Project Management: A Managerial Approach, 8th Edition

CHAPTER 5

The Project in the Organizational Structure

A firm, if successful, tends to grow, adding resources and people, developing an organizational structure. Commonly, the focus of the structure is specialization of the human elements of the group. As long as its organizational structure is sufficient to the tasks imposed on it, the structure tends to persist. When the structure begins to inhibit the work of the firm, pressures arise to reorganize along some other line. The underlying principle will still be specialization, but the specific nature of the specialization will be changed.

Any elementary management textbook covers the common bases of specialization. In addition to the ever-popular functional division, firms organize by product line, by geographic location, by production process, by type of customer, by subsidiary organization, by time, and by the elements of vertical or horizontal integration. Indeed, large firms frequently organize by several of these methods at different levels. For example, a firm may organize by major subsidiaries at the top level; the subsidiaries organize by product groups; and the product groups organize into customer divisions. These, in turn, may be split into functional departments that are further broken down into production process sections, which are set up as three-shift operating units.

In the past decade or so, a new kind of organization structure has appeared in growing numbers—the project organization, a.k.a. “enterprise project ...