Project Management 101: Organizational Structure

The power and influence of a project manager is different depending on the organizational structure of the company. Based upon the organizational structure the characteristics of the project manager’s authority, role, budget management, resource availability, and staff will vary. Organizational structures range from functional to matrix to projectized.

A functional structure follows the traditional company structure. Employees report to a single supervisor and are grouped by specific functions into departments i.e. public affairs, information technology, marketing, accounting. Project work within a department occurs independently of other departments. Project managers have little influence and are primarily responsible for coordinating project efforts through functional managers. Project resources, budget, and staff are provided at the discretion of functional managers and staff provided often assist with projects as supplemental tasks while maintaining functional area primary responsibility. The functional manager is at the top of the hierarchy in the functional organizational structure.

A projectized structure is at the other extreme of organizational structures. While employees within the company may still be grouped into departments, the employees may have primary responsibilities of providing support services to projects or report directly to the project manager. Project teams are often colocated (often in the same department) or virtual collaboration techniques are frequently used to maximize efficiency of project work. The project manager has significant authority and independence over project resources, budget, and staff. The project manager is at the top of the hierarchy in the projectized organizational structure.

A matrix structure combines properties of both functional and projectized structures and can be categorized as weak, balanced or strong based on how closely the structure aligns with a functional or projectized structure. Influence and power over project resources, budget, and staff vary depending on the type of matrix organizational structure. A weak matrix is more similar to a functional structure, while a strong matrix is more similar to a projectized structure. A balanced matrix is when the project manager and functional manager share equal or near equal influence on the project.

Organizations may have one type or a mix of organizational structures. One organizational structure may make sense for one department, while a different one may make sense for another department. Understanding the type of organizational structure dictating a project will allow the project manager and project team to better coordinate project efforts. If additional resources are needed on a project, will the request need to be approved by a functional manager or does the project manager have the authority to obtain the resources? In a functional structure, the functional manager would have the authority while a project manager would not. In a projectized structure, the project manager would have the authority while the functional manager would not necessarily need to be consulted. Knowing the format of the organizational structure will allow the project manager and project team to take full advantage of project opportunities or be aware of project drawbacks.

Disclaimer: The views and opinions expressed are those of the blogger and are not necessarily those of the Federal Reserve Bank of Dallas or the Federal Reserve System.