Measurement of organizational complexity in product development projects

Many modern products are becoming more and more complex in order to cope with customers' demands regarding performance and lifecycle properties. As traditional product development structures struggle to keep up with the rising complexity, companies may form cross-functional teams, integrate off-site experts or outsource certain tasks to external suppliers. This results in increasingly complex project organizations, requiring advanced management and coordination skills. Recent research has found a direct relationship between complex project organizations and missed cost and schedule targets, suggesting companies' inability to manage complex organizations. This paper develops a framework to measure organizational complexity and thus make it visible and more easily controllable for project managers. A broad literature analysis identifies a range of factors associated with organizational complexity. A mathematical model infers the complexity of a project organization based on the identified factors. A proposed visualization method identifies complexity hotspots, which can be used to assess project alternative structures. Finally, a project example illustrates the application of the overall method. Altogether, this approach may be useful to enhance project managers' awareness of complexity inside a project organization and thereby empower them to avoid overly complex, unmanageable structures.