Organizational Influence on Project Management

If you are someone who has played the role of a Project Manager in more than one company you would know that the organization has a direct influence on how projects are managed. I have worked as a Project/Program manager in a few companies and I can vouch for this fact. 

In the PMP Exam series there were 3 articles that covered this topic and I have explained in great detail about how Organizational structure & culture impact projects. 

They are: 

• Organizational Influence on Projects 
• Understanding the Organizational Structure
• Enterprise Environmental Factors and Process Assets

Trivia: Some people use terms like Cultural Norms when they talk about an Organizations Culture. 

ORGANIZATIONAL STRUCTURE

Organization structure is the hierarchical relationships of various entities within the organization that collaborate with each other for project execution. Different organizations, by virtue of their objectives and core philosophies, carry different organizational structures. The structure of an organization determines the operational model used in the organization. Organizational structure determines the responsibilities for different functions and entities. 

You could refer back to the article titled Understanding the Organizational Structure to know more details because I don't want to repeat the same details once again. 

FUNCTIONAL STRUCTURE

The structure of a functionally structured organization is based on the functions performed by each component of the organization. Such organizations would have different departments that are responsible for different functions and the Project Manager would work with all those departments to get the project done. From the view point of a Project Manager, this type of organization is the hardest to execute projects. 

PROJECTIZED STRUCTURE

The structure of a projectized organization is based simply on the projects the organization executes. It follows that project managers have complete responsibility over all projects assigned to them. They are provided complete authority to define priorities, use resources, and direct and monitor work making this the best organizational structure for us to execute projects. 

MATRIX STRUCTURE

The matrix structure effectively combines the best attributes of the functional and the projectized structures. 

In a matrix-structured organization, team members report to both their functional managers and project managers. Effective management of this dual relationship is critical to overall success of the project. Thus, matrix structures require clear cut role definition. Also, team building in a matrix-structure organization is often difficult because of the dual reporting structure.

Depending on how close the Matrix Structure is, to either the Functional style or Projectized style, it can be categorized into 3 groups: strong matrix, weak matrix, and balanced matrix 

Strong Matrix

In organizations with strong matrix structures, project managers have greater authority or right to command than functional managers. Such organizations closely resemble those with projectized structures and have full-time project managers and full-time administrative staff for projects.

Weak Matrix

In organizations with weak matrix structures, project managers do not have as much power as functional managers. In a weak matrix, the role of a project manager might be more that of a project expediter or project coordinator, and, as a matter of fact, no official designation as “project manager” exists. The project expediter acts primarily as a staff assistant and communications coordinator and is not authorized to make or enforce decisions, whereas the project coordinator has moderate decision-making powers and reports to a higher-level manager.

Balanced Matrix

In organizations with balanced matrix structures, the powers of the project manager and the functional manager are about equal and in balance. Here, although the need for project managers is recognized, the project manager is not provided full authority over the project and project funding.

COMMON SUCCESS CRITERIA FOR ORGANIZATIONAL STRUCTURES

No matter what sort of Organizational structure your company is following, certain things need to be taken care of, if you want the proposed methodology of handling projects to be successful. Some of them are:

1. High Transparency
2. Strong Management Support 
3. Continuous Monitoring
4. Clear and On-time Communications 

If an organization can take care of the above 4 aspects, chances of their projects succeeding go up considerably. 

ORGANIZATION PROCESS ASSETS

Organization process assets (OPAs) are assets of an organization involved in project implementation that can be used to influence project success. Organizational Process Assets is just a fancy term for documents & templates that your company uses as per the project management & governance structure put forth by the PMO. Read this article about OPAs as I will be skipping the details and move on to key specifics quickly. 

Updating OPAs is generally the responsibility of the project team members as only they would have the complete details of the work they do especially those related to technical artifacts.

OPAs are grouped into two categories:

1. Processes and procedures
2. Project knowledge base — knowledge repository where filled-in templates and other data are available

Examples of process assets include formal and informal plans, procedures, processes, guidelines, “lessons learnt,” and historical information. Generally, OPAs appear on an organization's intranet site, so that team members can refer the procedure or process easily. Such an intranet may also carry filled-in templates and documents from other projects for reference. 

ENTERPRISE ENVIRONMENTAL FACTORS

Enterprise environmental factors are factors that surround or influence project success – basically the environment in which the project is being executed. Of course, they may have a positive or a negative influence on project outcome. These factors are used as inputs to the planning and initiating process because a project cannot be planned without analyzing available infrastructure, tools, and software. 

An organization's structure and infrastructure are good examples of the enterprise environmental factors that would govern any project management initiatives the organization may undertake. For more info on Enterprise Environmental Factors read this article from the PMP Exam series.

That wraps up the basics of Project Management related topics. The next section would deal with basics of Agile Project Management

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 12: Environmental Factors and Processes Assets

In the previous chapter, we took a look at how the organizational structure can affect a project and how it affects the life of a Project Manager. In this chapter, we are going to take a look at the two other things that would affect us (we are the project managers, right?)

1. Environmental Factors
2. Process Assets

So, lets get started!!!

Identifying Environmental Factors and Process Assets

While exploring the environment of the performing organization, you should also identify the environmental factors and the process assets that will influence your project. Some of these assets and factors can be used to help the project; others may have a negative influence. As project managers it is our responsibility to identify them and ensure that we use them in the best interest of the project and mitigate any and all risks they might pose to the success of our baby (The Project)

Enterprise Environmental Factors

The enterprise environmental factors are related to the environment internal or external to the performing organizations and can potentially impact the project. They may originate from within the performing organization, from any external organization participating in the project, or from both. These factors may have positive or negative influence on the project, and some of these factors may give rise to constraints for the project.

Organizational environmental factors include the following:

Culture and structure

1. These refer to the culture and type of structure of the performing organization.
Processes and standards:
1. The organization may have specific processes in place do certain things in certain ways.
2. There may be government and industry standards to follow, such as legal requirements, product standards, and quality standards relevant to the project.
3. Personnel administration information, such as guidelines for hiring, firing, and performance reviews.

Infrastructure and resources:

1. Facilities and equipment to do the project
2. Project management information systems, such as software tools for scheduling tasks and meetings
3. Human resources currently available in the organization, such as skills and expertise
4. Commercial databases, such as standardized cost estimating data and risk databases
5. Work authorization system of the organization, because the project needs to be authorized
6. Communication channels and tools available in the organization, such as email systems

Internal and external conditions:

1. Risk tolerances of the project stakeholders
2. Marketplace conditions relevant to the project
3. Political climate

Note that the environmental factors can be internal to the performing organization, such as the organization’s culture, or external to the organization, such as market conditions.

Organizational Process Assets

These are the processes or process-related assets from any of the organizations involved in the project that can be used to help the project succeed. Some processes might look like an overhead or overkill but as responsible project managers, we are supposed to follow them religiously, period…

The organizational process assets are typically grouped into two categories:

1. Processes and procedures for conducting work, and
2. A corporate knowledge base for storing and retrieving information.

For example, the performing organization might have its own guidelines, policies, and procedures, whose effect on the project must be considered while developing the project charter and other project documents that will follow. Another example of an organization’s process assets are the knowledge and learning base acquired from previous projects.

Let us now take a detailed look at these two things.

Processes and procedures

This category includes processes, procedures, guidelines, and requirements as described in the following:

• Standardized processes and procedures. Examples are organizational-level policies, such as health and safety policies, ethics policies, project management policies, and quality policies and procedures, such as quality checklists and auditing processes.
• Standard guidelines and criteria. Examples are:
      o Project closure guidelines, project acceptance criteria, proposal evaluation criteria, performance measurement criteria, and so on
      o Guidelines and criteria for tailoring the standardized organizational processes for the purposes of the project
• Templates. Examples are the templates to support some project management tasks, such as risk management, project schedule network diagrams, and work breakdown structure.
• Requirements. Examples are:
      o Communication requirements, hiring requirements, and safety and security requirements
      o Guidelines and requirements for project closures, such as final mandatory project audits and product acceptance criteria

You need to follow these guidelines and accommodate the requirements while working out the details of the project management processes that you will perform. As you are a part of the organization you need to be aware of them in the first place and include them in all your plans to ensure that you do not violate them. Processes are put in place for a reason and as a leader who leads by example, we must use them properly to motivate our team members to follow rules as well.

Knowledge base

This category includes databases, which allow you to store information and to retrieve the stored information when needed. Some examples are:

• Project files. The documents and files related to the project, such as the project charter and the scope statement.
• Historical information and lessons learned. Archives of files from previous projects and lessons learned from them.
• Issue and defect management. Database that allows you to manage issues and defects, such as to log, control, and resolve an issue or defect. You can also find the status of the issue or the defect from this database.
• Financial database. The financial information related to the project, such as budget, work hours, and cost overruns.
• Configuration management database. This contains the change history: different versions and baselines for the company standards and policies and for the archived project documents.

We are all either project managers or people who aspire to be good and efficient project managers. Any project manager would have to interact with two neighbors with whom we share our life as a manager. They are: Program and Portfolio. We will be looking at them next.

Previous: Understanding the Organizational Structure

Next: Relationship between Project, Program and Portfolio

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