Organisational Structure and Design- BBA/MBA Note

Posted on Jun 3 2020 - 6:11pm by admin

(e) Project or Matrix Organisation

The major reform in the traditional functional structure has come from a group of closely related structures having titles such as project management, programme management, systems organisation, product management, brand management, and matrix structure. All these have in one thing common that they provide a horizontal grouping together of a number of functions which might otherwise be labelled as functional departments and exercising staff and functional authority. Out of these, project organisation structure and matrix organisation structure have become quite popular. Project organisation appears like a divisional structure, except that in the latter, various divisions are created on permanent basis while In the former they are created only for the life time of a project. When a particular project is completed, the concerned division may disappear. However, since a project may continue for quite a long time, a project may become a sort of permanent feature. For example, Middleton observes that “a project organisation can also be the beginning of an organisation cycle. The project may become a long-term or permanent effort that eventually becomes a programme or branch organisation. The latter. In turn, may become separated from the parent organisation and be established as a full-fledged division functionally organised.”

The establishment of project organisation calls for appointment of a project manager who is responsible for the completion of the project. He coordinates the activities of the project. He prescribes what is to be done, when it is to be done, and how much resources are required. The functional personnel are drawn from various functional departments and functional managers decide who in their department will perform the task and how It will be done. Thus, project manager is a unifying and focal point for the project activities.

A project manager really does not have vertical authority on the personnel drawn from various functional departments unlike a divisional manager who has line authority over the people working in various functional departments assigned to his division. In the absence of any vertical authority, the project manager must convince the functional people so that they help him to finish the undertaking within the time. In reality, project manager faces an authority gap- He has responsibility for completing the project but does not have direct authority over the people associated with his project. Project organisation structure is shown in following figure:

Features of Project Organisation
i. It is one-time task and is definable in terms of a single, specific goal.
ii. It is infrequent, unique and unfamiliar to the present organisation. Unfamiliarity usually leads to a disagreement as to how the activity should be managed.
iii. It is complex and calls for a high degree of interdependence among the tasks.
iv. There is a high degree of stake in the successful completion of the project. The time factors is critical because if the project is not completed within the stipulated time, the organization may lose heavily because of fine provision due to delay.

i. Project organisation allows maximum use of specialized knowledge which is available to all projects on equal basis. Knowledge and skills can be transferred from one project to another project.
ii. It enables the organization to adapt to environmental demands particularly when environmental factors are fast changing.
iii. It provides more flexibility for the utilization of resources in the organisation by allocating them to the projects where these are needed.

i. Project organisation creates feeling of insecurity and uncertainty among people in the organisation. It has an ad hoc arrangement with limited life. Therefore, a question comes in mind what will happen after the project is over.
ii. People are not able to Identify themselves with any particular department in the organisation because they do not have permanent tenure with any project. Thus, there is less loyally of people with the organisation.
iii. There is lack of clarity among members about their role In the organisation. For example, project relationships are not based on the principles of clarity of authority I and responsibility and fixed amount of authority. Thus, only those persons can work better who have high level of tolerance for ambiguity.
iv. Often, project manager faces numerous problems because he has to carry responsibility without authority. Thus, he has to rely on his personal qualities rather than on his official authority. Therefore, if organisational climate is not very congenial, there is high chance of his failure.

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