Project management in industry
University of Pittsburgh
Organizational and management models have undergone significant changes in the past two decades. The continued maturation of project management philosophies and techniques emerges as one of the more significant changes of this period. This article will briefly report on the current state-of-the-art of project management in the industrial sector.
The application of project management in an industrial organization brings about the emergence of the “matrix organization,” essentially the integration of a project team into the traditional functional organization. When project management techniques are used within a company, project teams and functional departments (production, marketing, finance, etc.) are integrated to provide a single organizational focal point and management system for managing ad hoc projects. Project management techniques are used for the management of large projects in the aerospace industry where the life of the project can extend over several years. In addition, project teams are also utilized to deal with short-term ad hoc problems such as the reduction of division personnel. (1) In many companies project management is used to manage emerging R&D projects. Some companies have experimented with using project teams at the production level as a means of creating cohesive work groups around interdependent activities. (2)
Figure 1 portrays a generic model of a matrix organization arrangement ; this model reflects the integration of the functional managers and the project manager in their interdependent and complementary roles.
Figure 1 defines the project-functional interface at a major echelon in the work breakdown structure level and keynotes the relationships of five key managers in the matrix organization: the manager of projects, project manager, functional manager, project representative and work package manager. In Figure 1, the functional manager has assigned a key individual within his organization for liaison with the project manager and his staff. The project representative, although reporting to the functional manager, represents the project manager within the functional organization and is the focal point for the activity on that project within that organization. He does, in effect, serve two masters — the project manager and the functional manager.
Within some companies project management techniques have advanced to the extent that a functional entity has been created to facilitate the management of projects throughout the organization. Often called “manager of projects,” (See Figure 1) his office is located on a functional parity with the major functional elements. A manager of projects is responsible for directing and evaluating all the individual project manager activities as well as proposing, planning, and facilitating the implementation of project management policy. The use of a manager of projects organizational mode reflects the growing maturity of project management concepts.
Companies that have reorganized along the matrix form have found it necessary to define explicitly the authority and responsibility patterns of the key personnel working in the project-functional interface. Leadership concepts within such companies have broadened from the narrow view of a relationship to subordinates to include the leader's relationship with peers and associates. In the matrix environment, the leader's role depends on the quality of information and his skills in processing information about the project wherever needed within the organization. Indeed the project manager is often viewed as the “general manager” of the company as far as the project is concerned and is the single point of focus for information flow about the project.
FIGURE 1 Matrix organization relationship of project management to functional management. Adapted from Management: A Systems Approach, by Cleland and King, McGraw-Hill Book Co., 1972, p. 347.
The application of project management techniques in industry, used on large projects as well as applied to small team effort, has had a major impact on the way of life of contemporary organizations. Changes brought about by the matrix organization are usually easily recognized but often not fully understood. Not so obvious are other changes occurring when the organizational structure is changed. These changes often come about more slowly — yet they can have enormous impact on the effectiveness of the organization. In the mature form of project management the following changes become evident:
(1) Accounting practices and systems are changed to denote the project office as a profit/loss center.
(2) Wage and Salary classification structures are modified to recognize project management standards.
(3) Emerging technological ideas embodied in project plans are used to test the credibility of existing long-range strategies.
(4) Authority and responsibility patterns tend to be formally defined as in the case of Figure 1.
(5) Individuals tend to have more autonomy and a greater participation in determining organizational goals; authority in the project teams tends to flow to the member most qualified when his particular kind of expertise is required.
(6) The traditional line-staff concept has been modified by the emergence of an explicit project-functional organizational interdependency free of traditional “vertical bias.”
(7) The delivery of projects on time, within budget, and meeting the desired performance requirements has been more effectively accomplished.
(8) A culture of “horizontal management” develops in the organization which tends to encourage participation, modify superior-subordinate relationships in favor of stronger peer relationships, and change management information systems.
Predicting the future is a dangerous thing to do. Yet the impact that project management has had on the theory and practice of management in industry over the past ten years has been enormous. Industrial organizations of the future will continue to refine matrix management techniques and in the process reduce the vertical nature of the bureaucratic structure towards a “horizontal hierarchy” of peers. As “outside” groups (characterized by the consumer and ecology movements) become more vociferous, project teams which cut across many different “organizations” will be used to solve complex problems facing the industrial world. For example, the solution of our energy and transportation problems depends in large part on our ability to manage large projects across industry, government, and consumer groups. Industrial organizations have become so large and complex, and so interwoven within larger social, economic, and political systems, that individual organizational autonomy has effectively ceased to exist. Project management philosophies and techniques show considerable promise for managing the complex organizational interfaces that will be found in the future.
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4. “Business Says It Can Handle Bigness,” Business Week, (Oct 17, 1970)
5. Cleland, David I., and William R. King, Systems Analysis and Project Management, 2nd Ed., McGraw-Hill Book Co., New York (1975)
6. Delbecq, Andre L., “Matrix Organization — An Evolution Beyond Bureaucracy,” Working Paper, The University of Wisconsin, (undated)
7. Drucker, Peter F., “New Templates for Today's Organizations,” Harvard Business Review, (Jan-Feb 1974)
8. Goggin, W. C., “How the Multidimensional Structure Works at Dow Corning,” Harvard Business Revew, (Jan-Feb 1974)
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10. Lombard, George F., “Relativism In Organizations,” Harvard Business Review, (Mar-Apr 1972)
11. Mee, John F., “Ideational Items: Matrix Organization,” Business Horizons, Vol. 7, No. 2, (Summer 1964)
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