Management functions are often described in four categories:
- Leading, and
While planning involves a strategic vision for the firm, organizing describes how the company intends to allocate resources to achieve goals and objectives. Leading, or directing, includes activities to motivate team members to do the work of the organization, and controlling is a function to ensure strategic plans result in the expected outcomes.
An important arena within the organizing category of management functions is the team structure. There are three common organizational structures in companies today. These are the functional organization, project-oriented organization, and a matrix or hybrid structure. In this post, the second in a series, we will investigate the characteristics, advantages, and disadvantages of a project-oriented organizational structure.
Project-Oriented Organizational Structure
Also known as a projectized organizational structure, the project-oriented organizational structure is centered around teams and specific project work. Recall that the definition of a project is a temporary endeavor producing a unique product, service, or result. By nature, then, the teams assigned to a project are also temporary.
An example of a project-oriented organizational structure is shown in the figure here. In contrast to the functional organizational structure, the project team structure is highlighted. Overall, the organizational structure in a project is simpler and less hierarchical. Team members are often co-located in a project-oriented organization.
Benefits of a Project-Oriented Structure
Common in firms where most of the work is project based, project-oriented structures offer cross-functional collaboration and coordination of activities. Team members report directly to a project manager who has much independence and authority. The dedicated teams offer additional benefits to completing specific tasks and activities.
Additionally, a project-oriented structure provides a high degree of efficiency and work productivity. Team members’ goals are aligned with the project, and decision-making is effective. Of course, the biggest benefit to the project-oriented structure is the cross-functional involvement of team members. This leads to integrated work activities, higher creativity, and more rapid problem-solving.
Disadvantages of Project-Oriented Organizational Structures
Even in firms in which most work is conducted with projects, there is a higher cost to maintain a project-oriented structure. Specialized jobs may be duplicated on one or more project teams, for example, leading to extra resources on a permanent basis. Moreover, communication of learnings and knowledge sharing between project teams is often limited.
Another disadvantage of a project-oriented structure is that team members may lack career path congruence, meaning that they have no “home” once a project is completed. While group members in a functional organizational structure assume a technical ladder and work with like-minded specialists, a team member in a project-oriented structure may experience many different technical aspects of a project. Because these experiences occur over a short period of time, the individual may not be able to develop deep expertise in a given field.
Using Project-Oriented Organizational Structure
Projectized organizational structures are most appropriate in those firms that use projects as the dominant form of business. For example, EPC (engineering, procurement, and construction) firms will use a project-oriented structure to take advantage of cross-functional coordination. In addition, project-oriented structures are well-suited for large, complex activities that will cover a long period of time.
Specifically, new product development (NPD) activities that involve developing a new technology platform, new-to-the-company, or new-to-the-world products will benefit from using a project-oriented organization. These teams are often identified as heavyweight or venture teams. Tackling both new technology and new markets requires a project manager with significant leadership skills and a high degree of autonomy for the team. Both breadth and depth of knowledge are required for successful execution of these innovation efforts by a project-oriented team.
To learn more about project team structures, please see the “NPDP Certification Exam Prep” (Chapter 6), available from Amazon. You can also learn more about mastering team skills as a project or engineering manager by joining us for an NPDP workshop. Workshops address the theory and best practices of teams working in innovation. NPDP workshops are held monthly through guided webinars or at your own pace in a cost-effective self-study format. We now also offer project management training through our partner, Leap University. Use code GNPS2015 to save $50 on your registration.
© 2015 Global NP Solutions, LLC
Your Training Partner for NPDP Certification, Project Management, and Engineering Leadership