5th Edition PMBOK® Guide—Chapter 2: Organizational Structures


The purpose of this post is to discuss the different types of organizational structure found in companies and what effect that structure has on project management.

 1. Project manager authority levels in different types of organizational structures

Fig. 1 Project Authority in different types of Organizational Structures

Functional Projectized Matrix Composite
Project Authority Functional Manager Project

Manager

Depends on type of matrix Depends on project

In a functional organization, project authority rests with a functional manager, and in a projectized organization, it rests with a project manager. A matrix organization tries to be somewhere in between these two.

 In a strong matrix, the authority is with a project manager, just like in a projectized organization. In a weak matrix, the authority is with a functional manager, just like in a functional organization. And a balanced matrix, the authority over the project is shared by both the functional manager and a project manager.

NOTE: In exam questions, you should assume that “matrix” means “balanced matrix” unless otherwise specified.

 Here’s the spectrum of authority for the different types of organization:

 Fig. 2. Project Manager’s authority over a project (increasing authority to the right)

The last type of organization, a composite organization, is one that changes the authority level of the project manager from project to project. In one project, it might be more like that of projectized organization, and in another project, more like a functional organization.

2. Advantages and Disadvantages of Organizational Structures

 There are exam questions that discuss the advantages and disadvantages of the various organizational structures from the point of view of project management. Here’s a capsule summary:

 a. Functional: In a functional organization, there may be no formal project manager assigned. The functional manager manages the project, sometimes with the assistance of a project expediter or a project coordinator.

Authority level Organizational level
Project expediter None Staff assistant
Project coordinator Some (> expediter) Staff member

The thing to remember about these two is that for some reason, the definitions are confusing to people. The project expediter has no authority to do anything himself, but he helps coordinate communications. The project coordinator does have the authority to get things done. So many people confuse expediter and coordinator, because a coordinator sounds like he gets things done or expedites them, and an expediter sounds like he coordinates communications. BE AWARE OF THIS and make sure you know which is which!   Just remember that an Expediter’s authority is Empty, and a Coordinator’s authority is Conditional (i.e., he has SOME).   This memory trick of associating these words since they start with the same first initial may be helpful in memorizing the difference.

 A functional organization’s main strength is that a functional manager has the resources of its department under his or her control. But getting resources from different departments together and coordinated for the purpose of a single project is more difficult.

b. Projectized: This would seem to be a project manager’s dream organization because the focus is on project work and not on ongoing processes that functional managers normally take care of. However, there are some disadvantages namely that when team members complete a project, they have no “home” and will have to find other employment if there is no new project to do. Highly specialized subject matter experts or SMEs are expensive if they go idle, so it can be wasteful on resources if there is no work for them currently on the projects that are in process.

c. Matrix: This tries to get the project manager the control over the organization’s resources like in a functional organization and the communication between departments unlike in a functional organization. However, the advantages it gains by trying to combine these two forms also creates its own disadvantage: an unclear demarcation of authority between the functional manager and the project manager.

 A matrix organization can remind one of the definition of a hermaphrodite once coined by Archie Bunker on All in the Family: “It’s a freak! With too much of both and not enough of neither!”

Now the various PMP guides as well the PMBOK® guide itself list up the various advantages and disadvantages of the various forms of organization: functional, projectized, and matrix. In order to organize these, I have put them into categories as listed by the left. Then if the item is an advantage I have it marked in RED, and if it is a disadvantage I have it marked in GREEN.

 Fig. 3. Advantages and disadvantages of various organizational types (by topic)

Functional

Projectized

Matrix

Career Path

Career path well defined in specialty

Career path in project management

Client

Slow response to client

Quick response to client

Chain of Command

Team members report to one supervisor

Team members report to one PM

More than 1 boss for project teams

Communication

Cross-functional communication difficulties

More effective communications

Better horizontal & vertical info

Human Resources

Flexibility in staff use

More effort needed to acquire team

Loyalty

More loyal to specialty than project

Loyalty to the project

FMs have different priorities than PMs

Organization

Inefficient project organization

Efficient project organization

Better coordination

Project

Fragmented approach to project

Project is point of emphasis

Careful monitoring of projects required

SMEs

Easier management of specialists

Lack of specialization in disciplines

PM authority

PM has little or no authority

PM has great deal of authority

Project objectives visible to organization

Resources

Similar resources are centralized

Less efficient use of resources

Better firm-wide balanced of resources

Stability

Team members maintain a “home”

No “home” when project done

Technology

Technological continuity (resources)

Access to reservoir of technical talent

 You can see that the advantage of one type of organization is balanced by the disadvantage of another type of organization: for example, a functional organization has a slow response to the client whereas a matrix organization has a fast response to the client. Why? Because a matrix organization is more client-focused based on specific projects than a functional organization which does not have the client as a focus of activity.

 If you look at the advantages and disadvantages in this comparative way ACROSS the organizational types, and then ask yourself WHY this is so, you can figure out a lot of these by logic rather than by trying to use the sheer brute force of memorization.

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