The document discusses different types of organization structures for project management: functional, projectized, and matrix. A functional structure groups employees by specialty area and the functional manager has most authority, while a projectized structure gives full authority to the project manager. A matrix structure combines these by having employees report to both a functional and project manager. The document outlines advantages and disadvantages of each type and notes that the best structure depends on organizational goals and environment.

1. Project Management
Organization Structure

2. Organization Structure
• Represents the management hierarchy:
– Reporting relationships who report to whom
– The official chain of control or authority, which deals of
official activities, such as firing, hiring, and promotion etc.
• Organization can be grouped into major subdivisions
on the basis of a number of frameworks.
• Responsibilities & type of work for each subdivision
• Official lines of authority & communication
Informal organization also important and can exist in parallel to
the official organization, communication of the informal is
socially motivated.

3. Forms of organization structures
are:
• There are a number of options
• Best depends on goals, type of work it
supposed to do, and the environment
within which it operates.
–Functional organization
–Project organization
–Matrix organization

4. Functional Organization
This type relies on formal rules, procedures, coordinated
plans, budgets, fairly common, segmented by
department and their functions.
works well in repetitive, stable environments

5. Functional org…
• A functional organization is the most common type of the
three.
• It works best in small organizations in which the different
sections are geographically close together and which provide
only a small number of goods and/or services.
• In a functional structure, the organization is broken into
different sections based upon specialty. For example, there
may be one area for sales, one for customer service and one
for the supervisors who deal with escalated problems.
• The project manager's role is to ensure smooth execution of
processes and projects; however, the functional manager has
the most power and makes the final decisions.

6. Types of Functional org
• Geographic Differentiation
• Product Differentiation
• Customer Differentiation
• Process Differentiation

7. Advantages of Functional Organization
An advantage to the functional structure is the role of
the functional manager, which means there is only
one boss. This reduces or prevents conflicts of
interest and makes it easier to manage specialists:
• Clear line of authority
• Career development
• Comfortable and easy
• Technical expertise
• Flexible resource assignment

8. Disadvantages of functional org.
A disadvantage of this type of structure is that the project
manager has limited authority and a limited career path.
• No accountability over complete project
• No project emphasis
• Low coordination across function
• Low delegation of authority
• Work delays due to red tape
• Heavy politics
• Lack of a big picture view

9. Projectized Organization
• Projectized organization is a project focused organizational
structure where project manager has the
final authority over the project to make project decisions,
priorities, acquire and assign resources.
• A projectized organization 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.
• In a projectized structure, all the work is looked at as a
project. The project manager has complete control, unlike
in the functional structure, and all team members report
directly to the project manager.

10. Projectized Organization
• Sometimes these team members are permanent, and
sometimes they are hired as temporary workers to help
with the project until its completion. If the organization
takes on a large project, it will have all the necessary
resources available to sustain the project and will act as a
small, self-contained company.
• The project manager works with complete autonomy
(central authority, power) over the project, team is on the
project full time and report to the project manager.
• As a project manager, you have the responsibility to take
authority, rather than waiting for someone to give you the
authority.

11. Project Organizations
(advantages and disadvantages)
• Advantages to the projectized structure include the project
manager's opportunity for career progression. In addition,
because good communication exists within the project work, the
team members tend to be more committed to, and excel in, their
responsibilities.
• The disadvantage of a projectized structure is that, because the
team breaks up and disperses after the completion of the
project, there are no long-term goals or sense of job security for
the rest of the workers. Another disadvantage is that the
organization has to essentially clone the same resources for
each project (project manager, work area, administrator).

12. Matrix Organization
- It is used mainly in the management of large projects or product
development processes, drawing employees from different functional
disciplines for assignment to a team without removing them from their
respective positions.
- Matrix management is a type of organizational management in which
people with similar skills are pooled for work assignments.
- The matrix structure combines both the functional and projectized
structures. Each team member has two bosses; they report both to the
functional manager and the project manager.
- If the matrix is strong, the power resides more with the project manager.
- If the matrix is weak, the power resides more with the functional
manager.
- The key is to find a balance in which the power is shared equally.
- Because of its complexity, this type of structure can lead to problems if it
is not used carefully and properly. Good communication is essential for
success.

13. Advantages of Matrix Structure
Advantage to the matrix structure lies in the efficient use of resources because of
ease of access. This structure also demonstrates efficient communication both
vertically and horizontally.
Because of this, once the projects have ended, the team members are likely to
receive a job elsewhere in the organization.
The advantages of a matrix include:
- Individuals can be chosen according to the needs of the project.
- The use of a project team which is dynamic and able to view problems in
different way as specialists have been brought together in a new environment.
- Project managers are directly responsible for completing the project within
specific deadline and budget.
- Required resources can be managed moving into and out of the project team
- Project cost is lessened because resources are used as needed
- There are an appropriate focus on the project objectives through a single PM
- The overall enterprise utilization of resources is better handled in the mode

14. Disadvantages of Matrix
• A disadvantage of the matrix structure is complexity, which
can be difficult to manage.
• For example, if the functional manager and the project
manager do not communicate well, the team members can be
caught in the middle, causing confusion.
The disadvantages include:
- A conflict of loyalty between line managers and project
managers over the allocation of resources.
- Projects can be difficult to monitor if teams have a lot of
independence.
- Costs can be increased if more managers (ie project mangers)
are created through the use of project teams.

15. Matrix Problems
• Unclear lines of authority, Two bosses, dual
reporting
“No Man Can Serve Two Masters!”
military principle of UNITY OF COMMAND
• chaos, confusion more common
• often project manager tells you what to do, but your
raise comes from functional manager
• Success highly depends on individuals

16. © McGraw-Hill/Irwin 2004
Information Systems Project Management—David Olson
3-16

17. Comparison between organizations
types
There are several differences between projectized and other types of
organizations:
- In projectized organizations, the Project Manager has all the authority he
wants, as opposed to matrix and functional organizations, where the Project
Manager has no or little authority.
- The Project Manager owns the resources, as opposed to matrix and
functional organizations where he borrows the resources.
- Resources are only allocated to projects in projectized organizations.
In other types of organizations, resources report to their functional
managers and usually do routine, non-project work.

18. © McGraw-Hill/Irwin 2004
Information Systems Project Management—David Olson
3-18