Business organisational structure

Project-based management structures are becoming more common. In this type of structure, a business is organised around teams set up to work on a specific project.

What is a project-based organisational structure?

A project-based structure usually takes staff from different departments and places them in a temporary project team. The team then works on one specific task.

This structure can be useful when developing a new product or entering a new market. A business that usually uses a functional or customer-based structure can use project management to deliver short-term goals. In this structure, a project manager usually:

• has overall authority for the project
• leads a team made up of staff from different departments

Team members work directly for the project manager.

The advantages of a project organisational structure

A project-based structure can work well for businesses that need to stay flexible and respond quickly to change. 

One advantage is greater control over the team. Other benefits include the ability to:

• support cross-functional working
• flatten a business' hierarchy
• create a strong team culture and  identity
• organise the business around its core activities
• make better use of employees' skills
• schedule work more easily with dedicated resources

The disadvantages of a project organisational structure

A project-based structure may seem simple, but it also has some disadvantages. For example, it can:

• blur reporting lines by moving staff away from their usual roles
• use up staff and resources on one project instead of wider business goals
• make accountability less clear if employees report to several managers

A project-based structure can also be expensive because dedicated project teams often cost more. It usually works best for large, short-term projects.

Other common ways to structure a business include hierarchical structure, a matrix structure and a product-based structure.