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.
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Next: Chapter 4
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