Pros and Cons of 3 Project Organizational Structures
Which structure works best for you?
The way your organization is structured influences how you manage and run projects. It can also influence how much authority and reach you have to do your job as a project manager.
There are three common organizational structures, and project managers work in all of them: functional, project, and matrix. Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure.
Functional Organizational Structure
In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. Generally, the functional manager has more authority than the project manager.
The functional structure gives you the least power as a project manager, but offers plenty of other advantages:
- It works well for small teams and small projects because the function has full control over the team members and other resources required.
- You can easily access the experts you need because they are in the same functional area.
- It’s quick to get everyone together to resolve problems related to the project.
- You can limit the project communications tools you need to use because the team is relatively small and simple.
- You often get enthusiastic team members who are keen to work on the project because it provides them with career opportunities. Project work can be a great way to motivate your team.
- If you are handing the project over to a functional team, it will be the functional team you work in, which can make closing a project easier.
Although this structure has plenty of advantages, also consider some downsides:
- Work takes place in a silo, which might mean you don’t have access to people outside your functional division.
- People on the project team might be more loyal to their department or team manager than to their work on the project, which can create conflicts.
- A large project can end up with a functional project manager for each function. It can result in work falling through the cracks if all project managers don’t work harmoniously together.
- Functional work can be isolating in that you don’t have an opportunity to network widely with the company. Maintaining a strategic focus can be harder.
Project Organizational Structure
Dedicated teams are put together to work on projects in a project organizational structure. The project manager probably has line management responsibility for the project team members. Examples of this would include large construction builds, but also corporate initiatives that require a dedicated team. The project manager has ultimate authority, reporting to the project sponsor and the project board. The individuals on the team work directly for the project manager.
The obvious advantage of a project structure is that you have more control over the team, but other advantages are in place, too:
- Teams can have a strong sense of identity. It is the easiest structure within which to create a strong team culture.
- The whole team is focused on the team’s goals, so conflict of loyalty exists with the day job for the people working on the project. Their day job is the project.
- Resources are dedicated to the project, so it’s much easier to schedule work. You’ll know when the team members are available and there’s no risk they'll be pulled off at short notice to business-as-usual work for another manager.
- Projects run in this structure are great environments for improving your project management skills as well as more technical leadership skills.
The project structure is the easiest to work with, but still has some drawbacks:
- Having a team dedicated to one project is an expensive commitment. It tends to be an option only on big projects.
- If you remove people from their functional jobs, they might find it difficult to go back, especially if the project is long. Project work stretches you, so returning to your previous role after working in a multidisciplinary environment on a new, challenging project, isn't an appealing prospect for many people. Thus, managing the transition of the team when you close a project becomes even more important.
- Sometimes closing a project can mean losing your job if the business has moved on and another role isn't available for you.
- By their nature, dedicated teams suck up resources to work on just one thing. They can limit the number of projects the company can do at any one time, especially when different projects require the same skills.
- Project managers in this type of structure do line management for their teams, too, which means spending time and effort on human resource tasks you wouldn't have to do in other structures. If you enjoy this element of working with people, this factor could be an advantage.
Matrix Organizational Structure
The third option is a matrix structure. Resources are shared across both business-as-usual work and project work. It might mean having two managers or "dotted-line" responsibility to a project manager as well as to the team manager. The functional management line structure is normally in place first, and the project manager takes the dotted line.
This structure splits power and authority between the functional or division team manager and the project manager. You’ll need to use your negotiating skills to their full power.
Matrix structures are very common because they allow managers to make flexible choices with how people spend their time. You’ll likely work in a matrix environment at some point in your career. The advantages of this structure are:
- Resources are used efficiently and can move around between projects as needed.
- You can work on lots of different things, sometimes in parallel—although this point can be argued as a disadvantage as well.
- Teams and individuals can be very responsive. If a new project comes along that has to take priority, it’s easy enough to pivot and suddenly focus on something else. You can’t do that easily in a project structure, which takes longer to disband and regroup.
- The structure requires that everyone use the same project management lifecycle and methodology, so moving between projects is easy. People can join a project team with relatively little onboarding required when the terminology and processes are common.
As with all setups, this one has its pitfalls, too. Despite it being a common structure, not many modern workplaces have cracked the problems of overload. Giving individuals too much to do can be easy if you don’t have systems in place to manage and monitor the entirety of their workload. Other disadvantages are:
- The conflict between projects is common because you might be fighting for the same resources as another project.
- The other project might have ring-fenced the best resources—the most appropriate people with the right skills—or their line manager might not make them available for project work.
- There can be some conflict between business-as-usual tasks and project work for individuals, especially when both managers are giving them different priorities.
- Resources might have a conflict about what development path they take for their future careers. Although you might know you want to stay in project management, you may have the option of progressing into a more senior functional role or a more project-oriented role. But having lots of career options is a good thing, even if it does make for difficult decisions.
An organizational structure that works perfectly for all the business-as-usual work doesn’t always work for projects, and you have to manage within the environment in which you work. Getting some experience in each of these structures is a good idea so you can experience them firsthand. It will help you decide which environment suits you best and fits your skills and preferences. Then you can make an informed choice if you have the chance to decide your future job environment.
Understanding the pros and cons of each project organizational structure gives you a chance to work out where best to spend your time and influence to get the most out of your team and help your project conclude successfully.