Project life cycles and
organizational structures
Typical management functions
 
 
 
 
 
Planning
Organising
Staffing
Directing
Controlling
Project characteristics
specific goal/objectives
uniqueness
project life cycle
interdependency
conflicts
The triple constraints of a project
Performance
Schedule
Budget
2
Project life cycle
(Reading – Meredith & Mantel Section 1.3)
  A
project is often one-off
  A project has a pre-determined duration
  From a slow beginning, projects progress to
a buildup of size, then peak, begin a decline,
and finally must come to termination
Slow – Rapid – Slow
3
Purpose
The project lifecycle provides project stakeholders
and project team with visibility, interface/
synchronization points, and decision points
throughout the project.
It enables management to have an overall view of
where the project is along the project timeline,
allowing go or no-go decisions to be made at
appropriate junctures.
4
Phases of different project life
cycles
 
Engineering
–  Startup
–  Definition
–  Main program
 
 
 
 
engineering analysis
conceptual design
prototyping & testing
final design
 
Manufacturing
–  Formation
–  Buildup
–  Production
–  Phase-out
–  Final audit
–  Commissioning /
Hand-over
–  Termination
5
Phases of different project life cycles
 
System development
–  Inception
–  Definition & Design
–  Implementation
 
 
 
 
programming
database development
testing
documentation
–  Commissioning &
hand-over
 
Construction
–  Planning
–  Design & engineering
–  Site preparation &
construction
–  Phase-out
–  Commissioning &
hand-over
6
Phases of different project life cycles
  R
& D Project
–  Conceptual & feasibility study phase
–  Definition & proposal phase
–  Main program
  planning
& organising
  design & engineering
  prototyping & testing
  hand-over or production
–  Post accomplishment
  appraisal
  follow-on
projects
7
BHRA* Project Life Cycle phases
  BHRA*
 
project life cycle
BHRA PLC
* British Hydromechanics Research Association
8
More varieties of PLC today   Phase/waterfall
  Iterative/spiral
  Incremental/prototyping
  Concurrent/agile
9
S-curve of Project Life Cycle
10
An Alternate Project Life Cycle
Remember the “mind” projects?
11
Time Distribution of Project Effort
Resource consumption versus time
12
Risk During at the Start of the Life Cycle
13
Risk During the Life Cycle
14
Project organizational structures
(Reading – Meredith & Mantel Chapter 4 – Organizing Projects)
15
Organisational structures
16
Authority, responsibility &
accountability
authority - power granted to individuals so that they
can make decisions for others to follow
Ø  responsibility - obligation incurred by individuals in
their role or position in the formal organisation with
regard to the performance of certain assignments
Ø  accountability - state of being totally answerable
for the satisfactory completion of a specific
assignment
Q. Differentiate authority, responsibility and accountability
in the context of functional management and project
management?
Ø 
17
Functional organisational structure -
Gaps, Gaps, Gaps
Top management
Strategy & policy
Middle management
Planning, directing & organising
Supervisors
Operators
Scheduling, monitoring
& co-ordinating
Operations
18
Project Growth
Ø 
Ø 
Ø 
Ø 
Need for speed, market responsiveness, and
product flexibility
Need for broader areas of knowledge in
developing new products and services
Rapid expansion of technology
Management inability to understand and control
large numbers of activities
19
Averaged Annual US Salary
January 2013
http://www.indeed.com/
v  Project
manager in USA – US$85000
v  Accounting – US$56,000; Lawyers – US$58,000; Social
work – US$40,000; Doctors – US$78,000;
v  Engineering – US$79,000; Quality engineer – US$84,000
v  Business manager – US$64,000; Marketing manager –
US$63,000; Production manager – US$69,000; Quality
manager – US$66,000
v  Civil servants - $58,000
v  Investment banker - US$102,000; Stock broker – US
$101,000
20
Switching to Project
Environment
Ø  Is
difficult and time consuming
Ø  Requires the full commitment of upper
management
Ø  Generally causes a lot of “concern” among
employees
Ø  As a result, organizations may have
multiple structures
21
Organizational Issues Related to Projects
Ø 
Ø 
Ø 
How to tie project to parent firm
How to organize the project
How to organize activities common to
multiple projects
22
Project organisational structures
Ø  Traditional
Functional organisation
Ø  Functional Matrix (weak matrix)
Ø  Balanced Matrix
Ø  Project Matrix (strong matrix)
Ø  Project Team
 
(classification by Larson & Gobeli)
23
Functional organizational structure
MD
marketing & sales
manufacturing
materials production
product development
engineering
accounting
electronics mechanical
Organization is divided into functional sub-units
§ Integration between sub-units handled by rules, procedures
§ Management chain handles problems
§ Works well in stable environment
24
Departmental projects
MD
marketing & sales
manufacturing
product development
Project Leader(s)
materials
engineering
accounting
Project Leader(s)
production
electronics
mechanical
25
Project liaison office
MD
Project Liaison Office
marketing & sales
manufacturing
materials production
product development
engineering
accounting
electronics mechanical
26
Special task force
MD
Task Force Leader
marketing & sales
manufacturing
materials
production
product development
engineering
accounting
electronics mechanical
27
Advantages
Ø 
Flexible use of staff
–  Experts assigned to functional units
–  Assigned to projects as needed
Ø 
Staff can easily be assigned to multiple projects
–  Experts can be switched between projects easily
–  Functional manager picks best expert for each project
28
Advantages
Ø  Specialists
Continued
can share knowledge and
experience
Ø  Functional units provide technological/
knowledge continuity
–  Also provide continuity of policies and
procedures
–  Functional manager can train and inspect
29
Advantages
Continued
Ø  Functional
areas provide for a career path
within a knowledge area
§  Engineers can become supervisors or VP’s
§  Does not require movement into project
management to advance
30
Disadvantages
Ø 
Client is not the focus
–  Function unit has its own work outside the project
–  Functional manager not likely to be accountable for
project and therefore client
Ø 
Functional units not focused on project
–  Function unit sees success in its area as most important
–  Project seen as secondary, or worse, an interruption
31
Disadvantages
Ø 
Continued
Project manager may not have adequate authority
–  Must share authority with functional managers
–  May be several managers responsible for various parts
of project
–  Client may not have a single point of contact at project
–  This can make response to the client slow or nonexistent
32
Disadvantages
Ø 
Continued
Slow response
–  Functional managers manage their part to benefit their
functional unit
–  Interests outside their area may not be fully considered
Ø 
Tendency to sub optimize
–  Complex projects require input from a large number of
different areas
–  This can be difficult to coordinate without a common
manager
33
Disadvantages
Ø  Motivation
Continued
is weak
–  Project is not the worker’s “home”
–  Project manager most likely does not do their
performance evaluations
–  May not receive additional pay for difficulties
of working on project
34
Pure project team structure
Ø  staff
are organised into project teams
Ø  functional units are established mainly to
support or serve projects
Ø  project managers have independence and
authority in the use of resources
Ø  common in companies whose businesses are
mainly conducted through projects
35
Pure project team structure
MD
project A
design A
accounting
marketing
engineering A production A
design B
project B
engineering B production B
36
Pure Project Organization
Figur
37
Advantages
Ø 
Project manager has full authority
Ø  Will typically report to senior management
(project sponsor)
Ø  This gives project manager access to
managerial advice
Ø  This centralizes authority and makes for rapid
decision making / response to client
38
Advantages
Ø 
Continued
Everyone reports to the project manager
Ø  This gives the project manager the ability to make
quick decisions
Ø  Makes it easier for project manager to motivate and
reward members
Ø  May be tempered by relationship to functional unit
Ø 
Shorter communications lines
39
Advantages
Ø 
Continued
Can maintain project management skills
–  Project managers can move from project to project
–  It pays to hire, train, and promote skilled project
managers
Ø 
Project team has its own identity
–  Project members work for the “project” not the
functional unit
–  This can significantly improve performance
40
Advantages
Ø  Quick
Continued
decisions
–  Authority is centralized
Ø  Unity
of command
–  Each worker reports to one, and-only-one,
manager
–  Project has a simple structure
41
Advantages
Ø  Structurally
Continued
simple and flexible
–  Easy to implement
Ø  Holistic
approach
–  Everyone on project is concerned about project,
not their functional unit
42
Disadvantages
Ø 
Duplicate staffing
–  Each project has a full staff
–  This leads to overstaffing
Ø 
Stockpiling
–  Project managers tend to stockpile resources so they are
available when needed
–  They also tend to keep those resources longer than
needed just-in-case
43
Disadvantages
Ø  Experts
Continued
falling behind in other areas
–  Experts on a project will focus on the areas
essential to the project
–  This can lead to them falling behind in other
areas
–  It can also be difficult to feed their developing
expertise back into the organization
44
Disadvantages
Ø  Organizational
Continued
inconsistency
–  Corner-cutting
–  “They don’t understand our problems”
Ø  Life
of its own
–  Projectitis
–  Us versus Them
45
Disadvantages
Ø  Life
Continued
after the project ends
–  Lots of uncertainty
–  Will there be layoffs
–  Rusty skills
46
Matrix structure
Ø  a
compromise between the functional
structure & the costly project structure
Ø  organisation retains a clear functional
structure and functional staff are assigned to
projects when needed
Ø  project manager has delegated authority
over the matrix team members
Ø  matrix team is project oriented
47
The Matrix Organization
Continued
Functional part provides home for workers after
project
Ø  Functional part helps maintain expertise
Ø  In a strong matrix, people from functional areas
are assigned to project
Ø  In a weak matrix, capacity from functional areas
are assigned to project
Ø 
48
Matrix structure
MD
project director
marketing & sales
projects office
manufacturing
materials
product development
production
engineering
electronics
accounting
mechanical
project A
project responsibility
project B
project C
functional responsibility
49
Advantages
Ø 
The project is the focus
Ø  That remains the project manager’s
responsibility
Ø 
The project has access to entire
organization for labor and technology
Ø  Projects draw from functional organizations
as required
Ø  This reduces duplication of resources
50
Advantages
Ø 
Continued
Less anxiety about the end of the project
Ø  Project members return to their functional
organizations
Ø 
Response to client is rapid
Ø  That remains the project manager’s responsibility
Ø  With much remaining within parent organization,
response to parent is also rapid
51
Advantages
Ø 
Continued
Consistent policies
Ø  Parent organization will oversee project
Ø  Project will have closer access to parent
administration
Ø 
Easier to balance organizational resources
Ø  Less competition for resources
Ø  Competition can be controlled by parent organization
and functional managers
52
Advantages
Ø 
Continued
Flexibility
Ø  Many different possible structures between
strong and weak
Ø  Different structures can be used for different
projects
Ø  Different structures can be used for different
functional areas
53
Disadvantages
Ø 
Functional units make many decisions,
including technology ones
Ø  Project manager has less control than in a
pure project
Ø  Project manager’s control is balanced against
that of the functional manager
Ø  If they disagree, it can be hard to resolve
Ø  Negotiation is the key to project success
54
Disadvantages
Ø 
Continued
Projects compete for resources
Ø  This is especially true when there are several
large projects
Ø  Someone above project managers must set
and enforce priorities
Ø  Multiple schedules will add stress to
functional managers
55
Disadvantages
Ø 
Continued
Strong matrices mirror many disadvantages of
project structure
Ø  People are assigned to, and identify with, “their”
project much as in the project structure
Ø 
Workers do not have a single manager
Ø  This splits loyalty
Ø  Makes performance appraisal difficult
Ø  Information flow is difficult
56
Mixed Project Organization
57
Virtual Projects
  Project
team crosses time, space,
organizational, or cultural boundaries
  Facilitated by the Internet
  Often organized as a matrix
Worth considering - A timely topic for term
paper
58
Virtual Project Rules
 
 
 
 
 
 
Challenging and interesting projects
Use volunteers
Use people who know each other
Create a resource to learn about one
another
Encourage frequent communications
Divide work into modules
59
Choosing an Organizational
Form
  Firms
typically do not set out to “pick” an
organizational form
  Rather, the structure evolves over time
  The structure is not static
  Rather, it changes as the organization, its
goals, and its environment changes
60
Functional Form Best for…
  In-depth
application of a technology
  Large capital investment, especially when
that investment is concentrated in one
functional area
61
Project Form Best for…
  Handling
a large number of similar projects
  Handling a one-time project that requires
much control but is not focused on one
functional area
62
Matrix Form Best for…
  Projects
that require inputs from several
functional areas
  Projects that use technology from several
functional areas
63
Project Management Structures
in HK Industries (92-96)
Industries
Organisational
Structures
Functional
Matrix
Project Team
Total :
Public Manufacturing
Utilities
3
5
28
10
5
5
36
20
Government
Agencies
6
8
0
Engineering
Services
5
5
4
Total
14
14
84
21
54
9
Organisational S tructures
Success
Partial success
Failure
Total
F unctional
Weak M atrix
Strong M atrix
Project Team
8(53%)
15(52%)
19(79%)
8(67%)
2(13%)
7(24%)
3(13%)
2(17%)
5(33%)
7(24%)
2(8%)
2(17%)
15
29
24
12
64
Failure to benefit from adopted
project structure
Ø  no
real need for formal project structure
Ø  the role & responsibility, performance & reward
of staff assigned to projects are not clearly
defined or understood
Ø  neither staff nor management are properly
prepared - misunderstanding & conflict in
authority/responsibility, resource allocation
Ø  staff or management are not fully supportive of or
committed to the change
65
Helpful ground rules
Ø  key
members should be full-time on the project
Ø  management must be committed
Ø  must have effective means for resolving conflict
Ø  there must be good communication & access
between managers
Ø  all should have a say during the planning process
Ø  project manager’s project authority must be
respected
66
Factors affecting the choice of
project organisational structure
 
 
 
 
 
 
Project and organisational
size
Organisational culture
Project duration
Project management
experience
Commitment of upper
level management in
project management
Available resources
 
 
 
 
 
 
Unique aspects of the
project
Diversity of product lines
or projects
Rate of change of product
lines or projects
Interdependencies among
supporting units
Level of technology
Rate of change of
technology
67
organisational design considerations
(Carlise, Management: Concepts, Methods & Appl, Sc Res Asso., 82)
Technology
Stable
Dynamic
Sales
Stable
Unstable
Product innovation Infrequent
Frequent
Competition
Unchanged
Changing
Regulatory control
Known
Evolving
Society values
Stable
Changing
ORGANISATIONAL
MECHANISTIC,
ORGANIC,
FORMS
STABLE
FLEXIBLE
68
Incident for discussion
Assuming that you are the Engineering Manager newly appointed to head
the Engineering Department in a well established, mid-sized home
appliance OEM/ODM company. Your department handles all the product
development projects of your company in collaboration with your OEM/
ODM clients. About 70% of the products generally involve minor
modification of existing product lines and the rest are new product
development.
The Engineering Department currently has a traditional functional
structure. The “modification” product development projects are often
reasonably well handled but new product development projects always
tend to have teething problems. With increasing competition and
shortening of product life cycles, there is an urgent need for increasing
new product developments. It is seen that the company’s future
profitability will depend very much on its new product development
capability.
You have been asked by your Production Director to report how you
intend to re-structure your Engineering Department to improve its ability
to handle future product development projects.
69
Questions for discussion
Choose a company and find out what is its
organisational structure?
  What project organisational structure(s) has this
company normally adopted for its projects ?
  Choose one project and find out what is the level
of authority and responsibility of the project
manager or leader?
 
70
Questions for discussion (contd.)
If you are advising this company, what will you
recommend to the company about its project
organisational structure? In your discussion, consider
whether
the projects are normally complex, non repetitive?
  there are several functional boundaries to be crossed in project
works?
  there are dynamic environmental considerations?
  there are tight constraints of schedules and budgets?
  there is need for close co-ordination and integration of project tasks
or activities?
 
71
Short case discussion – Hydrobuck
Hydrobuck case incident
72
HYDROBUCK is a medium-sized producer of gasoline-powered outboard
motors. In the past it has successfully manufactured and marketed motors in
the 3 to 40 horsepower range. Executives at Hydrobuck are now interested in
larger motors and would eventually like to produce motors in the 50 to 150
horsepower range.
The internal workings of the large motors are quite similar to those of the
smaller motors. However, large, high-performance outboard motors require
power trim. Power trim is a hydraulic system that serves to tilt the outboard
motor up or down on the boat transom. Hydrobuck cannot successfully market
the larger outboard motors without designing a power trim system to
complement the motor. The company is financially secure and is the leading
producer of small outboard motors.
Management has decided that the
following objectives need to be met within the next two years:
•  Design a quality power trim system.
•  Design and build the equipment to produce such a system efficiently.
•  Develop the operations needed to install the system on the outboard motor.
The technology, facilities and marketing skills necessary to produce and sell the
large motors already exist within the company.
Question: What type of project organization would suit the development of
73
the power trim system?