Unit III: Project Organization and Team Building (7)

3.1 System view of an organization

3.2 Pure functional organization

3.3 Matrix organization

3.4 Advantages and limitations of matrix organization

3.5 Project team building

3.6 Barriers to Project team development

3.7 Leadership in project environment

 Project Organization
Project organization is the arrangement of a project team to achieve its objectives. It
includes defining who does what (roles and responsibilities), how team members
communicate, and how decisions are made.

Good project organization is essential for completing projects on time, staying within
budget, and meeting quality standards.

Project organization refers to the structure and framework established to manage

resources, tasks, and responsibilities effectively for the successful completion of a project.

 It defines how activities are coordinated, how decisions are made, and how communication
flows within the project team and with external stakeholders

.
 Elements of Project Organization
a. Project Structure: This refers to how the project is organized, including the hierarchy of team members. It can be
structured in three main ways:

i. Functional: Organized by departments or functions.

ii. Divisional: Organized by products or projects.

iii. Matrix-based: A combination of functional and divisional structures.

b. Roles and Responsibilities: Assigning specific roles and responsibilities to each team member ensures everyone knows
what they are accountable for, promoting efficient task management.

c. Communication Channels: Setting up effective ways to communicate helps team members share information and
collaborate more efficiently.

d. Decision-Making Processes: Having clear processes for making decisions helps prevent delays and ensures decisions
are made properly.

e. Project Management Tools and Techniques: Using the right tools and techniques can improve workflow and enhance
 Benefits of Effective Project Organization
a. Improved Efficiency: Clearly defined roles prevent confusion and overlap in tasks, allowing
team members to focus on their specific responsibilities.

b. Enhanced Collaboration: Effective communication methods foster teamwork, making it

easier for team members to share ideas and work together.

c. Reduced Risk: Established processes and procedures help identify and manage potential
risks, reducing the likelihood of issues arising.

d. Increased Productivity: A well-organized project structure enables the team to work more
effectively, leading to quicker project completion.

e. Improved Quality: Organized teams are better equipped to produce high-quality work,
meeting or exceeding project standards.
 System View of an Organization
A systems view of an organization sees it as a complex entity made up of interrelated parts that
cooperate to reach a shared objective.
This approach highlights how the different elements within the organization and its surroundings
interact and influence each other dynamically.
The system view of an organization is a perspective that considers the organization as an
interconnected and interdependent whole, where various components work together to achieve
overall objectives.
It emphasizes that an organization is not just a collection of separate entities but a system with
inputs, processes, outputs, and feedback mechanisms.
 This perspective is rooted in systems theory, which applies a holistic approach to understanding
 Components of a System View
The components of system involves inputs, processes, outputs, and feedback:

a. Inputs: These are the essential elements needed for the organization to function,
including:

i. Raw materials/Labor (human effort)

ii. Capital (money or investment)

iii. Information (data needed for decision-making)

iv. Technology (tools and systems used in production)

v. Energy: This refers to the power or force that enables the organization’s
b. Processes: These are the activities that occur within the organization, which
include:

i. Transformation: Turning inputs into final products or services.

ii. Decision-making: Choosing the best course of action to steer the organization.

iii. Communication: Exchanging information among various parts of the organization.

c. Outputs: The results generated by the organization, which can be:

i. Products or services: The end items offered to customers.

ii. Waste: Unwanted materials that result from the transformation process.

d. Feedback: This is information about how well the organization is performing,

e. Environment: The external and internal factors that affect the organization.

i. External factors: Market conditions, competition, regulations.

ii. Internal factors: Culture, leadership, and employee behavior.

Characteristics of the System View

a. Interdependence: Departments and functions within an organization depend on each other for effective
operation.

b. Holistic Thinking: The organization is viewed as a whole, not as isolated parts.

c. Dynamic Interactions: Emphasizes the continuous and dynamic interaction between different parts of the
system and its environment.

d. Goal-Oriented: Focused on achieving organizational objectives.

 Pure Functional Organization
 A pure functional organization is a traditional way to structure a company by grouping employees according to
their specific skills or areas of expertise.

 This leads to the creation of specialized departments, such as engineering, marketing, and finance. Each
department is managed by a functional manager who is responsible for overseeing the work done in that particular
area.

 Examples of departments in a functional organization structure could be a human resources (HR) department,
marketing department, sales department, finance department, etc.

 This type of structure is very common, particularly in large corporations. Some large companies with a functional
organizational structure include:

i. Starbucks

ii. Amazon
 Characteristics of a Functional Organizational Structure
Some of the most significant characteristics of a functional organizational structure include:

i. Departments are organized based on common skills, expertise, and work activities

ii. Power and decision-making authority are consolidated primarily at the top levels of the
organization, with a strong hierarchy-based decision-making style

iii. Information flows up and down within functional silos, with less cross-functional
communication.

iv. Individual departments have clearly defined goals related to their specialized contributions

v. Employees develop specialized skill sets and extensive expertise within their specific
function.
 Advantages of a Functional Organizational Structure
a. Efficiency: Centralization and specialization can lead to operational efficiencies and cost
savings.

b. Expertise: Encourages the development of deep expertise within each functional area.

c. Clear Career Paths: Provides clear career paths for employees within their respective
departments.

d. Reduced Duplication: Centralized functions can minimize duplication of effort across

the organization.
 Disadvantages of a Functional Organizational Structure
a. Lack of Coordination: Limited interaction between departments can lead to poor
coordination and communication.

b. Silo Mentality: Departments may focus solely on their goals, neglecting the organization's
overall objectives.

c. Slow Decision-Making: Decisions requiring inter-departmental collaboration may be

delayed.

d. Limited Flexibility: The rigid structure makes it difficult to adapt to dynamic business
environments.
 Matrix Organization
Matrix organization structure is a special type of problem solving form of an organization.
Generally, matrix organization is formed to complete various types of project of specific and
unique nature.

 This is also known as project management structure. It requires diverse technical and
administrative experts to adjust efficiently with the dynamic and rapidly changing
environment of the business.

In matrix structure, a major project is assigned to the project manager and he is given a team
of specialists from different disciplines. The team members may be from various functional
areas such as research and development, production, finance, marketing etc.
This team provides support to the project manager to complete the project in a given time
frame. In general sense, matrix organization is a combination and interaction of functional
and project managers.

The project manager is responsible for the overall direction and integration of activities and
resource of the concerned project. Generally, their responsibility is to integrate the efforts of
all functional managers, planning and implementing the project policies, accomplishing
work on schedule and within the predetermined budget.

The functional managers look after the operational side of the project. Their responsibility is
to provide technical guidance and skilled functional staff and complete the project within the
standard technical specifications.
Especially, matrix structure integrates the efforts of the functional and project authority. The
authority of the functional manager flows vertically down from the superior to the
subordinates.

The project authority follows horizontally crossing vertical lines. In this structure, each
subordinate works under two superiors one is the project manager and the other is the
functional manager.

As such, this structure does not follow the principle of unity of command and scalar chain.
This organization is more democratic, human and participative and it maintains
collaboration and cooperation among a wider range of people.
A specimen of the matrix structure is as follows:
 Advantages and Limitations of Matrix Organization
The advantages of matrix structure are as follows.
a. Organizational effectiveness and dynamism: A matrix structure enables organizational
effectiveness by utilizing the resources in an optimum way.
b. Effective decisions and participation: Decisions are effective as it attempts to address the
interest of stakeholders.
c. Decrease in bureaucracy: There is decrease in bureaucracy due to direct coordination between
different levels or units of the organization.
d. Facilitates communication: It facilitates communication by enhancing motivation and
commitment of the employees.
e. Enhancement of team work and creativity: The creativity of the employees can be enhanced by
utilizing the human resource scientifically.
f. Excellence in inter-disciplinary specialization: The specialists are experts show their concerns
fro inter-departmental activities. It helps to achieve efficiency and effectiveness of the entire
organization.
The following are some limitation of matrix organization:

a. Feeling of Insecurity: A feeling of insecurity among the employees is one of the limitations
of matrix structure. In many cases, a project runs only for a fixed duration. After completion
of the defined works, there is more probability of the dissolution of the project. In such a
situation, the problem of unemployment may arise if another project is not available to the
organization.

b. Violation of Unity of Command: In matrix structures, subordinates have to follow

instructions from more than one superior. Generally, they receive orders from functional
managers as well as from project managers. In some cases, subordinates may receive
instruction from both superiors at a time, which confuses the subordinates. To avoid this
problem, frequent and comprehensive communication among project and functional
c. Costly Structure: This structure maximizes administrative cost. Here, Specialists from
the project as well as functional authorities involve in project works. It maximizes
paperwork and other information costs. Besides, it is essential to pay lump-sum
remuneration to functional and project specialists.

d. Problem of Over-specialization: In some situations, matrix organization creates a

problem of over-specialization. Specialists from both functional and project works gather
to solve many complex problems of the organization. As many experts gather to solve
problems, in some cases, they waste valuable time in discussing unrelated subject matters.
Thus, there is a possibility of delay in decision making. In one way, it maximizes the cost
of the organization, and in the other it delays decisions resulting in losses in the business.
 Project Team Building
A team is a group of individuals who work together towards a common goal. They share
responsibilities, coordinate their efforts, and rely on each other's strengths to achieve their
objectives.

A team is a group of individuals who come together to achieve a common goal or objective by
sharing their skills, knowledge, and resources. Teams are characterized by mutual accountability,
collaboration, and a sense of shared purpose.

Smith (1993):"A team is a small number of people with complementary skills who are
committed to a common purpose, performance goals, and approach for which they hold
themselves mutually accountable.”

Robbins and Judge (2013):"A team is a group whose individual efforts result in performance
A project team is a group of individuals brought together to work collaboratively on
a specific project, with clearly defined roles, responsibilities, and objectives.
The team is composed of members with diverse skills and expertise, selected based
on the requirements of the project. Unlike ongoing teams, a project team exists
temporarily and disbands once the project is completed.
Lewis (2006):"A project team is a temporary organization that includes individuals
with a shared responsibility for planning, executing, and completing a project.“
PMBOK Guide (Project Management Institute, 2021):"A project team is the set of
individuals assigned to perform the work of the project. They work collaboratively
to deliver the project’s deliverables."
 Characteristics of Teams
a. Shared Goal: Teams work towards a common objective that brings everyone together.

b. Interdependence: Team members depend on one another, exchanging information and

resources to complete tasks.

c. Accountability: Each member is responsible for their own work and for helping the team
succeed as a whole.

d. Communication: Good communication is necessary for coordinating efforts and

addressing conflicts within the team.

e. Synergy: Teams strive to achieve results that exceed what each member could accomplish
alone.
 Types of Teams
a. Self-Managed Teams: These teams operate independently, making their own
decisions and organizing their work without outside direction.

b. Cross-Functional Teams: These teams consist of members from various

departments or areas of expertise who collaborate to reach a shared objective.

c. Virtual Teams: These teams work together from different locations, relying on
technology to communicate and coordinate their efforts.

d. Project Teams: These are temporary teams created specifically to accomplish a

particular project within a set timeframe.
 Phases of Team Development (Tuckman’s Model)
Bruce Tuckman's model outlines five stages of team development:

a. Forming: Team members get acquainted and understand the project goals.

b. Storming: Conflicts may arise as individuals express differing opinions.

c. Norming: Team establishes norms and begins to work collaboratively.

d. Performing: Team operates at its highest efficiency, focusing on achieving

goals.

e. Adjourning: Team disbands after the project is completed.

 Barriers to Project Team Development
Project teams are crucial for an organization’s success, but they often face several
obstacles that can impact their growth and effectiveness. Here are some barriers:

a. Lack of Trust: Trust among team members is vital. Without it, members may hesitate to
express ideas or work together confidently.

b. Poor Communication: Clear communication is essential for project success.

Misunderstandings and unclear information can lead to delays and conflicts.

c. Unclear Goals and Expectations: If team members don't understand the project's goals
or their roles, it can create confusion and lower motivation.

d. Conflict and Disagreement: While conflict is normal in teams, if not handled well, it
e. Lack of Leadership: Strong leadership is important for guiding the team,
resolving issues, and keeping members motivated.

f. Diversity and Inclusion Challenges: While diversity is beneficial, it can also

cause misunderstandings if not managed properly, affecting collaboration.

g. Resource Constraints: Limited resources like time, budget, or personnel can

hinder the team's ability to meet its objectives.

h. External Pressures: Factors like organizational changes or market conditions

can add stress and create challenges for the team.
 Leadership in Project Environment
Leadership is the ability to influence and guide others towards a common goal. It involves
inspiring, motivating, and empowering individuals or teams to achieve their full potential.
Leadership is the process of influencing and guiding individuals or groups to achieve common
goals or objectives. It involves inspiring, motivating, and directing others in a way that fosters
teamwork, commitment, and performance.
 Effective leadership typically involves setting a vision, making decisions, building trust, and
managing resources, while also adapting to changes in the environment or context.
Leaders may use different styles and approaches, such as transformational, transactional, or servant
leadership, depending on the needs of the situation and the people they are leading. Leadership is
not only about authority or power but also about the ability to empower and support others in
Keith Davis: "Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor that binds a group together and motivates it
toward goals.“

Peter G. Northouse (2018): "Leadership is a process whereby an individual influences

a group of individuals to achieve a common goal.“

Stephen Covey: "Leadership is communicating to people their worth and potential so

clearly that they come to see it in themselves.“

Bernard Bass (1990): "Leadership is an interaction between two or more members of a

group that often involves structuring or restructuring the situation and the perceptions
and expectations of members."
 Roles of a Project Leader
a. Establishing project scope: Set clear boundaries for the project to understand what is included and what is
not.

b. Allocating resources: Assign the necessary time, budget, and personnel required to meet the project goals.

c. Prioritizing tasks: Determine which tasks are most important and allocate resources to those first.

d. Developing and maintaining project schedules: Create schedules with timelines and monitor the project's
progress.

e. Managing project risks: Identify possible risks and develop strategies to address them.

f. Facilitating communication: Ensure that team members and stakeholders communicate effectively
throughout the project.

g. Making decisions: Make timely decisions to keep the project moving forward.

h. Motivating and inspiring the team: Encourage and support the team to create a positive and effective work
 Leadership Skills for Project Managers
a. Communication: Being able to share ideas clearly and effectively to build relationships and solve issues.

b. Team Leadership: The skill to guide and inspire a group to work well together and achieve goals.

c. Conflict Resolution: The ability to address disagreements in a way that resolves issues positively.

d. Motivation: Encouraging team members to perform their best and stay engaged.

e. Problem-Solving: Identifying issues and finding effective solutions.

f. Decision-Making: Choosing the best course of action quickly and wisely, especially under pressure.

g. Adaptability: Being flexible and adjusting to new situations and challenges as they arise.

h. Emotional Intelligence: Recognizing and understanding your own emotions and those of others to
improve interactions and relationships.
 Leadership Styles in Project Management
a. Authoritative: The leader makes decisions independently and gives clear instructions
to the team.

b. Democratic: The leader collaborates with the team, involving members in the decision-
making process.

c. Laissez-Faire: The leader takes a hands-off approach, allowing the team to manage
themselves with minimal guidance.

d. Transactional: The leader motivates the team by using rewards for good performance
and punishments for poor performance.

e. Transformational: The leader inspires and motivates the team by promoting a shared