To manage a project, a company or authority has to set up a project organization, which can supply the resources for the project and service it during its life cycle.

There are three main types of project organizations:

1. Functional;
2. Matrix;
3. Project or task force.

Functional organization: This type of organization consists of specialist or functional departments each with their own departmental manager responsible to one or more directors. Such an organization is ideal for routine operations where there is little variation of the end product. Functional organizations are usually found where items are mass produced, whether they are motor cars or sausages. Each department is expert at its function and the interrelationship between them is well established.

In this sense a functional organization is not a project-type organization at all and is only included because when small, individual, one-off projects have to be carried out, they may be given to a particular department to manage. For projects of any reasonable size or complexity, it will be necessary to set up one of the other two types of organizations.

Matrix organization: This is probably the most common type of project organization, since it utilizes an existing functional organization to provide the human resources without disrupting the day-to-day operation of the department. The personnel allocated to a particular project are responsible to a project manager for meeting the three basic project criteria, time, cost and quality.

The departmental manager is, however, still responsible for their ‘pay and rations’ and their compliance with the department’s standards and procedures, including technical competence and conformity to company quality standards. The members of this project team will still be working at their desks in their department, but will be booking their time to the project. Where the project does not warrant a full-time contribution, only those hours actually expended on the project will be allocated to it.

The advantages of a matrix organization are:

1. Resources are employed efficiently, since staff can switch to different projects if held up on any one of them;
2. The expertize built up by the department is utilized and the latest state-of-the-art techniques are immediately incorporated;
3. Special facilities do not have to be provided and disrupting staff movements are avoided;
4. The career prospects of team members are left intact;
5. The organization can respond quickly to changes of scope;
6. The project manager does not have to concern himself with staff problems.

The disadvantages are:

1. There may be a conflict of priorities between different projects;
2. There may be split loyalties between the project manager and the departmental manager due to the dual reporting requirements;
3. Communications between team members can be affected if the locations of the departments are far apart;
4. Executive management may have to spend more time to ensure a fair balance of power between the project manager and the department manager.

All the above problems can, however, be resolved if there is a good working relationship between the project manager and the department heads. At times both sides may have to compromize in the interests of the organization as a whole.

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