Organisation is the management structure applicable to the project, programme or portfolio and the organisational environment in which it operates.
The organisational structure of individual projects, programmes and portfolios will vary according to the context and specific needs of each situation. In broad terms, the organisation will always have four main levels.
Figure 3.1: Generic organisation structure
The external level represents the host or client organisation for the work. This is the level at which requirements are defined and funding provided. The external organisation delegates responsibility for looking after its interests to the sponsoring level.
Sponsorship is a role that provides a link between the management level and the external environment. The sponsor champions the work and owns the business case.
The management level is where day-to-day responsibility for managing the project, programme or portfolio resides. The management and sponsorship levels collectively comprise the P3 management team.
The delivery level represents those who create the outputs or realise the benefits.
Alongside the four levels are P3 assurance and administrative support. Assurance reports to the sponsorship level and provides confidence that the management and delivery of the work are being conducted effectively and appropriately. The administrative support function provides administrative and technical support services to the management and delivery levels.
Temporary project, programme or portfolio organisations may be supported by a permanent governance infrastructure that ‘owns’ P3 management. This is usually referred to as an enterprise project management office (EPMO).
Most host organisations will be based around a functional structure, i.e. where people work in a particular department. Some project-based organisations, typically in construction or engineering, will have people working exclusively on a particular initiative. The majority of projects and programmes operate in a context that is somewhere between the two; this is known as a matrix organisation.
In a matrix organisation, delivery resources and sometimes management resources report both to their functional manager and to the project or programme. This often creates conflict between the two sources of authority when both impose demands for work to be delivered in the same time frame.
The situation where a functional manager has priority over how resources are used is called a ‘weak matrix’. Where a project or programme manager has priority over resources, the structure is known as a ‘strong matrix’. Between the two lies the ‘balanced matrix’.
From the P3 point of view, the greater the priority that the manager of a project or programme has over the deployment of resources, the more likely it is to succeed.
A project may be stand-alone, part of a programme or within a portfolio; it may be an internal project or delivered by a contractor on behalf of a client. The external level will reflect this context.
Figure 3.2: Project organisation structure
Sponsorship is normally carried out by an individual who may be supported by other senior managers in a group usually known as a project board or steering group. This is the level that is most affected by the project’s environment. For example, where the project is part of a programme, the programme manager may take the role of project sponsor. In the case of a project involving a contractor and client organisation, the project board will include representatives of both.
The project manager looks after day-to-day management and escalates issues to the sponsor or project board.
On large projects there may be team managers appointed to look after work packages. The project manager then delegates responsibility for their day-to-day management to the team managers. Where a project is divided into sub-projects delivered by different contractors, these may, in turn, be managed by the contractors’ project managers.
The structure of the project showing contractors, departments, teams and sometimes individuals is often represented by an organisational breakdown structure (OBS). The OBS shows the structure of the project, the communication routes and reporting links.
Through the identification of work packages, an OBS can be combined with a work breakdown structure to produce a responsibility assignment matrix (RAM).
A RAM is used to assign the work packages to the people, organisations or third parties responsible for creating the project’s outputs. The RAM can be populated with information regarding whether someone is responsible, or accountable, or should be consulted or informed. This is often known as a RACI chart.
Smaller organisations may lack the capacity to assign individuals exclusively to a project role. In this situation the OBS will reflect the need for individuals to adopt multiple project roles. However, care must be exercised to ensure that the level of risk involved in combining project roles does not become too great.
Figure 3.3: RACI chart
In a matrix organisation the project manager may have problems controlling resources that are primarily managed by functional line managers. So there should be negotiated agreements with the functional line managers based on the project schedule. If this approach fails, then the issue is escalated to the sponsor or project board to negotiate on behalf of the project.
The organisational demands of the project may change and should not be seen as constant throughout its life cycle.
The major addition to the basic organisation structure for programmes is the role of business change manager (BCM). BCMs are responsible for using the outputs of projects to create benefits.
The programme sponsor will invariably be supported by a group of senior managers, known as the sponsoring group, although the sponsor will still be ultimately accountable for the business case.
It is often useful to have, within the sponsoring group, the senior managers from the business units affected by the change; this promotes a closer relationship and understanding between the programme and those affected by it.
Figure 3.4: Programme organisation structure
A matrix environment at the programme level comprises resources required to deliver benefits, as well as those needed to deliver project outputs. The relationship between programme resources and their departments is an important success factor, so the inclusion of senior business managers on the sponsoring group will help solve any conflicts.
In the portfolio dimension there are typically only three organisational levels, since the external and sponsorship levels are combined.
Figure 3.5: Portfolio organisation structure
Ideally, someone on the top-level board of the organisation will represent P3 management. This will effectively make that person the sponsor of the portfolio. If no individual has this responsibility then the complete board should take ownership of the professionalism and discipline of P3 management.
The management of a portfolio may be the responsibility of an individual or of a group sometimes known as an enterprise project management office (EPMO). This is the body that collectively manages the portfolio and is also responsible for the overall development and promotion of P3 management in the host organisation.
As governance of the P3 environment originates at board level, issues surrounding matrix management and the allocation of resources throughout the portfolio can be resolved at the highest level.