Thoughts on Reorganising Businesses for Projects

Recently, I wrote about the problems re-organisations and management power struggles cause for projects and project managers. The article can be read in its entirety here: Come the Revolution - Managing Projects Through Revolutions.

To continue the discussion, I would like to consider a different question: Is there a way re-organisations in businesses can benefit projects and project managers?

Permanent and virtual organisations

There are many ways to structure organisations. This variety may be one of the causes of that on-going pain for many employees: reorganisations. Reorganisations are normally presented as an attempt to improve the effectiveness or efficiency of an organisation by some re-ordering of the parts that make up the business. (In reality, there are numerous factors that go into deciding what a new organisation looks like – including a large dose of corporate politics). Sometimes the outcome from reorganisations is a great success. Often it is not and a year or two later, with another period of pain, the organisation is changed again.

Whatever the reason for the re-organisation, the end result is normally some functional breakdown of staff and teams. Whatever the new organisation is, projects are still required and delivery of projects needs project teams. Project teams cut across the organisational structure. Projects are considered as a temporary layer on top of the permanent organisational structure. Project teams are virtual teams, with individuals allocated from across the different functional areas.

The concept of virtual teams is a clever answer to facilitate the delivery of projects in a permanent organisational structure that does not in itself recognize projects. It may be clever, but one of the ongoing challenges for project managers in this situation is managing a diverse pool of people, with individuals who often time slice their involvement in the project with various other functional or business as usual activities they do. In addition, the project team members are often geographically distributed. Project managers often deliver in spite of the organisational structure, rather than being aided by it.

Getting things done

In many cases this makes sense. An organisation cannot be optimised on every dimension. Many aspects of a business are not primarily project related and many processes and operational activities are best performed by functional teams. When projects are needed in this situation it is an acceptable cost that they are not able to work in the most efficient way possible.

But there are some, and I sense growing, aspects of businesses which are primarily project driven. I am thinking of applications development in IT, new product development, teams engaged in events management and so on. These teams are not made up of people who are occasionally on projects but primarily have a functional role to perform. These teams are made up of people who have a functional skill set, but are constantly engaged on projects. When a project ends, the individuals are re-allocated to the next project. Their working lives revolve around projects.

Let’s build a picture of an imaginary IT project team. (Imaginary, but I hope realistic). A project manager is allocated from a central project management team. The project manager has a business analyst appointed from a Business Analysis team. Otherwise on the team there are developers, testers, designers, architects and someone from the infrastructure and operations management team. Some of the team members are collocated permanent members of the team. Others are 100% allocated to the team, but are located in India working for an outsourced services provider. Some team members, especially those with specialist skills such as a solutions architect or an infrastructure management specialist, will be only partially allocated to the team. All this complexity of location, availability, and skill sets means that much of the time of the project manager is spent co-ordinating resources rather than directly managing the tasks in the project plan. If the team wants to work in an Agile fashion – then this is really hard with people working different days of the week and managing priorities outside of the project backlog.

Many project managers have grown adept at handling these situations. But in becoming adept the project management role risks becoming more and more a resource management role. Resource management is important, but project management is much, much more than this.

Swapping the permanent and virtual

This model needs to be revisited. This is a model of organisational design based on the assumption that an effective organisation is a functional one. It seeks for staff to be 100% utilised, managed as pools of resources with common skills, and resourced on the most economical day rate basis. The irony is that no part of this organisational model says "what is the most efficient and effective way to deliver projects?" – and this is ironical as the primary goal of these organisations is the effective and efficient delivery of projects.

2In the quest for the cheapest per head cost of staff, or ensuring people are 100% utilised, we lose sight of this fundamental goal. Another irony, in the age of reorganisations, is that some project teams last longer than the "permanent" organisational structure they virtually cut across.

I am convinced if we looked from this other angle – starting by considering the best way of delivering projects, then we would move away from functional organisational structures to project organisations.

Now, even in a project based organisation there is still a requirement for functional organisations. These functional organisations manage things like staff selection, training, skills improvement, career development, standards and knowledge management. But, and this is a very big but, it is the functional organisation that is virtual and the project organisation which is hard wired.

What Do You Think?

What do you think? Do you have experience of organisations designed around projects - and what were the benefits and issues? Let us know.

Related content:

Come the Revolution - Managing Projects Through Revolutions
Taking Over the Project No One is Running
Project Managers: Leaders or Managers?


Well done explanation. I could not of done better myself! I am really impressed that there is so much information about this subject that has been uncovered and you did it so well, with so much class. Please continue post such interesting article, Thanks.

Thanks for your support, and glad that you found the article interesting.

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