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A project organization is a structure that facilties the coordination and implementation

project activities. Its mean reason is to create an environment that fosters interactions among
the team members with the amount of disruptions, overlaps and conflict. One of the important
decisions of project management is the form of organizational structure that will be used for
the project.
Each project has its unique characteristics and the design of an organizational structure
should consider the organizational environment, the project manager is given. A project
structure can take on various forms with each from having its own advantanges and
One of the main objectives of the structure is to reduce uncertainly and confusion that
typically occurs at the project initation phase. The structure defines the relationships among
members of the project management and the relaionships with the external environment. The
structure defines the authority by means of the graphical illustration called an organization
A properly designed project organization chart is essential to project success. An
organization chart shows where each person is placed in the project structure. An organization
chart is drawn in pyramid have more authority and responsibility than members located
toward the bottom. It is the relative locations of the individuals on the organizaton chart that
specifies the working relationships, and the lines connecting the boxes designate formal
supervision and lines of communication between the individuals.


Creating the project structure is only a part of organizing the project it is the actual
implementation and application that takes the most effort. The project organization chart
establishes the formal relationships among project manager, the project team members, the
development organization, the project, beneficiaries and other project stakeholders. This
organization must facilitate an effective interaction and integration among all the major
project participants and achieve open and effective communication among them.
The project manager must create a project structure that will meet the various project
needs at different phases of the project. The structure cannot be designed too rigid or too lose,
since the project organization's purpose is to facilitate the interaction of people to achieve the
project ultimate goals within the specified constraints of scope, schedule, budget and quality.
The objective in designing a project structure is to provide a formal environment that the
project manager can use to influence team members to do their best in completing their
assignment and duties. The structure needs to be designed to help develop collaboration
among individual team members; all in a cost effective way with a minimum of duplication of
effort and overlaps.


A functional organization structure is a hieratchical type of organizational 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 effetively utilize the skills of employees, which ultimately helps him in achieving the
organizations 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 you the president, vice president, finance department, sales department, customer
service department, administration department

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 uniformly
of performance.

Different department are sometimes referred to as silos. This means the system is
vertical and disconnected. The communication flows through the department heads to the
top management.

The functional organization is suitable for an organization which has on going operations
and produces some standard products or good, such as manucfacturing and production

Example of functional organization structure

Advantages of the Functional Organizationa Structure:

a. Employees are grouped as per their knowledge and skills, which helps achive the
highest degree of performance.