What is Organizational Structure in Project Management?




Every organization is organized in a way that supports in the success of portfolios, programs and projects. Projects are actually a part of organization therefore study of organizational structure of a company is important to understand. In this blog, we’ll have a look into organizational structure, organizational structure types, organizational structure functional, organizational structure and design and organizational structure in project management.

Table of Contents


Why is Organization Structure Needed?



Every organization must have a well-defined organization structure if it wants to work efficiently and achieve its goal with fewer hurdles.

Nowadays, organizations have to be very competitive, productive, efficient and dynamic if they want to survive and grow. Clients and consumers are becoming more quality conscious and demanding and they need a quick response from organizations.



As you know, projects are impacted by organization’s cultural norms, management policies and procedures. If you look organizations worldwide, you will find that companies with organizational structure are most successful in providing quality businesses and services.  Best project managers always take care of these influences and manage them for the benefit of project and organization itself.

One of the primary forms of influence is organizational structure design.  Organization structure hierarchy is such important that it decides whom to contact for any help, how should the communication be managed and handled. This influence is so important that your answer can be changed for a same question of different organization structure types.



There are four types of Organization Structures as per PMBOK which are listed below. As you go through the below section, keep thinking about how each form would impact your work as a project manager and how would you solve the problems in different situations within organizational structure in management. Organizational structure examples of this type include insurance companies, engineering firms, law firms, regulatory agencies, etc.

The PMBOK Guide sorts organization structure into the following four categories with organizational structure chart and organizational structure hierarchy:

Functional Organization



A functional organization structure is a hierarchical type of organization structure wherein people are grouped as per their area of specialization. These people are supervised by a functional manager who has expertise in the same field, which helps him to effectively utilize the skills of employees, which ultimately helps him in achieving the organization’s business objectives.

In this kind of organization structure, people are classified according to the function they perform in the organization. The organization chart for a functional organization structure shows different departments viz. finance department, sales department, customer service department, administration department, etc.


Each department will have its own department head, and he will be responsible for the performance of his section. This helps the organization control the quality and uniformity of performance.

Matrix Organization



The matrix organization is a blend of the projectized and the functional organization structures.

The authority of a functional manager flows vertically downwards, and the authority of the project manager flows sideways. Since these authorities flow downward and sideways, this structure is called the matrix organization structure. In a matrix organization structure, employees from one section may report to one boss and the rest may report to another boss.


For example let’s say that you are a mechanical engineer working in a functional department. Your organization gets a project and they need a mechanical engineer to assist the project manager on certain tasks. In this case, you may be assigned to the project for a short time with in your own function or you may be transferred on the project for the time while your services are required. If you’re assigned there for a short time, you will have to report to two bosses.

Projectized Organization


In projectized organizations, organizations arrange their activities into programs or portfolios, and implement them through the projects.


Here, the project manager is in charge of his project, and he has full authority over it. Everyone in his team reports to him. The projectized organization structure is opposite to the functional organization structure. Here, either there will be no functional manager, or if he exists, he will have a very limited role and authority.

Composite Organization



In a composite organization structure, organizations may use any combination of the above given types of structures.

Suppose your organization is a functional organization and it needs a small building, and your organization has the capability to construct this building on its own. In this case, your organization will create a separate small project team to complete this task.

A Question for you

Do you think, your organization is following organization structure? Are you seeing it beneficial?


You can give your thought in the comment box provided at the end of this article.





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About Satyendra Mishra

Microsoft certified, motivated, energetic and accomplished SharePoint Consultant and Architect with 13+ years of work experience in Management, Architecture, Analytics, Development and Maintenance. He has been fortunate to be a part of over 20+ Web/Mobile/Software SharePoint and .Net projects delivery with various companies across different industry sectors. This has provided him a valuable insight and experience especially in successful implementation of technology solutions. Having very strong System Architecture, Technological, Management & Analytical Skills, Knowledge of Office 365, SharePoint, .Net, JavaScript, React, Angular, Azure, SQL. In 2016, he decided to start sharing the knowledge back to society in the form for content writing and blogging.
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