Functional organisation

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

Characteristics

• Project managers operate within their respective division and pose a level of expertise within their area of responsibility. For example a marketing division manager has knowledge or experience in sales.
• Both project and functional personnel are managed by Directors of the functional division. They define requirements, schedule work, provide facilities, set priority, acquire and manage resources as per company policies and ensure quality.
• Employees are assigned projects based on their skills and services.

They may be moved within divisions, wherever they are needed.

Advantages

• Projects completed will be more accurate since project manager and team members have functional area expertise. As a result, fewer changes will be made during a project life and more practical end products can be produced.

• Since the project team is accountable for their work. Project personnel's are more committed to their work.

• Since team members have functional expertise, learning time is reduced; problem situations can be identified and corrected resulting in quick project completion.

Disadvantages

• Since the focus is more on needs of the functional division, it makes it difficult to see and respond to the needs of the organisation as a whole. It is difficult to enforce enterprise policies and practices uniformly across all functional divisions.
• There is no standard means by which project control and status reports are communicated to senior management .Hence, making it difficult for senior managers to manage the various projects within the organisation.
• There is no proper account maintained for project costs.

• The differentiation between project and functional roles may be vague and projects might be lost on routine work.