Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

19.2.4 Project Organization

Intended learning outcomes: Differentiate between project coordination in a functional, or line, organization and project management in a project-based organization. Describe project management in a strong matrix organization.


There are various possibilities for the organization of a project. Similar descriptions of the variants mentioned in the following are found in [PBMOK]. Figure 19.2.4.1 shows project organization in a functional, or line, organization.

Fig. 19.2.4.1       Project coordination in a functional, or line, organization.

In this type of project organization, which is typical in small and medium-sized companies (SME), the project manager (see shaded box) has little authorization. The project manager usually works on the project part time, alongside his or her other tasks. The authority of the project manager is more or less limited. Various staff members from different functional areas (also shown in shaded boxes) are involved in the project. However, line mana­gers always give priority to their original functional tasks. The connection among the people involved is given by the definition of the project. The project manager coordinates the project activities and the line managers.

As a variant of this type of project organization, there is the so called weak matrix organiza­tion, in which project organization is conducted by the persons involved in the project only. Here, the role of the project leader is mostly only coordination. Another variant is what is called the balanced matrix, in which the project manager, or project officer, answers to one of the line managers and from there acts with low to moderate authority across the organiza­tion. In Figure 19.2.4.1, one of the “staff” boxes would be labeled “project management.”

A second possibility is the organization of the entire company based on projects, as shown in Figure 19.2.4.2.

Fig. 19.2.4.2       Project management in a project-based organization.

This organizational structure is typical for a company that primarily sells and implements projects, such as, for example, in consulting businesses or in engineering. A project manager — usually assigned full-time to project work — manages all persons and the other resources that are required to complete the project within the project area (shaded boxes).

A further possibility is the strong matrix organization shown in Figure 19.2.4.3.

Fig. 19.2.4.3       Project management in a strong matrix organization.

This organization is found in larger companies. Again, the company areas that are involved in a particular project are seen in the shaded boxes in the figure. Important resources are allocated to the project manager as well as a moderate-to-high authority to issue instructions in the horizontal organization, which is indicated in the figure by the broken line. Other people may also be involved in the project, but as in Figure 19.2.4.1 their first work priority is assigned to their line tasks. Composite forms are feasible, especially if several projects are being conducted simultaneously, some of them possibly with a weak matrix organization.

Depending on the type of project organization, the project leader or manager has varying responsibilities and resources at his or her disposal. In any case, the project manager is responsible for motivating and inspiring people in relation to the project. The issues are after all unique, whereby a project team made up of people from different company areas usually must work together. For this, the project manager has to have a high degree of social competency, a wealth of ideas, and good communication abilities. For a high-performance project team, the same is required of all team members. For a detailed discussion of this aspect of project management, see, for example, [Kerz17] or [KuHu15].



Course section 19.2: Subsections and their intended learning outcomes

  • 19.2 Project Management

    Intended learning outcomes: Present goals and constraints of a project. Describe project phase, project life cycle, and work breakdown structure. Explain scheduling and effort planning as well as organization of a project. Differentiate between cost, benefits, profitability, and risk of a project.

  • 19.2.1 Goals and Constraints of a Project

    Intended learning outcomes: Produce an overview on project performance and project deliverables. Differentiate between external constraints and internal constraints in project management.

  • 19.2.2 Project Phase, Project Life Cycle, and Work Breakdown Structure

    Intended learning outcomes: Produce an overview on the project phases in a generic project life cycle. Describe the increasing degree of detail of tasks and work packages in a work breakdown structure. Present an excerpt from a work breakdown structure for the preliminary study for a building conversion.

  • 19.2.3 Project Scheduling and Project Effort Planning

    Intended learning outcomes: Present in detail the schematic display of project effort per organizational unit. Explain an excerpt of the Gantt chart for the project “preliminary study for building conversion”.

  • 19.2.4 Project Organization

    Intended learning outcomes: Differentiate between project coordination in a functional, or line, organization and project management in a project-based organization. Describe project management in a strong matrix organization.

  • 19.2.5 Project Cost, Project Benefits, Project Profitability, and Project Risk

    Intended learning outcomes: Produce an overview on the total cost of ownership of a project. Explain the Matrix for estimating the project benefit of an investment in a software system as well as the graphic representation in overlay of nine profitability calculations, for cumulative benefits with degrees of realization 1 to 9. Identify NPV, the net present value technique. Present the issue of project risk management.

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