organization.

Functional Project Organisational Structure

Traditional organizational structure is developed around the functional aspects of the organization such as engineering, manufacturing, marketing, human resources and information systems. Projects in individual functional departments do not face any problems. But when different functional departments have to be coordinated, the project manager may have to assign, control and monitor the work through the functional manager, because of his lack of authority in the functional department. Traditional organizational structures are almost 200 years old and have undergone many changes during this period. Those changes can be attributed to the changing requirements about information, technology and the competitive environment. The increasing demands from the customers also led to changes in the traditional organizational structure.

Advantages of the Functional Project Organization Structure

The advantages of the functional organisation structure are given below:

1) It Improves control by Sharing knowledge and responsibility, and Grouping specialists.

2) It flexibly uses manpower.

3) Easy cost control and budgeting procedures.

4) Working with a broad manpower base.

5) Establishing continuity in functional disciplines, policies and procedures.

6) Reacting quickly to situations depending on the functional managers’ priority.

7) Taking up large-scale production activities within the specifications.

8) Establishing vertical communication channels.

9) Providing a reporting structure that gives good control over people.

10) Defining the lines of responsibility easily and understandably.

Disadvantages of the Functional Organization Structure

The following are the disadvantages of the functional organization structure:

1) It does not provide project-oriented emphasis to achieve the tasks.

2) Lack of formal authority, ie, no single person is responsible for the total project.

3) There may be partiality in decision-making and the strongest functional group may be favoured.

4) It is a complex coordinating system that consumes more time in approving the decisions.

5) Ideas are function-oriented rather than project-oriented.

6) It is slow in responding to customer needs.

7) It lacks customer focus.

8) It reduces motivation and innovation.

9) Lack of proper project-oriented planning and authority that leads to difficulty in pinpointing responsibilities.

Project Organisational Structure

A project organizational structure is of a recent origin, having been conceived after World War II. A project organisation structure is designed to streamline the coordination and implementation of project activities. It creates an environment that fosters interactions among the team members with a minimum amount of overlap, disruptions, and conflict. The form of organisational structure is one of the important decisions of project management that will be met for the project.

A project organization is composed of a core of functional departments; through its main units are specific programs or projects. The organization is designed with specific objectives in view, and there is also a provision to disband it after the program or project has been accomplished.

Advantages of Project Organizational Structure

Pure project organizational structure has the following advantages:

1) Facilitates unity of command.

2) The project team reports directly to the project manager.

3) The project manager has complete authority over the project.

4) Project personnel are shared between the project and the project organization.

5) Develop a formal communication channel between the project manager and his team.

6) The project manager has the freedom to acquire the resources needed for the project’s progress.

7) It provides more flexibility for the utilization of resources in the organization by allocating them to the projects where these are needed.

8) It enables the organization to adapt to environmental demands particularly when environmental factors are fast changing.

9) Project organization allows maximum use of specialized knowledge, which is available to all projects on an equal basis. Knowledge and skills can be transferred from one project to another project.

Disadvantages of Project Organizational Structure

The disadvantages of pure project organizational structure are as follows:

1) Duplication of facilities,

2) Inefficiency in resource utilization,

3) Sourcing personnel from internal functional departments to work on the project affects work in the functional departments.

4) People are not able to identify themselves with any particular department in the organization because they do not have permanent tenure with any project. Thus, there is less loyalty of people to the organization.

5) Project organization creates feelings of insecurity and uncertainty among people in the organization. It has an ad hoc arrangement with limited life. Therefore, a question comes to mind what will happen after the project is over?

6) There is a lack of clarity among members about their role in the organization. For example, project relationships are not based on the principles of clarity of authority and responsibility and a fixed amount of authority. Thus, only those persons can work better who have a high level of tolerance for ambiguity

Matrix Organizational Structure

A matrix organizational structure is formed as a result of combining the advantages of all the aforementioned organizational structures. This structure is suitable for project-driven organizations like software development firms. This structure makes the project manager responsible and accountable for the success of a project,

There are certain requirements for developing a matrix organizational structure:

1) Ensure quick conflict resolution.

2) Ensure the functioning of functional departments as individual entities.

3) Ensure commitment by making team members spend full time on the project.

4) Ensure that the resources are negotiated with function and project-oriented managers.

The primary objective of a matrix organizational structure is to derive synergy through shared responsibility between project and functional management. Matrix structures can be categorized into strong and weak structures depending on the influence of the project manager on functional resources.

Since a matrix structure is complex, it is important to note the preconditions for implementing such a structure. The following are situations in which the implementation of a matrix structure is favourable:

1) When large amounts of data are required to be processed.

2) When resources have to be shared among different projects.

3) When the primary output of an organization is a complex product.

4) When the market conditions demand rapid changes in the product.

5) When designing, developing and testing a product requires sophisticated skills.

6 ) When the organization serves multiple customers in different geographical locations.

7) When a project with a complex design that requires innovation is to be finished on time.

Advantages of Matrix Organizational Structure

The advantages of a matrix organizational structure are as follows:

1) Minimizes conflicts,

2) Develop a strong technical base,

3) Enables authority and responsibility sharing.

4) Facilitates cost minimization by sharing key personnel,

5) Facilitates spending more time to solve complex problems,

6) Derives support of the functional department to the project,

7) Every project has its own independent set of policies and procedures,

8) Enables the project manager to exercise control over all the resources,

9) Facilitates quick response to conflicts, changes and other project needs,

10) Eases solving of the problems that require top management Involvement,

11) Ensures optimum balance among time, cost and performance parameters,

12) Authorizes the project manager to commit the company resources. This ensures that scheduling does not clash with other projects,

13) Enables proper Human Resource Development by enhancing the career prospects of team members,

Disadvantages of Matrix Organizational Structures

1) Team meetings in the matrix are time-consuming.

2) A dual-boss system is susceptible to organisational power conflicts.

3) Requirements of adding team leaders to a matrix structure can result in increased costs.

4)Teams may develop “Groupitis” which refers to strong team loyalties that can cause a loss of focus on larger organizational goals.

Project Organization Charting

An important part of team organisational design planning is to plan for the organisational arrangements that will be used in the management of the team. The team is like a football team. The individual and collective roles on the team must be planned so all the players know their authority and responsibility and that of the other players. Project team organisation charting can be highly beneficial as it provides a clear visual representation of the project team structure, their roles, and responsibilities. 

An organisational chart can help the project manager and the project team to identify the reporting relationships among the project team, management, and other key stakeholders.

A Linear Responsibility Chart (LRC) is a model of an organisation that goes beyond the simple display of formal lines of communication, gradations of organisational level, departmentalisation, and organisational territory portrayed in the traditional organisational chart found in most offices. The LRC reveals the work package-organisational position couplings in the organisation. It shows who participates and to what degree when a task on the project is to be carried out. It also helps to clarify the authority expectations when two or more organisational positions have overlapping involvement, it clarifies the authority relationships that arise when people share common work.

The development of such a chart as part of the organisational planning activities of the team, combined with the inevitable discussions that usually accompany such a development, can help facilitate an understanding of how the team is organised and how the day-to-day team roles will be carried out.

Characteristics of Project Organisational Charting Design

Characteristics of organisational charting design are as follows:

1) An elimination of unnecessary work that fails to add value to the enterprise. Activities within organisational processes are reduced, and teams are used to manage the processes of creating value for a customer.

2) A reduction in the number of organisational levels, resulting in a flatter hierarchy with an increased number of people reporting to a manager.

3) An organisational design based on processes, such as product development, order entry, or quality improvement initiatives, rather than functions or departments. In every process, there is a designated individual who acts as a focal point for the development of strategies for that process.

4) The use of suppliers and customers in important working positions on the empowered teams. Team members are brought into direct and ongoing contact with suppliers and internal and external customers. Teams and the organisation are driven by performance and quality in creating customer value. Organisational results and rewards follow from providing value to customers.

Key Characteristics of Project Organisational Charting Design

5) The use of empowered teams as the building blocks in bringing a focus to the management of change within the enterprise. Teams have specific objectives and goals and a common purpose- and share resources, results, and rewards and are held responsible and accountable for results.

6) The use of management across and diagonally in the enterprise, is more critical than managing up and down in a traditional organisational structure. Organisational boundaries are eliminated or reduced as empowered interdisciplinary teams work together to perform core processes, such as product development or sales generation.

7) The use of training as a way of life in the enterprise to improve individual and collective knowledge, skills, and attitudes in technical, social, and managerial expertise. Through empowerment, people develop extraordinary technical, managerial, and leadership skills as they serve on teams that, for all practical purposes, manage themselves.

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