The PMO can establish consistent procedures and develop best practices and templates for planning,

monitoring, and controlling projects; data gathering; documentation; and project reporting, for example.

Advantages and Disadvantages of Organizational Structures

Functional Organizational Structure

Pro

By bringing specialists from the same discipline together in one organizational

• reduces duplication and overlap of activities

• environment in which individuals can share and keep up with the

knowledge and skills of their particular discipline

Cons

Functional organizations can be insular

• each functional component concerned about only its own

performance

• teamwork with other functions is not emphasized, and

• there is little cross fertilization of ideas among functions.

• project focus is not emphasized, and decisions may be parochial

The hierarchical structure slows communication, problem resolution, and decision making.

• The functional organization lacks customer focus.

• There is a stronger allegiance to the function than to the project or

the customer.

Autonomous Project Organizational Structure

Pro
In an autonomous project organization, all the individuals on the project team work for the project
manager.
• has full control over the resources, including authority
over how the work gets done and by whom
• no conflict with other projects over priorities or
resources
• highly responsive to the customer

Cons
The project organizational structure can be cost inefficient because
• under-utilization of resources.
• a one-week activity can stretch out to two or three
weeks, causing project costs to increase
• unapplied time is still a cost to the company

• potential lack of opportunity for cost efficiencies from

leveraging activities with other concurrent projects
• low level of knowledge transfer among projects
• do not have a functional "home" to serve as a source
of shared functional expertise and knowledge

Also, at the end of a project, people may be laid off if there is not a new project to which they can be
assigned. In such cases, what they learned on the project is lost to the company.
• team members experience high anxiety about
reassignment as their project nears completion

Advantages and Disadvantages of Organizational Structures

Matrix Organizational Structure

Pros

The matrix organizational structure tries to capitalize on the advantages of both the functional and the
autonomous project structures while overcoming their disadvantages.

• allows efficient utilization of resources

• not unusual for individuals in a specific function to be working on

two or more projects concurrently

• individuals can be moved among projects as necessary to

accommodate any project changes

The matrix structure provides a core of functional expertise that is

available to all projects, and thus this expertise is better utilized.

• have a common discipline and can collaborate with and learn from

one another.

• provides a home for individuals at the end of a project

• knowledge stays with the company, ready to be used on future

projects

The matrix structure also facilitates improved communication, allowing for more timely problem
identification and conflict resolution.

• two channels through which to send warnings about a potential

problem—the project manager and the functional manager

• dual communication paths increase the chances that problems will

be identified rather than suppressed

Finally, the matrix organization is customer focused. The project manager is the designated focal point
for communication with the customer, and the functional units are set up to support projects.

Cons

Members of a project team in a matrix organizational structure have a dual reporting relationship:
• temporarily they report to a project manager while
• administratively they still report to their functional
manager

If an individual is assigned to work on several projects,

• he or she can have multiple managers
• This can cause anxiety and conflict over work priorities
• have a permanent allegiance to their functional home
• strained by their required allegiance to the project
team
A company that uses a matrix organizational structure must establish operating guidelines to assure a
proper balance of power between project managers and functional managers.

Conflicts will arise between project managers and functional managers regarding
• priorities,
• the assignment of specific individuals to projects,
• technical approaches to the work,
• and changes to projects

If there is an imbalance of power, such conflicts may

not be resolved in a manner that will be in the best interests of either the customer or the company.

Critical Success Factors

• In a matrix organization, it is important to delineate the project

management responsibilities and the functional management
responsibilities.
• When implementing a matrix organizational structure, operating
guidelines should be established to assure proper balance of
power between project managers and functional managers.
• Project teams should be kept as small as feasible
throughout the project.

1. Describe what a functional organization is. Make sure you discuss the advantages and disadvantages
of this structure.
• Consist of individuals who perform the same function

Advantages
• Activities are not duplicated
• It provides the benefits associated with
specialization and functional excellence

Disadvantages
• Tends to be insular
• Slow response time
• Lack of customer focus

2. Describe what an autonomous project organization is.

Make sure you discuss the advantages and disadvantages of this structure.
• Company that is in the project business and works on multiple projects at a time
Advantages
• Control over resources
• High degree of responsiveness to customers

Disadvantages
• There can be cost-inefficiency
• Low level of knowledge transfer among projects

3. Describe what a matrix organization is. Make sure you discuss the advantages and disadvantages of
this structure.
A matrix organization is a hybrid structure that combines elements of a functional organizational
structure and an autonomous project organizational structure

Advantages
• An efficient utilization of resources
• Functional expertise that is available to all
projects
• Increased learning and knowledge transfer
• High degree of responsiveness and customer
focus

Disadvantages
• Dual reporting relationships
• Need for a balance of power

4. Which type of organizational structure is often used by companies that produce standard products?
Why?
Functional organizationalstructure

• The focus is on the technical excellence and cost

competitiveness of the company's products, as
well as the importance of each functional
component's expertise and its contribution to the
company's products.

5. Discuss some of the problems that might be encountered when a functional organization develops
new products.
Team members view their contribution to the project(developing a new product) in terms of their
technical expertise, their allegiance remains with their functional managers.

• If there is conflict among the team members, it

usually works its way through the organization
hierarchy to be resolved, slowing down the
project effort.

• Decisions might reflect the interests of the

project manager's own functional component,
rather than the best interests of the overall
project.

6. Why is an autonomous project organization considered to operate like its own somewhat independent
entity?
• All the resources needed to accomplish each
project are assigned full-time to work on that
project.

• A full-time project manager has complete project

and administrative authority over the project
team.

7. Why is an autonomous project organization sometimes considered to be cost inefficient?

• Each project must pay the salaries of its
dedicated project team, even during times when
they are not busy.

• Resources or work activities may be duplicated

on several concurrent projects.

8. Which organizational structure is considered to be a hybrid? Explain.

• The matrix structure is a hybrid—a mix of both
functional and autonomous project
organizational structures.

• It provides the project and customer focus of the

project structure, but retains the functional
expertise of the functional structure.

9. How does a matrix organization provide for career development?

• A matrix organization provides for career development by assigning individuals to various types of
projects.
• As they broaden their experience, these individuals become more valuable for future assignments.

10. What are the responsibilities of the project manager in a matrix organization?
The project manager is the intermediary between the company and the customer.

She or he is responsible for:

• Leading the development of the project plan
• Establishing the project schedule and budget
• Allocating specific work activities and budgets to
the various functional components of the
company organization

11. What are the responsibilities of the functional manager in a matrix organization?
Each functional manager in a matrix organizational structure is responsible for how the assigned work
activities will be accomplished and who (which specific people) will do each task.

12. What are the responsibilities of the vice president of projects in a matrix organization?

13. What is the role of a project management office?

What organizational structure best supports having a project management office, and why?
Roles:
• Oversees and coordinates multiple projects
• Resolve s priority conflicts between projects
• Can facilitate decisions regarding the priority
among projects
• Provides project management training;provides
administrative support staff for projects
• Establishes consistent procedures
• Develops best practices and templates for
planning, monitoring, and controlling projects

The matrix organizational structure provides a core of functional expertise that is available to all projects
and supports the project management office.