Alastair Majury Dunblane

How Organizational Structures Affect Projects and Project Management


It’s correct that the structure of an organization can have a significant impact on project management.

Think about your personal experience. Is it tough to find traction on your projects? Are there several layers of authority that you have to navigate to get approvals for basic tasks? Does your budget get cut due to competition for limited funding? Do your projects lose out in favor of day-to-day routine surgeries? And you believed it was something you were doing, or failing to perform! Well it might have been, but it’s more probable that you’re feeling the effects of the organizational structure in which you operate. Recognizing your working environment better can help you to grow above organizational issues and also easy the way to effective project management.

By looking at three different organizational structures – functional, matrix and projectised – we will discover how every distinct organizational style affects project administration.

Functional Organizational Structure. These firms are organized into functional divisions based on main functions such as engineering, human resources, finance, IT, planning and policy. Each different operational division operates independently and isolated groups of workers in a division report to a functional supervisor. The operational manager generally both allocates and tracks the job and carries out jobs such as performance evaluation and setting payment levels. Within this model project managers have very limited authority. Functional organizations are set up for ongoing operations rather than projects and so this organizational arrangement is often found in companies whose primary objective is to produce standardized products and services.

Matrix Organizational Structure. In a matrix organization control is shared. The project manager shares responsibility for the project with a number of individual functional managers. Common responsibilities can include assigning tasks and priorities to individual team members. But practical managers still make the final decisions about who will work on projects and are still responsible for administration. Project managers accountable for allocating and organizing the work for your designated project staff. Within this kind of structure there is a balance between continuing operations and jobs, so it’s a frequent structure for organizations that have these dual roles. For instance, local body organizations who are accountable for both maintaining existing infrastructure (ongoing operations) and commissioning the building of new infrastructure (jobs) frequently have matrix structures.

Projectised Organizational Structure. In a projectised company the project director has complete authority over the job. This includes the ability to set priorities, employ resources, and to direct the work of their project staff. All members of the staff report directly to the job manager and everyone is assigned to your job. After conclusion of this undertaking, funds will be re-assigned to another project. This sort of construction is common in firms that operate on size-able, long-term jobs, like in the construction industry.

Take a moment to reflect on which type of organizational arrangement you operate in before we move on to discuss how these organizational arrangements influence projects. Then see if you recognize any of the problems raised.

So what are the implications for project management?

In a functional organization, jobs that exist within one operational division generate no particular organizational issues, but projects that cut across functional branches can be challenging to manage. Why? Since the project manager doesn’t have direct functional authority and must obtain continual cooperation and assistance from practical managers of other divisions to be able to meet job objectives. This can get complex.

Since the matrix structure gives ability to both project managers and operational managers the outcome is to provide a more seamless division of labor and finally to build a stronger team civilization. On the other hand, the prospect of conflict between operational managers and project managers still exists since there’s still source conflict. Everyone who’s on a project team has two bosses – their operational supervisor in addition to their project supervisor.

In a projectised business authority is centralized. Because projects are eliminated from functional divisions the lines of communication are shortened. These two factors enhance the ability to make swift decisions. Project teams create a solid sense of identity which subsequently creates a high level of commitment from team members. On account of their participation in consecutive jobs of a similar character projectised organizations can create and keep up a long-term body of expertise and skills in specialized areas.

It’s apparent that projectised organizations make it simpler to conduct jobs because the entire structure is put up for that purpose. But if you are managing a project within other organizational structures, then recognizing and understanding that the impacts will raise your awareness of the potential project management pitfalls, so that you can be proactive about resolving them. Communication, conflict resolution and team building will be key to your success.

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