Resource allocation under uncertainty in a multi-project matrix environment: Is organizational conflict inevitable?

The matrix structure has become the primary organizational means for maintaining an efficient flow of resources in multi-project environments. Critics of the matrix, however, describe an inherent propensity for conflict among managers that substantially limits its effectiveness. Conflicts occur not only between the divergent interests of project and functional managers, but also among different project managers in a multi-project setting. A system dynamics simulation was developed for a such complex high-tech environment, a milieu with high uncertainty in meeting project deadlines and with intensive competition over scarce resources. Expected net benefits were calculated for each of the organizational groups under different work profiles. Findings from the simulation suggest that not all conflict is realistic. For some project objectives, higher organizational performance can be achieved when managers learn that they have no basic differences in real interests and they can agree upon a resource allocation policy. © 2007 Elsevier Ltd and IPMA.