Project-based organizational structure organizes human resources around particular projects allowing businesses to increase flexibility to adjust quickly to market changes, or adopt rapid innovations.
What is project-based organizational structure?
Project-based organizational structure is a type of organizational structure in which employees are grouped together into teams to work on specific projects. This method of organizing a business can also be task-focused.
In many businesses, project-based organizational structure is only used for a temporary period of time to finish specific projects. Workers will be focusing on their assigned project rather than on their position in the firm itself.
Once the project is completed, the team is disbanded, and the employees are reassigned to other projects.
Features of project-based organizational structure
There are a few common features for project-based organizational structure.
Projects are led and supervised by project manager who is supported by a team of workers. These projects may include researching and developing new products, entering into foreign markets, creating a new promotional campaign, etc.
Project managers may have to work on several projects simultaneously having different groups of workers reporting to them at the same time. The workers in project groups often come from different functional departments, but work together to focus on completing a particular project before the deadline.
When is project-based organizational structure used?
Many businesses use a project-based organizational chart. This type of structure is often used in organizations that need to be very flexible and adaptable such as software development companies, entertainment companies, consulting firms, industrial firms in aerospace and oil exploration, construction and engineering companies, etc.
For instance, a construction company might have several teams working on different projects such as the building of a bridge, highway, school, stadium and hospital.
Project-based organizational structure – Evaluation
Advantages of project-based organizational structure include:
- Flexibility. As projects are time-limited by definition, project-based organizational structures continuously change as projects are completed and new ones initiated. Can be task or project focused. Eliminates many problems associated with hierarchy, cuts across departments and creates project teams made up of people from all departments, divisions.
- Productivity. Projects are focused on solutions rather than functionality. Project managers focus on implementation, striving to meet deadlines and operating within the assigned budget.
- Efficiency. As the project manager has direct control and authority over the project, tasks get done quicker. Efficiency is further improved if the project manager can assemble the team, made up of people most suited to the project.
- Motivational. Project-based organization can be a source of motivation because individuals are able to work on different projects, so this adds interest and variety to their work. It also broadens their professional experiences.
Disadvantages of project-based organizational structure include:
- Discontinuity. As workers always move between projects, with different teams and project managers, there could be fewer opportunities to develop personally and professionally.
- Isolation. Each project team is self-sufficient yet only operates temporarily. There are very limited opportunities to work with other teams or people in the rest of the organization.
- Inefficiencies. Each project needs its own finances and team of experts, resulting in a duplication of resources and effort. As people continuously move from one project to another, there can be added pressures/stress for staff.
- Conflicting interests and priorities. Project teams are formed on a temporary basis, so there is less obligation to make sure that team members get along, especially if the members come from departments with different cultural norms.
Overall, a project-based organizational structure can be a good option for organizations that need to be flexible and adaptable. However, organizations should also be aware of the potential drawbacks of this structure, such as lack of continuity, difficulty in managing multiple projects, and potential for conflict.
