Types of Organizational Structure in Project Management

Overview: Types of Organisational Structure

Every project management plan maintains an organisational structure defining the employee hierarchy and the roles and responsibilities of everyone associated with the project. Having a defined project organisational structure helps to foster efficiency and ensures seamless and quick execution of the project. 

Read this blog to learn about the different types of organisational structures in project management, factors to consider before choosing one, best practices and examples. 

Types of Organisational Structure

  • Functional Organisational Structure

The functional organisation structure is commonly seen in corporations, with the company manager leading the structure. The other employees of the organisation are assigned roles in various niches, such as human resources, customer service, quality assurance, R&D, sales, etc., based on their skills and expertise.

Different departments specialise in different tasks and report to their respective managers. This structure enhances effectiveness and ensures the task is accomplished efficiently.  

  • Projectized Organisational Structure

The projectized organisational structure is temporary and is enforced when a company starts a project to meet a specific goal. In this structure, a project manager leads the project and oversees the different departments and groups performing specific tasks. 

For instance, if a company has to develop technology to help them accomplish their tasks more efficiently, they might consider framing an organisational structure. It can include teams for hardware development, software development, research team, etc., and a project manager who will oversee the tasks. 

  • Matrix Organisational Structure

The matrix organisational structure has two kinds of managers who ensure the task is evenly distributed among the employees across all the departments. While a project manager stresses how to plan the project, looks after its execution, and oversees it till its execution, the functional managers within teams look after the operations and technical management within the departments. They streamline the functioning of all the employees, easing the project managers’ tasks. 

A company may have multiple project and functional managers entrusted with managing the tasks within their departments. These managers ensure the optimum utilisation of the company’s resources to meet company goals.

  • Hybrid Organisational Structure

The hybrid organisational structure in project management is similar to the matrix structure. The hybrid organisational structure divides the tasks into different departments based on their nature. This structure ensures optimum knowledge, skills, and resource utilisation while maintaining specialisation in the different divisions. 

In this structure, multiple organisational patterns are used together. It combines the different elements extracted from various models for the best results. 

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Factors To Consider When Choosing an Organisational Structure

A well-defined organisational structure ensures proper workforce arrangement, techniques, and tasks. It helps maintain organisational transparency and ensures all information is up-to-date. 

Several factors must be considered while choosing an organisational structure for project management. Some of the factors that you need to consider while choosing an organisational structure are:

  • Clarity: All the employees should be thoroughly informed about the goals and objectives of the project. It gives them a better understanding of their job roles. For instance, workers and supervisors should understand the organisation’s goals and figure out the tasks they need to perform to ensure the accomplishment of those goals.

There should also be clarity in the information sources and the reporting relationship that are pivotal in the decision-making process. The structure also provides clarity on the hierarchical relationship.

There should also be tools that can measure the progress with time. 

  • Decentralisation: When an organisation follows a centralised structure, the top-ranking officials take all the decisions requiring minimal input or suggestions from lower-level employees. 

Decentralisation of an organisational structure allows room for open discussion and ensures everyone can air their opinions in the decision-making process. It helps gather valuable information and insights that top-level managers may need to be made aware of. 

  • Understanding: When all the employees/stakeholders responsible for accomplishing a project are thoroughly informed about where they fit in the organisation’s big picture, they can perform better. The employees should clearly understand the organisation’s infrastructure, cultural and behavioural aspects, etc. 
  • Adaptability and stability: An organisational structure should be able to adapt to the changes occurring in the environment. Although it should maintain stability even in the most precarious circumstances, it should be able to adapt to the changes that might arise during a project’s completion. 

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Best Practices for Implementing Organisational Structures

Below are some best practices to help you implement your organisational structure most efficiently:

  • Identification of the right personnel

The first step to framing an organisational structure is identifying the right personnel to be involved in the roles. It includes everyone ranging from professionals who will build the projects to those who will manage the different aspects throughout the project management process. 

  • Creating a management team

Ideally, it is advisable to create a management team in the senior-most position who can oversee all the project areas. These professionals should be skilled in their respective domains. 

There should also be project coordinators for all the departments. Although they should know what is happening in the departments, they must also have adequate domain knowledge. 

  • Training the groups 

The groups executing the different tasks associated with the project’s accomplishment should also receive training. It is crucial to identify the training requirements of the groups and understand the time required to be ready to take up their roles. 

  • A project organisation chart for better clarity

Once you have done all the above, prepare a project organisation chart. The project organisation chart will give a clear understanding of the roles and responsibilities of the professionals comprising the project management team structure

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Real-World Examples of Organisational Structures in Project Management

The organisational structures in project management vary depending on the requirements and goals of the project. Below are some examples to depict organisational structures in project management.

1. Functional project organisational structure example in manufacturing

A functional project management structure in the manufacturing department depicts a straightforward structure. All the functional managers, like the marketing, manufacturing, and engineering managers, coordinate the project’s different parts and then report to the respective executives. 

2. Projectized organisational structure example in the construction sector

The projectized project organisational structure is primarily used In the construction sector. Project managers are tasked with coordinating the project’s different aspects, which they report to the company executive. There may be supporting departments involved in the process. 

3. Matrix project organisational structure example in software development

Software development is a complex task and may often require the involvement of cross-functional teams for optimum performance. This organisational structure takes and uses the most convenient features from different structures. Such an organisational structure involves cross-reporting; for instance, technical specialists must report to the head of their discipline and the project manager. 

Comparing and Contrasting Different Types of Organisational Structures

There is no one-size-fits-all approach when choosing the most appropriate organisational structure. The success of an organisational project management structure depends on the organisation’s mission and goals. Various factors determine whether an organisational structure will work in a particular case.

Illustrated below are the differences between each structure based on a few parameters.

Parameter Functional Projectized Matrix Hybrid
Pros The work is accurate since the professionals are skilled in the respective domains. Issues are resolved quickly. Different teams work in collaboration with one another, which helps in excellent knowledge sharing. Increased efficiency
Ensures speedy execution of tasks Ensures more transparency Employees can strengthen their interpersonal skills. Employees get the opportunity to develop cross-functional skills.
Assigning tasks to specialised individuals provides greater clarity about the work. Excellent cooperation and smooth communication among teams. Communication is exceptionally smooth. Ensures greater flexibility
Cons Teams are segregated and may not get to work together and share ideas. Hiring skilled professionals may be costly. Slow decision-making process. Slow decision-making process.
Lack of coordination among the units Entire power lying in the hands of the project manager may pose a problem. Difficult to assess individual employee performance Conflicts might arise among the departments.


A well-defined organisational structure ensures proper workforce arrangement, techniques, and tasks. It helps maintain organisational transparency and ensures that all the information is updated. 

You can learn more about organisational structures in project management by signing up for the Advanced General Management Programme from IMT Ghaziabad, offered by upGrad. This course will boost your career and help you master job-relevant skills. Visit upGrad to know more!

Frequently Asked Questions

What is project organisation?

Project organisation, also known as projectized organisation structure, is a temporary set-up built by companies for the effective execution of a specific project. A manager heads this structure.

Does an organisational structure outline the hierarchy within a company?

An organisational project management structure defines the roles and responsibilities of all the individuals involved in the project management process. It also provides a clear idea about the flow of communication. Therefore, organisational structures outline the hierarchy within an organisation.

Why is a decentralised organisational structure important?

Decentralisation helps an organisational structure operate more independently and also has an inclusive approach where everyone gets to put forth their views.

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