Types of project management organizational designs. (By Tariro Gwete and Tapiwa M Gudza)

There are three primary project management organizational designs that have become the foundation for how an organization is run which are the functional, matrix, and pure project. Each structure has disadvantages and advantages, if used correctly in the right environment, the type of a particular design can further the completion of projects. An organizational structure can help or hinder project success and some organizational structures can impair the ability to deliver projects. Some organizational structures may also impede the ability to share resources and impair the workers ability to deliver projects. However, these project designs can still work well if the project managers understand them correctly and when good communication exists. Choosing the correct organizational structure for each project is imperative for the success of that project. Organizations must compare and contrast all choices to pick the best one suited for their particular project.

Functional type

A functional organizational design is a structure that consists of activities such as coordination, supervision and task allocation. Tait (2010) The organizational structure determines how the organization performs or operates. The term organizational structure refers to how the people in an organization are grouped and to whom they report. One traditional way of organizing people is by function, the functional organizational structure groups people by typical broad business activities based on role such as marketing, finance, human resources and production then further subdivides as necessary which results in a vertical, hierarchical structure. The project teams are formed within functional units and nobody is responsible for the entire project. Leadership also occurs within functional units and it belongs to technical experts. Burke (2000) The functional structure offers a number of potential advantages as well as disadvantages.

Advantages

A functional structure has several commonly-recognized advantages for the company and its managers.  Firstly, the natural division of labor associated with the formation and maintenance of functional groups allows the members of each group to become more specialized and productive and creates opportunities for them to continuously learn and improve through their interactions with other group members.  Secondly, since the members of each functional group are brought together and linked by their common skills, education and training, it is easier for them to supervise one another and control the activities and behavior of all of the members of the group. Thirdly, the consistent interaction and collaboration among group members ultimately leads to a team orientation that makes the group more effective in tackling and completing the projects assigned by the senior managers overseeing all of the functional groups. Bobera (2008) There is also high efficiency and productivity since a worker who is an expert in his functional area can perform tasks with a high level of speed thus enhancing efficiency and productivity. The career paths within the functional unit are clear, the employees may be highly motivated to advance their careers which may also make them more productive. Finally, the functional structure facilitates segregation of company assets and resources into the areas that are most important for the company’s success and thus makes it easier for senior management to identify, manage and control resource deployment during a time when the company is growing rapidly and adding new resources quickly. http://en.wikipedia.org/wiki/Functional_management

Disadvantages

While specialized units within the functional structure often perform with a high level of efficiency, they may have difficulty working well with other units thus lack of team work. If a project calls for several units to work together, units may become territorial and unwilling to cooperate with each other. In essence, each unit may act in what it perceives to be its own best interests instead of those of the organization as a whole. Infighting may cause projects to fall behind schedule. Bobera (2008) Another potential disadvantage of the functional organization structure is that it can pose a challenge for top management to maintain control as the organization expands. As organizations get larger and top management needs to delegate more decision-making responsibilities to each functional area, the degree of autonomy may also increase, making coordination of activities more difficult. http://en.wikipedia.org/wiki/Functional_management If the company expands into new geographic areas, maintaining control of and managing the separate functions can be even more of a challenge.

The functional structure does ultimately lead to several serious potential problems. As the company creates more functional groups, and each of those groups expands and develops it own unique hierarchy and system of interaction among members of the group, the chances of communication problems between groups increases substantially. Kezner (2006) Not surprisingly, each functional group begins to develop its own orientation toward how the activities of the entire company should be prioritized and these will often conflict with the views of other departments that depend on the group for cooperation and resources. Also as the company grows and creates new functional groups and adds new products and services it becomes more difficult for senior management to identify and measure the contribution that each employee and functional group is making to the necessary activities of the company and the pursuit of the strategic goals and objectives set by the company leadership. These measurement problems ultimately lead to poor decisions about the portfolio of company products and services unless steps are taken to collect and properly evaluate all the information necessary to determine how and where the company’s limited resources can be effectively deployed. The expansion of the functional-based structure ultimately becomes a burdensome distraction on senior management that diverts their attention from important strategic issues that impact the entire company. Tait (2010)

Also specialization leads to operational efficiencies where employees become specialists within their own realm of expertise. The most typical problem with a functional organizational structure is however that communication within the company can be rather rigid, making the organization slow and inflexible. Therefore, lateral communications between functions become very important, so that information is disseminated, not only vertically, but also horizontally within the organization. Burke (2000) Employees within the functional divisions of an organization tend to perform a specialized set of tasks and this leads to operational efficiencies within that group. However, it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.

Communication in organizations with functional organizational structures can be rigid because of the standardized ways of operation and the high degree of formalization. Bobera (2008) This can further make the decision-making process slow and inflexible. Even though functional units often perform with a high level of efficiency, their level of cooperation with each other is sometimes compromised. Such groups may have difficulty working well with each other as they may be territorial and unwilling to cooperate. The occurrence of infighting among units may cause delays, reduced commitment due to competing interests, and wasted time, making projects fall behind schedule. This ultimately can bring down production levels overall, and the company-wide employee commitment toward meeting organizational goals.

Pure project

A pure project organization is a model of a business where project managers have total control over the project they oversee. Galbraith (2012) In addition to that Galbraith (2012) is of the view that pure project organization might also be termed a task force. In the case of a "pure project," the leader of this task force would have to be given total authority for a limited period to solve a particular problem. The project-based model of organizing is widespread in traditional manufacturing industry but also employed in other industries by both public and private organizations such as consultancy firms, marketing and film industry. It is especially suitable for complex, innovative high-technology and high-value new-product development and business-to-business projects in rapidly changing environments. In pure project organization approach the structures, strategies, resources and capabilities are organized around the needs of the project often cutting across conventional industries and firm boundaries. The project, therefore, is the primary business mechanism for coordination integrating the key business functions such as manufacturing and marketing. In the pure project-based organization no other types of organizing exists. Hobday (2000)

Advantages

In pure project organization approach project managers are usually very high in the hierarchy having direct control over business functions, personnel and project resources. For larger projects this way of organizing is effective and efficient, but for smaller projects it is often expensive to operate. This is because there is a varying need for specific resources throughout the project and with smaller projects this variation, for example a work-load of an individual, is harder to even out. In addition the input of human resources or accounting department may be needed for a shorter period or part-time only. Employing persons full-time to accomplish these tasks would be waste of resources. Hobday (2000) and Mantel (2001)

The project manager is fully responsible and authorized for the project. Although he has to report senior management of the home organization about the advancement of project realization, the complete labor is allocated to the project. As the authority is centralized, the possibility of fast decision-making is increased. In this way, the organization is enabled to react fast on the demands of clients or top management.The pure project organization is structurally simple and flexible; it enables its relatively simple application and understanding.  The project manager has full authority over the project and team members report to one boss. Lines of communication are therefore shortened thus decisions are made quickly and team pride, motivation and commitment are high. http://www.scribd.com/doc/27605941/Pure-Project-Organization

Disadvantages

A problem in project-based organizing is that it may lead to limited technological depth of the project. This is a result of few employed specialists who may lack a certain expertise or specific knowledge which would be needed to complete a task. In situations like this it may be necessary to hire a consultant outside the project. Another drawback is the so called “projectities”, the typical project related challenges, which appear especially in long-lasting projects. People assigned to a specific project tend to get strongly attached to it, fear the day the project is ending, and thus may slow down the pace of working. Eventually "projectities" may lead to a situation where the control is lost, systems vary from project to another, and the project begins to take on a life of its own. Hobday (2000) and Mantel (2001)

This type of the organizational structure has a tendency to support the holistic approach to the project. Mantel (2001) The tendency of focusing and optimization of project segments, relating to the whole project, can often result in technical errors in the project. Intial operating costs may be high considerable time before projects completed. Also a sense of competition develops between various project teams and project team members may not have long term commitment. This type of project design might also lead to duplication of resources and organizational goals and policies are ignored.  This type of design may lack new technology transfer due to weakened functional divisions.Hobday (2000)

Matrix type

The matrix project attempts to blend properties of functional and pure project structure. The matrix project design superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure. Field and Keller (1998) Matrix project organization was formed in attempt to capture the advantages and tackle the disadvantages related to the approaches of pure project and functionally organized project. It is a combination of these two approaches, where pure project is superimposed to a functionally organized system. Project manager reports to program manager who is responsible for coordinating the activities of specific or all projects, as well as balancing time, cost and performance between a bunch of projects run simultaneously within the parent organization. Mantel (2001) In this type of organizing two distinct levels of responsibility exists. The vertical functional hierarchy consisting of departments such as manufacturing and finance exists alongside with the horizontal structures formed by the projects that overlay the functional departments. These projects have some access to functional departments’ resources. Project manager controls when and what the team members do while the head of the functional group controls who is assigned to the project and which technology is the most appropriate to be used. Mantel (2001)

Advantages

The matrix structure also has significant advantages that make it valuable for companies to use. The matrix structure improves upon the “silo” critique of functional management in that it diminishes the vertical structure of functional and creates a more horizontal structure which allows the spread of information across task boundaries to happen much quicker. http://en.wiktionary.org/wiki/matrix Moreover matrix structure allows for specialization that can increase depth of knowledge and allows individuals to be chosen according to project needs. This correlation between individuals and project needs is what produces the concept of maximizing strengths and minimizing weaknesses.

The main advantage of the matrix based organization is the efficient allocation of all resources, especially scarce specialty skills that cannot be fully utilized by only one project. For instance, monitoring and evaluation specialists may not be utilized full-time on a project but can be fully leveraged by working on multiple projects. The matrix based organization is also the most flexible when dealing with changing programmatic needs and priorities. http://en.wiktionary.org/wiki/matrixAdditional advantages to matrix management are: it allows team members to share information more readily across the unit boundaries, allows for specialization that can increase depth of knowledge and allow professional development and career progression to be managed. It is easier for a program unit manager to loan an employee to another manager without making the change permanent. It is therefore easier to accomplish work objectives in an environment when task loads are shifting rapidly between programmatic units. Field and Keller (1998)

A matrix organization handles number of projects simultaneously. As the approach is project oriented, details of the resources required are calculated accurately. Resources are transferable from one project to another. The matrix design helps self development and growth since it exposes the employees to job rotation and to complex situation and challenges.  In a matrix organizational structure, the project team can accommodate project changes rapidly and with excellent integration into the overall work. If the changes require revisions in design or in completed work, the project manager can make the appropriate decisions with his team based on his proximity to the work and their advice. If the changes include revised manpower, the matrix organization lets the project manager send people who are no longer required back to their home departments while adding to the team new people with corresponding expertise or capabilities matching the changes. This matrix organization flexibility helps produce excellent project outcomes. Barlett and Ghoshal (2010)

Disadvantages

For the most part, matrix organization structure tends to avoid the disadvantages of pure project and functional project, but there are unique problems related to the project matrix organization mainly arising from the split authority and the tension arising at the interfaces of the two competing ways of organizing. Individual specialists have two superiors, often leading to a situation where project manager decides on the tasks undertaken by the specialist, but the reporting is done for the functional manager who evaluates the performance, promotion and salary of the specialist. Consequently, project workers often face conflicting orders and demands on time and activities. Adding to the conflict is the difficulty that the project manager is in charge of the project and its administration, but the functional manager is often higher in organizational hierarchy controlling the technological decisions. http://en.wikipedia.org/wiki/Organizational_structure

Although the matrix project organization allows flexibility through coordination of all projects, balancing the resources between various projects is a tough work often resulting in political infighting among project managers who instead of viewing the overall benefits of the parent company focus on the benefits of their individual projects. In addition conflicts within the project teams seem to be more common in matrix project organizations. They are mainly caused by the split authority and lack of the clear single point of responsibility, but also appear to be inherent in the transdisciplinary teams. Sherperd (2007) Team members often work part-time for the project, have different functional homes, and other commitments therefore being more commitment to the functional home than to the project. Mantel (2001) 

The matrix structure is difficult to manage and internal operations are complicated. This is due to horizontal and vertical lines of authority. The rule and procedures are not followed uniformly in all departments therefore it becomes difficult to manage. It also creates communication gap, there is communication gap between project manager and functional manager as a result this may lead to confusion. The matrix design also has some complexities in the internal operation and too much shifting of staff from one project to another creates more complications.The problem with this structure is the negative effects of dual authority similar to that of project organisation. The functional managers may lose some of their authority because product managers are given the budgets to purchase internal resources. In a matrix organisation, the product or business group managers and functional managers have somewhat equal power and this causes a very high possibility of conflict and frustration. http://en.wiktionary.org/wiki/matrix

Once an organization finds its organization structure, it will help put them on the road to success. There are three primary project management organizational structures to choose from, which include: functional, matrix, and pure project. Every organizational structure has advantages as well as disadvantages, but choosing the correct structure can help implement a successful project. This is why it is so important to compare and contrast these organizational structures and choosing the correct one to meet all your company’s needs and wants, because choosing the wrong one could end in failure of the project. The functional organization structure is the most common type of project management organizational structure. It works best in small organizations where all the sections are geographically close together and provide a small number of goods and services.The matrix structure is for “project-driven” companies such as construction. It is a combination of both functional and pure projects structures and each team member has two bosses the project manager and functional manager. An organization that has a fewer number of projects but they have a longer duration of time, that is when the pure project is used. After these project management organization structures are compared and a company figures out which structure would be the best method to manage a project team.