Structuring the Small Company

Small and medium-sized companies generally prefer to have the project manager report fairly high up in the chain of command, even though the project manager may be working on a relatively low-priority project. Project managers are usually viewed as less of a threat in small organizations than in the larger ones, thus creating less of a problem if they report high up.

Organizing the small company for projects involves two major questions:

• Where should the project manager be placed within the organization?

• Are the majority of the projects internal or external to the organization?

These two questions are implicitly related. For either large, complex projects or those involving outside customers, project managers generally report to a high level in the organization. For small or internal projects, the project manager reports to a middle or lower-level manager.

Small and medium-sized companies have been very successful in managing internal projects using departmental project management (see Figure 3-2), especially when only a few functional groups must interface with one another. Quite often, line managers are permitted to wear multiple hats and also act as project managers, thereby reducing the need for hiring additional project managers.

Customers external to the organization are usually favorably impressed if a small company identifies a project manager who is dedicated and committed to their project, even if only on a part-time basis. Thus, outside customers, particularly through a competitive bidding environment, respond favorably toward a matrix structure, even if the matrix structure is simply eyewash for the customer. For example, consider the matrix structure shown in Figure 3-16. Both large and small companies that operate on a matrix usually develop a separate organizational chart for each customer. Figure 3-16 represents the organizational chart that would be presented to Alpha Company. The Alpha Company project would be identified with bold lines and would be placed immediately below the vice president, regardless of the priority of the project. After all, if you were the Alpha Company customer, would you want your project to appear at the bottom of the list?

Figure 3-16 also identifies two other key points that are important to small companies. First, only the name of the Alpha Company project manager, Bob Ray, need be identified. The reason for this is that Bob Ray may also be the project manager for one or more of the other projects, and it is usually not a good practice to let the customer know that Bob Ray will have split loyalties among several projects. Actually, the organization chart shown in Figure 3-16 is for a machine tool company employing 280 people, with five major and thirty minor projects. The company has only two full-time project managers. Bob Ray manages the projects for Alpha, Gamma, and Delta Companies; the Beta Company project has the second full-time project manager; and the IBM project is being

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Figure 3-16. Matrix for a small company.

Figure 3-16. Matrix for a small company.

managed personally by the vice president of engineering, who happens to be wearing two hats.

The second key point is that small companies generally should not identify the names of functional employees because:

• The functional employees are probably part-time.

• It is usually best in small companies for all communications to be transmitted through the project manager.

Another example of how a simple matrix structure can be used to impress customers is shown in Figure 3-17. The company identified here actually employs only thirty-eight people. Very small companies normally assign the estimating department to report directly to the president, as shown in Figure 3-17. In addition, the senior engineers, who appear to be acting in the role of project managers, may simply be the department managers for drafting, startup, and/or design engineering. Yet, from an outside customer's perspective, the company has a dedicated and committed project manager for the project.

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Figure 3-17. Matrix for a small company.
Project Management Made Easy

Project Management Made Easy

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.

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