What Is a Project Organization Chart? With 4 Types of Groups

By Indeed Editorial Team

Updated December 13, 2022

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Project management requires the organization of people, budget, and activities to make a project successful. Many project managers use an organization's structure to help them achieve their project goals. Learning about organizational charts can help you better coordinate a project by choosing the best format for the situation. In this article, we discuss the definition of a project organization chart, identify four common organizational structures for company projects, and determine how to structure a practical project.

What is a project organization chart?

A project organization chart provides a concise hierarchy to outline the people and responsibilities within a project management team. The group requires guidance and support through a well-defined structure to have a successful project. Team members can quickly identify who can provide clear direction and task assignments through the project organizational structure. With an organizational chart, all project team members understand the project's purpose, the lines of communication, and the support structure to accomplish the project's objectives.

4 types of project organization charts

Within project management, there are four common organizational structures you can use, including:

1. Functional

A functional organizational chart is a hierarchical structure useful for manufacturing, production, or engineering companies. The company divides the project organization into departments or silos, where a functional manager leads the tasks and responsibilities of the department staff. Employees work within specialized functional areas, such as accounting, marketing, human resources, purchasing, manufacturing, or sales. The functional manager oversees the business operations under their guidance and typically has a well-defined scope of authority.

Within a functional chart, the project's head is the president or chief executive offer, followed by the vice-president. Looking at a visual representation of a functional chart, the departments show vertically and don't connect to the other functional areas of the company. The functional managers communicate with the executive management and other department managers to ensure clear and open communication to control the quality of a project. Project managers within a functional structure often work as coordinators, bringing together specialists from various departments to achieve results. Here are some advantages and disadvantages of a functional chart:

Advantages of a functional chart

Some advantages of a functional project organization include:

The hierarchy structure is prominent, which minimizes reporting to multiple people.
Specialization exists within each department, which eliminates duplication of work.
Team members have clearly defined roles, allowing for greater accountability.
Work teams are distinct with focused skills, allowing for increased productivity and efficiency.

Disadvantages of a functional chart

Several disadvantages of a functional project organization include:

Departments can be more interested in their goals than that of the project.
Functional management can receive a limited experience that benefits higher management positions.
Delays in decision-making can occur because of waiting on executive management for project direction.
Hiring costs can increase because of employing highly skilled staff.
Employees may lose enthusiasm because of routine tasks.

2. Project-oriented

A project-orientated organizational chart, also known as a projectized structure, is a temporary system that a company uses for specific projects. After the company completes the project, the project manager can dismantle or reuse the organizational structure for another upcoming project. In a project-oriented chart, the project manager is the head of the system and identifies key individuals and departments who can help complete the work activities.

Once the project manager selects the team, they provide concise assignments, schedules, and deadlines. Depending on the project scope, team members can include employees from all company departments, contractors, or external vendors. Here are some advantages and disadvantages to a project-oriented chart:

Advantages of a project-oriented chart

Some advantages of a project-oriented organization include:

Ease of communication, as the project manager coordinates and manages the entire process.
Project team members experience a sense of accountability and accomplishment.
Employees work together to achieve a common goal for the company.
The management of resources is effective and controlled.

Disadvantages of a project-oriented chart

Several disadvantages of a project-oriented organization include:

Project team members have no clear career path once the project is over.
Specialists hired for a single project can be a costly investment for the company.

3. Line and staff

A line, or line and staff, organizational chart is the simplest form of hierarchical structure, and both small and large companies use this system. The company has a top-down structure with authority and decision-making power filtering down from the top management to various operational divisions. Each level of the structure has clearly defined accountability and responsibilities. Along with general staff that provide operational functions, the company also includes specialized staff who serve as experts. General company staff support the various operational managers and supervisors, completing tasks as assigned.

Specialized staff serve as advisors or consultants to the operational managers, providing expertise in various areas, such as compliance, quality control, or customer service. Within a line and staff organizational chart, a project manager works with as much authority as the level of their position allows. In addition, project managers often work as coordinators, bringing together professionals from various departments to achieve results. Here are some advantages and disadvantages of a line and staff chart:

Advantages of a line and staff chart

Some advantages of a line and staff organization include:

Fast and accurate communication and feedback to project members and employees
Transparency of employee authority and responsibilities
Ability to access expert support from specialized staff positions

Disadvantages of a line and staff chart

Several disadvantages of a line and staff organization include:

Delays in decision-making can occur because of waiting on executive management for project direction
Hiring costs can increase because of employing highly skilled staff for specialist positions
Increased focus on the performance of the operational group instead of the project or company goal

4. Matrix

A matrix organizational chart is a project-oriented and functional structure hybrid combination. Within this system, functional and project managers share a project's success accountabilities. Company employees work under a department or functional leader, performing activities that contribute to the organization's operational success. A project manager can also use the employees for specialized skills related to the project.

When a project begins, the project manager can recruit team members to work under their direction while performing their functional duties. Functional managers oversee the operational activities for the project, working closely with the project manager. Within a matrix structure, the project manager handles the planning and execution of the project and oversees that they complete all activities using the assigned resources. Here are some advantages and disadvantages of a matrix chart:

Advantages of a matrix chart

Some advantages of a matrix organization include:

Efficiency in sharing organizational resources, such as team members and specialists
Decision-making is flexible between project and functional managers
Team members can communicate effectively between project and functional colleagues
Positive working environment based on collaboration
Employees accept the challenge of daily tasks combined with project activities

Disadvantages of a matrix chart

Several disadvantages of a matrix organization include:

Occasional confusion for employees who have dual reporting structures
Lack of coordination between functional and project managers can cause inefficiency
Hiring costs can increase because it requires several managers

How to structure a project

Structuring a project's organizational structure effectively can enhance the group's productivity. Consider the following four steps when structuring a project:

1. Identify the project team members

When beginning a project, the first step is to identify the project team members who can help achieve the project's objectives. You can identify key staff you want to invite to join the team based on their functional, operational, or specialization area. Depending on the company's organizational structure, you may require permission from an employee's direct supervisor or manager, or you may speak to them directly. When you identify each project team member, you recognize the individual talents and competencies they add to the project, making it easier to assign responsibilities and work activities.

2. Create well-defined goals

Next, you want to create well-defined goals for the project. Plans can be large and focus on a work team or remain small for individual achievement. Each goal directly relates to the overall project objective and purpose. When a group shares goals with a similar purpose, they work together to achieve a shared outcome.

3. Determine a timeline

The third step is to determine a timeframe for all goals and milestones. Creating a timeline allows all project team members to have visibility on the next deadline and to keep track of progress. Sharing the timeline also encourages the team to remain punctual and accountable to each other. You can identify timelines on a daily, weekly, or monthly basis.

4. Assign responsibilities and duties

Once you've identified your team, set well-defined goals, and established a timeline, you can assign specific responsibilities and project duties to individual members. You can assign tasks based on the expertise and skills of the project team members to use your group's talents. Team roles may evolve throughout the project, allowing employees to develop additional skills.