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Project Organization Types

31/03/2024


A project organization refers to a structure that is specifically designed to execute projects efficiently and effectively. Unlike traditional functional organizations where work is organized by departments, a project organization is temporary and formed around the specific needs of a project. Project organizations are commonly found in industries such as construction, engineering, information technology, research and development, and event management, where projects are temporary in nature and require dedicated resources and coordination to achieve specific objectives. Effective project organization requires strong leadership, communication, teamwork, and project management skills to deliver successful outcomes within scope, schedule, and budget constraints. 

An organizational structure determines how the various groups and individuals within the organization interrelate. It also affects how much authority the project manager has, as well as the availability of resources and how projects are performed. The structural model used by an organization will have a huge impact on how project managers interact with team members and stakeholders. In many cases, a project manager will interact with people at various levels in an organization—for example, middle management, operations, strategic functions and senior management. Knowing which individuals in the organization are decision-makers or influencers and working well with them increases the probability of project success.

Organizations will typically be configured in one of the main structural implementations:

These are listed as follows :

Functional

  • Each department is responsible for carrying out a specific, similar set of activities. 
  • Several people perform each type of activity. 
  • Reporting is hierarchical, with individuals reporting to a single manager. 
  • The project manager's authority is low, relative to the functional manager's authority 

Matrix

  • The team members may be added from other functional areas. 
  • The team members report to multiple managers, the functional manager, their resource manager and possibly to the project manager. 
  • The structure may be characterized as weak, balanced or strong, depending on the relative authority of the project manager to the functional manager. 

Project-oriented

  • In a projectized organization, teams are organized around projects. 
  • The project manager and a core project team operate as a separate organizational unit within the parent organization. 
  • Team members are dedicated to specific projects for the duration of the project. 
  • Project managers have full authority and control over project resources and decisions. 
  • Core team members are responsible for the work of extended team members in their functional area. 
  • Team members are often co-located. 
  • The project manager reports to a program manager and has a significant amount of authority and independence.

Composite

  • A composite organization combines elements of multiple organizational structures to suit its specific needs.
  • For example, it may have functional departments for day-to-day operations but adopt a projectized approach for specific projects.
  • The goal of a composite organization is to leverage the strengths of different structures while minimizing their weaknesses.
  • This flexibility allows the organization to adapt to different project and business requirements efficiently.
  • However, managing the complexities of multiple structures can be challenging and requires strong leadership and communication.

Each organization type has its own set of advantages and disadvantages, and the choice of structure depends on factors such as the nature of the projects, organizational culture, industry norms, and strategic objectives.

Functional, Matrix, Projectized, and Composite are organizational structures commonly used in project management and business management. Each structure has its own characteristics and is suited to different types of organizations and projects

Relative Authority in Organizational Structures

Depending on the organization type, the project manager or team will have some expectation of authority. Relative authority refers to the project manager's authority relative to the functional manager's authority over the project and the project team. In a purely functional organizational structure, the project manager's authority is low relative to that of the functional manager. Conversely, in the project-oriented organizational structure, the opposite is true.

 The matrix organizational structure comes in three variations: weak matrix, balanced matrix, and strong matrix. These variations differ in the degree of authority and power allocated to the project manager relative to functional managers. Here's a breakdown of each:

Weak Matrix Organization:

  • In a weak matrix organization, functional managers hold most of the power and authority.
  • Project managers have limited authority and often act more as coordinators or facilitators rather than having full control over project resources and decisions.
  • Project managers may face challenges in managing project scope, schedule, and budget since they rely heavily on cooperation and resources from functional departments.
  • The weak matrix structure is common in organizations where functional departments have stronger influence and where project management is not a primary focus.

Balanced Matrix Organization:

  • A balanced matrix organization strikes a middle ground between weak and strong matrices.
  • Both functional managers and project managers share power and authority over resources and decisions.
  • Project managers have more authority than in a weak matrix but may still need to negotiate with functional managers for resources and prioritize project tasks.
  • This structure fosters better cooperation between functional departments and project teams, leading to more efficient project execution.
  • The balanced matrix structure is often found in organizations where project management is recognized as important, but functional departments still retain significant influence.

Strong Matrix Organization:

  • In a strong matrix organization, project managers have substantial authority and control over project resources and decisions.
  • Functional managers play a supporting role, providing resources and expertise as needed, but project managers have the final say in project matters.
  • Project managers have dedicated project teams, and team members report directly to them rather than to functional managers.
  • This structure facilitates faster decision-making, clearer lines of authority, and greater focus on project objectives.
  • The strong matrix structure is suitable for organizations where projects are the primary focus, and there's a need for centralized project management control.

Choosing the appropriate matrix structure depends on factors such as the organization's culture, the nature of projects, the level of project management maturity, and the balance of power between functional and project managers. Each variation has its own advantages and challenges, and organizations may adapt their structures over time based on evolving needs and priorities.

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