Organization structure

A project manager’s powers strongly depend on an organization’s structure. There are

  • functional organizations – structured by departments and grouping a company’s functions like “controlling” or “accounting”, “sales” etc.; function managers manage headcount under their hierarchical supervision; project managers depend on the functional managers to release resources for participation in a project
  • matrix organizations – project managers and functional managers share their powers
  • project-ized organizations – project-based organization which is created for a project and dissolved as soon as the project is completed
  • project based organizations (PBO for short) – organizational structure only put into place for a project, “short-cutting” any other existing functional or project structure within the organization

Functional organizations

A major drawback of functional organizations becomes visible when a project needs to involve multiple functions: usually, such projects are split up – the first department does it’s work, then hands the result over to the next department which starts own project to continue the overall work. Obviously, communication breakdowns and information loss at those interfaces are to be expected.

Additionally, project resources are bound to be more loyal to their functional manager than towards the project manager, because the function managers pays them and is responsible for their yearly performance rating. On the other hand, a clear advantage in this structure is that in general people only need to deal with one supervisor – their functional manager.

Project-ized organizations

Such organizations can be identified by the following factors:

  • Project managers have the ultimate authority over projects
  • Organization is project-focused and -driven, therefore its resources are focused on projects as well
  • Team members are co-located
  • There is no functional-manager loyalty like in a functional organization – loyalties are established towards the project manager
  • Project teams are dissolved after a project’s conclusion

Matrix organization

Whereas the project-ized organization can probably be seen as the “opposite” of a functional organization structure, the matrix organization is kind of in between. There are functions as well as project hierarchies in a matrix organization – the functional manager and project manager share their powers to manage daily business and projects alongside.

There is a strong, a weak and a balanced form of a matrix organization. In the strong form, the power balance between the functional and project manager tips towards the project manager; in the weak form, the functional manager gains the upper hand.

Only the balanced matrix organization fairly balances powers between the functional and project manager.

Project Management Office (PMO)

A project management office (PMO for short) is a central function or department in an organization, responsible for establishing and maintaining a framework for organizational project management (OPM for short). The project management office is focused on assuring projects, programs and portfolios are managed in a consistent manner and that they work towards the company’s goals.

In general, PMI’s PMBOK Guide identifies the key purpose of a PMO as supporting project managers, which can take very different forms – depending on how the PMO is actually run.

Management styles of a PMO

A PMO may be supportive only, with a low level of control in the organization, offering training, templates and forms. On the other hand, a PMO may be controlling with a moderate level of control, ensuring compliance with a company-wide project management standard and making sure project managers adhere to that standard methodology. Last but not least, a PMO may be directive, in which case it holds a high level of control and actually controls and manages projects.

Commonly offered PMO services

In practice, it’s very common to have at least the following services offered by a PMO:

  • Provide a company-specific methodology for project management, supported by standard templates and forms and defined processes
  • Coach and train project managers in project management
  • Strengthen and facilitate know-how transfer and communication across all ongoing projects
  • Manage project resources
  • Archive project documentation
  • Review project success and adherence to company’s project management standard

Project, portfolio, program

Today, I’m starting out with a new series – focused on the PMP exam and meant as a preparation for it. Consequently, we are now moving back to “square one” and start with the basics to make sure we will use the proper terms.

What’s a project?

A project is temporary in nature, has a definitive start and end date. In PMI’s PMBOK Guide terms, a project is successfully completed when it delivered on the set goals and objectives – that also means that the involved stakeholders are happy with the outcome.

A stakeholder is anyone who has a vested interest in the outcome of the project (be it positive or negative). Obviously, a project manager needs to deal with stakeholders, because key stakeholders can make or break a project.

Projects only exist to deliver something new, like a new product or service, that doesn’t exist yet. Said products and services may range from something tangible like a car to intangible things like a new mobile service plan.

The features and characteristics of a project are commonly defined via progressive elaboration – I’d call it “agile specification”: it basically means that we start out with a rather rough plan at the beginning of the project and keep clarifying and making it more detailed over the course of the project. In principle, this is the only feasible way to deal with a project’s features anyways: when you launch a project, you simply don’t have all the facts and details on the table. A project sponsor will give you a vision and general idea of what he wants, but you’ll have to clarify that picture continuously to ensure you’re really delivering to his need.


In contrast – operations is ongoing and repetitive work that keeps going on without a set end date. Usually this means repeating a particular set of processes over and over again to deliver a specific output.

Nonetheless, it’s not uncommon to have a project extend into operations; this may happen for example when

  • developing a new product or service or changing an existing one
  • improving the product development or an operational process
  • in general – whenever a project reaches the end of a phase (and for example delivers to operations)

In summary

A project is

  • unique
  • temporary
  • has a definitive start and end
  • delivers something new
  • completed successfully after meeting the stakeholder expectations

What’s a program?

A program is a collection of related projects that are managed in similar and coordinated ways. Managing the program’s projects collectively allows one to deliver additional benefits which wouldn’t be brought to realization if the project’s were managed separately.

Therefore, the projects in a program work towards a common broader goal and deliverable. An example for such a program is a housing development program, which may consist of several projects – one for building construction, one for roadwork and traffic planning, another one for utilities and so on.

Programs primarily focus on managing project inter-dependencies and gaining a benefit from the connection.

What’s a portfolio?

A portfolio is a collection of projects, too. However, a portfolio’s projects aren’t necessarily managed in a collaborative way. Instead, they serve a common business objective, not a particular common goal.

For example, an IT company may have multiple “website development” projects in its “web development” portfolio; however, these projects do not serve a common customer or goal. They primarily deliver on the business objective to deliver websites to customers.

Portfolios therefore primarily focus on optimizing efficiencies over multiple independent projects – in regards to cost, resource, risks and schedules.