In this type of organization structure resources are still grouped by their functional skills, however work is primarily done through projects and a single point of contact (project manager / project coordinator) for each project is established.
Ideally, the project managers are grouped in a separate unit or department and they are responsible for the successful delivery of projects from concept to product release. Resources working on projects in a matrix environment report to their functional line manager as well as to the project manager for their project. This can become a source of conflict as the functional manager views their own role as being responsible for the work of their resources across all projects, while the project manager is responsible for a specific project.
With multiple project assignments resource’s priorities can shift as they are now assigned to more than one project at the same time. Establishing clear roles and responsibilities for functional and project managers is important for the better utilization of this type of organization structure.
The matrix organization is suitable for large projects that require significant cross-functional resources, and with a project manager in charge, there is a better overall project communications. This type of structure can foster better project resource team spirit. To run projects efficiently in a matrix organization, project managers should own the project budget and should be able to plan for and communicate in advance resource requirements.