8 Common Types of Organizational Structures in Project Management

An organizational structure is a standard hierarchy of operations. It defines how

you can divide, coordinate, and direct groups. More so, it defines the positions
and describes the tasks required to achieve an organization’s objectives and
vision.

Organizational structures aren’t set in stone and are tweaked as per the
organization’s size, needs, and their philosophy.

Features of an Organizational Structure

When choosing an organizational structure, certain features shouldn't be

overlooked. The key elements that contribute to a proper organizational
structure are as follows.
Apart from the features above, other factors that influence tTagshe
organizational structure are:

- Degree of alignment with organizational objectives

- Accountability assignment

- Delegation of Capabilities

- Simplicity of Design
 - Physical locations

Types of Organizational Structures

1. Organic or Simple Organization

This type of organization is very flexible and able to adapt well to market
changes.

This structure is characterized by having few rules, regulations and management

layers and a decentralized decision making a layout.

The organic organization's design deals well with a rapidly changing

environment. People work side-by-side to communicate quickly and often
solving unforeseen problems, issues and requirements.

Here, the project manager has very little or no authority, and may or may not
have a designated job role.

2. Line Organization

This is the simplest form of organizational structure commonly adopted by

small companies. It has well-defined authority levels in the hierarchical
structure. Power flows from the top down to different operational levels or
workers.

The hierarchical structure clearly defines authority, responsibility, and

accountability at each level.

Due to its simplicity, authority and responsibilities are transparent and easily
traceable. Communication is fast and easy because employees get quick
feedback and respond fast.

The project manager performs duties based on position or authority in the

hierarchy. Some organizations don’t have this position, but when they do, they
may have little or nothing to do.
3. Line and Staff Organization

The Line and Staff Organization is a modification of the Line Organization.

Here, functional specialists work with line managers to guide and advise them.

This structure is more common in present-day, and most of the larger

enterprises adopt this type of set up.

The staff consists of two categories; the general and the specialized team.

General Staff

The general staff consists of the ordinary employees that assist the top
management. These staff aren’t experts

Specialized Staff

This team consists of experts that offer services to the organization. Their roles
can be advisory, control (as in quality control), or service (such as
maintenance).

The Line and Staff Organization uses the expertise of specialists. So the line
managers become better in several fields.
Advantages

 Staff can make quality decisions, get support from specialists, and enjoy
better coordination.
 Get training to enhance skills, get an opportunity to work in research &
development.

Disadvantages

 Increased confusion and conflicts among the staff

 Higher costs on hiring specialist
 A tendency to develop personal image within the group

4. Functional Organization

The Functional Organization groups workers based on their area of

specialization. This structure is an extension of the Line Organization. The
functional manager leads the team and manages all the operations or businesses.

The Functional Organization manager enforces directives within a clearly

defined scope of authority. This concept originated with Fredrick W. Taylor.

Here you classify workers according to their functional roles and department.
Some of the general departments under this are
 - Finance

- HR

- Sales

- Customer service

- Supply Chain, etc.,

The organization's head is the president, followed by the vice president, and the
chain goes on. Furthermore, the leaders of departments foresee their
departmental performance. So, they collectively help the organization control
quality and uniformity.

The structure positions departments vertically and disconnected from others.

Hence the name “silos.” The department heads manage communication between
the top management and his subordinates.

The project manager has a minimal role to play or may not have a designated
position. Generally, you'll play the role of an expediter or work as a coordinator.
While as a functional manager, you'll deal with

- Budget allocation

- Resource allocation, and

- Decision making.

This type of organization is suitable for manufacturing or engineering

companies. It supports ongoing operations and practices for producing standard
products.
Advantages

Some of the main benefits of this type of organization are:

 It group employees based on functional skills for a higher degree of

performance.
 Employees have experience in the same field, resulting in higher output.
Also, they deliver high-quality services and results.
 Accountability is evident, as the roles and responsibilities are clearly
defined.
 Hierarchy is visible and no need for multiple reporting
 No duplication of work as each department is different. Also, the job
description is clear.
 Career path for the staff is clear It groups and visible

Disadvantages

 Employees get bored from the routine and lose enthusiasm.

 It limits the management skills of functional managers. Hence, they face
restrictions on their growth path and remain specialists. So they're not
prepared for top management posts.
 Departments are more concerned with their departmental goals. Hence
may be less responsive to the organization’s overall objectives.
 Hiring costs are too high as high-skilled employees cost more.
 It causes conflicts in making critical decisions as a result of bureaucratic
hierarchy. Functional managers have full authority and may make
arbitrary decisions.

5. Divisional Organization
This type of organization often resembles a Functional Organization. The team
members work in different departments. This setup splits the employees into
segments based on products, markets, or services.

Albeit, the divisional organization's segments or division are autonomous.

Functional units that support this structure include:

- Operations,

- Marketing,

- R & D department, and

- Personnel, etc.

This design focuses on service lines like products, customers, area, and time.
Since they operate as small organizations, they're called “self-contained
structures.”

So they work independently on divisional goals. But all divisions collectively

meet the organizational policies and business objectives.

This type of organization is suitable for companies that

- Operate in different geographical locations,

- Have chain stores with subsidiaries, and

- Banking and insurance business

Here, the project managers may or may not exist or may be hired on temporary
assignments.
Advantages

 People work in different geographical locations and enjoy different

work environments
 Share ideas and enhance skills, thereby creating a collaborative work
culture. Thus, enhancing overall productivity.

Disadvantages

 This structure affects the integration of the organization as a whole.

 The autonomous nature often results in duplication of functions and
resources.
 Segmentation creates boundaries among divisions and may lead to poor
inter-unit coordination

6. Project Organization

Project organization is a temporary setup formed for specific projects. It's also
called “projectized organizational structure.” The project manager assigned for
the project is the head of this structure.

Once the project is complete, you may choose to dismantle this setup or move it
to form a new project. In the case of a new project, the project manager might
have to reshuffle the staff to fit the new plan. You’ll hire resources or specialists
from different functional departments.
As a project manager, you can use allotted resources until completion and
closeout. Albeit you're accountable for all the activities and timely completion
of the project. In other words, you must spend based on the project budget.

The manager assigns clearly defined tasks to each of the team members, along
with the complete schedule.

These types of organizations are useful when:

- The project scope is complete, and objectives are clearly defined

- Project is unique and independent

Advantages

 Easy to communicate, hence can stay up to date

 The team can have a strong sense of identity as all are working together
to achieve a common goal
 Manage resources efficiently and effectively

Disadvantages

 No clear growth path for the team once the project gets completed
 It's expensive because the organization dedicates all the specialists for
one single project.
7. Matrix Organization

This one is the combination of a projectized and functional organization. This

hybrid organization overcomes the limitations of each organization. Here, both
the functional and project managers share their respective authorities.

Project managers are generally responsible for

- Overall integration

- Project planning

- Execution of the project, and

- Completion of project activities.

All activities must be done using the assigned resources.

The functional managers are concerned with the operational aspects of the
project. They’re also responsible for providing technical guidance.

The functional staff specializes in the skills required for the project. Though
project managers manage the project staff, functional managers control the
process.

This type of organization is most useful when workers must share available
resources. The combination achieves high efficiency and better usage of
available resources. Also, they adapt better to the changing trends.

You can further classify the Matrix Organization into

- Balanced

- Strong and

- Weak

The authority level that both functional and project managers share determines
its strength.
Advantages

 It helps in sharing resources efficiently

 Decision making is balanced and flexible
 Staff members can communicate with each other across boundaries
 Pleasant environment
 It has a clear career graph and job security; hence, members would be
more loyal to the organization

Disadvantages

 The dual reporting structure add confusion and results in conflicts

 Create issues when there is no coordination between functional and
project managers
 Resources may be under-utilized if you don't assign them with skill-
related tasks
 Costly to maintain as it has many managers
 You need to maintain resources throughout the project, no matter how
long it takes

8. Virtual Organization
A virtual organization is a recent development that involves different locations.
When your team executes a project in one area, you can manage it from any
other place. So you can distribute resources to your project team regardless of
location.

You can connect all the locations virtually. The other names for this
organizational structure are:

- Digital organization

- Network organization, or

- Modular organization

ICT (Information and Communication Technology) is the backbone of virtual

organizations. This organization is a social network without vertical and
horizontal boundaries.

Resources aren't tied to a particular workstation (desk). Also, you can work
from any mobile device. You can manage every project activity, including
meetings, virtually.

The team reports digitally except on a few occasions that need physical
meetings. Hence, it's common to hear of virtual offices, virtual teams, and
virtual leadership

This setup is most suitable for software or IT companies.

Advantages

 Faster and cost-effective as there are no boundaries to work and

communication.
 Lower operating costs as no permanent set up required (no need for
office premises)
 Have several options like flexitime, part-time work, job-sharing, and
home-based working, hence increased
 Employee satisfaction and efficiency
 Can have a larger talent pool

Disadvantages

 No physical contact or communication, thus, lacks team integrity

 Difficult to restrict information sharing as your locations are different
 You have to spread resources across various locations and time zones
 Resources require training for virtual interaction
 Different time zones cause delayed responses

CLASSIFICATIONS OF PROJECTS

Every Project is different. Projects can be classified on several different points. The
classification of projects in project management varies according to a number of different
factors such as complexity, source of capital, its content, those involved and its purpose.
Projects can be classified on the following factors.

According to complexity:

 Easy: A project is classified as easy when the relationships between tasks are basic and
detailed planning or organisation are not required. A small work team and few external
stakeholders and collaborators are common in this case.
 Complicated: The project network is broad and complicated. There are many task
interdependencies. Cloud-based apps will immensely help to simplify complicated
projects by automatically calculating the project’s best work path and updating any
changes introduced through its use of different types of project management tools.

According to source of capital:

 Public: Financing comes from Governmental institutions.

 Private: Financing comes from businesses or private incentives.
 Mixed: Financing comes from a mixed source of both public and private funding.

According to project content:

 Construction: These are projects that have anything to do with the construction of a civil
or architectural work. Predictive methods are used along with agile techniques which
will be explained later on.
 IT: Any project to do with software development, IT system etc. The types of project
management information systems vary across the board, but in today’s world are very
common.
 Business: These projects are involved with the development of a business, management
of a work team, cost management, etc., and usually follow a commercial strategy.
 Service or product production: Projects that involve themselves with the development of
an innovative product or service, design of a new product, etc. They are often used in the
R & D department.

According to those involved:

 Departmental: When a certain department or area of an organisation is involved.

 Internal: When a whole company itself is involved in the project’s development.
 Matriarchal: When there is a combination of departments involved.
 External: When a company outsources external project manager or teams to execute the
project. This is common in digital transformations, process improvements and strategy
changes, for example.

According to its objective:

 Production: Oriented at the production of a product or service taking into consideration

a certain determined objective.
 Social: Oriented at the improvement of the quality of life of people.

Educational: Oriented at the education of others.

 Community: Oriented at people too, however with their involvement.

 Research: Oriented at innovation and the gaining of knowledge.