Chapter 3: Organizational Frameworks

Aim: To Explain Organizational and Environmental Factors that might affect Projects

In almost all practical cases, a project usually exists within a larger organization. Some group or organization creates each project, and the project team must operate within the larger organization’s environment. Simply put, no project exists in a vacuum. Every process within every project is affected to some degree by organizational culture and practices.

Working with Organizational Politics and Influences

In many cases, the extent to which the initiating organization derives revenue from projects affects how projects are regarded. In an organization where the primary stream of revenue comes from various projects, the project manager generally enjoys more authority and access to resources. On the other hand, organizations that create projects only due to outside demands (like regulatory or legal requirements) will likely make it more difficult for the project manager to acquire resources. If a particular resource is needed to perform both operational and project work, many functional managers will resist requests to assign that particular resource to the project.

Another factor that influences how projects operate with respect to sponsoring organizations is the level of sponsorship from the project’s origin. A project that has a sponsor who is at the director level typically encounters far less resistance than one with a sponsor who is a functional manager. The reason for this is simple: Many managers tend to protect their own resources and are not willing to share them without sufficient motivation (In most cases, orders from upstairs). The more authority a project sponsor possesses, the easier time the project manager has when requesting resources for his/her project.

In addition to the above mentioned issues, the sponsoring organization’s maturity and project orientation can have a substantial effect on each project. More mature organizations tend to have more general management practices in place that allow projects to operate in a stable environment. Projects in less mature organizations might find that they must compete for resources and management attention due to fewer established policies. There can also be many issues related to the culture of an organization, such as values, beliefs, and expectations that can affect projects.

The last major factor that has a material impact on how projects exist within the larger organization is the management style of the organization itself. Since this is probably the biggest factor that might affect a project, we will look at it in a bit more detail.

Differentiating Functional, Matrix, and Projectized Organizational Structures

Each organization approaches the relationship between operations and projects differently. The PMBOK defines three main organizational structures that affect many aspects of a project. They are:
1. Functional Organizations
2. Matrix Organizations &
3. Projectized Organizations

Each of these 3 organizations differs from one another in the following aspects:
• The project manager’s authority
• Resource availability
• Control of the project budget
• The project manager and administrative staff roles

Functional Organizational Structure

A functional organization structure is a classical hierarchy in which each employee has a single superior. Employees are then organized by specialty, and work accomplished is generally specific to that specialty. Communication with other groups generally occurs by passing information requests up the hierarchy and over to the desired group or manager. Of all the organizational structures, this one tends to be the most difficult for the project manager. The project manager lacks the authority to assign resources and must acquire people and other resources from multiple functional managers. In many cases, the project’s priority is considered to be lower than operations for which the functional manager is directly responsible. In these organizations, it is common for the project manager to escalate to the senior management to resolve resource issues.

Advantage: The FM holds accountability for the project.
Disadvantage: The PM holds little or no authority.

Matrix Organizational Structure

A matrix organization is a blended organizational structure. Although a functional hierarchy is still in place, the project manager is recognized as a valuable position and is given more authority to manage the project and assign resources. Matrix organizations can be further divided into weak, balanced, and strong matrix organizations. The difference between the three is the level of authority given to the project manager (PM). A weak matrix gives more authority to the functional manager (FM), whereas the strong matrix gives more power to the PM. As the name suggests, the balanced matrix balances power between the FM and the PM.

Advantage: The PM and FM share the responsibility of the project
Disadvantage: The PM and FM can see each other as a threat and cause conflicts. In some cases, they may even be confused as to who manages what.

Projectized Organizational Structure

In a projectized organization, there is no defined hierarchy. Resources are brought together specifically for the purpose of a project. The necessary resources are acquired for the project, and the people assigned to the project work only for the PM for the duration of the project. At the end of each project, resources are either reassigned to another project or returned to a resource pool. Most IT companies work in such a Projectized Org Structure.

Advantage: The PM has full, or almost full, authority to staff and manage the project.
Disadvantage: The PM holds accountability for the project.

There are many subtle differences between each type of structure. You can visit the chapter on Organizational Structure to understand each of these better by Clicking Here.

Understanding Enterprise Environmental Factors

It is the responsibility of the project manager to understand the project environment. All projects operate within a specific environment or blend of environments. In addition to understanding the organizational structure, a project manager needs to understand the effects enterprise environmental factors may have on projects. The most obvious enterprise environmental factors for projects are
• Organizational culture and structure
• Human resources currently in the company
• Political climate in the country where the project is executed
• Government or industry standards and regulations
• Infrastructure facilities available
• Marketplace conditions
• Stakeholder risk tolerances

Organizational Process Assets

Two of the goals of project management are to make projects repeatable and to do a better job with each new project. To do this, organizations that are committed to effective project management develop shared, and often standardized, resources to help project managers do their jobs well. These resources are called organizational process assets and include formal and informal plans, policies, procedures and guidelines that might help the PM during the course of the project.

These assets could be as simple as a spreadsheet to a fully descriptive document that elaborates on various facts and processes. As these assets are put to use, they tend to be altered and refined. New documents often become necessary or useful as well. All lessons learned from previous projects should be examined to apply any necessary changes to the process assets. This continuous process of improvement encourages the base of assets to become a critical core of resources for any project. You will see organizational process assets mentioned in many of the project management processes. The assets can include many types of documents, including
• Organizational policies
• Operational guidelines
• Templates used to create many project process outputs
• Project closure procedures
• Communication requirements and procedures
• Change control procedures
• Financial control procedures
• Quality control procedures
• Project historical files
• Pertinent organizational knowledge bases

You can learn more about Enterprise Environmental Factors & Organizational Process Assets by Clicking Here

Exam Watch:
Organizational Process Assets are an input to many of the project management processes. Remember that this simply refers to any organization’s central repository of plans, policies, procedures, and guidelines that a project manager can use during his job of managing the project.

Prev: Chapter 2

Next: Chapter 4

PMP Exam Nuggets - Project Life Cycle and the Organization

Project Life Cycles

o Projects follow a logical sequence of phases to completion. Phases are typically different from project to project, since the project work will differ from one project to the next. The point of segmenting projects into phases is to allow for smaller, manageable sections and to provide deliverables in support of the ongoing operations.

o The collection of the project phases, as a whole, is known as the project life cycle.

o Project life cycles define the beginning, middle, and end of a project. Projects have a greater risk and uncertainty in the early phases of the project life cycle than near their end. The project is also most susceptible to change, failure, and stakeholder influences at the beginning of the life cycle than near its end.

o In tandem, project costs and demand for resources are generally low at the beginning of the project, have a tendency to peak near the end of the project work, and then diminish.

Meeting the Project Stakeholders

o Project stakeholders are individuals, businesses, or communities that have a vested interest in the project’s outcome. Typically, project stakeholders are involved in the project process, and their expectations drive the project requirements.

o It is essential to scan for hidden stakeholders early in the project life cycle to eliminate the need for change when addressing stakeholder needs later in the project.

o There are several key stakeholders that have direct influence over the project. They are:

• Project manager Manages the project
• Customer Pays for the project; uses the project deliverable
• Performing organization The organization hosting the project
• Project team The collection of individuals completing the project work
• Project management team The collection of individuals that contribute to the management of a project
• Project sponsor Authorizes the project work and budget
• Influencers People who can influence the project for better or worse
• PMO May have direct responsibility for the project’s success

Identifying Organizational Models and Attributes

o Organizational structures have direct influence over the project. Organizational structures determine the procedures that the project manager must follow and the amount of authority the project manager possesses. A project office may oversee project management activities and provide additional support in any of the organizational structures. The organizational types and the level of authority a project manager can expect are shown in the following table.


o Beyond the concept of getting the work done, project managers must also consider the social, economic, and environmental influences that may sway a project. Specifically, the project manager must evaluate the project to see its social, economic, and environmental impact—as well as note the project’s surroundings. The project manager may have some external guidance in these areas in the form of standards and regulations.

o Standards are guidelines that are generally followed but not enforced or mandated. Regulations come in the form of laws and industry demands, which are enforced by various governing bodies.

Defining Key General Management Skills

o Management is all about key results. It is about the project team getting things done in the project.

o Leadership is about motivating, inspiring, and directing people to accomplish the project objectives and personal goals.

o Project managers spend the bulk of their time communicating information—not doing other activities. Therefore, they must be good communicators, promoting a clear, unambiguous exchange of information. Communication is a two-way street; it requires a sender and a receiver.

o Project managers must negotiate for the good of the project. In any project, the project manager, the project sponsor, and the project team will have to negotiate with stakeholders, vendors, and customers to reach a level of agreement acceptable to all parties involved in the negotiation process.

o Project managers have to work with stakeholders to influence the decisions within the project. This includes politics; tradeoffs; and managing requirements, changes, and issues within the project.

Chapter 11: Understanding the Organizational Structure

In the previous chapter, we saw that an organizations policies and culture can have a significant impact on a project. Towards the end we also saw that, an organizations structure too would have an impact on a project. In this chapter, we are going to look closely at the organizational structure.

So, lets get started!!!

Organizational Structure

To do your job efficiently and effectively, you must figure out what kind of organizational structure you are in. Excepting the hand full of people who own the companies, the rest of us are all working class. We work for some company and get paid. Every individual must understand his/her organizations structure in order to blend into the organization as well as to carry out his/her duties without any issues.

Now, you as the project manager too are part of some organization and your organizations structure has a direct bearing on the project that you manage. So it is imperative that, you as the project manager understand the various structures an organization could take.

From the perspective of structure, organizations fall into three categories:
1. Functional organizations
2. Projectized organizations and
3. Matrix organizations.

Functional Organizations

A functional organization has a traditional organizational structure in which each functional department, such as engineering, marketing, and sales, is a separate entity. Look at the pictorial representation below:

As you can see, there are distinct departments and each has a manager and a set of staff who work for him. Each of these managers in turn report to someone higher up in the ladder, for ex: The CEO.

Depending on the size of the organization, there could be a hierarchy within these manager and other designations like director, managing director etc could be available who in turn report up to the CEO or the owner of the company.

The scope of a project in a functional organization is usually limited to the boundaries of the functional department. Therefore, each department runs its projects largely independent of other departments. When a communication needs to occur between two departments, it is carried through the hierarchy of functional managers.

For Ex: If someone from the Sales team needs to communicate with someone in the Marketing team, he would route it through the Sales Manager who in turn will route the information through the Marketing Manager.

All the managerial power or authority in simple terms, in a functional organization is vested in the functional managers, who control the team members’ performance evaluations, salaries, bonuses, hiring, and firing.

The Project Managers are held responsible for the project results even though they have little say over resource assignments and holding team members accountable for their work. (Because the power lies with the functional manager) As a result, project managers in a functional organization are often frustrated. Their work is, at best, challenging. You, as a project manager in a functional organization, can benefit greatly from your good relationships with functional managers and team members. Networking and leadership are the key points to your success in a functional organization.

A project manager in a functional organization has the following attributes:

• The project manager’s role and the project team are part-time.
• There is little or no authority over anything: resource assignments, team members, and so on.
• The project manager reports directly to a functional manager.
• There is little or no administrative staff to help with the project.

Projectized Organization

A projectized organization’s structure is organized around projects. Most of the organization’s resources are devoted to the projects. Look at the pictorial representation below:

As you can see, the project team members report directly to the project manager who has a great deal of independence and authority (Imagine the structure in the Functional Organization) He reports directly to the CEO and has great control over his team and especially on what happens to his team members (Unlike the functional structure where the team is at the mercy of the functional manager)

Along with the responsibility comes the high level of autonomy over the projects. The projects managers are a happy bunch of people in a Projectized organization. The functional and projectized organizations are like north and south poles of a magnet.

A project manager in a projectized organization has the following attributes:

• The project manager is full-time.
• The project manager has full authority over the project team.
• There is full-time administrative staff to help with the project.

Matrix Organization

A matrix organization is organized into functional departments, but a project is run by a project team, with members coming from different functional departments. Look at the pictorial representation below:

As you can see the project managers are a separate group and do not have any clash of interests like in a functional organization with the functional managers.
On the spectrum of a project manager’s authority, matrix organizations are in the middle of two extremes: functional and projectized organizations.

The matrix organizations are generally categorized into a strong matrix, which is closer to projectized structure; a weak matrix, which is closer to functional structure; and a balanced matrix, which is in the middle of strong and weak.


Let us Summarize the influences of the different organizational structures on a Project.

Influences of Organizational Structures on Projects

Project Characteristic	Functional	Matrix	Projectized
Project manager’s authority	None to little	Limited to high	High to full
Project manager’s role	Part-time	Part-time to full-time	Full-time
Project management administrative staff	None to part-time	Part-time to full-time	Full-time
Project budget controlled by	Functional manager	Functional manager, project manager, or both	Project manager
Resource availability	None to little	Limited to high	High to full

Let us wrap up this chapter by Summarizing the influence of various types of matrix organizations on a project.

Influences of Matrix Organizational Structures on Projects

Project Characteristic	Weak	Balanced	Strong
Project manager’s authority	Limited	Low to moderate	Moderate to high
Project manager’s role	Part-time	Full-time	Full-time
Project management administrative staff	Part-time	Part-time	Full-time
Project budget controlled by	Functional manager	Functional manager, project manager, or both	Project manager
Resource availability	Little	Low to moderate	Moderate to high

We have explored the three basic organizational structures. In the real world, some organizations use a hybrid (mix) of these structures to meet their varied needs. For example, a functional organization may run a specific project just like it would be run in a projectized organization. Such organizations are called composite organizations.

Obviously, organizational structure and organizational culture heavily determine the project environment. Two other important factors that influence the project environment are enterprise environmental factors and organizational process assets. We will be looking at these in the next chapter.

Previous: Organizational Influence on Projects

Next: Environmental Factors & Process Assets

Chapter 10: Organizational Influences on Projects

In the previous chapters, we saw about the various stakeholders in a project and also about the most influential & important stakeholder of them all, you. In this chapter, we are going to take a look at the impact of organizational culture on a project and its operations.

So, lets get started!!!

Can an Organizations Culture affect a Projects Outcome?

A project is typically performed inside a company called the performing organization, which creates an environment for the project called the project environment. The projects are influenced by the project environment, which is shaped by many elements, such as organizational culture, organizational structure, enterprise environmental factors, organizational process assets, and the maturity of the organization.

To summarize, Yes the organizational environment within which a project is being executed can have a significant impact on the outcome of the project.

Understanding the Organizational Culture

Each organization often develops its own unique culture, which depends on many factors, such as the application area of the organization and the general management philosophy implemented in the organization.

The organizational culture includes the following elements:

1. Work environment - The organizational culture is reflected by work ethic and work hours. For example, do the employees work strictly from 8:00 AM to 5:00 PM, or is the timing flexible so that employees can change their work timings to cater to some of their personal commitments. Ex: If a persons wife is pregnant and is experiencing morning sickness, he would have to support his wife atleast for an hour or so in the morning and hence he may not be able to make it to work @ 8:00 AM sharp. Would the organization be flexible enough to allow him to come in late say 9:30 AM and let him work till 6:30 to compensate for it?
2. Management style - Organizational culture also reflects authority relationships. Do the managers manage by authority or by leadership? How much feedback is taken from the employees in making management decisions? How do the employees view the authority of the management?
3. Policies - The organizational policies, methods, and procedures also reflect the organizational culture.
4. Values and vision - A significant part of organizational culture lives in the set of values, norms, beliefs, and expectations shared within the organization. This may be impacted by the organization’s mission and vision. For example, a nonprofit organization will have different values than a for-profit organization. Furthermore, one organization may encourage an entrepreneurial approach while another organization may be rigidly hierarchical and take an authoritarian approach to making decisions about what to do and what not to do.

At the beginning of this chapter, I had said that an organizations culture can have a significant impact on a project. Now that we know what is part of an organizations culture, let us see how an organizations culture can influence an project.

Organizational culture influences multiple aspects of a project. Some are:

1. Project selection - The organizational culture will creep into the selection criteria for projects and programs. For example, a rigidly hierarchical and authoritarian organization may not be very adaptive to programs and projects with high risk.
2. Project management style - The project manager should adapt the management style to the organizational culture. For example, an authoritarian style may run into problems in an entrepreneurial organization with a participative culture.
3. Team performance assessments - While making the team performance assessment, the project manager should keep in mind the established norms and expectations within the organization.
4. Project policies and procedures - The project policies and procedures will be influenced by the organizational policies and procedures because both should be consistent with each other.

The culture of an organization is greatly influenced by its structure.

From the perspective of a project, there are two kinds of organizations:
1. project-based and
2. non-project-based.

The project-based organizations fall into two subcategories, those that derive their revenue primarily from performing projects for others and those that do in-house projects to deliver products or services for customers. Project-based organizations are well aware of the importance of project management and generally have systems to support project management. Non-project-based organizations generally have a low appreciation for and understanding of the importance of project management and often lack systems to support project management.

The point here is that the type of organization and the organizational structure have a great influence on how the projects will be managed inside the organization. This is what we are going to learn in the next chapter.

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Next: Understanding the Organizational Structure