Organizational Structure:

In an organization constraints are imposed to the projects through organizational structures and governance frameworks. The governance frame work is consisting of rules, policies, procedures, norms, processes etc.  The general management elements are included in governance framework and depending upon the organizational structure is selected. The performance of the project or organization depends upon the selection of appropriate types of organization in management. Determination of appropriate organizational structure type require a detailed study and trade off between different parameters. There is no one specific organizational structure fitting for the all projects, you will have to adapt and select the right structure for your project needs or as per your organizational framework.

Organizational structure types:

Each companies considers different /numerous factors in selecting the organizational structure, some of the factors are "alignment to organizational objectives", "competency and specialization", "control & authority" , "accountability & responsibility", "cost", "location", "communication and efficiency".

The main types of organizational structure are:

  • Functional organizational structure
  • Matrix organizational structure
  • Projectized organizational structure or Project oriented organizational structure

Matrix organizational structure can be further divided in to 3 types of organizational structure.

  • Weak matrix organization
  • Balanced matrix organization
  • Strong matrix organization

The classification is mainly depending upon the project managers authority, the role of project manager and budget, resource control in the project.

Main types of organizational structure

 

Organizational structure Project manager’s authority Resource availability PM’s role Budget control
Functional None or very little Little Part time or may not be available Functional manager
Weak matrix Low Low Part time Functional manager
Balanced Matrix Low to moderate Low to moderate Part time Mixed
Strong Matrix Moderate to High Moderate to High Full time designated Project Manager
Projectized or Project oriented High or Total Total Full time designated Project Manager

 

Functional vs Matrix vs Projectized

 

A functional organization structure is a hierarchical organization structure wherein people are grouped as per their area of specialization,the reporting relationships are grouped based on the specialty or functional area. Separate areas are established to take care of different concerns.A functional organization is the most common type of organizational structure. This is where the organization is divided into smaller groups based on its special functions such as IT, finance or marketing.

Functional organizational structure advantages and disadvantages:

Advantages: 

  • Clearly defined career path
  • Greater specialization and skill development
  • More flexible work force
  • Only one manager and no conflict

Disadvantages:

  • Department work gets higher priority than project work
  • No career path for PM

A matrix organizational structure is a company structure in which the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. This is a combination of functional and project oriented organizational structure, employees have dual reporting relationships - generally to both a functional manager and a project manager.

Matrix organizational structure advantages and disadvantages:

Advantages: 

  • Better Coordination
  • Maximum utilization of resources

Disadvantages:

  • Higher potential for conflict
  • Greater communication complexity and overhead

A project organizational structure refers specifically to an organizational structure that has been set up in a manner in which the project manager leads the group and in which the project manager has the ultimate authority to make any and all decisions involving the organization.The structure facilitates the coordination and implementation of project activities. Its main reason is to create an environment that fosters interactions among the team members with a minimum amount of disruptions, overlaps and conflict.

Projectized organizational structure advantages and disadvantages:

Advantages: 

  • Better Communication with in project
  • More loyal to the project goals

Disadvantages:

  • Less efficient use of resources
  • No home once the project is completed
  • Limited skill development