Chapter 4: Organizational Structure and Project Management

Learning Objectives

  • Discuss the impact of organizational structure on project management.
  • Define authority, reliability, responsibility and accountability in projects.
  • Assess the importance of aligning project objectives with organizational strategy.
  • Examine the role and function of Project Management Office.

Organizational structure

Organizational structure refers to how various task are divided, resources are deployed and how units/departments are coordinated in an organization. An organizational structure includes a set of formal tasks assigned to individual and departments, formal reporting relationship, and a design to ensure effective coordination of employees across departments/units with the help of authority, reliability, responsibility and accountability, which are fundamental to developing organizational structures and workflow based on their clear understanding by all employees. In discussing organizational structure the following principles are important:

Authority – Is the right to make decisions, issue orders and allocate resources to achieve desired outcomes. This power is granted to individuals (possibly by the position) so that they can make full decisions

Reliability – Is the degree to which the project team member can be dependent on to ensure the success of the project with a sound and consistent effort.

Responsibility – This is an obligation incurred by individuals in their roles in the formal organization effectively perform assignments or to work on the success of the project with or without guidance or authorization.

Accountability – The extent to which an individual or project team is answerable to the project stakeholders and provides visible evidence of action.

(Accountability = authority + responsibility.)

Authority and responsibility can be delegated to lower levels in the organization, whereas accountability usually rest with the individual. Yet many executives refuses to delegate and argue that an individual can have total accountability just through responsibility.

Building an organizational structure engages managers in two activities: job specialization (dividing tasks into jobs) and departmentalization (grouping jobs into units). An organizational structure outlines the various roles within an organizational, which positions report to which, and how an organization will departmentalize its work. Take note than an organizational structure is an arrangement of positions that’s most appropriate for your company at a specific point in time. Given the rapidly changing environment in which organizations operate, a structure that works today might be outdated tomorrow. That’s why we hear so often about organizations restructuring—altering existing organizational structures to become more competitive/efficient once conditions have changed.

Traditional groupings of jobs result in different organizational structures, and these impact project management because of possible conflicts in authority, responsibility and accountability. Some examples of organizational structures are:

  • Centralized
  • Functional
  • Matrix

Understanding organizational structures- and how projects fit within them gives project managers insights into managing projects more effectively and efficiently.

Levels of Management: How Managers Are Organized

A typical organization has several layers of management. Think of these layers as forming a pyramid like the one in Figure 4.1, with top managers occupying the narrow space at the peak, first-line managers the broad base, and middle-managers the levels in between. As you move up the pyramid, management positions get more demanding, but they carry more authority and responsibility (along with more power, prestige, and pay). Top managers spend most of their time in planning and decision making, while first-line managers focus on day-to-day operations. For obvious reasons, there are far more people with positions at the base of the pyramid than there are at the other two levels.

Figure 4.1: Levels of Management

How is a typical law enforcement or public safety agency structured? Is this consistent with the above model of Levels of Management?

Determining How Important a Project is to an Organization

The importance an organization places on a project directly influences the chances for the project success. For example when conflicting demands for scarce resources arise, resources are usually given to the projects that the organization feels will provide the greatest benefit. To determine the importance of projects to the larger organization:

  • Investigate how the project relates to the organization’s top priorities. The following four organizational documents can help confirm that the project’s identified needs and objectives are appropriate:
  • Strategic plan (Determines organizational strategy – vision, mission & goals)
  • Annual budget
  • Capital appropriations plan
  • Managers’ annual performance objectives (Management by Objectives).
  • Examine the organization’s relationship with outside clients/stakeholders.
  • Seek information from all possible sources.
Figure 4.2: Projects and Organization Structure

Project Strategy

The project strategy is the general approach project managers’ plan to perform the work necessary to achieve a project’s outcome. A strategy isn’t a detail list of activities to be performed which is derived from a Work Breakdown Structure (WBS).

Defining Project Roles

Various individuals and groups are involved in a single project. The following people typically play a critical role in a project success- project manager, functional manager, project team members and upper management. We will discuss their roles in the next chapter.

The Project Management Office

Many large and even medium-sized organizations have created a department to oversee and support projects throughout the organization. This is an attempt to reduce the high numbers of failed projects (see the Project Management Overview chapter.) These offices are usually called the project management office or PMO.

The PMO may be the home of all the project managers in an organization, or it may simply be a resource for all project managers, who report to their line areas.

Typical objectives of a PMO are:

  • Help ensure that projects are aligned with organizational objectives
  • Provide templates and procedures for use by project managers
  • Provide training and mentorship
  • Provide facilitation
  • Stay abreast of the latest trends in project management
  • Serve as a repository for project reports and lessons learned

The existence and role of PMOs tends to be somewhat fluid. If a PMO is created, and greater success is not experienced in organizational projects, the PMO is at risk of being disbanded as a cost-saving measure. If an organization in which you are a project manager or a project team member has a PMO, try to make good use of the resources available. If you are employed as a resource person in a PMO, remember that your role is not to get in the way and create red tape, but to enable and enhance the success of project managers and projects within the organization.

Key Takeaways

  • Organizational structure refers to how various task are divided, resources are deployed and how units or departments are coordinated in an organization
  • authority, reliability, responsibility and accountability, which are fundamental to developing organizational structures and workflow
  • The organization strategic plan is one document that can be used to determine the importance of projects to the larger organization.
  • The PMO may be the home of all the project managers in an organization, or it may simply be a resource for all project managers, who report to their line areas.


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