Project Structures
There are three generic ways that organisations structure themselves
to manage projects. They are:
- Projectised
- Functional
- Matrix
No one form is inherently "right". Each has its advantages and disadvantages and each are more suitable for certain project environments than others. Organisations tend to move from one to another as situations change.
Projectised Organisation
In many ways the simplest and most obvious organisational form for managing projects is the projectised organisation. In this, each project becomes a self-contained organisation with all resources and functions within the project divisions. Top management see their role as that of a "holding company" managing a portfolio of project businesses.
This form is often used by organisations carrying out major projects. Thus British Aerospace uses this structure - project A might be the new Airbus, project B might be the Harrier replacement etc.
The project is often initiated by top management and central support, then a project division is formed with its own director. Each project is largely self-contained with its own budget, support operations, staff, and facilities. Some major charities adopt this form - thus project A might be a famine project in Ethiopia.
- Advantages
It is simple and easily understood, focus and responsibilities are very clear, each project has its own dedicated resources, and each project can build its own organisational ethos and identity. It is a structure that can be good at delivery. - Disadvantages
- It can be expensive (e.g. many finance sections), the project divisions can become overly competitive, and the overall corporate identity can be lost. Project Divisions can go their own way - developing their own practices and systems. It can be inflexible - setting up a new project is a significant act, in theory needing a new division.
It is often best suited to large, long-lasting, stable projects.
For projects to be managed effectively:
- The central operations need to be very capable both strategically at identifying new projects, and from a control and support point of view - a good balance of "tight-loose".
- The Project Managers need sufficient delegation and empowerment.
Functional Organisation
In this, the most common form of organisational structure in general use, staff are grouped into teams or sections or divisions according to some particular basic function.
Most common ones are:
- Business function/skill (as in the chart below)
- Product/service (an electronics company organised by TV, Radio, Computers, etc)
- Geographic (in the UK organised by North, South, Midlands, etc)
In the functional organisation most projects are initiated by the top and divisional management, and a project manager is then appointed who must form a team from people in the various sections. The people are only on the project on a part-time basis and the project may not have a dedicated budget.
- Advantages
Superficially it is cost effective, there is little duplication as there is in the Projectised form. It can be flexible - setting up a new project is simple. Expertise is kept together in groups. Corporate identity can be maintained, and there can be standard systems across organisation. - Disadvantages
Projects can be very difficult to manage. It is often very difficult for project managers to gain commitment from the people selected - they have no dedicated resources. Project funding can be difficult - budgets usually lie with the functions rather than the projects. Often project sponsorship is unclear or even absent. Projects can get lost or disappear from view. There can be conflicts between project team member's own day to day work and their project work. Project work may not be recognised in performance appraisal system. Nobody is managing the project portfolio. It can be very poor at project delivery.
For projects to be managed effectively:
- The management needs to identify projects effectively and then select capable project managers.
- Project managers need to be capable at gaining the commitment of their team members.
- There needs to be a climate of co-operation in the organisation.
- Someone in senior management must take on and fulfil the role of Project Sponsor well for each project.
Matrix Organisation
The matrix organisation attempts to combine the advantages of the Functional organisation (cost effectiveness and specialist groupings) with the advantages of the Projectised organisation (focus and clear responsibilities and delivery)
It is often used where people need to be grouped into specialisms for management purposes, but brought together on particular projects of multi-disciplined teams.
Staff are organised into functional groupings (specialisms, geography, business) and then brought into projects to work on them when needed. Each project would have a project manager leading a team of seconded specialists. In some organisations, the project managers would be full time professionals located in a separate group under a Director of Projects. Hi-tech companies like Microsoft and Hewlett Packard use this, as does the BBC (a new TV programme).
- Advantages
Maintains cost effectiveness and specialised groupings of the Functional organisation but introduces a stronger project chain of command as per the Projectised organisation. Post of Director of Projects ensures that sponsorship of projects exists at senior level and can ensure management of the project portfolio. Very flexible - projects can be started and stopped quite quickly. Project managers become skilled and experienced at managing projects. Projects often have dedicated budgets. - Disadvantages.
Often requires a lot of communication, negotiation, and meetings. There can be some competition between projects - particularly if they need the same people as team members. It can become complicated. For example, the person in Finance might be working on three projects - who decides their priorities? Performance appraisal needs to take account of project work - who should be involved in the annual appraisal?
For projects to be managed effectively:
- The Director of Projects needs to be very able
- The project managers need to be capable and seen by others as so.
- Projects require their own budgets.
- There needs to be a climate of co-operation in the organisation.