In this type of organisational structure people are grouped into functional divisions such as production or marketing. Every employee reports to a superior. It is hierarchical in nature. The scope of a project is limited to the functional division boundaries. Every division has a project manager who reports to his superior. Every project manager manages his functional division independent of other functional divisions. This hierarchical structure is illustrated in figure.
Figure: Functional organisation structure
They may be moved within divisions, wherever they are needed.