What is project organization?

Project organization in project management refers to the structural system you use to delegate authority and responsibility to team members. The structure indicates the hierarchy within the team to assign clear reporting. It also helps individuals understand their responsibilities and purposes within the project.

The importance of project organization in project management

Defining project organization helps create structure and guidance for team members. It allows the team to work toward shared goals. Specific benefits include:

• Keeping the project on schedule: Every participant knows their role, which helps tasks stay well-organized with clear assignments and processes. It also reduces the need for project managers to micromanage team members.
• Aligning with objectives: The structure is often developed with the company’s strategic objectives in mind. It allows you to focus on specific details, such as improved resource management, to help the organization reach those goals. When team members know their roles within the project, they also become aligned with the larger purpose.
• Streamlining operations: Project organization provides clarity for team members, helping them know where to find information or how to handle specific situations. This can empower team members to take action quickly and keep tasks running smoothly.
• Addressing potential issues proactively: Organizing the project structure well can save your company time and money by allowing you to navigate or avoid common project management concerns.
• Informing decision-making: The well-defined roles, duties and relationships help give team members the appropriate level of authority and decision-making power. A structured approach may help employees make decisions or know where to go for approval.

Types of project organization structures

There are three common project organization structures based on how you arrange employees and handle project assignments.

Functional

A functional organizational structure is a traditional method, with employees performing their duties within a specific department. The manager of that department typically serves as the project manager and maintains authority over the project.

This structure often simplifies how resources and employees are managed. However, communicating effectively can be challenging when a project involves numerous functional units.

Project

In this structure, employees are dedicated to specific projects based on their strengths and skills rather than a specific role or department. The project manager usually has full authority and leads the project, and employees and resources are assigned to the individual project and report to the project manager. This structure is often used for large projects.

Matrix

The matrix structure combines aspects of functional and project structures. Employees report to a functional manager, who manages their normal work tasks, and a project manager, who oversees project-related work. This approach enables you to share resources effectively and with a great deal of flexibility.

Best practices for managing projects

Implementing these project organization best practices may help keep projects and employees on track.

1. Create a project organization chart

Deciding on the organization structure enables you to assign employees and resources to projects within your organization. Creating a physical organizational chart allows you to share the details of that structure with your employees. It serves as a reference for decision-making and effective communication with teammates, so making this chart easily accessible with other project resources is helpful.

2. Start with roles and responsibilities

Instead of focusing on employees, it helps to start with defining the roles and responsibilities within the project. Defining those positions and identifying the skills necessary for them may make it easier to assign team members to the positions on the chart.

3. Offer transparency

By providing a detailed outline of the project organization structure, you give employees transparency on how the project is being managed. This can make the process clear and allow team members to act with confidence while creating a sense of trust and belonging within the group.

4. Communicate effectively

Effective communication enables the project manager to share essential information about the project and organization. Having a communication plan in place based on the structure can increase the chance of team members interpreting the information accurately and consistently. Consider highlighting the flow of communication in the project organization chart to help employees understand reporting hierarchies and approved communication channels.

5. Set achievable and measurable goals

Setting realistic goals helps develop corresponding milestones and assign roles and duties accordingly. This also helps you measure your team’s progress toward the goals to ensure your team members can see if they’re on target to meet those objectives.

6. Evaluate risk and be proactive

Evaluating risks and challenges helps you build a project organization structure that mitigates those issues. The corresponding chart helps to communicate this information with essential members of your team.

7. Be flexible

You may find that the project needs, objectives or deadlines change as work progresses. Being flexible with the organization you’ve created allows you to adapt to those changes. For example, you may need to reallocate project resources based on changing priorities.

8. Make improvements

Your company may need time to create a project organization process that works efficiently for your projects. Using evaluation tools, such as tracking project metrics and gathering feedback from team members, helps you determine if your project organization method is working well. That data can inform decisions and changes to how you handle projects going forward.

FAQs about project management and organization

What is the difference between project management and project organization?

Both concepts refer to how a project is carried out, but project management is a broader process. It focuses on the entire project lifecycle and controls all aspects of planning and executing the project. Project organization is one aspect of project management that focuses specifically on the roles of team members and the overall team structure.

How do you choose the best type of project organization structure for your company?

The size, scope and complexity of the project often influence which structure you choose. Larger or more complex projects may benefit from structures that include project managers, such as project or matrix structures.

Meanwhile, a traditional functional structure may work for a smaller or less complex project. The way you handle projects within business units can also help you decide. Functional structures may work if most of your projects stay within one unit, while other structures may help if you implement several projects across departments.