Time to go back to the basics. One of the first things that clicked with me when formally studying project management was organizational structure, because I had worked in all three main environments. The way that the project team is organized is directly related to the way the entire organization is structured. There are three major organization structures to manage work and people.
In a functional organization, a project team is generally staffed with people from the same department. All the resources needed for the project team come from the functional organization. In this kind of organization the team members always report to the functional manager, who has full authority. The project managers are essentially assistants to the functional managers in getting the work accomplished. Or, the functional managers may be the project manager.
In a functional organization, all of the project work usually happens within a particular department and it is that department’s manager that is responsible and in charge of pretty much everything.
The biggest advantage of functionally-based projects is that there is usually clear authority, and there is usually no need to negotiate with other organizations for resources, since all of the staff needed for your project will come from the same functional organization.
A major disadvantage of the functional organization is that your functional area may not have all of the specialists needed to work on a project.
Think consulting company. If you have ever worked with one, usually you will find yourself in a project based organization.
In this case, teams are organized around the projects themselves. Once that project is complete (remember, the definition of a project is that it is temporary) the team is released and moves on to another project. An advantage of this type of organization is that their is very clear authority and focus. The PM makes all the decisions about the budget, schedule, resources, etc. The team has the advantage here too, as the project is their primary responsibility.
But the flip side of that coin and one major disadvantage comes with the possible duplication of resources, since scarce resources must be duplicated on different projects. There can also be concerns about how to reallocate people and resources when projects are completed. In a functional organization, the people still have jobs within the functional department. In a project-based organization it is not so clear where everyone is reassigned when the project is completed.
My favorite type of organization to work in, and no, not just because the name is awesome.
Matrix organizations allow functional departments to focus on their specific business competencies and allow projects to be staffed with specialists from multiple functional organizations. Their are three types of matrix organizations, weak, balanced and strong.
In a weak organization the PM has some authority but are not in charge of the resources on a project. Personally I have never seen this work well, especially around deadline time. Major decisions are still made with the functional manager’s approval, which as you can imagine, often can lead to conflict.
In a balanced matrix, the PM share the authority with the functional manager. If you work in a balanced environment and you are on the team, you report to the PM and functional manager equally.
In a strong matrix, the PM has more authority than the functional manager, but the team still reports to both managers. I have been in this environment more than once, and I personally think this is the one where the project work flows smoothly, because the delivery of the project is the most important thing.
The main advantage of the matrix organization is the allocation of all resources is usually extremely efficient and this type of team is the most flexible when dealing with changing business priorities.
Although complicated reporting relationships are often listed as a disadvantage in a matrix – as many people have multiple work managers – a functional manager and one or more project managers, I have never found this to be a problem. Functional managers who work in a matrix environment know the delivery of the project is the most important thing and work hard to ensure that their team members are utilizing the appropriate time management skills to meet the work expectations of multiple managers.