Hello and welcome back. In this lesson, we're going to identify potential project organizational structures that you may encounter as a project manager. There are many potential structures and combinations for projects. Today, we're going to cover some of the more common ones. First, Functional Based Organizations. Matrix (or Composite) Based Organizations, and finally, Project Based Organizations. Each one of these has its place in executing projects. Each one is favored by different organizations. Each one has its strengths and weaknesses. As part of these lessons, we'll explore all of these. Here we see a typical organization chart for a company. Most organizations are organized according to the functions independent of how they run projects. Each function represents a key functional requirement for the organization to complete its business. As an example, your organization may have an engineering group, a sales group, operations, strategic planning, procurement, quality, an accounting department. Each one of these departments represents a function and has its own staff of specialists. Alternatively, the organization may be structured by product line. Each key product line or segment is managed by its own group. For instance, in the auto industry there may be a design group, a body group, drive train, interior, etc. Each one of these key functions is its own group within the organization. Each one of these functions is represented by the vertical columns we see on this org chart with the associated staff included below the manager. When an organization decides to implement a project, it may decide to execute it within its functional organization. This is called the functional organization structure for the project. In this organizational approach, the project is run by the functional managers as a group. Project coordination is done as a committee. The functional managers are responsible for the project scope, the schedule and the budget. They must interface with the client, do quality assurance, and purchase any material or services. Each functional group operates independent of the other groups. In a classic functional organization, all communication among the team members is done up through the functional managers, across, and back down. This type structure has certain advantages. The resources allocated to the project are optimized. The same staff works on the ongoing operations of the organization and the project. When the project doesn't need their services, they go back to their day job, thereby limiting the time and cost they spend on the project. Technical controls improve, because the project team is embedded in the functional group. They have access to the technical experts in the group. Also the functional manager's overseeing their work, and thus controls the technical content of the project. Communication and procedures have been established as part of the normal work process. Everyone knows the work process and no new processes are created for the project. And finally, at the end of the project each team member goes back to his or her previous work. There's no requirement to move or reallocate staff. Everyone just keeps doing their old job. However, the disadvantage of this organization is there's no one person in charge of the project. The functional managers run the project as a committee and they share budget and schedule authority. In fact, each functional manager may create a separate budget and schedule for his department and his staff. This makes project coordination much more complex. Also, from a customer perspective, or a sponsoring organization perspective, they must deal with all of the functional managers. There's no focal point. Obviously, the functional manager's going to favor the functional priorities or the project priorities. The project activities can easily get siloed with each group and each function working independently and then, the functional managers hoping it all fits together at the end. A functional organization chart for a project works well for small projects than in the course of a normal business. However, as projects get more complex, we may want to consider other options. In the next lesson, we'll examine matrix organizations. These organization types attempt to address the disadvantages of a functional organization while keeping the advantages.