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Impact of project organizational structure on management efficiency
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  • A good adviser is better than any wealth Socrates (469 – 399 BC.)

Impact of project organizational structure on management efficiency

Elena Ovsepyan Practice supervisor, Partner

In today's economy, the projects are part of any company and even of more global systems, regardless of the scope of its activities or its tasks:

  • This may be the need for internal organizational changes or implementing complex solutions (including in the integrated automation of business management or keeping Financial Accounting and Taxation (FAT));
  • Development of new areas and creation of new businesses;
  • Fabrication of new products, services and systems;
  • Construction and reconstruction of immovable assets and entire building complexes;
  • and many more

In addition the bigger and more complex the projects are and the more the internal and external participants in them are, the more efficient and methodology-based control, they would need in order to achieve their objectives.

Having not only theoretical knowledge (training in one of the oldest and the most prominent centers – “Bogdanov and Partners”), but also many years of experience of working on complex projects as part of project teams. As well as the interaction with the Customer’s specialists, who are seldom deeply immersed in the “Project Management” or not possessing adequate experience of working on large projects has highlighted an interesting gap in their vision about the project planning stage.

Today more and more managers and professionals know what the “project management” is, why it is needed and how it is important for the success of work and many are even familiar with various methodologies. In minor projects, even a superficial knowledge of methodology allows them to efficiently manage and the errors introduced are offset by the opportunities presented by the “little project” to its Manager. But large-scale projects and the “program of projects”* is another matter, it requires attention to detail, including in one of the most important stages – “Project Planning.”

Coming back to the “vision gap” that I observed which traditionally falls out of focus of the project managers during the project planning phase - it will be an underestimation of the “impact of the project organizational structure on the management efficiency.” Again, for the sake of  truth, it should be noted that the Project Managers for the most part follow all methodological sequence of the “Project Planning” phase (for example, at the end of the material), including “development of a hierarchical structure of the project,” but often pay too little attention to the quality of organizational design.

 

There is a well-established expression – “Agreement on structure, goals and strategies.” This is a fairly succinct (as agreement is also related to the business structure - the number and functionality of business units, corporate structure, the organizational structure of the company, etc.) and a very precise definition of the importance of an efficient organizational structure.

And of course here the structure of a particular project is no exception.

While designing the structure, it is mandatory to examine the following important conditions:

  • Decomposition is carried out from general to particular, then vice versa
  • Structure must comply with the approach towards achievement of goals
  • There should be an appropriate structure for specific project / company
  • Ensuring unity of command and compliance with span of control
  • Compliance by the authorities with responsibilities
  • Communication of key business processes and structural units
  • one structural unit must be responsible for the major functional area (task)
  • Each important business process should have a “master”
  • And a number of other parameters...

 

Majority of the investment projects under implementation are so large that in the terms of PMBOK (Project Management Body of Knowledge), these are not “projects” at all, but a “program of projects”* - as they consist of several independent projects. And just for ease of reference, the term “project” is often used.

 

An example of the organizational structure under the program of projects – “Construction of a vertically integrated poultry complex”:

Example structure1 

An example of the organizational structure of subprojects:

Example structure2 

 

An example of the organizational structure of subprojects not directly related to the creation of objects:

Example structure3 

 

In the above-presented schemes, the complexity and the importance of efficient organizational structure are clearly visible and only the principles described above cannot miss a single important block and any important task, but all this certainly only in combination with these traditional project planning activities, such as:

  • Development of the Project Management Plan,
  • Formation of a hierarchical structure of the project and objectives
  • Determination of the composition and relationships of operations,
  • Assessment of resources and the duration of operations,
  • Cost estimate and expense budget,
  • Quality planning,
  • Human Resource Planning (HRP),
  • Communications planning,
  • Identification, qualitative and quantitative risk analysis,
  • Risk Response Planning (RRP)
  • Planning of contracts
  • And others

 

The principle of organizing work on complex (including investment) projects and project management proposed by our company provides an approach towards the date of commissioning the facilities - not just as objects of “build-ready”, but as a functioning business on a “turnkey” basis.

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