Project Management Organizational Structure

Project Organizational Structure Definition

The Project Organization Structure is an enterprise environmental factor that plays an important role in determining the way, in which the organization and Project Manager perform. Organizations have their own styles and cultures that influence how project work is performed. One of the keys to determining the type of organization you work in is measuring how much authority senior management is willing to delegate to project managers. Project Management Organizational Structure helpful to know and understand the organizational structure and the culture of the entity in which you’re working. Although uniqueness abounds in business cultures, all organizations are structured in one of three ways:

  • Functional.
  • Projectized.
  • Matrix.

We’ll now take a look at each of these types of organizations individually to better understand how the project management role works in each one.

Functional Organizations:

A Functional Project Organization structure is a hierarchical type of organizational structure wherein people are grouped as per their area of specialization and supervised by the functional manager with expertise in the same field, so that their skills can be effectively utilized and the organization’s objective can be achieved.

Here, all authority, budget allocation, and decision making power stays with the functional manager. A project manager has no role in this type of structure. Even if he exists, his role will be very limited and he has to ask the functional manager for his requirements. Here, a project manager may have the title of a coordinator or an expediter.

The Functional Organizational structure, is a project management organizational structure, which is suitable for an organization which has ongoing operations such as manufacturing and production operations. In functional organizations, the organization is divided into various specific departments; e.g. human resource, marketing, finance, operations, etc. Each department will have its own department head and he will be responsible for the performance of his section. This helps control the quality and uniformity of performance.

Advantages of the Functional Organization Structure:

Following are a few advantages of functional organizations:

  • Employees are grouped as per their knowledge and skills.
  • Job responsibilities and reporting are straight to the functional head, and the hierarchy path is clear.
  • Employees have a clear career growth path.
  • Within the functional department communication, cooperation and coordination is excellent.

Disadvantages of the Functional Organization Structure:

Following are a few disadvantages of functional organizations:

  • The employee may become lazy due to repeating the same type of work.
  • Conflicts may arise due to the promotion of another employee.
  • The functional manager pays attention to only his department; he usually doesn’t care for other teams or sections.
  • Poor communications and poor inter-department coordination.
  • Delays in decision making due to bureaucratic hierarchy.
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    Projectized Organizational Structure:

    Projectized organizations are nearly the opposite of functional organizations. The focus of this type of organization is the project itself. The idea behind a projectized organization is to develop loyalty to the project, not to a functional manager. In projectized organization, for project management organizational structure, the project manager has all the power and authority and everybody directly report to the project manager. Here, either no functional manager exists, or if he exists, he will have a very limited role.

    Advantages of the Projectized Organizational Structure:

    A few advantages of this in project management organizational structure are as follows:

    • Clear line of authority.
    • Strong communication with single reporting system.
    • Flexibility in trade-offs and decision making.
    • Fast decision making.

    Disadvantages of the Projectized Organizational Structure:

    A few disadvantages if in project organizational structure are as follows:

    • Authority and power can make project manager arrogant.
    • The work environment can be stressful because there is always a deadline (milestones).
    • Team members have sense of insecurity because once the project finishes, they may lose their jobs.
    • If the project gets elongated, cost of employee and equipment can go higher.

    project management organizational structure

    Matrix Organizations:

    Matrix organizations came about to minimize the differences between, and take advantage of, the strengths and weaknesses of functional and projectized organizations. The idea at play here is that the best of both organizational structures can be realized by combining them into one. The project objectives are fulfilled and good project management techniques are utilized while still maintaining a hierarchical structure in the organization.

    In matrix organization structure in the project management organizational structure, the knowledge and skills of the talented employees could be shared between the functional departments and the project management teams, as needed. Here, the employee generally works under two bosses. The authority of the functional manager flows vertically downwards and the authority of the project manager flows sideways. Since, the authorities flow downward and sideways, this structure is called the Matrix Organization Structure. In matrix organization structure, usually employees have two bosses to whom they may have to report. Which boss is more powerful depends upon the type of matrix structure.

    Matrix organization structure can be further divided into three categories:

    • Strong Matrix.
    • Balanced Matrix.
    • Weak  Matrix.

    Note: This lecture is designed by AIMS' for online project manager certification and masters in project management online programs. For more details on these programs, please visit AIMS' project management academy.

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