The pure product organization, as shown in Figure 3-5, develops as a division within a division. As long as there exists a continuous flow of projects, work is
stable and conflicts are at a minimum. The major advantage of this organizational flow is that one individual, the program manager, maintains complete line authority over the entire project. Not only does he assign work, but he also conducts merit reviews. Because each individual reports to only one person, strong communication channels develop that result in a very rapid reaction time.
In pure product organizations, long lead times became a thing of the past. Trade-off studies could be conducted as fast as time would permit without the need to look at the impact on other projects (unless, of course, identical facilities or equipment were required). Functional managers were able to maintain qualified staffs for new product development without sharing personnel with other programs and projects.
The responsibilities attributed to the project manager were entirely new. First of all, his authority was now granted by the vice president and general manager. The program manager handled all conflicts, both those within his organization and those involving other projects. Interface management was conducted at the program manager level. Upper-level management was now able to spend more time on executive decision making than on conflict arbitration.
The major disadvantage with the pure project form is the cost of maintaining the organization. There is no chance for sharing an individual with another project in order to reduce costs. Personnel are usually attached to these projects long after they are needed because once an employee is given up, the project manager might never be able to get him back. Motivating personnel becomes a problem. At project completion, functional personnel do not "have a home" to return to.
TABLE 3-3. ADVANTAGES OF THE PRODUCT ORGANIZATIONAL FORM
• It provides complete line authority over the project (i.e., strong control through a single project authority).
• The project participants work directly for the project manager. Unprofitable product lines are easily identified and can be eliminated.
• There are strong communications channels.
• Staffs can maintain expertise on a given project without sharing key personnel.
• Very rapid reaction time is provided.
• Personnel demonstrate loyalty to the project; better morale with product identification.
• A focal point develops for out-of-company customer relations.
• There is flexibility in determining time (schedule), cost, and performance trade-offs.
• Interface management becomes easier as unit size is decreased.
• Upper-level management maintains more free time for executive decision making.
Many organizations place these individuals into an overhead labor pool from which selection can be made during new project development. People still in the labor pool for a certain period of time may be laid off indefinitely. As each project comes to a close, people become uneasy and often strive to prove their worth to the company by overachieving, a condition that is only temporary. It is very difficult for management to convince key functional personnel that they do, in fact, have career opportunities in this type of organization.
In pure functional (traditional) structures, technologies are well developed, but project schedules often fall behind. In the pure project structure, the fast reaction time keeps activities on schedule, but technology suffers because without strong functional groups, which maintain interactive technical communication, the company's outlook for meeting the competition may be severely hampered. The engineering department for one project might not communicate with its counterpart on other projects, and duplication of efforts can easily occur.
The last major disadvantage of this organizational form lies in the control of facilities and equipment. The most frequent conflict is that which occurs when two projects require use of the same piece of equipment or facilities at the same time. Hierarchical referral is required to alleviate this problem. Upper-level management can assign priorities to these projects. This is normally accomplished by
TABLE 3-4. DISADVANTAGES OF THE PRODUCT ORGANIZATION FORM
• Cost of maintaining this form in a multiproduct company would be prohibitive due to duplication of effort, facilities, and personnel; inefficient usage.
• There exists a tendency to retain personnel on a project long after they are needed. Upper-level management must balance workloads as projects start up and are phased out.
• Technology suffers because, without strong functional groups, outlook of the future to improve company's capabilities for new programs would be hampered (i.e., no perpetuation of technology).
• Control of functional (i.e., organizational) specialists requires top-level coordination.
• There is a lack of opportunities for technical interchange between projects.
• There is a lack of career continuity and opportunities for project personnel.
defining certain projects as strategic, tactical, or operational—the same definitions usually given to plans.
Table 3-3 summarizes the advantages of this organizational form, and Table 3-4 lists the disadvantages.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.