The end of the project organization spectrum is the functional project. Its theme is housing the project within a functional division. In this form of organization, all activities of the enterprise are grouped and divided according to functions like production, marketing, finance and others. Each department is in the charge of a specialist who is called functional manager. The functional manager has a control over the functions in his charge and no matter on those functions found in other part of the organization.
Specialization—It ensures a greater division of labour and enables the concern to take advantage of specialization of functions.
More efficiency—Efficiency of workers is increased as the workers and other have to perform a limited number of operations and they get suggestions and instructions from specialists.
Separation of mental and physical functions—It ensures the separation of mental and physical functions. This ensures better control of the working of the different sections.
Economy—Standardization and specialization in various fields facilitates production on a large-scale resulting in economy in production.
Expansion—it offers a greater scope for expansion as compared to line organization. It does not face the problem of limited capabilities of a few line managers. The expert knowledge of the functional managers facilitates better control and supervision in the organization.
Coordination is established: all the persons working within a department are specialists of their respective jobs. It makes coordination easier at the departmental level.
Minimal duplication of efforts: In this type of organization unnecessary duplication of efforts is eliminated. For example, the function of finance is only carried out by the finance department. There is no need to establish two or more departments. It makes it possible to
utilize the human and other resources effectively.
(1) Confusion—the operation of functional organization is too complicated. Workers are supervised by a number of bosses. This results overlapping of authority and thus creates confusion in the organization.
(2) Lack of coordination—under this, the work is divided into parts and sub-parts. It poses difficulties in coordinating the functioning of different parts. Thus it is difficult to take quick decisions.
(3) Difficulty in fixing responsibility—because of multiple authorities, responsibility for poor performance cannot be fixed easily on a particular person.
(4) Conflict-supervisory staff of equal rank may not always agree on certain issues. Therefore, there may be frequent conflicts which may lead to non-performance.
5) Hurdle in complete development: this system is a hurdle in the way of the complete development of the employees. Each employee specializes only in a small part of the whole job.
(6) Ignorance of organizational objectives: each departmental head works according to his sweet will. They always give more importance to their departmental objectives. Hence, overall organizational objectives suffer. For example, to establish its image, the production department may produce quality product ignoring the fact that market trend favors accepting medium quality product.