The project organisation is a special organisational structure that is set up for the duration of the project. A special team is needed because the existing line organisation is designed to fulfil its regular specialist work, rather than to manage and carry out new, one-off initiatives that involve different areas and departments. The line organisation also lacks the flexibility to react quickly enough when problems are encountered or changes are needed.
Functional organisation
In a functional organizational structure, the company is divided into separate roles and functions by divisions or departments (e.g. engineering, procurement, sales). In case of a project, the various roles of the project are taken from the functional units with the project manager having little or no authority. Authority-driven decisions on budget, schedule, and equipment rest on the shoulders of the functional manager who possesses a significant level of expertise in the same field.
Advantages:
High degree of specialization, efficiency and productivity
Functional experts can be used by several projects
Functional departments can provide a normal career path for professionals
Disadvantages:
Projects often lack focus as each function has its core business
Lack of motivation as project might be perceived as additional burden for staff
Lack of teamwork due difficulties in inter-departmental cooperation and exchanges
Difficult management control
Project-based organisation
Project organizational structure refers to the creation of an independent project team where the project manager has project authority. The team’s management is separated from the parent organization’s other units and the project has its own expert staff. The company assigns certain resources to the project team and grants the project manager authority over the project’s budget, schedule and project team.
Advantages:
Clear, established line of authority resulting in faster decision-making and approval
Easier and more effective communication in the project team
Disadvantages:
Duplication of efforts and the loss of scalable economies
Ineffective integration of the project team with the parent organization
Project team members lack business continuity and security as once the project ends, the return to the original functions may be more difficult
Matrix organisation
Matrix organizational structure is a hybrid form meaning a project structure in which the reporting processes are set up as a dual reporting relationships – project management and functional management. According to the relative power of project managers and functional managers, in practice there are different types of matrix systems. In a functional matrix functional managers have greater powers than project managers, in a project matrix, project managers have greater powers than functional managers and in a balance matrix both have equal powers.
Advantages:
Resources can be shared in multiple projects, which can significantly reduce the problem of redundant staff
The anxiety of project members is reduced greatly after the end of the project, while they are strongly associated with the project, on the other hand, they have a “home” feeling about their functions
Disadvantages:
High level of tension between functional manager and project manager (team members have two bosses)
Sharing equipment, resources and personnel among different projects may lead to conflict and competition for scarce resources
Project manager must negotiate and consult with the department managers on various issues, which leads to the delay in decision making
Sources accessed on May 17th, 2018
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