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Project Management

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PROJECT ORGANISATION,
STRUCTURE
Dr Manpreet Arora (Ph.d, M. Phil, M.Com (Distinction Holder,
B.com(Gold Medalist) NET )
Assistant Professor Management
Department of Accounting and Finance
School of Business and Mangement Studies
Central University of HP

PROJECT MANAGEMENT




Project management is concerned with the
overall planning and co-ordination of a project
from conception to completion aimed at meeting
the stated requirements and ensuring completion
on time, within cost and to required quality
standards.
Project management is normally reserved for
focused, non-repetitive, time-limited activities
with some degree of risk and that are beyond the
usual scope of operational activities for which the
organization is responsible.

PROJECT DEFINITION AND
SCOPE


What is a Project?
“A project is a one-shot, time-limited, goal-directed, major
undertaking, requiring the commitment of varied skills and
resources”.
A project is a temporary endeavor undertaken to create a unique
product or service. A project is temporary in that there is a
defined start (the decision to proceed) and a defined end (the
achievement of the goals and objectives). Ongoing business or
maintenance operations are not projects. Energy conservation
projects and process improvement efforts that result in better
business processes or more efficient operations can be defined as
projects. Projects usually include constraints and risks regarding
cost, schedule or performance outcome.

FOUR BASIC ELEMENTS OF PROJECT MANAGEMENT


Managing Resources
A successful Project Manager must effectively manage the resources assigned to the project. This
includes the labor hours of the project team. It also includes managing labor subcontracts and
vendors. Managing the people resources means having the right people, with the right skills and
the proper tools, in the right quantity at the right time.
However, managing project resources frequently involves more than people management. The
project manager must also manage the equipment (cranes, trucks and other heavy equipment)
used for the project and the material (pipe, insulation, computers, manuals) assigned to the
project.



Managing Time and Schedule
Time management is a critical skill for any successful project manager. The most common cause
of bloated project budgets is lack of schedule management. Fortunately there is a lot of software
on the market today to help you manage your project schedule or timeline.
Any project can be broken down into a number of tasks that have to be performed. To prepare the
project schedule, the project manager has to figure out what the tasks are, how long they will
take, what resources they require, and in what order they should be done.



Managing Costs
Often a Project Manager is evaluated on his or her ability to complete a project within budget.
The costs include estimated cost, actual cost and variability. Contingency cost takes into account
influence of weather, suppliers and design allowances.



How the 80/20 Rule can help a project manager?
The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are
trivial. Successful Project Managers know that 20 percent of the work (the first 10 percent and
the last 10 percent) consumes 80 percent of your time and resources.

PROJECT MANAGEMENT LIFE CYCLE
The various elements of project management life cycle are


a) Need identification



b) Initiation



c) Planning



d) Executing



e) Controlling



f) Closing out

NEED
IDENTIFICATION










The first step in the project development cycle is to identify components of the project. Projects may be
identified both internally and externally:
Internal identification takes place when the energy manager identifies a package of energy saving
opportunities during the day-to-day energy management activities, or from facility audits.
External identification of energy savings can occur through systematic energy audits undertaken by a
reputable energy auditor or energy service company.
In screening projects, the following criteria should be used to rank-order project opportunities.
Cost-effectiveness of energy savings of complete package of measures (Internal rate of return, net
present value, cash flow, average payback)



Sustainability of the savings over the life of the equipment.



Ease of quantifying, monitoring, and verifying electricity and fuel savings.



Availability of technology, and ease of adaptability of the technology to Indian conditions.



Other environmental and social cost benefits (such as reduction in local pollutants, e.g. SO x)

INITIATION




Initiating is the basic processes that should be performed to get the project started.
This starting point is critical because those who will deliver the project, those who
will use the
project, and those who will have a stake in the project need to reach an agreement
on its initiation. Involving all stakeholders in the project phases generally improves
the probability of satisfying customer requirements by shared ownership of the
project by the stakeholders. The success of the project team depends upon starting
with complete and accurate information, management support, and the
authorization necessary to manage the project.

PLANNING




The planning phase is considered the most important phase in project management.
Project planning defines project activities that will be performed; the products that
will be produced, and describes how these activities will be accomplished and
managed. Project planning defines each major task, estimates the time, resources
and cost required, and provides a framework for management review and control.
Planning involves identifying and documenting scope, tasks, schedules, cost, risk,
quality, and staffing needs.
The result of the project planning, the project plan, will be an approved,
comprehensive document that allows a project team to begin and complete the work
necessary to achieve the project goals and objectives. The project plan will address
how the project team will manage the project elements. It will provide a high level of
confidence in the organization’s ability to meet the scope, timing, cost, and quality
requirements by addressing all aspects of the project.

EXECUTING






Once a project moves into the execution phase, the project team and all necessary
resources to carry out the project should be in place and ready to perform project
activities. The project plan is completed and base lined by this time as well. The
project team and the project manager’s focus now shifts from planning the project
efforts to participating, observing, and analyzing the work being done.
The execution phase is when the work activities of the project plan are executed,
resulting in the completion of the project deliverables and achievement of the project
objective(s). This phase brings together all of the project management disciplines,
resulting in a product or service that will meet the project deliverable requirements
and the customers need. During this phase, elements completed in the planning
phase are implemented, time is expended, and money is spent.
In short, it means coordinating and managing the project resources while executing
the project plan, performing the planned project activities, and ensuring they are
completed efficiently.

CONTROLLING


Project Control function that involves comparing actual
performance with planned performance and taking
corrective action to get the desired outcome when there are
significant differences. By monitoring and measuring
progress regularly, identifying variances from plan, and
taking corrective action if required, project control ensures
that project objectives are met.

CLOSING OUT


Project closeout is performed after all defined project objectives have been
met and the customer has formally accepted the project’s deliverables and
end product or, in some instances, when a project has been cancelled or
terminated early. Although, project closeout is a routine process, it is an
important one. By properly completing the project closeout, organizations
can benefit from lessons learned and information compiled. The project
closeout phase is comprised of contract closeout and administrative
closure.

Project time
management

Project
integration
management

Project scope
management

Project risk
management

Project
communication
management

Project cost
management

Project quality
management

Project
management

Project
HRM

Project
procurement
management

WHAT IS ORGANIZATIONAL
STRUCTURE?
By structure, we mean the framework around
which
the
group
is
organized,
the
underpinnings which keep the coalition
functioning.
It's the operating manual that tells members
how the organization is put together and how
it works.
More specifically, structure describes how
members are accepted, how leadership is
chosen, and how decisions are made.

WHY SHOULD YOU DEVELOP A STRUCTURE FOR
YOUR ORGANIZATION?
Structure gives members clear guidelines for how to
proceed. 
A clearly-established structure gives the group a means to
maintain order and resolve disagreements.
Structure binds members together. It gives meaning and
identity to the people who join the group, as well as to the
group itself.
Structure in any organization is inevitable -- an
organization, by definition, implies a structure.
Your group is going to have some structure whether it chooses
to or not.
It might as well be the structure which best matches up with
what kind of organization you have, what kind of people are
in it, and what you see yourself doing.

WHEN SHOULD YOU DEVELOP A STRUCTURE
FOR YOUR ORGANIZATION?
It is important to deal with structure early in the
organization's development.
Structural development can occur in proportion to other
work the organization is doing, so that it does not crowd
out that work.
And it can occur in parallel with, at the same time as,
your organization's growing accomplishments, so they
take place in tandem, side by side.
This means that you should think about structure from
the beginning of your organization's life. As your group
grows and changes, so should your thinking on the
group's structure.

ELEMENTS OF STRUCTURE
While the need for structure is clear, the best
structure for a particular coalition is harder to
determine. The best structure for any organization
will depend upon who its members are, what the
setting is, and how far the organization has come in
its development.
Regardless of what type of structure your
organization decides upon, three elements will
always be there. They are inherent in the very idea
of an organizational structure.
They are:
•Some kind of governance
•Rules by which the organization operates
•A distribution of work

Governance
The first element of structure is governance - some person or
group has to make the decisions within the organization.
Rules by which the organization operates
Another important part of structure is having rules by which the
organization operates. Many of these rules may be explicitly
stated, while others may be implicit and unstated, though not
necessarily any less powerful.

Distribution of work
Inherent in any organizational structure also is a
distribution of work. The distribution can be formal or
informal, temporary or enduring, but every organization
will have some type of division of labor.
There are four tasks that are key to any group:
1. Envisioning desired changes. The group needs
someone who looks at the world in a slightly different
way and believes he or she can make others look at
things from the same point of view.

2.Transforming the community.
The group needs people who will go out and do the work that has
been envisioned.
3.Planning for integration. Someone needs to take the vision
and figure out how to accomplish it by breaking it up into
strategies and goals.
4.Supporting the efforts of those working to promote
change.
The group needs support from the community to raise money for
the organization, champion the initiative in the state legislature,
and ensure that they continue working towards their vision.

Types of Organizational Structures: their
Advantages and Disadvantages!
All managers must bear that there are two organizations
they must deal with-one formal and the other informal.
The formal organization in usually delineated by an
organizational chart and job descriptions. The official
reporting relationships are clearly known to every
manager.
Alongside the formal organization exists are informal
organization which is a set of evolving relationships and
patterns of human interaction within an organization that
are not officially prescribed.

Formal organizational structures are categorized as:
(i) Line organisational structure.
(ii) Staff or functional authority organisational structure.
(iii) Line and staff organisational structure.
(iv) Committee organisational structure.
(v) Divisional organisational structure.
(vi) Project organisational structure.
(vii) Matrix organisational structure and
(viii) Hybrid organisational structure.

Line Organisational Structure:
A line organisation has only direct, vertical relationships
between different levels in the firm.
There are only line departments-departments directly involved
in accomplishing the primary goal of the organisation.
For example, in a typical firm, line departments include
production and marketing.
In a line organisation authority follows the chain of command.

Features:
Has only direct vertical relationships between different levels in
the firm.
Advantages:
1. Tends to simplify and clarify authority, responsibility and
accountability relationships
2. Promotes fast decision making
3. Simple to understand.
Disadvantages:
1. Neglects specialists in planning
2. Overloads key persons.

Some of the advantages of a pure line organisation are:
(i) A line structure tends to simplify and clarify responsibility,
authority and accountability relationships. The levels of
responsibility and authority are likely to be precise and
understandable.
(ii) A line structure promotes fast decision making and flexibility.
(iii) Because line organisations are usually small, managements
and employees have greater closeness.
However, there are some disadvantages also. They are:
(i) As the firm grows larger, line organisation becomes more
ineffective.
(ii) Improved speed and flexibility may not offset the lack of
specialized knowledge.
(iii) Managers may have to become experts in too many fields.
(iv) There is a tendency to become overly dependent on the few key
people who an perform numerous jobs.

Staff or Functional Authority Organizational Structure
The jobs or positions in an organisation can be categorized as:
(i) Line position:
a position in the direct chain of command that is responsible for the
achievement of an organisation’s goals and
(ii) Staff position:
A position intended to provide expertise, advice and support for the
line positions.
The line officers or managers have the direct authority (known as
line authority) to be exercised by them to achieve the organisational
goals.
The staff officers or managers have staff authority (i.e., authority to
advice the line) over the line. This is also known as functional
authority.
An organisation where staff departments have authority over line
personnel in narrow areas of specialization is known as functional
authority organisation.

• In the line organisation, the line managers cannot be experts in all
the functions they are required to perform.
• But in the functional authority organisation, staff personnel who
are specialists in some fields are given functional authority (The
right of staff specialists to issue orders in their own names in
designated areas).
• The principle of unity of command is violated when functional
authority exists i.e., a worker or a group of workers may have to
receive instructions or orders from the line supervisor as well as the
staff specialist which may result in confusion and the conflicting
orders from multiple sources may lead to increased ineffectiveness.
Some staff specialists may exert direct authority over the line
personnel, rather than exert advice authority (for example, quality
control inspector may direct the worker as well as advise in matters
related to quality).

While this type of organisational structure overcomes the
disadvantages of a pure line organisaional structure, it has some
major disadvantages:
They are:
(i) the potential conflicts resulting from violation of principle of
unity of command and
(ii) the tendency to keep authority centralized at higher levels in
the organisation.

Line and Staff Organisational Structure:
Most large organisations belong to this type of organisational
structure.
These organisations have direct, vertical relationships between
different levels and also specialists responsible for advising and
assisting line managers.
Such organisations have both line and staff departments. Staff
departments provide line people with advice and assistance in
specialized areas (for example, quality control advising production
department).

The line functions are production and marketing whereas the
staff functions include personnel, quality control, research and
development, finance, accounting etc. The staff authority of
functional authority organisational structure is replaced by
staff responsibility so that the principle of unity of command is
not violated.
Three types of specialized staffs can be identified:
(i) Advising,
(ii) Service and
(iii) Control.
Some staffs perform only one of these functions but some may
perform two or all the three functions. The primary advantage
is the use of expertise of staff specialists by the line personnel.
The span of control of line managers can be increased because
they are relieved of many functions which the staff people
perform to assist the line.

Some advantages are:
(i) Even through a line and staff structure allows higher
flexibility and specialization it may create conflict between line
and staff personnel.
(ii) Line managers may not like staff personnel telling them
what to do and how to do it even though they recognize the
specialists’ knowledge and expertise.
(iii) Some staff people have difficulty adjusting to the role,
especially when line managers are reluctant to accept advice.
(iv) Staff people may resent their lack of authority and this may
cause line and staff conflict.

Features:
1. Line and staff have direct vertical relationship between different
levels.
2. Staff specialists are responsible for advising and assisting line
managers/officers in specialized areas.
3. These types of specialized staff are (a) Advisory, (b) Service, (c)
Control e.g.,
(a) Advisory:
Management information system, Operation Research and
Quantitative Techniques, Industrial Engineering, Planning etc
(b) Service:
Maintenance, Purchase, Stores, Finance, Marketing.
(c) Control:
Quality control, Cost control, Auditing etc. Advantages’
(i) Use of expertise of staff specialists.
(ii) Span of control can be increased
(iii) Relieves line authorities of routine and specialized decisions.

Disadvantages:
(i) Conflict between line and staff may still arise.
(ii) Staff officers may resent their lack of authority.
(iii) Co-ordination between line and staff may become difficult.
Committee Organisational Structure Features:
(a) Formed for managing certain problems/situations
(b) Are temporary decisions.

Divisional Organisational Structure:
In this type of structure, the organisation can have
different basis on which departments are formed.
They are:
(i) Function,
(ii) Product,
(iii) Geographic territory,
(iv) Project and
(iv) Combination approach.

Project Organisational Structure:
The line, line and staff and functional authority organisational
structures facilitate establishment and distribution of authority
for vertical coordination and control rather than horizontal
relationships.
In some projects (complex activity consisting of a number of
interdependent and independent activities) work process may
flow horizontally, diagonally, upwards and downwards. The
direction of work flow depends on the distribution of talents
and abilities in the organisation and the need to apply them to
the problem that exists.
The cope up with such situations, project organisations
and matrix organisations have emerged.

A project organisation is a temporary organisation designed to
achieve specific results by using teams of specialists from
different functional areas in the organisation.
The project team focuses all its energies, resources and results
on the assigned project. Once the project has been completed,
the team members from various cross functional departments
may go back to their previous positions or may be assigned to a
new project.
Some of the examples of projects are: research and
development
projects,
product
development,
construction of a new plant, housing complex, shopping
complex, bridge etc.

Feature:
Temporary organisation designed to achieve specific results by
using teams of specialists from different functional areas in
the organisation.
Importance of Project Organisational Structure:
Project organisational structure is most valuable when:
(i) Work is defined by a specific goal and target date for
completion.
(ii) Work is unique and unfamiliar to the organisation.
(iii) Work is complex having independent activities and
specialized skills are necessary for accomplishment.
(iv) Work is critical in terms of possible gains or losses.
(v) Work is not repetitive in nature.

Characteristics of project organisation:
1. Personnel are assigned to a project from the existing permanent
organisation and are under the direction and control of the project
manager.
2. The project manager specifies what effort is needed and when work will
be performed whereas the concerned department manager executes the
work using his resources.
3. The project manager gets the needed support from production, quality
control, engineering etc. for completion of the project.
4. The authority over the project team members is shared by project
manager and the respective functional managers in the permanent
organisation.
5. The services of the specialists (project team members) are temporarily
loaned to the project manager till the completion of the project.
6. There may be conflict between the project manager and the
departmental manager on the issue of exercising authority over team
members.
7. Since authority relationships are overlapping with possibilities of
conflicts, informal relationships between project manager and
departmental managers (functional managers) become more important
than formal prescription of authority.
8. Full and free communication is essential among those working on the
project.

Matrix Organisational Structure:
It is a permanent organisation designed to achieve specific
results by using teams of specialists from different functional
areas in the organisation. The matrix organisation is
illustrated in Exhibit 10.8.
Feature:
Superimposes a horizontal set of divisions and reporting
relationships onto a hierarchical functional structure
Advantages:
1. Decentralised decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
5. Flexible use of resources.
6. Efficient use of support systems.

Disadvantages:
1. High administration cost.
2. Potential confusion over authority and responsibility.
3. High prospects of conflict.
4. Overemphasis on group decision making.
5. Excessive focus on internal relations.
This type of organisation is often used when the firm has to be
highly responsive to a rapidly changing external environment.
In matrix structures, there are functional managers and
product (or project or business group) managers. Functional
manager are in charge of specialized resources such as
production, quality control, inventories, scheduling and
marketing. Product or business group managers are incharge of
one or more products and are authorized to prepare product
strategies or business group strategies and call on the various
functional managers for the necessary resources.

The problem with this structure is the negative effects
of dual authority similar to that of project
organisation. The functional managers may lose some
of their authority because product managers are given
the budgets to purchase internal resources. In a
matrix organisation, the product or business group
managers and functional managers have somewhat
equal power. There is possibility of conflict and
frustration but the opportunity for prompt and
efficient accomplishment is quite high.

Hybrid Organisational Structure:

Advantages:
1. Alignment of corporate and divisional goals.
2. Functional expertise and efficiency.
3. Adaptability and flexibility in divisions.
Disadvantages:
1. Conflicts between corporate departments and units.
2. Excessive administration overhead.
3. Slow response to exceptional situations.

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