Functionally-Based Project Organization

Functionally-Based Project Organization - There are three types of project relations organization structures – project-based, functionally-based and matrix-based.

In a functional project organization, a project team is staffed with people from the same department, functional organization or portfolio.

All the resources needed for the project team come from the functional organization.

For instance, if the project is related to the finance function, then the project resources come from the Finance Division. If you need IT, finance and legal resources, they are all available directly from within the Finance Division.

The biggest advantage to a functional-project organization is that there is usually clear authority, since the project managers tend to also be the functional managers.

ou also do not need to negotiate with other organizations for resources, since all of the staff needed by your project will report into the same functional organization.

Other advantages of this organization are that the team members tend to be familiar with each other since they all work in the same area. The team members also tend to bring applicable business knowledge of the project.

This staffing model is sometimes used in large, decentralized organizations, where each department or division needs to act fairly autonomously.

A major disadvantage of the functional organization is that skills get spread out through the entire company and it is harder to take advantage of economies of scale.

The Finance Department, for example, must have IT resources, Legal resources and Purchasing resources for specific projects. Likewise, the Purchasing Department needs their own Finance and Legal staff. If all of the specialty resources are not available in every department, the teams may have a hard time staffing projects.

They either must have specialists that are hard to keep fully busy or they must use contractors to fill the skill gaps.

Another disadvantage is that project team members may have other responsibilities in the functional organization since they may not be needed full-time on a project.

Rather than work on another project, they may have support responsibilities, which could impact their ability to meet project deadlines.

Future State Vision


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