This is one of the latest types of organisational design. It has been developed to establish flexible structure to achieve series of project objectives. Matrix organisation, also known as grid, is an answer to the growing size and complexity of the undertaking, which require an organisation structure more flexible and technically oriented than the line and staff and functional structures.
The matrix organisation is a combination of the project organisation and the functional organisation. Authority flows vertically within functional departments, while authority of project managers flows horizontally crossing vertical lines. Thus, martix organisation is created, “when project management is superimposed on a stable hierarchical structure, usually of a functional nature. Here the individuals working on a project have a continuing dual assignment; to their project and to their base department.”