Functional Organizations vs Projectized Organizations is the 10th post in our PMP Concepts Learning Series.
Designed to help those that are preparing to take the PMP or CAPM Certification Exam, each post within this series presents a comparison of common concepts that appear on the PMP and CAPM exams.
Functional Organizations vs Projectized Organizations
Your approach to project management may vary based on the type of organization that you are working within. Organizations may be structured in a traditional or functional manner or a projectized structure.
Depending on the organizational structure, your project management authority and availability of resources will vary.
A functional organization is a traditional structure where the organization is divided based on the functions performed by that particular group of people, such as Human Resources, Information Technology, Marketing, Service, etc.
The resource assigned as the “project manager” is usually a team member within a functional area and does not have the title of project manager. The functional manager will control the budget and the “project manager” will act more as a coordinator or expediter of project activities rather than having true project management responsibilities.
Resources for the project will need to be negotiated for with the functional managers and the accessibility of those resources will be based on business conditions. Any type of escalations of issues would need to be made to the functional manager.
Because the “project manager” has little to no authority, the project can take longer to complete than in other organizational structures and there is generally no recognized project management methodology or best practices. However, the depth of subject matter knowledge is much greater because the resources that will contribute to the project reside within the functional areas.
In projectized organizations, the majority of the organization’s resources are involved in project work and the project work is generally completed for the benefit of an external customer. The project manager has increased independence and authority and is a full-time member of a project organization and has project resources available to them, such as project coordinators, project schedulers, business analysts, and plan administrators.
The project manager has authority and control of the budget and any escalation of issues would be made to the sponsor and potentially the PMO leadership. Given that the project resources report into the project manager versus the functional area, there may be a decrease in the subject matter expertise of the team members.
Arizona Construction Company is a projectized organization: the majority of their resources are allocated against delivering projects for external customers, although they do have a few back-office workers who process the timecards, issue payroll, etc. Each foreman is a project manager and has authority over the project resources assigned to him or her.
AAJ Grocery is a functional organization: the company’s resources are structured by the function that they perform: front-end, bookkeeping, stock rotation, grocery, personal care and pharmacy, dairy, meat, etc. There is not a defined “project” organization nor are there defined “project managers”.
The organizational structure will dictate the level of power, authority, and resources available to a project manager. A traditional functional organization gives the project manager very little, if any, authority, whereas a projectized organization will provide the project manager with significant authority.
|FUNCTIONAL||WEAK MATRIX||BALANCED MATRIX||STRONG MATRIX||PROJECTIZED|
|PM’s Authority||None||Limited||Low to Moderate||Moderate to High||High to Complete|
|Availability of Resources||Very Low||Limited||Low to Moderate||Moderate to High||High to Almost Total|
|Project Budget Control||Functional Manager||Functional Manager||Mixed||Project Manager||Project Manager|
|PM Administrative Staff||None||Part-Time||Part-Time||Full-Time||Full-Time|
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