Unit-7

Project Organization

Project organization
It refers to the division of labour , grouping of

project activities, showing inter relationship in

between authority and responsibility ,
developing reporting and controlling
mechanism, creating department s and work
units.
Project organization is a system which
includes includes input-process-outputfeedback mechanism with limited life.

Types of project organization

structures
The organizational structure depends on the

nature , size, technology , complexity ,

objective etc. of the project.
Generally project organization can be as
follows :
Part of functional organization structure
Pure project organization structure
Matrix organization structure

Part of functional organization

structure
General
manager

Marketing
departme
nt

Project -A

Project-B

Productio
n
departme
nt

Project-C

HR
departme
nt

Finance
departme
nt

Part of functional org.

structure
It consists of different functional departments like production ,

marketing , HR , R&D, finance etc. and different projects are

formed under the above functional departments.
A project manager should work under the concerned functional
manager .
Budget and resources are allocated to the project from the
functional departments.
It is suitable for small projects
Projects have access to knowledge, experience, technical and
financial support of functional departments.
Limitations: Functional departments focus on functional activities
than project activities.
Decision can be delays due to long hierarchy in the organization.
Only top-down communication are encouraged .

Pure project organization structure

General
manager

Production
department

Marketing
department

HR
department

Design

Project -A

Construction

Finance

administratio
n

Pure project organization structure

A project is separate from the functional department

.
A project manager has full authority to make
decisions in the project.
Quick decision making. unity of command.
Communication can be vertical, diagonal, horizontal
etc.
Focus on project objectives.
Separate staffs are needed .
Lack of job security for project s employee
Suitable for big projects

Matrix organization
structure
General
manager

Marketing
dept

HR dept

Production
dept

Finance
dept

Projectcoordinatio
n

Project A

Project B

Project -C

Matrix organization
structure
It is a combination of functional and pure project organization

structure.
The project manager leads the project .
The project manager should coordinate with the functional
managers for human , financial and physical resources.
All functional departments should support to all the projects for
concerned functions.
cross functional team is formed to perform project task.
Facilitates efficient use of resources.
Ensure job security
Duplication of effort , delay and conflict due to dual boss system
Complex and difficult to manage .
Lacking chain of command and unity of direction

Project authority
Authority is a legal power to command and control

over the resources.

It is the power to make decisions within the
organization to mobilize the resources.
Project authority is the legitimate power to implement
the project and make decisions from inception to
completion .
Project manager has fully authority to make decisions
to mobilize resources like man , money , material,
machine , information etc.
It is commanding power to control over the project
activities.

Sources/types of project authority

Legal
Real
authority
authority
Project
charter
authority

Legal authority
The authority provided by the existing law to

control over the resources is called legal

authority.
The constitution, act and other associated law
provides legal authority.
Organizations policies, rules and regulations
,MOA, AOA etc. provides legal authority.
Job description and delegation of authority from
the superior may also provides legal authority.

Real authority
It is the authority grasped by the leader from

the follower or it is the power granted by

subordinates to the superior.
It is gained by the leader due to his/her
competence, knowledge, skill, experience,
expertise, age, managerial capacity etc.
The subordinates willingly follow and respect
the superior and accept the authority .

Project charter authority

The authority which is provided by project plan

or project charter is called project charter

authority.
It provides the authority for Budgeting ,
spending, estimating cost, reallocation of
budget etc.
Authority for Scheduling and rescheduling of
project activities
Authority for Accepting bid, awarding contract,
hiring staffs , procurement of materials etc.

Linear responsibility
chart (LRC)
Linear responsibility chart is a tool which identifies the

project participants and shows the interrelationship among

authority and responsibility .
It is developed to clarify the responsibility of each
employee of the project to remove the confusion , delay
and conflict within the project.
It is useful for monitoring the responsibilities.
It facilitates delegation of authority.
It facilitates for the coordination of project manager and
functional managers.
It is divided into rows and columns .rows includes
responsibility and authority and columns refers to the
positions of employees.

LRC
Responsibilty
Establish
department
objective
Project planning
Integration of
project
Project control
Project
budgeting
Coordination in
between project
and functional
manger

General
manager

Functional
manager

Project
manager