Project Management

Topic: Project Organizational Structure Types

UoT Academy
 Project Organizational Structure Types
There are three main types of structures to consider when organizing a project:

1. Functional,
2. Projectized, and
3. Matrix.

Each type is characterized by the project manager's authority and role,

resource availability, budget responsibility, and whether or not a project
management staff is available.
 1. Functional Organization
A functional organization is one in which the project manager works on a part-
time basis and has minimal authority.
There are few resources, and a functional manager bears the budget, decision
making, and overall responsibility.
A project management administrative staff is available, but like the project
manager, works part time.
This type of organization is grouped by functionality, for instance, marketing,
human resources, finance, may be subdivided further into departments.
The department level will complete projects separately from other
departments.
A defining characteristic of the functional organization is that it is a hierarchy
with one clear manager or boss.
 1. Functional Organization
A functional organization is suited for small companies with different
departments that can work independently of each other and can provide
limited services or goods.

Advantages of functional organizations include clear direct authority, direct

career development and experience, strong technical ability, and resource
flexibility.

There are a few disadvantages of the functional organization. For example,

no one is solely accountable for the project, projects are not emphasized,
and there can be plenty of politicking in the organization.
 2. Projectized Organization
A projectized organization is characterized by total project manager authority and
dedicated resources.
The project manager is full-time and has budget responsibility, and the administrative
staff is on the project full-time.
Projectized organizations are designed solely to run projects, which means that when
the project is complete, personnel have to find another project or not have a job.
This is both an advantage and disadvantage of the projectized organization.
An example of this type of organizational structure would be used in a government
project management office (PMO).
In this organization, if personnel complete a project, they need to find another project
to continue to work.
 3. Matrix Organization
Matrix organization is a combination of the projectized and the functional structures.
In a matrix structure, the authority of a functional manager flows downwards, and the
influence of the project manager flows horizontally. Hence, it is called a matrix
organizational structure.
Employees may report many managers in a matrix organizational structure.
For example, let us say you are an engineer working in a functional department.
 Your organization gets a project, and they need an engineer to assist the project
manager.
 You may be assigned to the project for a short period or be called you whenever they
will need your services.
 You will have two bosses to report to.
 3. Matrix Organization
The matrix structure is a composite of the projectized and the functional
structure.
Here, the knowledge, skills, or talent of an employee can be shared.
Functional managers will look after the functional part of the project. They
may decide on the staff assignments.
The project manager will have authority over the administrative part of the
project: for example, carry out the work, follow-up on the schedule, evaluate
the performance, etc.
 3. Matrix Organization

Working in a matrix organization is challenging.

Your role will be complex because you have many bosses.

Work priorities, a clear reporting system, and responsibilities are important to

avoid confusion and provide a better work environment in a matrix
organization.
 3. Matrix Organization

The matrix organization structure usually exists in large and multi-project

organizations.

Here they can move employees whenever and wherever their services are
needed.

The matrix structure has the flexibility of transferring the organization’s talent
by considering employees to be shared resources.
 Types of Matrix Organizational Structure

The matrix structure can be classified into three categories:

1. Strong Matrix Structure

2. Balanced Matrix Structure
3. Weak Matrix Structure
 1. Strong Matrix Organizations

In strong matrix organizations, the project manager has the authority and a full-time
role.

A full-time project management team will report them and they control the budget. This
structure has the characteristics of a projectized organization.

The functional manager has a minimal role in a strong matrix organization.

 2. Balanced Matrix Organizational Structure

In balanced matrix organizations, project and functional managers share the authority.
The project manager has a full-time role, while project management staff will be part-
time.
Here, both managers control the budget.
 3. Weak Matrix Organizational Structure

In weak matrix organizations, the project managers have limited authority.

Their role is part-time and no administrative staff report to them.
Their role is like a coordinator or an expediter.
Here, the functional manager controls the project budget.
A weak matrix organizational structure resembles the characteristics of a
functional organizational structure.
 Advantages of a Matrix Organizational Structure

The following are a few advantages of a matrix organizational structure:

Highly skilled and capable resources can be shared. This allows open
communication and knowledge sharing within the organization.
The matrix structure is dynamic. It allows employees to communicate across
the boundaries and creates a pleasant, cooperative, work environment that
helps to integrate the organization.
Employees can enhance their skills and knowledge by taking part in different
projects. The matrix structure provides a good environment to learn and grow.
 Advantages of a Matrix Organizational Structure

Employees are skilled in functional departments. Project teams can get these
highly skilled employees whenever their services are needed.
Because of job security, employees will be faithful and perform well, meaning
the efficiency of a matrix organization is higher.
Resource usage is optimal. You can get access to experts easily from your
organization, and you can share equipment between projects.
Negotiation is better in matrix organizations.
 Disadvantages of a Matrix Organizational Structure
The following are a few disadvantages of a matrix organizational structure:
Employees may have to report to two managers which adds confusion and
may cause conflict. This happens in a balanced matrix organization where
both bosses have equal authority.
A conflict may arise between the project manager and the functional manager
regarding authority.
Employees may be confused about their roles and responsibilities. Work
priorities can cause conflict among employees if they are not well defined.
This happens when employees are assigned a task different from what they
were doing.
 Disadvantages of a Matrix Organizational Structure
There can be competition for scarce resources. This may cause hostility and
could impair the work.
It is generally perceived that matrix organizations have more managers than
required, which increases overhead costs.
The workload tends to be high in a matrix organization. Employees have to do
their regular work along with the additional project-related work. This can
exhaust them. Employees may ignore their regular responsibilities if they are
overtaxed.
A matrix structure is expensive to maintain. Organizations have to spend more
to keep resources because all resources are not busy at all times and some
are needed only for a short duration.
 How to Overcome the Disadvantages of a Matrix
Organizational Structure
Some of these disadvantages can be countered in the following ways:

There must be close cooperation between the project manager and the
functional manager to avoid confusion and conflict.
Communication should be well defined and it should occur in all directions.
This is important to gain support from executives, managers, supervisors, and
employees.
Organizations must communicate their vision, objectives, and goals with their
employees.
 How to Overcome the Disadvantages of a Matrix
Organizational Structure

Power distribution between the project and the functional manager should be kept
properly. Any imbalance may impact the effectiveness of operations.
Any conflict between the project manager and the functional manager must be
resolved as quickly as possible and in private.
Roles and responsibilities should be clear and communicated to employees to avoid
confusion.