Organization Structure and Integration MT 246 Module 17

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Organization Structure and IntegrationMT 246 -
Module 17
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This Lecture

• Review the way companies organize themselves
• Formally studied in the field of Organizational
  Development
• Review the Integration Process

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Business Organization Types

• Traditional
• Functional
• Geographical
• Customer
• Process
• Product
• Project
• Matrix

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Business Organization Objectives

• Organization success depends on the way
  individuals and groups are organized
• Employees can be organized by employee function,
  product type, project, or geographic/customer
  location
• Managers in an organization will typically have 5
  or 6 Direct Reports
• Supervisors may have up to 15 or 20 technicians
  in their group
• Span of Control of a manager is determined by
  position in the corporate hierarchy

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Business Organization Objectives (contd)

• Clearly define the flow of authority within the
  company and the project
• Typically have two types of organization charts
• Functional
• Project
• Deal with issues of reporting to both a project
  and a functional manager
• Two lines of authority
• Two bosses
• Authority matrix
• Deal with contractual authority to subcontractors

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Authority Matrix
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Integration Relationships on a Large Scale
Project
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Organization Design

• No best type of organization
• Unique for each organization
• Organization structure is dynamic
• Evolutionary responses to ongoing problems
• As organizations grow, or environment changes,
  managers review and revise the organization

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Functional Organization Description

• Personnel in an organization are grouped by area
  of expertise
• Functional units or areas
• Marketing, finance, production, design
  engineering, etc.
• Accomplishment of a project requires coordination
  between functional areas
• A great deal can be learned by the study of Org
  Charts

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Functional Organization Drawbacks

• When problems occur, functional managers must
  resolve issues and set priorities
• Problems can occur with this type of organization
  when a functional manager has multiple projects
  in progress simultaneously within his group
• Schedule priorities and allocation of personnel
  can allow a project to become an Orphan due to
  manpower loading limitations, conflicts with
  other projects, etc.

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Liaison Assignments

• This is the first step toward providing project
  focus within a Functional Organization
• Assign focal point within each organization to
  interact across functional boundaries
• Still has the problem of very complex management
  interaction
• Many individuals in each company responsible for
  project health
• No project manager
• Success of this type of organization depends on
  the people involved, and their willingness to
  own a problem
• How do you interview and select/hire these
  folks!!!

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Iron Butterfly Liaison Org Chart
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Project Team Assignments

• Assignment of Project Manager who reports to a
  high level of the organization
• Next step towards providing project management
  focus
• Accomplished by creating dotted line
  relationship between project personnel
• Weak Project Matrix
• Useful for small projects requiring fractional
  headcount
• Employees at the working level have two bosses

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Iron Butterfly Project Team Org Chart
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Project Organization Description

• For large projects, it is better to organize
  around project deliverables
• Allows excellent customer and project focus
• Combination of Functional and End Item
  subprojects
• Dedicated project personnel assigned only to your
  project
• Fractions of engineers are required for some
  roles
• Must assign people to multiple roles

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Iron Butterfly LOGON Project Org Chart
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Project Organization Drawbacks

• Temporary Organization
• At end of project, everyone has to scramble for
  new project assignments
• Different skills required at different project
  phases
• Hire/Release, or
• Use sub-optimal personnel skill mix if keep
  project team intact throughout life of contract.
• Small projects cannot justify dedicated project
  manager and staff

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Project Organization Design Guidelines

• Carefully think through each key project role
• Consider several alternatives
• Organize around deliverable end items
• Change the organization with project phases
• Avoid weird org chart topologies and span of
  control extremes

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Matrix Organization Description

• Grid-like structure of authority and reporting
  relationships
• Created by overlay of a project organization and
  functional organization
• Functional part of the organization is repository
  for technical expertise and physical resources
  (Labs, manufacturing areas, etc.)
• Project manager negotiates personnel assignments
• Project manager controls money
• Functional manager controls personnel
  (assignments, salaries, raises)

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Iron Butterfly Matrix Org Chart
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Drawbacks of Matrix Organizations

• Overlays horizontal resources onto Functional
  vertical resources
• Subject to authority conflicts between Project
  and Functional managers
• Engineers can be torn between dual loyalty to
  Project Manager (tasker) and Functional
  Manager(rater)
• Required to wear two hats
• Functional manager controls promotions and raises
• Project manager recommends to the Functional
  manger

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Org Chart Tips for New Employees

• New hires generally are not given org charts
• Must figure out organization upon assignment/hire
• Ask for and study Org Charts
• Study Telephone Directory
• Study company Web Site
• There are always two organizations
• Published Org Charts (Wiring Diagram)
• Informal Org Structure
• Usually derived from prior working relationships
• Family/school alums, etc.

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Org Chart Tips for New Employees (contd)

• Watch out for the Informal Org Structure!!!!
• It can hurt you if unaware
• It can help you if you figure it out
• Always treat upper managers, peers, and people
  working for you with respect
• They may shoot pool with the President

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How to Select a Project Organization

• Certain situations lend themselves to applying
  certain types of organizations
• No correct approach
• Depends heavily on the talent of the employees
• General guidelines apply

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Organization Criteria

• Frequency of new projects
• Duration of projects
• Size of projects
• Complexity of relationships required to succeed

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Large Scale Integration Projects

• Large projects often fail as a result of
  incomplete definition of the lines of authority
• Project manager must spend significant time and
  thought on the organization of sub-projects and
  sub-contracts
• This can be quite complex
• If you have a complex reporting relationship, the
  probability of failure goes up
• Technical LSP develop and construct Complex
  Systems
• Systems Engineering
• Management of SE

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Large Scale Integration Projects(Continued)

• Large Government Projects
• Integration is Responsibility of Government
  Agency
• Integration Process is given to a Single
  Oversight Body
• Considerable Manpower
• Broad Technical Skills
• Usually Assigned to Lead or Prime Contractor
• Project Sponsor
• Contracts with Associate (Subsystem) Contractors
• Makes Major Decisions
• Resolves Conflicts

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Large Scale Integration Projects(Continued)

• Associates become Subcontractors to the Prime
• Take Direction
• Surveillance
• Approval
• Prime can be Given Even More of a Role
• Assists Sponsor with Choosing Subs
• Pricing Subsystems
• Allocating Funds
• Can be a Problem when Prime and Subs are
  Competitors

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Large Scale Integration Projects(Continued)

• When Largest Primes Cannot Perform Alone, They
  Team
• One Company Assumes Prime Role
• Systems Engineering
• Management
• Appeals to Small and Medium Sized Companies
• Can Have Serious Interface Problems
• Sponsor may Force Prime to Sub in Selected Areas

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Large Scale Integration Projects(Continued)

• When Prime cannot Perform the Integration Role
• Sponsor Selects an Integration Contractor
• Performs Integration and Engineering Advice
• Have Expertise and Resources
• Can be a Conflict as Prime and Integrator are in
  the Same Business
• Can be Managing Their Competitors

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Integration in Systems Development Projects

• Integration of Functional Areas of the Project
  Horizontal Integration
• Integration of Phases of Project Vertical
  Integration
• Systems Development Project
• New Product Development
• Software Development
• Stages of Development Project are the Systems
  Engineering Cycle

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Horizontal and Vertical Integration
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Integration in Systems Development Projects
(Continued)

• Nonintegrated Systems Development
• Traditional
• Work in Each Phase Performed by Functional Area
• Not Much Vertical or Horizontal Integration
• Each Phase Starts Over
• Process Involves little Interaction Between
  Phases
• Decisions are Made Sequentially and Independently
  with Wrong Mix of People and Functional Areas

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Traditional Phases of Systems Development
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Integration in Systems Development Projects
(Continued)

• Life Cycle Costs
• Materials
• Production
• Distribution
• Operation
• Continue for as Long as it is Produced or Used
• Decision made Early Affect Entire Cycle

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Life Cycle Costs
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Integration in Systems Development Projects
(Continued)

• Two Approaches to Integration in Systems
  Development Projects
• Concurrent Engineering
• Organizational Approach
• Form a Single Team from All Functional Areas to
  Work on Every Stage
• Horizontal Works in Concert with Vertical
• Quality Function Deployment
• Vertical Integration Methodology
• Requirements First then Applied by Functional
  Areas to Each Phase

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Concurrent Engineering

• Cross-Functional Teams
• Team may be
• Multifunctional Matrix
• Pure-Project
• Team Invites Different Functional Areas to
  Participate as the Project Move from Stage to
  Stage
• Team Composition
• Engineers, Planners, Buyers, Marketers,
  Suppliers, Customers

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Concurrent Interactions
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Concurrent Engineering(Continued)

• Cross-Functional Teams (Continued)
• Overlap in Design and Production Reduces Time
  between Product Concept and Product Launch
• Improves Design Trade-offs
• Product Features vs. Production Capabilities
• Sometimes Call Design-Build Teams

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Concurrent Engineering(Continued)

• Conditions Affecting Performance of Team
• Autonomy
• Committed Full Time and Full Duration
• Colocated
• Small Size
• Team of Multi-Talented Achievers

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Concurrent Engineering(Continued)

• Heavyweight Teams (Autonomous)
• A Core Team Approach
• PM and Small Group of Experts
• Strong Focus on Goals
• Free to Do Development in any Manner
• Draw from Functional Areas as Needed
• Con Small Team Cannot have Enough Technical
  Depth

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Quality Function Deployment

• Methodology for Defining Customer Needs and
  Requirements and Focus throughout Development
  Process
• Yields End-Items in Less Time and Lower Cost
• Process for Integrating Cross-functional Teams
  and Activities
• Developed by Mitsubishi Kobe Shipyards (1972)
• Toyota (1978)
• Ford (1983)

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Quality Function Deployment (Continued)

• House of Quality
• Translates Need into Technical Requirements
• Systematic Way of Organizing and Analyzing Data
• Prevents Things from being Overlooked
• Justifies Use of Resources
• Critical Few vs. Trivial Many

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Structure of the House of Quality
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Quality Function Deployment (Continued)

• QFD Process
• Create the First Matrix (A)
• The House of Quality
• Develop an Initial Project Plan
• In Parallel with HOQ
• Create the Design Matrix (B)
• Technical Reqs for House into Product Design
  Features and Requirement
• Create the Process Matrix (C)
• Takes Design Into Process or Production Reqs

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Quality Function Deployment (Continued)

• QFD Process (Continued)
• Create the Control Matrix (D)
• Takes Process Matrix into Process Tracking and
  Control Procedures
• Refine the Project Plan
• Improve based on (C) the (D)
• Process Ensures End-Item Traceabilty to
  Requirements

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QFD Multiphase, Multimatrix Approach
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Preparing an Integrated Project Plan

• Information Needed to Build Plan
• Goal of Product or System
• Ranked List of Customer Needs or Reqs
• Ranked Technical Reqs Traceable to Customer Needs
• Target Values or Tech Reqs
• Information Quality(Pluses or Minuses) between
  Reqs

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Preparing an Integrated Project Plan (Continued)

• The Matrices in the QFD Process connect Project
  Tasks to Technical Requirements and Customer
  Needs
• Define the Relationships among tasks and the
  order to Execute
• Define the WPs and Project Network
• Do Schedule, Budgets
• You Have Worked the Process Hard at the Start

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LOGON Project

• Use Labor costs (An average of labor rates/task),
  and Material costs. Do not worry about O/H or GA
  expenses. Keep in mind that total costs of
  Appendix C will not match with those in table 9-4
• Create your WBS, the PERT and GANTT charts
  follow. Without them, any analysis is impossible.
  Be sure all the tasks are connected properly
  (levels, sublevels, etc).
• Create a table of resources, identifying the
  number of people and the Labor cost of step 1.
  You can use material cost as a fixed cost. What
  MS project calls Cost/use
• Assign resources per task
• Check that resources are not over allocated, if
  necessary, reassign them. Keep in mind that there
  are labor requirements per task in table 9-4
• Now, Save your well designed budget , MS project
  calls this budget the BASELINE. Do not type
  Actual costs or completion before completing
  this Baseline. (MS project has a tool, accessed
  in the menu tools called tracking-save baseline)

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LOGON Project (Continued)

• Input percent complete and ACWP per task. This is
  the table attached in the homework (MS project,
  in the main menu, has an icon called task
  information, it has a field called Percent
  complete, and also, go to view-table-cost to
  input ACWP).
• Re-read subchapters 11-8 and 11-9. They will help
  you as a guide in the process
• Do cost and Schedule analysis, including BCWS,
  BCWP, and ACWP. (MS project has a tool called
  earned value, accessed in the menu
  view-table-more tables-earned value).
• Plot a graph costs vs time to analyze BCWP, BCWS,
  etc
• Create a table with variances like Table 11-1 to
  have control of each work package of the project
  (performance indicator, cost and schedule
  variances)

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Next Lecture

• Managing Participation, Teamwork, and Conflict
• Read Nicholas Chapter 16