Chapter 4: Organizational Structure and Project Management
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 be