CONSTRUCTION PROJECT ORGANIZATION

Types of Organizational Structure:

1. Functional Organizational Structure

-The functional organization structure helps organizations run their business and earn profit.
This type of structure suits organizations intended to produce some product or service on a
continuous basis. Here, employees feel secure, perform well and tend to be highly skilled.
The project manager doesnt have any role in functional organization, and even if he exists,
his role will very limited and he will be known as either the expediter or coordinator.

Advantages of the Functional Organization Structure

The following are a few benefits of the functional organization structure:

Employees are grouped as per their knowledge and skills, which helps achieve the

highest degree of performance.

Employees are very skilled and efficient because they are experienced in the same work

and hence they perform very well.

Their role and responsibility is fixed, which facilitates easy accountability for the work.

The hierarchy is very clear, and employees dont have to report to multiple bosses. Each

employee reports to his functional manager, which reduces the communication channels.
There is no duplication of work because each department and each employee has a fixed

job responsibility.
Employees feel secure, and therefore they perform well without any fear.

Since there is a sense of job security, employees tend to be loyal to the organization.

Employees have a clear career growth path.

Within the department, cooperation and communication is excellent.

Disadvantages of the Functional Organization Structure

The following are a few disadvantages of the functional organization structure:

Employees may feel bored due to the monotonous, repeated type of work and may

become lazy.
If the performance appraisal system is not managed properly, conflicts may arise. For
example, an employee may feel demoralized when a lower performing employee is

promoted.
The cost of high skilled employee is higher.
The departments have a self-centered mentality. The functional manager pays more
attention to only his department; he usually doesnt care about other departments.
Communication is not good among the departments, which causes poor inter-department
coordination. This decreases flexibility and innovation. Moreover, there is a lack of

teamwork among different departments.

Employees may have little concerns and knowledge about anything happening outside

their department. This causes obstacles in communication and cooperation.

The functional structure is rigid, and therefore is slow to adapt to changes.

Due to bureaucratic hierarchy, delays happen in decision making.

Generally the functional manager makes decisions autocratically without consulting the

team members, hence it may not always work in favor of the organization.
When the organization becomes larger, functional areas can become difficult to manage
due to their size. Each department will start behaving like a small company with its own

facilities, culture and management style.

Functional departments may be distracted by their own goals, and focus on them rather
than the organizations goal.

2. Project-based Organizational Structure

-Project organizational structure refers to the creation of an independent project team, the teams
management is separated from the parent organizations other units, have their own technical
staff and management, enterprise assigns certain resources to project team, and grant project
manager of the largest free implementation of the project .

Advantages
In a project-based organizational structure, employees are assigned to projects and report to the
project manager. The project manager conducts performance appraisals and prepares career
development plans for project team members. This improves employee loyalty to project goals.
Moreover, because the project manager has direct control and authority over project operations,
flexibility and response time to changing circumstances improve.

Disadvantages
Without devising procedures to share knowledge between projects, learning in the company
suffers. Projects need their own resources and expertise; as a result, duplication of resources is
another problem with project-based organization. Additionally, when personnel keep moving
from one project to another, professional growth and career continuity of employees suffer.
Managers should strive to clarify the contribution of the project to the overall mission of the
company to avoid ambiguity for employees.

3. Matrix Organizational Structure

-

An organizational structure that facilitates the horizontal flow of skills and information. It
is used mainly in the management of large projects or product development processes,
drawing employees form different functional disciplines for assignment to a team without
removing them from their respective positions.

Advantages
a)

Better coordination and control: - This structure is very much suitable to coordinate and

control the functional activities and project activities. Project manager has got responsibility to
establish better coordination and control system in organization. Functional authority flows
downwards and project authority flows horizontally which enables to establish better control and
coordination.
b)

Adaptable to dynamic environment: - It is hybrid type of organizational structure which can

easily adjust with changing environment at business world. The project managers have functional
independently and they can get quickly feedback with information related with project. Along with
project mange, employees from different functional area are specialists and adjustment does not
become problematic.
c)

Effective utilization of resources: - Project structure makes very much effective utilization of

resources available. The whole staff along with project manager is specialists in various areas. And
has to make maximum utilization of resources. They know better hoe to utilize project capacity and
time, how to utilize human and financial resources they know better.
d)

Particular management: - In this type of organizational structure people work in project as a

team. They participate in decision making and problem solving activity. They make joint team effort.
They have authority to carry out day to day activity. Frequent sharing of ideas and opinion with
project manager is common.
e)

Sufficient time for top management: - It encourages delegation of authority to project

managers. Project managers are responsible for operation of the project. They have authority to take
decision about day to day activity of project. Employee working in project will also have sufficient
authority. Hence, top management will have sufficient time to think about policy and strategies.
f)

Excellence in inter disciplinary specialization: - In matrix organizational structure experts

and specialists from various functional areas are combined together and quality performance
becomes possible. All experts from various disciplinary or functional areas interact with each other
and they make excellent specialization.
g)

Development of team work: - Team work is facilitating project organization or matrix

organization itself is team work. Employees from various functional areas work under the spirit of
team and make the project successful. Team effort is made.

Disadvantages
a)

Violation of unity of command: - They get command from two superior functional or

departmental manager and project manager. He or she has to report superior at a time i.e; project
manager and functional manager. He/she will be in confusion. Unity of command hence is violated.

b)

Costly structure: - Matrix organizational structure involves huge overhead cost. There will be

much paper work and information collection that involves heavy cost. Most of the worker or
employees are specialist and they are given high remuneration and facilities and amount is given to
project workers in many cases as incentives.
c)

Problem of overspecialization: - Matrix organizational structure create problem of over

specialization in some situations. Specialist from both functional project works gather to show many
complex problems of the organization. As many experts gather to solve problems they waste
valuable time in supporting their own ideas and sometimes problems remains unsolved. It becomes
like the famous saying Too many cooks spoils the food.
d)

Difficult to balance: - There will be two types of specialists functional and project specialist.

And, to make a balance between these two specialist is a difficult task. Therefore, high level of
interpersonal skill or specialists is required to balance these two types of experts and to maintain
balance between project authority and functional authority is also difficult task.
e)

Feeling of insecurity: - Those employees who are specially appointed for the projects they feel

a sense of insecurity after the completion of the project. This may cause project completion delay.
Loyalty and commitment towards project may decrease.
f)

Lack of white coordination: - In a matrix organization there will be a problem of maintaining

effective coordination among project workers, functional workers and among the workers from
various functional areas. Project manager have to make a high level of exercise to maintain effective
coordination in the organization.