3 minutes and 45 seconds
Checkout this great article from Method123 that describes how an
organization’s structure effects the make up of a project team.
The project organization is described in
the Project Charter. The way that the project team is organized is directly
related to the way the entire organization is structured. There are three major
organization structures to manage work and people.
Functionally Based
In a functional organization, a project
team is generally staffed with people from the same department. All the
resources needed for the project team come from the functional organization.
For instance, if the project is related to the finance function, the project
resources come from the Finance Division.
Another way a project is staffed in a
functional organization is by executing portions of a project in separate
functional organizations. For example, let’s say that a large project needed
resources from the Finance, Purchasing, IT and Manufacturing departments. In a
functional organization, the project would be broken down by organizational
unit and each unit would do its own part relatively independently. At the end,
all of the independent solutions would be integrated into one final
solution.
The biggest advantage of functionally-based
projects is that there is usually clear authority, since the project managers
tend to also be the functional managers. You also do not need to negotiate with
other organizations for resources, since all of the staff needed for your
project will come from the same functional organization.
A major disadvantage of the functional
organization is that your functional area may not have all of the specialists
needed to work on a project. A Finance project with an IT component, for
instance, may have difficulty acquiring specialty IT resources.
Project Based
When projects are large enough, it's
possible to form functional departments around the project team. This is
especially practical when a large program has hundreds or thousands of people
assigned over a long period of time. Advantages include clear authority, since
the project manager is also the functional manager, and a clear focus, since
everyone on the team has only the project for their primary responsibility.
One disadvantage is duplication of
resources, since scarce resources must be duplicated on different projects. For
instance, a large project may have its own Human Resources staff, which could
duplicate a central Human Resources Department. There can also be concerns
about how to reallocate people and resources when projects are completed. In a
functional organization, the people still have jobs within the functional
department. In a project-based organization it is not so clear where everyone
is reassigned when the project is completed.
Matrix Based
Matrix organizations allow functional
departments to focus on their specific business competencies and allow projects
to be staffed with specialists from multiple functional organizations. For
instance, a Legal resource might report to the Legal Department, but be
assigned to a project in another department that needs legal expertise.
The main advantage of the matrix
organization is the efficient allocation of all resources, especially scarce
specialty skills that cannot be fully utilized by only one project. The
matrix-based organization is also the most flexible when dealing with changing
business needs and priorities.
The main disadvantage is that the reporting
relationships are complex since many people have multiple work managers - both
a functional manager and one or more project managers. Staff members need
strong time management skills to ensure that they fulfill the work expectations
of multiple managers.
Summary
The matrix-based organization is the most
common. Can you tell which model your organization uses?
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