A critical analysis of ‘Functional’ Project Management Organizations

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Last updated on
11th Jul, 2022
16th Oct, 2017
A critical analysis of ‘Functional’ Project Management Organizations

One of the main dilemmas any organization faces when setting up their project team is on making the decision of project composition. Often the organization’s leadership ends up stressing over how to resource the project team. 

As we all know a project is a temporary endeavor undertaken to produce a unique product, service or a result. Projects can be undertaken by organizations in any business domain, for any specified duration, in order to achieve a set of goals and objectives. So, the organization may decide to form the project team based on the factors mentioned above.

Here is the articles on project description and conflict management.

Types of Project Organizational Structures

The main three types of project organizational structures are as follows.

  • Functional organizational structure
  • Project-based / Projectized organizational structure
  • Matrix organizational structure

A Matrix Project Organizational Structure can be further classified as a Strong matrix, Weak matrix and Balanced Matrix based on the authority and power shared by the functional manager and the project manager.

The purpose of this article is to discuss a Function-based project organization structure in detail. So, I will keep the discussion on Projectized and Matrix Organization structures for a later date.

Get to know more about characteristics of project management.

What is a Functional organizational Structure?

A Functional project organizational structure consists of project team members allocated from different functional units of an organization. A typical organization would have different functional units such as- HR, Finance, Marketing, Sales, Operations, IT, Administration etc.

Each unit will be managed by a functional unit/business unit head who would be reporting to the strategic leadership of the organization. In a large organization, the functional unit heads may have functional managers or operational leadership-level managers working under them who in turn would have a team of executives reporting to them. For example, the HR business unit may have a head of HR, under whom there may be multiple HR managers who are responsible for different aspects of human resource management such as recruitment, performance management, training etc. There will be HR executives working with the HR managers to achieve the objectives of the HR division. Thus, functional organizational structures are to be managed using the current organizational hierarchical structure

A temporary team assembled using team members from different functions are formed once the project begins. Project execution in this structure requires the involvement of different functional units. Hence, the different functional unit carries out various components of the project where each unit is responsible for completing a particular component. 

Project coordination in this structure normally happens at the functional management level. It is not mandatory that all units in an organization are represented. Staff will be allocated from units only as per the requirements of the project.

Advantages of a Functional Organizational Structure
A functional project organizational structure is more suitable for projects that require a greater deal of technical expertise. The organization’s leadership has the flexibility in selecting the personnel for the project. Each functional unit involved in the project may nominate resources based on the priority and importance of the project for their unit.

The project is like a temporary home for the staff member. Once they complete the project work they have a permanent home to come back to, which is the functional unit. 

The staff member though allocated to a project still reports to his or her functional manager. Thus, the staff member’s performance is still tracked and taken note of, thus resulting in better performance evaluations and an uninterrupted progression in one’s career.

Organizations often face the issue of key staff members leaving the company while a project is in progress. A functional organizational structure reduces the risk of such turnover with the functional manager being able to easily replace a resource with an equal or better resource in order to ensure continuity of the project.

And now the disadvantages…
The main issue with a functional organizational structure is to do with the priorities of the staff member. The staff member while working on the project has to worry about day-to-day tasks in the functional unit. Thus project responsibilities may be missed or ignored, resulting in delays or issues with quality in terms of project deliverables. The team member’s allegiance and interest may still lie with the work in the functional unit and not in completing the project work. This may negatively impact project progress.

Projects often work with constraints and limitations. Similarly, there are a lot of dependencies that need to be properly coordinated for a project to be successful. Collaboration among staff members from different functional units is a key problem faced in this sort of an arrangement. If a staff member from functional unit A needs to solve a problem which involves a staff member from functional unit C, the problem must first be taken up by the manager of A, who must then coordinate with the manager of C who may reach down to the staff member in C to get the relevant information and then relay it back along the same path back to the staff member in A. This as we see is a tedious task and may result in delays and unwanted stress on the part of staff members.

Functional organizational structures often result in a lack of motivation, interest or belongingness among team members and a lack of urgency to complete tasks. They normally end up feeling that a project is just an additional burden that will have no impact on their career progression.

Finally, a functional organizational structure is a great mechanism to use when dealing with projects that span multiple functional units and which require specialized technical expertise to complete tasks.

Hence, this method must be used sensibly when forming project teams within an organization.


Rumesh Wijetunge

Chief Innovation Officer - Zaizi Limited, Chief Operating Officer - LearntIn (Pvt) Ltd., Director /

Rumesh is an IT business leader with over 12 years of industry experience as a business analyst and project manager. He is currently the CIO of Zaizi Limited, a UK based data management company heading the operations in Sri Lanka, the COO of LearntIn, a global training institute based in Sri Lanka and is also a lecturer / trainer at multiple private universities on management, IT, business analysis and project management subjects. He is the current president of the IIBA Sri Lanka chapter and is one of the most qualified and sought after trainers in Sri Lanka. Refer his LinkedIn profile for more details and to see more articles he has written on linkedin