The term functional manager is one that is of crucial and critical importance to the project team and to the project leader as it most appropriately allows for an accurate representation of the actual chain of command. The functional manager refers specifically to the individual or the individuals who have management authority (or serve in that capacity) over the particular organizational unit within a functional group, company, or organization. The term functional manager can also be used to refer to that particular manager who serves the role of leading a group that is charged with the actual production of a product, or performs a specific and real service. The functional manager traditionally is not affiliated with a project team and is often, and more likely, a colleague who may have some involvement in the project, but is not directly involved in the day to day management of this unique project.
This term is defined in the 3rd and the 4th edition of the PMBOK.