Organizational structure - fully projectized for success?

Organizational structure - fully projectized for success?

One important decision that any organization with multiple ongoing projects needs to make is the choice of an appropriate organizational structure. These usually vary in terms of how much authority is delegated to project managers. Functional organizational structures give them very little power, while newer project-based structures give them considerable authority over projects and their resources. Depending on the type of projects involved, project-based structures can offer many advantages over more traditional models.
 

The functional organizational structure

Traditionally, people have been grouped according to the task they perform for the company

Traditionally, organizations have been structured hierarchically according to the functions performed by their employees - people are grouped according to the task they perform for the company, such as marketing or engineering. Each department - or functional unit - has its own manager and, in theory, each employee reports only to their superior in their functional unit. This structure makes it easy to centralize similar resources and provides a clear career path for employees.

The role of the project manager

A project manager in a functional organizational structure has little formal power. Problems can arise in this kind of structure when multiple projects are competing for each functional unit's resources.

Matrix structures

A matrix structured organization uses the traditional functional "vertical" structure

A matrix structured organization still uses the traditional functional "vertical" structure, but with an additional "horizontal" structure of project managers and their teams. The project manager has real control over project resources, unlike in the purely functional model. Matrix structures allow for effective sharing of functional unit resources between project teams, and effective coordination between members of different functional units. Potential problems with a matrix structure include the fact that employees may end up reporting to a number of different managers, sometimes with differing priorities.
 

Strong or weak?

Matrix structures are often described as being either "strong" or "weak". A strong matrix structure gives more power to project managers than its weak counterpart, in which functional managers play a more important role.

The fully projectized organization

The organization is structured around project teams

In a fully projectized organization, the organization is structured around project teams. Project managers have complete authority over their projects and can acquire resources for them as needed, depending on project targets. Each employee reports only to the project manager of the project to which they are assigned.

Problems that can arise with a fully projectized structure include the duplication of resources between projects, and the difficulties involved in reassigning project team members once the project has been completed.

However, this structure has a number of advantages, notably the fact that members of a project team are focused on working together toward a common goal. Effective communication between team members themselves and between team members and their project manager is also enhanced.

Should I use a fully projectized structure?

Few real-life organizations rely on either of the "extremes" of organizational structure

Few real-life organizations with multiple projects rely solely on either of the "extremes" of organizational structure - a completely functional structure in which project managers have no real authority, or a completely projectized structure. It's important for companies to weigh up the advantages and disadvantages of each structure and consider its appropriateness for their proposed projects.
Projects that are suitable for a strong matrix or projectized structure usually

• are at least moderately large

• have a moderate to long duration

• use complex or new technology

• have a high priority for the company