Balanced Matrix Organizations

As a software technical consultant/developer who has grown an interest in project management I find many things that I read about project management to be in sharp contrast with the reality that I found in the organizations for which I have worked.

One thing that I don't understand is the power struggle between the functional managers and project managers. Usually the functional managers are responsible for the budget and the resources of a department and they sometimes organize the work by starting projects. The functional managers however are not necessarily trained in project management and here is where the project managers help. In this scenario a conflict between the functional and the project manager is virtually impossible.

From my experience working on several projects the role of the project manager is not to exercise power but to assist with their project management skills those who do have power.

For example in the department where I work as a consultant the functional managers are exploring the possibility to contract a project management consultancy firm to help them with their projects. Probably they are not pleased with the work performed by the project managers that are already working for the company.

Regarding the relationship between functional and project managers I have found that the functional managers sit higher in the hierarchy on different levels but usually they don't have direct authority over the project managers who work for different departments and report to some sort for functional managers for project managers. This basically makes the project managers to be peers with the team members rather than with the functional managers as employee sitting at the bottom of the hierarchy but working in different departments. Many times the project managers don't even work for the organization but they are contractors working for some sort of consultancy firm.

Good discussion gents.
I have worked in both matrix and projectized set ups.
For strategic or mission critical projects, as Pankaj and Pravin pointed out , Projectized setup is the only way.

However, in matrix setup, I suggest a good rapport ( personal , technical in office and out of office ) with functional managers who control your resource schedule is an effective way of smoothing resource problem.

If you have a sponsor, the same principle applies ( normally the sponsors do have a higher rank in the organization set up , say Project director or some executive director or VP/SVP ). Situations will be there not to your liking. So, rely on your SOFT Skills to move and shake a few heads here and there to achieve what you want