Masaryk University Faculty of Informatics. Master Thesis. Project Management in Matrix Organization

Transcription

1 Masaryk University Faculty of Informatics Master Thesis Project Management in Matrix Organization Student: Agron Zylali, Brno 2014

2 Statement I declare that I have worked on this thesis independently using only the sources listed in the bibliography. All resources, sources, and literature, which I used in preparing or I drew on them, I quote in the thesis properly with stating the full reference to the source. Agron Zylali Supervisor: RNDr. Stanislav Michelfeit 1

3 Contents Abstract Introduction Background Literature and Theory Project Management Project Life Cycle Project Initiation Project Planning Project Execution Project Closure Project Decomposition Product Breakdown Structure Organization Breakdown Structure Work Breakdown Structure Project Organization Functional Organization Projectized Organization Matrix Organization Literature Review Interview Procedure Questions related to Matrix Structure Organization Questions regarding the projects in Matrix Structure Organization Conclusion Bibliography

4 Abstract This diploma thesis contains a topic regarding project management, mainly concentrated about projects in matrix organization structure, which is a blend of functional and projectized organization. Initially I will elucidate the significance in detail for each various type, with the enlightenment of advantages and disadvantages. Furthermore I will focus on responsibilities of each organization line within the matrix organization mainly for managing a project, including as well the influence of work breakdown structure (WBS). Entirely I will illustrate the interaction between these lines throughout project lifecycle in project management processes. Subsequently I will advice some kind of recommendation concerning suggestions in terms of using each organization type for some different variety of projects. 3

5 Keywords Project, Project Management, Matrix Organization, Functional Organization, Projectized Organization, Work Breakdown Structure, Project Lifecycle 4

6 (1) (2) 1. Introduction The area of Project Management fortunately does not simply contain a specific definition and explanation, because it has been enlightenment in various different approaches and manners, but the most common one used are the ones given by PMI (Project Management Institute), which defines the Project Management as the application of knowledge, skills, tools and techniques to project activities to meet or exceed stakeholder objectives and expectations from a particular project (2) and the other definition formulated by ISO which describes it as follows: Project Management is the planning, organizing, monitoring and controlling all aspects and activities of the project in a continuous process to achieve its planned objectives (2) Both of definitions specified above are accurate since they provide a clear explanation seen from different perspectives of what really this discipline is and what managers and leaders in general suppose to do in order to drive the project till the successful completion through predefined sets of activities. This discipline has been and continues to be applied in many different industries, rather than in specific one and not all of them manage it in the same way. Therefore, organizations based on their strategy they have, structure, service they provide and the method they perform, differ from each other the way they manage the projects, because of applying completely compatible project life cycles for their particular needs. The approach chosen by the organization on how the projects will be managed has extremely high impact, and it is very important for the organization since it is the key to the success. 5

7 (3) (4) (5) 2. Background Literature and Theory Despite the fact of being a modern discipline, its origin starts from the latter half of the nineteenth century, evolved mostly from the approach of how people used to organize and manage their work, especially when the business in the world started to develop into complex. In that time, people believed that the only method of improving the productivity was working harder and longer, in contrary according to Frederick Taylor analysis it was brought into the market the concept of providing more efficient work. Another significant person of the management principle is Henry Gant, who created the tool called Gant chart, which enables people to better organize and control their work. These two scientists are considered to be the father of scientific management. The management process mainly achieved its peak in the middle of the twentieth century where the two project scheduling models were introduced to managers for facilitating a control over complex projects. These two models are: CPM (Critical Path Method) is an algorithm for setting up activities for a particular project and PERT (Program Evaluation and Review Technique) which beside being a method and technique for better analyzing the tasks and activities, its main functionality is to evaluate the minimum period of time required to successfully complete the project. Subsequently, the area continued to improve and it reached the attention mostly when two non-profit organizations were created; IPMA (International Project Management Association) in 1967 and PMI (Project Management Institute) in They had a high impact on increasing the significance of various industries for managing projects. Both of them were mostly concentrated on increasing the knowledge, developing and continuously improving the Project Management area by providing different kind of services for managers and leaders; for instance professional education, books (Project Management Body of Knowledge), working guidelines prepared by experienced project managers, trainings and seminars held by experts, instructions given by qualified and skilled leaders, networking etc. 6

8 3. Project Management (6) (7) (8) Project Management is very comprehensive and attractive area, seen as a science or modern discipline. Furthermore, it can be considered as well as a matter of art to manage a project from the beginning, through the lifecycle till the successful closure. The discipline had a huge impact by its various significant benefits within organizations, influencing the business world. All this occurred by the result of concentrating through different outcomes such as: improving the customer satisfaction by increasing efficiency in delivering services. This can be easily identified by the objectives of this area, for instance: - recognizing additional risks, analyzing and making correct decisions by responding with a proper solution. This can be named as Risk Assessment; - ensuring the completion of the project within budget and time, by using specified resources; - having control of the project for facilitating the tracking of it; - increasing the quality; - improving the communication within the organizations; - the achievement of projects goals; - the most important objective is to simply ensure that customers specific needs and requirements are met, etc Project Management principally supports three related fundamental levels, and they are: Projects, Subprojects and Programs: Project: is basically created once, it is specific and temporary, undertaken by a member, team or organization. It is a unique process established to achieve or deliver an output, consisting of controlled and well coordinated set of 7

9 activities in line with cost, time and specific resources. In essence, it refers to a particular outcome in a kind of product or a specific service created and developed by a team which is run by a leader. Projects are not the same as operations; they differ from each other from the viewpoint of the functionality since projects are unique and temporary consisting of a beginning and the end, while operations are ongoing and repetitive with no start and end, Subproject: same as the projects, it is a temporary process, undertaken with the aim of producing an outcome, product or a service. It is basically a set of activities and work divided from a single project in case of it is a big or more complex. It is divided among more manageable parts which are called Subproject, in order to be able to better control, manage and facilitate the completion of it by assigning the right employees in the area which they are specialized and experienced. Even though they are split from projects, subprojects are mostly considered and treated like a project, Program: While the Project intends as an outcome to achieve a specific service or a kind of product, Program is a process undertaken to achieve a mission or a strategy. It contains several projects and ongoing sets of activities. It actually refers to multiple interrelated projects, in order to be able to improve as well as facilitate the general control and management within the organizations. This process of managing is known as Program Management. It is worth pointing out that in general Projects and Programs are not the same; they differ from each other, therefore the main and most significant differences between them are as follows: 8

10 Project: is temporary has a start and an end supports service as an outcome has a specified scope focuses more on the outcome Program: is ongoing activity has no beginning and no end supports strategy as an outcome can have a wide scope focuses more on the benefit The scheme how the Project, Subproject and Program are in general structured within an organization or company is as follows: Picture 1: Project Management Tool used: Project Life Cycle (9) (10) (7) (11) In order to be able to manage projects in most effective and efficient way for delivering an outcome or service, managers are going through an approach called Project Life Cycle. Each organization or company, or even 9

11 each manager can have its own way of managing or personal approach which may be differentiated from one other. The reason of not having a unique one is because it depends on the type of the project or the business it is needed. However, over time a standardized Project Life Cycle has been created, which is considered as a base for any decided approach by the manager or the leader. By this standardized approach, a manager can adjust it to his type of project or business. The mentioned standardized approach consists four significant interrelated phases which are: Project Initiation, Project Planning, Project Execution and Project Closure. Basically, a meaning behind this phase is: Start-Plan-Do- Close! However, there is another additional phase which is called Controlling. Actually, it depends on the manager or leader, whether he/she is going to consider this activity as a phase itself and put it as a separate one, or whether he/she will apply its functionality throughout the whole approach of the project. Clearly, each phase has different functionality, characteristics and is helping a leader to better plan the way he will manage the project, although from all of them it is expected to deliver a result which facilitates him or her to make a decision to further proceed or turn back. Except the fact of having a standardized way of managing a project, it is still not enough for delivering what is expected or being successful, and indeed a careful, detailed and analyzed planning is required Project Initiation (9) (10) (7) (11) The first phase of Project Life Cycle is called Project Initiation. This stage is considered as very significant and critical for its importance since a leader establishes the projects objectives and defines deliverables. In case that this phase is not analyzed and defined properly by the leader, it increases the risk of not succeeding, meaning of project failure or it may also occur to late delivery. The mentioned phase can be very broad and can contain numerous steps, however in the 10

12 following part the thesis concentrates on covering the most essential phases and steps in general. It is worth to point out that this phase is also subdivided into further steps: - Feasibility Study: This stage is the first stage that the leader performs after receiving the project proposal or after the project proposal has been sent. It means undertaking a detailed study of the offer/project/business case, analyzing the requirements and resources as well; identifying any kind of problem; estimating how big and how complex the project or offer is; foreseen a risk or issue that may occur, which can have an impact during the project life cycle and prioritizing them based on their importance; additional delays; building a plan in order to avoid the mentioned risks and issues; identifying and classifying a list of solution in case a risk or issue occurs; identifying the business environment and collecting the business information, etc. For all these studies and analysis, a document usually is prepared containing the outcome of analyses, with tables and matrixes. Afterward the document is presented and communicated within the Portfolio and Program level of the organization or company in order to evaluate it. A brief example of one of these tables that can be found in the document of the feasibility study, may be written as the instance given below for risks: Risk Probability Impact Action Description Instance 1 L/M/H L/M/H Action 1 Instance 2 L/M/H L/M/H Action 2 Table 1: Feasibility study (Risk Analyses) Risk Description: a brief description of a risk that may occur during the project lifecycle; 11

13 Probability: a probability that a risk may occur in future, usually is evaluated as follows: Low, Medium and High; Impact: a level of the impact that may have if the risk occurs, this also may be estimated by: Low, Medium and High; Action: A description of the solution, in case a particular risk occurs. - Projects Objective: In some organization this phase is called in different way, for instance: a mission or a vision. The manager in this stage first defines the objectives of the project. Clearly each project has a common goal: success, meeting and/or even exceeding the expectations within the time and within budget. However, apart from this, projects may also have other objectives to. Therefore, to better and easily identify the objectives, there are usually some questions answered by the leader such as: Why this Project? What is this Project? Is it feasible? What will be the outcome? What are the circumstances? What are the expectations? - Deliverables and Requirements: Apart of the above mentioned quantitative analyses the manager studies the deliverables and requirements to. They are stated in contracts, but sometimes it may not be sufficient to fully define all requirements. There is also another fact to be considered, whether the deliverable is a product/service or result because for each category there should be different analyses performed. However, for each type it is significant to be defined as much as it is possible. Of course, there are some questions where the answers given can provide us a clear picture for deliverables for instance: What is required? Is it new or existed? Where is the location? How many should be delivered? etc. As for Requirements based on the type of the project there can ban various questions, and from the outcome the manager defines the requirements by following step: Gathering, Categorizing, Validating and creating Requirements Baseline. When having all information in place, afterwards manager ensures that his or her team stakeholder, sponsors and everyone involved in the 12

14 team fully understand the projects objective. In order to avoid any kind of misunderstanding in future, usually managers writes it down and stores it as evidence. - Project Charter: Finally, after having all studies and analysis done and documented, also presented and discussed with the people involved in project, manager prepares the Project Charter. Beside the manager, also a sponsor can prepare this document. A sponsor is an individual or may be an organization that has an authority to ensure or delegate a formalization of agreement with the delivery. This document is an official document where the projects scope, objectives, rules, time, budget, requirements, framework and other information are clearly defined. This document usually is up to ten pages, based on the size of the project; sometime a verbal agreement is done for small projects but still it is recommended to have it in paper for future evidence. Project Charter can be structured in a different manner since it may vary on the type of the project and organization, but usually it contains the following sections: Project Purpose, Objective and Requirements, Description of the Project, Schedule, Budget, Resources; Project Manager, Team members and Resources. Usually after all have been analyzed, in order to make it fully certain, sale manager consults with the quality team and engagement team, to review again if the project is feasible, doable, and possible before they submit the contract with the client. - Assigning the Project: In this phase a leader takes the first step after performing a feasibility study, with reviewing, analyzing and also taking the motive under consideration of accepting the project. After having the result, a leader approves its launch and he/she confirms the right person responsible as Project Manager in order to drive it from the beginning till successful completion. Usually a decision is made by considering from one side how complex and big the project is and from the other side employee s knowledge, experience, capability and availability. Afterward the Kick Off 13

15 is sent, and the Project Manager can continue with the further responsibilities. However, there might be some situations when the Project Manager is part of the Project Initiation Phase from the very beginning. This has a positive impact and is effective since he/she is aware of the project, and when the Kick Off is sent there is no need of further analysis of the contract, he/she can immediately start with the next phase of the lifecycle. It is very apparent that the manager or leader should initiate very carefully and pay attention the mentioned phase since it may increase a risk to project failure, not to be successful, in time or within the budget, for instance: unforeseen risks/issues or in case the assumed solution for foreseen risks are not feasible, or not clear defining of requirements, resources or conditions, no clear communication which can cause a misunderstanding, etc Project Planning (9) (10) (7) (11) - Project Planning is the second stage of Project Life Cycle. It starts right after the Kick Off has been sent, and everything has been properly described. Project manager before establishing his/her detailed plan, he/she starts with his/her action as follow: creates the team through Team Member Selection and organizes meeting with the team member s in order to ensure that the team has all necessary information that will be needed in the future. Team Member Selection is not the same in every Organizational Structure. However, the thesis is focused mainly on the Matrix Organizational Structure and both of them will be explained later in detail. This stage is estimated with high significance because it ensures that the team has a clear and understandable view for the project, especially for the following parts: WBS, OBS, PBS, plan, financial plan, activities, tasks, durations, resources and many more information. The mentioned parts are used as a guide, reference or database knowledge by the project manager 14

16 and the team. This means that it gives them basically the management methodology and principle which is going to be used in order to achieve the objective and the goal. All these plans may be documented in one document, but it is recommended to create each one of them separately to be properly sequenced. WBS, PBS and OBS will be explained in a following chapter of the thesis. - Project Plan is considered as the main document. It is mostly used by the project manager in order to track the work and progress. He/she especially concentrates on two things: costs in order not to exceed the budget, and dates in order to ensure that the service/product/result is delivered no later than agreed time with the customer. It also helps to reduce constrains, uncertainty and avoid the misunderstandings. Beside that it contains the major phases of the project which are required to be undertaken also it needs to cover the below information: - Statement of work: can be also found in a different name, for instance: Work Defining stage or Work specifications stage, etc. however it is a formal document which is written by project manager with the main purpose of defining the scope of the work. To define the scope the following information must be issued and included in detail: the activities, location, tasks, dependencies, roles, responsibilities, duration, schedule, dependencies, financial plan, communication, approval etc. - Activities (Tasks): defines accurately what work are going to be done, what action is exactly going to be undertaken, the characteristics and the impact of achieving the outcome. - Roles and Responsibilities: provides clear information for each team member for what assignments they have been assigned, what are the responsibilities of each activity/task and what is expected from them to perform. Tasks are assigned to current stuff based on some factor: the experience, knowledge, availability and willingness. 15

17 - Duration and schedule: contains timeframe for each activity and task. For having a better structure, milestone can be used as well. Milestones are used to group the activities into one group. In order to easily track the schedule and control it, it is vital to have the following points: start date and end date of each activity. The sum of duration for each activity should not be later than the agreed time with the customer for delivering the requirements. However, it is not that easy as it may look to define the overall duration of the activities. There are a lot of factors that should be taken under consideration; therefore when setting up the duration and schedule, a deep analyze of everything should be taken: feasibility of completing the tasks, the amount of work, the dependencies, complexity, resource availability, etc. Beside the professional analyzes also the calendar should be part of analyze, meaning of public holidays, even weather, the absence of the employee, etc. A method which is used in this phase is CPM (Critical Path Method). This method is known and is widely used as a project management tool. It is a model as a network with nodes, which refers to activities and nodes which refers to start and end point. It is used mainly to predict the time required to complete each activity and the project itself. Another important characteristic is that it helps to identify which activities are critical, by finding the path which requires a longer amount of time. - Dependencies: there are four types of dependencies, which helps better understand the meaning of it: Finish-to-start (FS) means that the current task cannot start if the previous task is not completely finished. This dependency is very common in project management, Finish-to-finish (FF) means that the current task cannot finish if the previous one is not finished, however it does not mean that they have to end at the same time, Start-to-start (SS) means that the current task needs to start in order next task to start with the work, 16

18 Start-to-finish (SF) means that current task cannot finish until the previous one starts. This dependency is very rarely in project management in general. - Feasibility study: is been reviewed one more time, in more deep studies and analysis to prevent any constrain and avoid any kind of obstacle that may happen. Sometimes this part maybe called a Risk Plan, but still the resource is the same, the feasibility study which is performed in detail during the initiation phase of the project. - Financial studies: these studies are performed after having all information for activities, tasks, resources, duration clearly identified. It contains a list of the expenses for each member of the team, equipments, administrative costs, etc. It may also have a schedule of when and what will be paid. After having the price for each expense, a total sum is being calculated in order to simply check how much will be spent to finish the projects. A simple example of how the evidence of each project member and/or equipment maybe calculated can be found below: Role Project manager IT specialist Administrator Total price Unit cost Cost/hour Cost/hour Cost/ hour Amount Equipment Unit cost Computers Furniture Materials Total price Cost/item Cost/item Cost/item Amount Table 2: Members cost Table 3: Equipments cost Tool Used: MS Office 2010 Tool Used: MS Office Communication plan: is about the internal communication and a communication with the customer. The internal one is usually scheduled by the project manager with the team and portfolio manager. These communications are usually done with meetings and are highly significant for the project managers since even they have everything in place, they cannot simple assign the responsibilities to the team members then to sit and to except what is required from them 17

19 for achieving the goal. He/she has to be continuously proactive by tracking the work and progress for having a better control. This can also have an impact of motivating the team. In every meeting, a certain topic is discussed based on the phase the project is. The communication with the customer is also important since the client has a high focus on the requests and the requirements, and above all because they are paying and that s why they are willing to be informed, therefore a meeting is held to inform them regularly about the current status, project activity and tasks status, the progress meaning of what has been done, and what are the next steps, or in case there is a proposal change to provide the information, etc. Usually every communication is being saved to have it as evidence that what was exactly discussed at the certain time and place. In some organizations, you can find it in some platform which can be called as follows: MoM (Minutes of Meetings). - Approve Project Plan: after having the document prepared, it is sent to portfolio level, which is reviewed and approved. This approval includes the authorization of budget and work to begin with the work. It means a negotiation of the project manager with the portfolio or organization level to approve the budget (amount of money) and resources to allow the team to spend for specified activities within the given period of time. This approval varies depending on the type of organization, it can be simple verbally agreed or it can be officially documented. For instance in Matrix structure organization it is officially documented instead of verbal agreement. The reason is because it is considered as a contract of work and is supporting the sub-projects. Basically, the project manager is in the middle and is like a bridge of communication between the organization and the team. He/she has to convenience the organization for getting the approval and then is responsible to allocate it to the team, meaning that he/she has to ensure that the team has everything necessary and what is needed to perform their work and what is expected. After having this authorization approval confirmed, the next stage can be running. 18

20 (9) (10) (7) (11) Project Execution Clearly this phase takes more time and more energy than any other phase. In this phase, it is time to perform everything that has been analyzed, studied, documented and approved. Not only this, but also to track, control and ensure that everything is going towards the right path. - Time Management process performing: this process helps the manager to increase the possibility of delivering the outcome, facilitates the monitoring and tracks the current time spent against the planned time to be spent. Not only time, it also helps to check the current status of the activities and tasks performed, the ones that are completed and which ones are about to complete. Beside this, a manager can also record information collected during this process. For the record, the following tool is used: Timesheet. Usually it is completed on a weekly basis, for having a weekly status of the work performed by the team. - Cost Management process performing: this process helps the project manager to control the expenses which are being recorded from the team member by using the following template: Expense Forms. It basically gives a clear and accurate view to the manager with the following information: amount of money spent for each activity, the date when it occurred, the type of the expense, etc. The expenses usually are approved before they are purchased and are registered by the manager for having evidence through Expense register log. - Quality Management process performing: The purposes of this process it to initiate the continuous increasing or improve the quality of the team s deliverables. This is very critical since the manager will have a control of the quality of the target which should be accomplished. - Change management process performing: not all the projects are being performed successfully from the beginning till the end as planned and because of that it is very rare that the change management is not being used. The reason is that unforeseen incidents almost always occur. Even that everything may look perfect in the beginning, still during the project phase it is very likely that a problem may raise or a 19

21 better way of performing the activity may evolve. For not experiencing bigger issues the project should be flexible to adjust to a particular change. Change management is usually agreed with the customer and is being written in the contract. It contains the condition on who can request the change, timing window and the change template. It is actually in companies favor, because out of this change they can benefit from it by receiving another profit. Every change is recorded with the following information: requestor, time, reason, solution, etc. The managers should be very careful when they accept change since they should ensure the change do not impact the scope and the time of the project. - Issue and Risk management process performing: is also very critical. The main purpose is about identifying, monitoring, solving and mitigating anything that may affect the project. The analyses are undertaken during the Initiation phase, therefore when a foreseen risk or issue appears a solution is in place. However, it can appear in any phase of the project lifecycle and in case an unforeseen risk or issue is being identified than it should be immediately raised, registered, analyzed, solution or action should be find, approved and then applied. - Communication management process performing: as the process stated above, is about having regular meetings, preferably weekly, in order to be informed with the following information: the work, process, schedule, etc. It should be managed and registered by the project manager. - Project review process performing: may be performed by the end of each phase, in order to have the accurate results of the actions undertaken and produce the result to the portfolio level. Usually the reviewers are some independent skilled persons outside the current project in order to review it more objectively. (9) (10) (7) (11) Project Closure Project Closure stage is the last one of Project Life Cycle. When the result, product or service has been successfully delivered to the customer, it means that the 20

22 project should have accomplished the objective. However, this does not simply mean that the project manager has finished with his duty; therefore there are some further steps that should be taken from his side: to perform the closure of the project. This action requires time and budget, but still it is very significant since it is the evidence of what and how was performed, later the level of success of the project can be reviewed by the third party, can be taken as a reference for other managers, especially for the new ones to improve, develop and gain new knowledge. As all phases, also this part is subdivided into further steps: - Documentation of Project Closure Report: this document is usually prepared by the manager, submitted by the project sponsor and then is sent to customer for agreement confirmation. The very basic closure document contains a detailed description of what was the objective, including: the request, deliverables and benefits; than information of what actions were performed, which is the most vital: activities performed, risks and issues, what solutions were taken to overpass the problems; also information about the expenses, schedule: when the project started and when the project was closed. Nevertheless a detailed closure document may contain all information in detail regarding the project, beside the ones that were mentioned above, it may include also: resources, team members; change management: in case a change was needed to be taken, also communication which was performed with the customer, etc. - Customer agreement request: after completion of the mentioned report, it is the moment to send it to the customer, to review the project report and to confirm the agreement. After receiving the confirmation from the customer, the manager finally informs his/her team and everyone else that was associated with the project. - Lessons learned: this information is highly important and it is also documented. In companies, usually a meeting is held to discuss with everyone regarding the lessons learned from the particular, or a questionnaire may be send to the team. This document contains the following kind of information: What went well in project? What could have been 21

23 done better? What went wrong? How the issues/risks could have been avoided? What are the recommendations? The purpose of this document is that it can be later used on new or similar projects. - Archive data: finally this is the last step that should be performed by the project manager. After having all information collected, sorted, written, maintained and documented, than he/she follows the company s processes, procedures and rules to archive the data in order to protect the information. It is not common, but it is worth to point out that after all mentioned actions are performed, there is another additional stage: PIR meaning of Post-Implementation Review, usually done by portfolio or program level of the company. The endeavor has a single aim, to do the overall assessment of the success of the project and especially the manager s work, by deeper analysis of benefits realizations, objectives achieved, time management, risk and issue management, what was achieved, etc. Cycle. Below is given a picture (nr: 3) of the Project Life Picture 3: Project Life Cycle Tool used: Paint. 22

24 3.2. Project Decomposition Decomposition is known as a hierarchical structure or subdivision of project deliverables (products), staffing resources and work into smaller components, with the intention of better managing. This is also known as breakdown structure. There are three different types of decomposition: Organizational Breakdown Structure (OBS) which answers the question: Who? ; Product Breakdown Structure (PBS) which answers the question: What? ; Work Breakdown Structure (WBS) which answers the question: How? Product Breakdown Structure (6) (12) (13) This kind of decomposition focuses on structuring the deliverables into components. It gives a clear understanding on what is going to be delivered, actually what is needed to be delivered in order to achieve the project s goal/s. PBS is required to facilitate project manager s work to identify all work products, establish logical relationship of building collocation and to develop the WBS. By this we, understand that PBS precedes WBS. Usually, when the PBS is created the final product is put in the top of the structure or hierarchy and then is subdivided into categories and/or elements of the project deliverable. Below is given a picture (nr: 4) of Product Breakdown Structure: Picture 4: Product Breakdown Structure Tool used: 23

25 Organization Breakdown Structure (14) (15) Organization Breakdown Structure (also known as Organizational Breakdown Structure) illustrates the responsibilities of activities of the individuals working on a particular project. This form basically describes the team structure of the project organizational unit and department. It also facilitates the understanding of the following points: the relationship of projects with subproject and relationship of the reports within the organizational units. Below is given a picture (nr: 5) of Organization Breakdown Structure: Picture 5: Organizational Breakdown Structure Tool used: Work Breakdown Structure (6) (16) (1) This variety of decomposition is the most known and the most used one. There are different definitions of it however Project Management Body of Knowledge (PMBOK), defines the Work Breakdown Structure as follows: a deliverable oriented hierarchical decomposition of the work to be executed by the project team. (6) Work Breakdown Structure is considered as a vital step and it is established during the initial phase of the project, right after the scope is identified. It represents the work as an 24

26 activity and also ensures that the project contain all the required work to successfully accomplish the defined project objectives. Project Manager creates the WBS for different related purposes: to define the hierarchy of the deliverables with the frameworks, to provide a better understanding of a project scope through graphical draw and/or textual sketch, building a system to assess and integrate the performance of cost and schedule, facilitates the reporting organization. All these functionalities help the project manager to track the status of the project s progress. Below is given a picture (nr: 6) of Work Breakdown Structure: Picture 6: Work Breakdown Structure Tool used: Project Organization This part of the thesis elucidates the following three major organizational forms for projects: Functional Organization, Projectized Organization and Matrix Organization. However, it will mainly focus and concentrate on the third organizational type. 25

27 (17) (18) Functional Organization This type is known also as traditional category of organization. Over the past years, it has successfully accomplished the requirements with satisfactory control and minor issues. Nevertheless, as recently the business developments rapidly changed in terms of technology improvements and nowadays needs including the increasement of stakeholders demands, have created serious weaknesses. The mentioned aspect means that previously organizations could endure with even one or two product lines, but, as time went through the experts came to a conclusion that this survival depended on a following so called factor diversification, which means having multiple lines. However, as the organizations developed the companies noticed that the activities unfortunately weren t effectively integrated and it caused in increasing of issues and conflicts. This was the motive of inventing the newer and better organizational forms which will be explained in the following part. This variety of organizational form has some advantages such as: the functional manager establishes the budget of the projects and after approval from the upper line has a full control over it. The responsibility is clearly defined and channel of communication is well planned since employees report to a single individual. This feature also helps the functional manager having a good control and overview over the team members. Beside the good points, unfortunately there are some negative aspects of this type of organization as well. The most significant one is that there is no client focal point. In this organizational type usually are several layers between the customer and project thus, this characteristic causes a slow response to customer s needs. Decision making processes are usually slow since there is no member directly responsible for the ongoing project and the top level management is involved in daily routine work. This tends to decreasement of motivation for employees. Also, project managers work more as coordinators since the functional managers have authority. 26

28 Below is given the picture (nr: 7) of the Functional Organization: Picture 7: Functional Organization Structure Tool used: Projectized Organization (17) (18) Nowadays this organizational kind is mostly used by the companies. It is known for the fact that the project managers maintain full authority for ongoing projects after the authority has been given by general manager. Having the full control and overview of the project means that team members of the project are directly responsible to manager of the project. This method of reporting and communication has a significantly high impact on establishing the communication channel within the team. This kind of strategy leads to quicker decision making process which makes the project capable to react rapidly for new customer needs and demands. When it comes to the perspective of analyzing the other view for this kind of organization, unfortunately there are several negative points of it. When this form is applied and 27

29 implemented especially in a company which is multi-product, running several project in the same time, it will be expensive to cover all the expenses. The reason is that each one of the running projects should be fully staffed. Individuals are assigned to a single project, therefore there is no space and availability of sharing individuals for reducing costs. This leads to duplication of the personnel. Although, another fact that should be consider is the availability of facilities and equipments. The conflict may arise if there is a situation where the same equipment is required in the same time for two or more different and/or not related projects. In this situation the upper level of management decides which project to use it first based on the several aspects: impact, importance, priority etc, or another solution is duplication of the facilities which will increase the cost. Further weak and worrying point for individuals of the team is the career continuity and opportunity. Below is given the picture (nr: 8) of the Projectized Organization: Picture 8: Projectized Organization Structure Tool used: Matrix Structure Organization takes part in the following of the thesis as chapter. 28

30 4. Matrix Organization The following part of the thesis contains the focus and the concentration on the Matrix Structure Organization. In the beginning the literature review will be enlightened, afterward it will be followed by the interview made with individuals, who are part, actually have experiences in such structure and analysis done of the outcome from the interviews. (19) (20) (18) (21) 4.1. Literature Review This kind is a blend of two mentioned organizational forms: Functional Organization and Projectized Organization. It has been established with the idea of combining the advantages of the two mentioned structures and creating a single form which will deliver higher efficiency with minimum risk. However, it is worth to point out that even this form does not provide the perfect solution for organizations that are implementing it in their business since there are several challenges in general that they are experiencing. This sort of organizational structure was first incorporated by huge oil industry, large car manufactures, high-technology companies, such as NASA, etc. They had to adapt to such a structure, for improvement and facilitation in order to deal with the customer s increasement demand. There are two cords of ordering (commands) in Matrix Structure Organization, which are known as vertical and horizontal. When a draw of this organizational chart is made in blank paper, it results to a matrix form and this is the reason why it has been called in this approach. The vertical line represents the operations and deals with issues related to the project whereas the horizontal line represents the functional division and therefore deals with the problems directly related with it. Each project in the vertical line of the organization has an individual responsible as Line Manager for a project which is usually temporary and in the other side also each functional division has an individual working as Functional Manager whereas this line is permanent. 29

31 The figure given below nr: 9, demonstrates a clear view how classical Matrix Structure Organization resembles. However, it may differ in terms of how it is implemented in certain organizations and/or companies depending on their business need, but they all are based on the instance given below nr: 9. In some organization and/or company, an individual may be hired with the following position: Program Manager, whose responsibility is to have a control over all running projects. Below is given the picture (nr: 9) of the Matrix Structure Organization: Picture 9: Projectized Organization Structure Software used: SmartDraw ( The job s responsibility of the functional manager and line manager is different but very crucial for making the Matrix Structure efficient within the organizations and/or companies work. Therefore, their collaboration should, actually must be in high and professional level. Another fact which should be taken under consideration for making the 30

32 collaboration effective is that their roles and responsibilities should be clear and fully understood by each and everyone within the team. However, their task may be depended on how the structure is applied and implemented, but their general tasks are the same. In general the main responsibilities of the functional manager in Matrix Structure are the following: ensuring the project meets the objectives, controlling of scope, budget as well schedule, monitor the progress and improvement of the projects, supervising the project resources, organizing meetings with the client and stakeholders, etc. In general the main responsibilities of the line manager in Matrix Structure are the following: ensure the resources and data for the projects, maintain technical excellence for project managers, controlling and managing technical stuff, organizing trainings for project team members, participating in meetings with project managers for information purposes, etc. It is very common that functional managers put the line managers under big pressure to ensure more resources for the project. The reason is that functional managers somehow depend on line managers to meet the project objectives, since they need the right resources and equipment/technology. Furthermore, considering the perspective of the vision, it differs between them since the functional managers are focusing on the project itself only, which means they are concentrating on the short-term goals, while on the other side the line manager are concentrating on the long-term goals because they are part of permanent division within the structure. 31

33 4.2. Interview Procedure The interview was conducted with the selected employees only from IBM GSDC (International Business Machines - Global Service Delivery Center) located in Brno, Czech Republic. The selected employees were based on the following conditions: having knowledge and being familiar with the matrix organization structure, as well having experience more than 4 (four) years in such structure and being part of different business area and/or background, such as the following profession: Project Manager, Portfolio Manager, Transition Transformation Manager, Project Coordinator, Project Administrator, Team Leader, Contract Business Office and Cost Manager. The questions prepared were the type of Semi- Structured Questionnaire and consisted of 10 (ten) questions in total. The interview was conducted through face to face method when available, or with the use of the following application: Skype. Another application used during the interview was Voice Recorder. The target of the participants was 20 (twenty), but because of the following phenomenon: Saturation of Data, which means the information were almost the same and no new information were given by participants till the number of 15 (fifteen), therefore the total number of participants in the interview is 15 (fifteen). Below the schedule of the interview can be found: The Interview had two parts: First Part contained questions about the Matrix Structure Organization. 1. Do you understand what Matrix Structure Organization is? How? 2. What are the advantages of Matrix Structure Organization? 32

34 3. What are the disadvantages of Matrix Structure Organization? 4. Line Manager and Functional Manager! How do you see the importance, authority and co-operation of these two lines in Matrix Structure Organization? 5. Having two bosses and dual reporting? What s your concern on this point? Second part contained questions (except the last question) about the projects in Matrix Structure Organization. 1. Who decides if the Project is going to be taken? Is the Project Manager involved in this phase, or the project is given after the decision has been made? 2. Resources! Who creates the team after the KICK OFF is sent? 3. What is your opinion about Decision making? Is there any procedure? 4. How the projects are run in Matrix Structure Organization you are part of? 5. Do you like being part of this structure, or you would like to rather change it? 33