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14 ORGANIZING FOR PROJECT MANAGEMENT

concepts are best suited for situations where the firm is engaged in multiple proj-
ects, of various sizes and duration.

We can only present an overview of these organizational concepts here.
In order to best understand the options available to us, we start off with a
description of the classic organizational types, followed with discussion on
emerging variations.

Basic Organizational Structures

There are three classic organizational structures available for dealing with proj-
ects. These are:

1. The Functional Organization.
2. The Project Organization.
3. The Matrix Organization.

The Functional Organization

The Functional Organization is the granddaddy of them all. It is the traditional
organization for performing ongoing work. Its focus is on operational discipline.
It is best for routine work and the maintenance of standards. See Figure 1.2a.

A pure Functional Organization is a poor model for the execution of projects.
The typical functional manager is measured and rewarded for running an effec-
tive functional operation. These measurements would usually include (1) hiring
and developing personnel having the skills to execute the work expected of that
function, (2) career development, (3) development and auditing of functional
standards, (4) minimizing unapplied and lost time. While these are all important,
and are required even in a highly projectized environment, none of these are con-
sistent with project performance.

Usually, in a pure Functional Organization, projects are assigned in one of
two ways. In the first mode, a project is assigned to a specific functional man-
ager. For instance, a project that has a high degree of manufacturing content
might be assigned to the Manager of Manufacturing. That manager has the re-
sponsibility to coordinate contributions from the other disciplines. In the second
mode, the responsibility for managing the project is passed from functional man-
ager to functional manager as the concentration of effort shifts to different disci-
plines. For instance, the project responsibility might start off in the hands of the
marketing manager while the project objectives and scope are being developed,
get passed on to the engineering manager during the conceptual phase, then on
to the design manager during detailed design, on to the manufacturing manager