Project organization
A project organisation is a temporary organisation designed to achieve specific results by
using teams of specialists from different functional areas in the organisation. The project team
focuses all its energies, resources and results on the assigned project. Once the project has been
completed, the team members from various cross functional departments may go back to their
previous positions or may be assigned to a new project. Some of the examples of projects are:
research and development projects, product development, construction of a new plant, housing
complex, shopping complex, bridge etc.
Importance of Project Organisational Structure:
Project organisational structure is most valuable when:
(i) Work is defined by a specific goal and target date for completion.
(ii) Work is unique and unfamiliar to the organisation.
(iii) Work is complex having independent activities and specialized skills are necessary for
accomplishment.
(iv) Work is critical in terms of possible gains or losses.
(v) Work is not repetitive in nature
Characteristics of project organisation:
1. Personnel are assigned to a project from the existing permanent organisation and are under the
direction and control of the project manager.
2. The project manager specifies what effort is needed and when work will be performed whereas the
concerned department manager executes the work using his resources.
3. The project manager gets the needed support from production, quality control, engineering etc. for
completion of the project.
4. The authority over the project team members is shared by project manager and the respective
functional managers in the permanent organisation.
5. The services of the specialists (project team members) are temporarily loaned to the project
manager till the completion of the project.
6. There may be conflict between the project manager and the departmental manager on the issue of
exercising authority over team members.
7. Since authority relationships are overlapping with possibilities of conflicts, informal relationships
between project manager and departmental managers (functional managers) become more important
than formal prescription of authority.
8. Full and free communication is essential among those working on the project.
Matrix Organization
The matrix structure superimposes the product (project) structure laterally over the functional
structure. The result is creation of dual line of authority that is balanced by top managers. It is
formulated with the desire to maximize the strengths and minimizing the weakness of the both
structures.
This type of organisation is often used when the firm has to be highly responsive to a rapidly
changing external environment. In matrix structures, there are functional managers and product
or project group managers. Functional manager are in charge of specialized resources such as
production, quality control, inventories, scheduling and marketing. Product or business group
managers are in charge of one or more products and are authorized to prepare product strategies
or business group strategies and call on the various functional managers for the necessary
resources.
- It is used mainly in the management of large projects or product
development processes, drawing employees from different functional
disciplines for assignment to a team without removing them from their
respective positions.
- Matrix management is a type of organizational management in which people with
similar skills are pooled for work assignments.
- The matrix structure combines both the functional and project structures. Each
team member has two bosses; they report both to the functional manager and the
project manager.
- If the matrix is strong, the power resides more with the project manager.
- If the matrix is weak, the power resides more with the functional manager.
- The key is to find a balance in which the power is shared equally.
Because of its complexity, this type of structure can lead to problems if it is not used carefully
and properly. Good communication is essential for success.
Advantage to the matrix structure lies in the efficient use of resources because of ease of access.
This structure also demonstrates efficient communication both vertically and horizontally.
Because of this, once the projects have ended, the team members are likely to receive a job
elsewhere in the organization .
Advantages:
1. Decentralised decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
5. Flexible use of resources.
6. Efficient use of support systems.
Disadvantages:
1. High administration cost.
2. Potential confusion over authority and responsibility.
3. High prospects of conflict.
4. Overemphasis on group decision making.
5. Excessive focus on internal relations.
