Definition
Project organization is a concept that defines the structure of the organization based on the project and decides on its process, for instance, planning, deadlines, costs, personnel, etc. It is created with the help of employees as well as specialists from various departments.
There are three areas of responsibility and competence in the project organization. These are
- Project leadership – It is entrusted with the management side of the project
- Project team – The project team is assigned with the implementation aspect of the project
- Project board – It is the decision-making body that is entrusted with the success of the project and who makes important decisions like whether a project should be canceled or continued.
Types of project organization
The project organizational structure is dependent on several factors like type and style of organization, the hierarchy, and workflow.
Some of the most common types of project organization are as follows-
1. Functional organization
This is one of the most common organizational structures. The company is divided into several departments, and individuals with similar skills and know-how are grouped. The project manager and the other resources work in the same division, for instance, marketing, sales, accounting, etc.
The advantages of a functional structure are as follows-
- It is best for small projects as well as small teams because the function can gain full control and authority over team members and other resources
- It is easy to motivate members as they are small in number
- It is easy to gain access to experts as they are in the same functional area
- It is easy to gather everyone related to a project and have a discussion about a relevant issue
- Employees are ready to work in such projects as it gives them the necessary exposure to moving forward
- As the team is small, it is possible to limit the project communication tools
The disadvantages of a functional structure are as follows-
- It is not easy to gain access to people outside your functional division
- Employees are loyal to their team manager instead of the work on the project
- It is hard to maintain a strategic focus
2. Project-based
Here the project manager has full responsibility for every project. He has a full-time role with a whole team at his disposal and budget control for its successful completion. He reports to the project board and the project sponsor.
The advantages of a project-based organization structure are as follows-
- Full control over the team
- Strong sense of identity in the team that results in a dominant team culture
- Minimum conflict as every member works towards achieving project objectives and goals
- Scheduling work is easy
- Easy availability of resources
- Improves technical leadership as well as project management skills
The disadvantages of project-based organization structure are as follows-
- It is an expensive commitment
- It is difficult for employees to go back if they are removed from their functional jobs
- In some cases, project closure means losing your job
3. Matrix
A matrix project organization structure is created by integrating both project-based and functional organization. There are two structures horizontal and vertical and hence an employee can work on a project as well as in a functional group.
The matrix organization is of three types
- Strong matrix – The project manager has a full-time team and has full authority and control over the team and the project
- Weak matrix – This is closer to a functional structure, and the project manager has less power. He has a part-time team and budget control
- Balanced matrix – The project manager has the medium authority and a part-time team. He and the functional manager manage the budget
The advantages of matrix organization are as follows-
- Resources are used in an effective manner
- Resources can be moved easily between various projects
- Individuals, as well as the team members, are responsive by nature
The disadvantages of matrix organization are as follows-
- In most cases, you will find a conflict between projects because of resources
- Individuals are entrusted with conflicting and different priorities, and this can cause confusion
Some other types of project organization are as follows-
- Simple or organic organization – This is the simplest of the project organization structure and includes business entities with one owner as well as freelancers. The role of the project manager is generally handled by the owner or a professional who is entrusted with managing the workflow
- Multi-divisional organization – In this type of organization structure, there are numerous functional divisions that are independent of each other. The divisions include people with differing skills and know-how and are held together with a common thread, and that can be either a geographic location or a similar project. All the divisions have their resources for autonomous work.
- Virtual organization – In a virtual organizational structure, the organization maintains its core business and tries to outsource other processes. The central organization is linked with various external organizations to conduct its business successfully. The project manager in such organizations has moderate to low authority and mixed power over budget control
How to make a project organization chart?
A project organization chart helps to identify the roles and responsibilities undertaken by a team as well as whether training is needed, how to allocate resources and find ways to involve the participation of stakeholders. The steps necessary are as follows-
1. Identify personnel
The first step is the process is to identify the people related to the project scope and who has the power to yield a powerful impact on the project. These are generally the key staffs that influence marketers, department heads, salespeople, support staff, consultants and even IT personnel.
2. Create a senior management team
The second step is creating a viable team who will be responsible for the project and make sure that it is successful. The team will include client or the sponsors of the project and in some cases experts that will offer their guidance and help throughout the project
3. Assign project coordinators
The third step includes assigning project coordinators who will be the point-person at mid and low management. It will be their responsibility to carry out duties at this level and coordinate team tasks. There can be numerous project coordinators in a project organization, but in most cases, you will at least find three for handling communications, technical and planning aspects
4. Note stakeholders
Identify the key stakeholders and try to involve them in the project development
5. Identify training requirements
In some cases, a team can handle a task efficiently. In contrast, in others, they do not have enough tools, skills, knowledge to handle the intricacies of the project. Identify the training requirements and offer it to the members who need it. It is the responsibility of a project coordinator to manage the task force and provide the necessary training to an employee
6. Create a project organization chart
The last stage is of developing a project organization chart. Review the steps that you have already taken and think about how the people in the project will coordinate and collaborate to make a perfect chart.
Look deeply so that you can determine their interrelation and duties that should be assigned. List the decision-makers who will have a prominent role to play and write down their role, responsibility, and assignment side-by-side to get a clear picture. Identify connecting roles and define the communication and reporting channel if you are determined to create a useful project organization chart
Advantages
The advantages of an appropriate project organization model are as follows
- Offers employees the opportunity to improve their skills
- There is a concentrated effort on project work
- Allows the organization to grow and develop
- Assist in keeping an eye on strategic goals
- Boost the ability to cope with environmental factors
- Makes the decision-making process smooth, efficient and fast
- Encourages employee specialization
- Helps in better use of resources
- Easy to meet project deadlines
- Assist the employees to grow professionally
Disadvantages
The disadvantages of a project organization model are as follows-
- Relationships are not clearly defined
- There is a problem in coordination
- Duplication of efforts
- There is a feeling of insecurity amongst employees in some projects
