Dušan Bobera Project

Organization

Summary Article Info: In our work we will try to show, according to recent and by scientific publicity accepted Management Information , attitudes, three basic organizational forms for , with their Vol. 3 (2008), No. 1, description, characteristics, advantages and disadvantages, as well as to try to identify pp. 003-009 the cases in which some of them could be applied. In this sense we will analyze the

Received 12 Januar 2008 functional organizational type, where the project is a part of functional enterprise or- Accepted 24 April 2008 ganization, clear project and combined or matrix . According to the fact that each one of the models mentioned above has its own advantages and UDC 005.8 disadvantages, in this work we will try to pre-sent the procedure for choosing which model will be the most appropriate for implementation in particu-lar cases.

Key words

Project and People Management, Staffing

Introduction projects. When all projects are complete, they integrate into the whole applicative system. An enterprise, if successful, has a tendency towards growth and development, it employs and trains This has caused that many enterprises, non- qualitative staff, provides resources and develops software similar to software ones, have accepted the . In general, the the system by means of which they can keep on structure is focused on specialization of the group working their traditional work, already done in the staff. If the organizational structure is unable to traditional way, in the way which will not change perform some task, the tendency of its rejection the form of project realization. There are many will appear. When such a situation becomes reasons for the fast increase of number of project- dangerous for the firm, the increasing pressure will oriented , but in the literature they are usually grouped into four general fields: be exerted on reorganization. Every elementary book dealing with . The first cause is speed of the answer to the management problems includes the elements of increasing rhythm of market changes specialization, and especially always popular determining the speed of answers to these functional organizations dividing and organizing changes (they can be both danger and the enterprise to product lines, geographical chances), as an absolute condition for position of some parts, on the basis of production successful competitiveness. In addition, process, types of consumers, and so on. In from the aspect of competitiveness, it is not addition, large companies can be organized in any more acceptable development of a auxiliary segments, doing it often according to product or service in the traditional way different methods at different operative levels. where in this process it passes from one Recently, several different forms of project functional field to the other one without organizations have appeared in professional evaluating that it is ready for production and literature, as “project management”, “organization sale. In today’s business ambient, realizing management by means of projects”, “project- the possibility to appear in the market with oriented firms”, and so on. The forms are products or services is considered one of the described as “applying project management biggest competitive advantages. The practice and its tools in the enterprise”. application of modern organizational forms, As a potential source of these organizational as well as contemporary software tools has forms, fast increasing software industry is identified drastically reduced the time of developing that has developed the long practice in developing new products, and the consequence is a big software application programs, decomposing drastic reduction of product living cycle. Similar to this, the possibility of broadening them into the series of comparative small software modality has been created in many fields, in

Dušan Bobera

essence the same product; thus, it suits to recent and professional attitudes, to represent three the consumer’s wishes even more. basic forms of the organization for project . Development of new products or services, management, with their description, characteristics, almost always requires the application of advantages and disadvantages, as well as to try to knowledge from different and specialized identify cases where some of them can be seen. fields of knowledge. Unfortunately, Models planned to be elaborated are:

combination is specific for every field. It 1. Functional type of organization where the means that there is a need of creating ad hoc project is part of the functional organization teams composed of experts needed for that of the enterprise; case and which will be disbanded when the 2. Pure project organization, and work is finished. 3. Combined or matrix systems. . Another characteristic of the contemporary business environment is a strong development and expansion of technological 1. Functional type of the project possibilities, causing, as one of the management organization

consequences, destabilization of the This type, as one of the possible forms of realizing organizational structure. This is a tendency a project in the organization, represents the in different economic and non-economic possibility of its realizing in one, existing, fields; we consider it unnecessary to list, functional part of the enterprise. because it is an obvious fact in all the sectors, for example, from banking to Figure1 Functional type of the project management ferrous metallurgy. This is especially present organization in developed market economies in Western countries, but we consider that this General manager orientation of changes will be generated in our economy by different processes in the Engenering Product Marketing future which has already begun by the manager manager manager process of privatization. The process of uniting, some of the enterprise’s parts, Electrical Plant Promotion becomes independent, reducing engenering managers management levels, and similar serious

disturbances of the current practice will Mechanical Quality Sales require the broad system of answers. engenering control . Transfer of non-routine activities of the

enterprises, conditioned by market and Materials Inventory Market engenering mngmt. research technological changes (with a view of using chances and evading danger) in projects, enables forcing the obligations to perform Advantages of this model of realization can be, activities as unavoidability of project generally speaking, found in the fact that, in this planning, their integration with all the case, functional dimensions of the existing necessary and related activities and enabling organization are used. The major advantages of this constant reporting about the progress of model can be grouped in the following way: realization of these activities. . There is a maximal flexibility in using the Transfer of a non-profit ambient into that where staff. In case that the correct functional projects are used for realizing specific tasks, i.e. to department of the organization is selected the complete project-oriented organization for realizing the project, the department will represents for top management an extremely have the primary and administrative base for complex transition which should be realized. There individuals with technical knowledge in the are many reasons for such a statement. fields relevant for the project. They can be This process takes time. Even in case when all temporary engaged in cases when their the necessary resources are collected and when contribution is necessary and then they can there is complete readiness of management for be returned to perform their regular such a change, it is still difficult. activities; Further, we shall try, in accordance with the

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. Some experts can be engaged in many some part of the project, but some other different projects. With the broad basis of person is authorized for other parts. This is the technical staff available to the functional obvious lack of coordination which is very department, if it is the case, the people can important in realization; be easily moved from one project to the . The same reasons bring to the lacks of other one. coordinated efforts which can have . Experts in the department can be grouped tendencies to reduce the responsibilities for to exchange knowledge and experiences they the client’s needs because there are several possess. Thus, the project team has the management levels between the project and access to any technical knowledge existing in the client; that functional group. Further, it can be the . There is also a tendency of suboptimal big resource of synergic solution for solving execution of the project that some people some technical problems; working in the department where the project . Functional departments also serve as a basis is realized very carefully and efficiently, are of technological continuity when some interested in realizing some segments of the experts decide to quit the project team, and project and so neglecting and even ignoring, the enterprise, too. It is equally important, more or less, the other ones; both in technological continuity and in the . Motivation of the people working in the continuity of procedural, administrative and project has a tendency to grow weaker other policies which will result when the because the project is not paying appropriate project continues in that department of the attention and some team members can home enterprise. understand assigning their activities in the . The last, but not the least important is that project as going astray from their basic the functional department possesses the activities; organized way of advancing individuals as . This organized approach does not enable experts in their functional fields. The project the holistic approach to the project. can be an opportunity for promotion all Complex projects, technically considered those who took part in its successful work, (development of complex and sophisticated but the functional department is their home products, and similar) cannot be qualitatively base and the focus of their professional designed by this method. Mutual inter advancement. departmental communication and necessary knowledge exchange is insufficient. It is normal that so described way of project carrying out, besides all cited advantages, has also its disadvantages which can be grouped as follows: 2. Pure project management organization . The essential shortage of this way for project carrying out is that the client in not in the The pure project organization is at the other end of center of activities and attention. The the spectrum of organizational possibilities for functional department, namely, has its own project management. The essential characteristic of major work which, the most often, has an this approach is that the project is separated from advantage over the wok within the the home organization. It becomes an independent framework of the project, therefore, the segment with its special technical staff, its own client’s interests are pushed into the administration, connected with the home background; . Functional departments have the tendency organization by wakened links which are of orientation to specific activities associated manifested in the periodical reports on the project with their activities. This not an unimportant advancement and some exceeding. When we talk problem in order to realize the project about the way of work performance, there are successfully; different solutions in business practice. Some home . Sometimes, in projects carried out by this organizations issue rules of administrative, form, neither individual is completely financial, staff and control procedures in detail. responsible for the project. The lack of this Contrary to this, some home organizations give the precision usually means that the project project an absolute freedom. The previously cited manager is authorized and responsible for points to the fact that there is a wide spectrum of

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possible organizational varieties between these two important because, in case these groups extreme modalities; the choice depends on many exist, it can be a good reference for the factors. Figure 29 is a graphical illustration of the organization and it will attract consumers; model of a pure project organization for project . The project team, having a strong and its management. own identity, has a tendency of developing the high level of communications and the The pure project organization has its exchange of knowledge and experience advantages and disadvantages, identically as the among its members; functional model of project management . organization. As the authority is centralized, the possibility The advantages of this approach to project of fast decision-making is increased. In this management can be classified as follows: way, the organization is enabled to react fast on the demands of clients or top . The is fully responsible and management; authorized for the project. Although he has . The rule of the united management is to report of the home respected. The value of particular organization about the advancement of organizational principles cannot be project realization, the complete labor is exaggerated, and the quality of allocated to the project. subordination is doubtlessly bigger when this subordination is done by one person; General manager . The pure project organization is structurally simple and flexible; it enables its relatively

Program Product Marketing R&D simple application and understanding; manager manager manager manager . This type of the organizational structure has a tendency to support the holistic approach e s

to the project. The tendency of focusing and n t r c h & t i n g t i o n s o u r c n c e p m e e

Project “A” c

e optimization of project segments, relating to a a l o manager e e n r a r k r o u v F i n a e s P M

R the whole project, can often result in D e H u m technical errors in the project.

As any model used for carrying jobs, generally s e t

c n speaking, so this form of project management has h & m e c t i n g t i o n s o u r r Project “B” n c e a l o p e manager r k e its advantages and disadvantages. We have e a r o u c v F i n a a n r e e s P M R D e previously pointed to the very important H u m advantages of the project organization. Similarly,

Figure 2 Pure project management organization this form has very serious weaknesses. In addition, we shall point to the disadvantages of this . organizational form of project management: The complete labor, engaged in the project is directly responsible to the project . If the home organization has taken several manager. In this case, permits and advices of projects at the same time, it is logic to expect department bosses are not necessary. The that every of them (if the same organization only director in this model is the project model) be completely equipped and supplied manager; by all resources. This may double or tripled, . In case of realizing complex projects, when as a consequence, the efforts in every fields, some phases are moved from one to another from the office staff to the most functional department, communication lines sophisticated (and most expensive) units for are shortened because the whole functional technological support; structure is bypassed, and the project . In essence, the need to ensure the manager communicates directly with the top accessibility to technological knowledge management structure; results in the attempt of exaggerated . If several, similar projects are realized accumulation of equipments and successfully, the pure project organization technological supports with a view of can enable permanent, more or less expert ensuring that they will be available in every staff which can develop necessary skills for moment when it is needed. Therefore, the some technologies. This can be very people with critical technical skills can be

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engaged in the project longer than it is organization can be considered as the combination necessary. Similarly, there may be a tendency of these two forms so we can find in the that the project manager wishes to keep professional literature that it is about covering the them in the project longer than they should pure matrix organization over the functional be in order to protect them from possible departments in the home organization. bad events; The fact that it represents the combination of . Keeping the project out of the technical two extreme forms generates the existence of control of the functional department may different modalities and which will be have its advantages, but also serious differentiated if it is more similar to functional or disadvantages, especially in cases when it pure matrix ones. If the form of project belongs to the fields of “high technologies”. management organization is more similar to the The functional departments are still the base pure project organization of project management, of technological knowledge and it is not so then we talk about the “strong matrix simple to determine that only some of them organization”. If contrary to this case, then we talk can be part of the pure project team; about the “coordinating”, “functional”, or weak . In the pure project organization, we have matrix organization more similar to the functional already cited, during defining one of the one. As there is the middle in every dilemma, there characteristics f the project, the project has is the so-called “balanced” matrix organization its own independent life span or cycle, with being between these two. In the project practice of the beginning and the end. The team case studies in this field, there is unlimited number members are strongly associated with the of varieties of organizational forms, between these project and among themselves. The increase extremes, and the primary difference between these of division “we – they” deforms the forms is determined by the level at which the relationships between the team members power of decision-making is, i.e. it is concentrated and the other team members and the in the project or functional manager. relations in the home organization. Rivalry Methodologically considered, it is easier to among friends can become keen or hostile explain the “strong matrix organization”. Instead competition; of standing aside in relation to the home . At the end, but is not the least important. At organization, as in case of the pure matrix one, it is the beginning, we have pointed that the not separated. This form of the organization is project has the life span with the beginning illustrated in Figure 3. and the end. Within this context, there is a question: what to do after the project? It is General Manager necessary to emphasize great uncertainty of P

Engineering Operations Marketing Finacial Others r the team members’ future after finishing the o j e c t

project, their further engagement, R PM1 1,5 1,5 1,5 4 e s

equipments, and so on. p o n

PM2 4 1,5 0,5 2 s

i b i l i t y 3. The matrix form of project PM3 0,5 3 0,5 1 management organization Functional Responsibility From the above-cited, it is obvious that considered forms have their serious advantages, each of them Figure 3 Matrix organization for project management separately, which qualify them as acceptable, but there are also serious disadvantages. Trying to The matrix organization is balanced between collect advantages of the pure project organization these extremes which is nothing else but the with determined and desired characteristics, as well balance of the cited approaches where there are to avoid disadvantages of any of them, a matrix many different mixtures of project and functional organization for project management has been responsibilities. So, for example, in cases when developed. In essence, careful consideration of all projects require the group work, before all, it is the cited, as well as all that is appearing in practice, usual to prefer the group work to their transfer in draws a conclusion that the previous two forms, projects. functional and matrix, represent the extremes on As for the previous models, the matrix the spectrum of varieties of possible forms for approach also identifies some advantages and organizing project management. Thus, the matrix disadvantages.

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Advantages can be classified as follows: manifested in the conflict of two diametrically supposed principles. . The project is paid the central attention, as with the pure matrix organization. The . In the functional approach of organizing the individual, i.e. the project manager, takes project, all the power for decision-making is over the full responsibility for project doubtlessly concentrated in the functional management, its realization as planned, department while in the project approach, it within the framework of in advance defined is with the manager. This power, which can budget, specifications and quality; be very important in relation to the project . The fact that the project organization destiny, is very balanced in the matrix includes functional departments, temporary approach. If there is any doubt about the taking over workers and their skills from responsibility, the project suffers. If there is these departments, draws the logical uncertainty about the positive result of the conclusion that this enables the use of all project, the struggle for the prestige resources from all functional departments. according to the question “who is This is especially important when many responsible for praise and glory” can projects are carried out at the same time and increase; experts for all departments are available to . We have already cited that one of the all projects; it drastically reduces the multiple advantages of this approach is manifested in resource use, as with the pure project the possibility to carry out several projects organization; simultaneously and control time, costs and . Here, the team members are not so much performance quality. This possibility, afraid for their destiny after finishing the however, has its shortages. The set of project, even in case of their strong projects must be considered on the whole association with the project because they are although it is very difficult. In addition, the personnel of the home department; transferring resources from project to . The answer to the client’s needs is equally project with the need to satisfy different fast as with the project approach, but the term plans of every project can specially matrix is more flexible because it is included increase conflicts between project managers. into the organization which already The consequence of this cannot be optimal functions and it has to adapt to these needs; performance of objectives of the . With this type of organization, management organization; will have the possibility to use the existing . Similar to the existing problems relating to administrative staff. The result of this is the the end of the projecting, they are present in consistency with policies, procedures and the project organization and they cannot be practice of the existing enterprise which will simply evaded because it is the work with be saved. the beginning and the end. . In case of simultaneous realization of several . The project management controls projects, the matrix organization enables administrative decisions in matrix organized better resource use, from the aspect of the project realization; technical decisions are company on the whole. This, holistic, controlled by the responsible manager in the approach of considering the enterprise, as an functional department. This distinction entirety, enables the supply of needed explained in the handbook in this way resources for the period which enable the sounds logical and understandable, but it can optimization of using resources of the whole be very delicate in the concrete project company. management of job distribution and . Contrary to the pure project organization authority in decision-making and division of representing the extreme in the spectrum of responsibilities. The capability of the project possible varieties, the matrix organization manager to negotiate about all resources for tries to include the wide field of these technical support and their delivery on time extreme approaches. can be of the key importance for the whole work; These cited advantages of the matrix approach . This management model directly violates sound very strongly, but disadvantages, which will one of the principles of the management- list, are also very serious and they are mostly unity command. The staff involved in the

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project has at least two managers, their . Define the project with defining the functional, as well as permanent, and the objectives which will determine the final project manager, whose function stops when project evaluation; the project ends, but its realization is in . Define the key tasks associated with every progress and he is the key manager. This objective and define organizational units of represents a very serious problem. the home organization which can serve as places for task performing; 4. Conclusion . Group the key tasks with every objective and define jobs in detail; After all the previously cited, we can put the . Determine organizational units responsible question what model to choose. In other words, for performing these jobs and units for the question is how we should establish connection mutual cooperation; between the enterprise and its business which . Make a list of specific characteristics or exists in a definite time having the characteristic of evaluations associated with the project, as, continuity, on the one side, and the project having for example, the level of needed technology, the characteristic that it is unique and temporary. possible length of lasting and project scope, In any case, it is necessary to consider the nature of all possible problems with possible the potential project, characteristics of different individuals who can be included in the projects, advantages and disadvantages of every project, previous experiences of the organizational form, different preferences in the organization in realizing projects, and so on; culture of the home organization, as well as to Select the model based on the above-cited, reach the best possible compromise. taking into consideration all the factors pro and It is generally considered that the functional contra. model would be the best choice for projects where the major focus is oriented on the qualitative technology application, not on cost minimization, References Burke, R. (1998). Project Management Planning and Control. New Jersey: making determined plans or fast response to Wiley. changes. Burke, R. (2000). Project Management Planning and Control Techniques. If the enterprise is engaged in realizing many New Jersey: Wiley. and similar plans, the pure project form can be Charvat, J. (2003). Project Management Methodologies: Selecting, preferred. The similar thing can be suggested in Implementing, and Supporting Methodologies and Processes for Projects. New Jersey: Wiley. case when the enterprise is faced with one, very Cleland, D. I. (1999). Project Management, Strategic Design and specific, unique task (project definition, in essence) Implementation. New York: McGraw-Hill. which is not appropriate for realizing in none of Field, M., & Keller, L. (1998). Project Management. London: International existing departments of the enterprise, i.e. new Thomson Business Press. product development. Graham, R., & Englund, R. (2003). Creating an Environment for Successful Projects: The Quest to Manage Project Management. New Jersey: Wiley. However, when the product requires the integration of inputs from different functional Grundy, T., & Brown, L. (2001). Strategic Project Management: Creating Organizational Breakthrough. London: Thomson Learning. fields and which understands sophisticated Kerzner, H. (2003). Advanced Project Management: Best Practices on technology where experts should not be engaged Implementation (2nd ed.). New Jersey: Wiley. the whole project time, the matrix structure could Maylor, H. (2003). Project Management. Esex: Prentice Hall. be recommended. Meredith, J., & Mantel, S. (2002). Project Management a Managerial Disregarding the above-cited, it is considered Approach. New York: John Wiley & Sons. that selecting the model for realizing the project should pass the following procedure:

Dušan Bobera, Ph.D.

University of Novi Sad, Faculty of Economics Subotica Segedinski put 9-11 24 000 Subotica Serbia

Email: [email protected]

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