PMP : Different Kinds of Organizational Structures - Whizlabs Blog (2024)

We are publishing series of articles on PMP topics to help the PMP exam preparation. In this article we are going to explain about organization structures.

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Okay, so you have a lot of experience working with various corporate and teams. Did you ever wonder what your company is structured like? Or say how cool would it be to assume your level of authority without having to reach out to someone every now and then. I didn’t know that too, until I started learning for my PMP.

Project Management Principles from PMI not only tells you about the organizational structures, they have a whole section on describing what authorities you could assume in these structures and how each of these structures, function with teams.

As per PMP, there are 4 structures of Organization namely Functional, Matrix, Projectized and composite.

Organizational structures

Functional Organization:

This structure of organization is based on hierarchical structure of functions. A functional manger in this kind of organization has complete authority. All of the project work typically happens within a particular department, and that department’s manager is completely in charge of everything.

• The project team members report to a functional manager.
• Project management decisions have to be cleared with functional managers.
• Project managers are assistants to the functional managers in getting the work done.
• Project managers spend a lot of time doing administrative tasks.
• They are called project expediters in functional organizations.

Advantages:

• Broad specialist base available

• Shared knowledge of latest technology

• Flexible resource scheduling

Disadvantages:

• Less Project Manager authority

• Complex coordination

• No one person responsible for an entire project

Matrix Organization:

Matrix organizations as the name suggests minimizes the difference between Functional and the Projectized Organizations. It also takes advantage of the strengths of these two set-ups. The gap however is so big that even the Matrix organization had to be divided in to three categories – Weak Matrix, Balanced Matrix and Strong Matrix:

• Weak Matrix– This structure is bent towards functional structure. The decisions making still happens with the functional manager’s cooperation or approval. The project managers do have some authority; however, they hold close to no authority over the resources on a project. Project expediters and project coordinators can work in weak matrix organizations, too.

Project coordinators are like expediters, except that coordinators typically report to higher-level managers.

Difference between Project Coordinator and Project Expediter is that an Expediter may have no authority at all while a coordinator may have some decision making authority at a lower level.

• Balanced Matrix – Clearly the authority level is balanced. Project managers share authority with the functional managers. Project manager, however, has to run his people management decisions by the functional manager, but vice versa, the functional manager too have to run the project decisions by the project manager. Resources working in a balanced matrix organization report to a project manager and a functional manager equally.

• Strong Matrix – A strong matrix organization has its focus majorly on the delivery of the project. In this set-up, the project managers have more authority than the functional managers. The people management decision making lies with the functional manager and the team still reports to both managers. The team is appraised based on their project performance as well as their functional expertise.
  • Advantage:
    • Good control over projects
    • Better coordination between the departments
    • Identifying the problems early
    • Change management becomes easier and in a timely manner
  • Disadvantage:
    • Duplicate Reporting – team members have two different bosses, one their functional manager, another project manager of the project they have been assigned to.
    • Sometimes conflicts would arise between departments.
    • Information and workflow in multiple directions

• Projectized: In a Projectized set-up, every entity is organized around projects. Once a project is complete, the team is released. The resources of that project are reassigned to another project. The project manager makes every crucial decision including that on budget. All of the decisions about a project’s schedule, quality, and resources are taken by the project manager. All said and done, the complete accountability lies with the project manager and he becomes responsible for the success or failure of the project. For example, a contractor or a consulting company is organized like this.

Advantage:

• Team reports to one manager

• No multi-direction flow, only single point focus on projects

• Change response happen rapidly

• High project commitment

• Accountability for strong and disciplined line of communication and status updates.

Disadvantage:

• High cost to the enterprise

• Team members cannot appraise their skill sets

• Duplication of resources

• Career insecurity

• Composite – The last type of organization, acompositeorganization, 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.

In a nutshell, Functional organizations are set up to give authority to functional managers, Projectized organizations give it to the PMs, and Matrix organizations share responsibility and authority between the two. Functional organizations are usually painted in a negative light because they tend to give less authority to project managers.

For the PMP exam, if you see a question that mentions a Project Manager’s role in some way, and if it doesn’t up front mention which kind of organization is being described, then we must assume that the question is talking about a matrix organization.

The diagram below depicts how from Functional to Projectized, the authority of a Project Manager goes on increasing.

Practice Questions

1. A project manager is having trouble securing designers for his project. Every time he asks the Creative manager for resources, she denies saying they’re all assigned to other work. So he has to everytime reach out to her superiors and over-rule her. Which type of organization is she working for?

1. Functional
2. Weak Matrix
3. Strong Matrix
4. Projectized

Answer. C. (The Project Manager in this scenario can overrule the functional manager, so he’s working in a Strong Matrix organization.)

2. In which type of organization, the set-up is hierarchical, traditional and the employees report to their departmental managers?

1. Functional
2. Strong Matrix
3. Projectized
4. Composite

Answer. A.

Summary

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In this article we have explained about the organization structures. If you have any questions, please write it in the comments section.