2.3 Organizational Influences

Projects are typically part of an organization larger than the project—corporations, government agencies, health-care institutions, international bodies, professional associations, and others. Even when the project is the organization (joint ventures, partnering), the project will still be influenced by the organization or organizations that set it up. The maturity of the organization with respect to its project management office can also influence the project. The following sections describe key aspects of these larger organizational structures that are likely to influence the project.

2.3.1 Organizational Systems
Project-based organizations are those whose operations consist primarily of projects. These organizations fall into two categories:

   Organizations that derive their revenue primarily from performing projects for others—architectural firms, engineering firms, consultants, construction contractors, government contractors, nongovernmental organizations, etc.

   Organizations that have adopted management by projects (see Section 1.3).

  These organizations tend to have management systems in place to facilitate project management. For example, their financial systems are often specifically designed for accounting, tracking, and reporting on multiple simultaneous projects.
  Nonproject-based organizations often lack management systems designed to support project needs efficiently and effectively. The absence of project-oriented systems usually makes project management more difficult. In some cases, non-project-based organizations will have departments or other subunits that operate as project-based organizations with systems to match.
  The project management team should be acutely aware of how the organization's systems affect the project. For example, if the organization rewards its functional managers for charging staff time to projects, the project management team may need to implement controls to ensure that assigned staff members are being used effectively on the project.

2.3.2 Organizational Cultures and Styles
Most organizations have developed unique and describable cultures. These cultures are reflected in their shared values, norms, beliefs, and expectations; in their policies and procedures; in their view of authority relationships; and in numerous other factors. Organizational cultures often have a direct influence on the project. For example:

   A team proposing an unusual or high-risk approach is more likely to secure approval in an aggressive or entrepreneurial organization.

   A project manager with a highly participative style is apt to encounter problems in a rigidly hierarchical organization, while a project manager with an authoritarian style will be equally challenged in a participative organization.

2.3.3 Organizational Structure
The structure of the performing organization often constrains the availability of or terms under which resources become available to the project. Organizational structures can be characterized as spanning a spectrum from functional to projectized, with a variety of matrix structures in between. Figure 2-6 shows key project-related characteristics of the major types of enterprise organizational structures. Project organization is discussed in Section 9.1, Organizational Planning.
  The classic functional organization shown in Figure 2-7 is a hierarchy where each employee has one clear superior. Staff members are grouped by specialty, such as production, marketing, engineering, and accounting at the top level, with engineering further into functional organizations that support the business of the larger organization (e.g., mechanical and electrical. Functional organizations still have projects, but the perceived scope of the project is limited to the boundaries of the function: the engineering department in a functional organization will do its work independent of the manufacturing or marketing departments. For example, when a new product development is undertaken in a purely functional organization, the design phase is often called a "design project" and includes only engineering department staff. If questions about manufacturing arise, they are passed up the hierarchy to the department head who consults with the head of the manufacturing department. The engineering department head then passes the answer back down the hierarchy to the engineering project manager.
  At the opposite end of the spectrum is the projectized organization shown in Figure 2-8. In a projectized organization, team members are often collocated. Most of the organization's resources are involved in project work, and project managers have a great deal of independence and authority. Projectized organizations often have organizational units called departments, but these groups either report directly to the project manager or provide support services to the various projects.   Matrix organizations as shown in Figure 2-9 through 2-11 are a blend of functional and projectized characteristics. Weak matrices maintain many of the characteristics of a functional organization and the project manager role is more that of a coordinator or expediter than that of a manager. In similar fashion, strong matrices have many of the characteristics of the projectized organization—full-time project managers with considerable authority and full-time project administrative staff.
  Most modern organizations involve all these structures at various levels as shown in Figure 2-12. For example, even a fundamentally functional organization may create a special project team to handle a critical project. Such a team may have many of the characteristics of a project in a projectized organization. The team may include full-time staff from different functional departments, it may develop its own set of operating procedures, and it may operate outside the standard, formalized reporting structure.

2.3.4 Project Office
There is a range of uses for what constitutes a project office. A project office may operate on a continuum from provinding support functions to project managers in the form of training, software, templates, etc. to actually being responsible for the results of the project.