Page 365 - Global Project Management Handbook

18-6 MANAGEMENT OF THE PROJECT-ORIENTED COMPANY

Through the more frequent definition and performance of projects, many companies
apply management by projects implicitly. To create the benefits described above, an
explicit application of management by projects and an explicit provision of the corre-
sponding structural and cultural prerequisites are required.

ORGANIZATIONAL STRUCTURE OF THE
PROJECT-ORIENTED COMPANY

The permanent organization of a company is designed to perform repetitive business
processes. The organizational structures and business processes should provide orientation
for employees through clear definitions of tasks and responsibilities. Furthermore, the
organization should guarantee continuity in the relationships of the company with its relevant
environments.
For the most part, these organizational objectives can be met by a stable, hierarchical
line organization. However, a company that continuously performs new projects of dif-
ferent contents and degrees of complexity requires a more flexible, networked organiza-
tional structure. Companies can be positioned on a continuum between extreme steep
hierarchical organizations and flat, network-type organizations. The amount of routine
work in relation to the amount of project work determines the positioning of an organization
on the continuum. There is no clearly optimal position for an organization, but a trend
toward flatter, networked structures is observable.
In companies with little project orientation, projects are used in addition to the hierar-
chical line organization. Through the use of projects, this type of organization becomes
flatter and more flexible (Fig. 18.2). Flattening comes about through an enlargement of
the communications span and a (partial) reduction in the number of levels in the hierarchy.
Flexibility is achieved through the possibility of using (project) organizations and then
dissolving them after the objectives have been achieved.
In flat, networked organizations, the most important business processes will be per-
formed within projects. An example of a flexible, networked structure is depicted in the
organizational chart of the Gore Company (Fig. 18.3). The main characteristic of this
organizational structure is that roles, lines of communication, and boundaries between
teams, projects, and departments are depicted, but not the hierarchical relationships.
Project-oriented companies perform a number of different projects and programs at

the same time. This high number of temporary organizations requires a high level of syn-
chronization. In order to fulfill this integration function, projects (and programs) can be
clustered into chains or clusters of projects, project portfolios, and networks of projects

P P

Project Project
B
A
FIGURE 18.2 Flattening of the organization through projects.