Organizations are having to adapt to stay profitable in this tough market, they must be results-oriented while improving their operations and working conditions.
Organizations must adapt to a suitable structure to achieve their business goals, whether that be a functional, projectized, matrix, or other type of structure.
Please note that project and projectized are different terms. Projectized is classification for an organization that deals with projects; many experts call projectized organizations, project-oriented, or project-based organizations.
Projectized Organizational Structure
In projectized organizations, all activities are managed through the projects.
Here, organizations encourage employees to share their lessons learned. At the same time, they allow others to learn and benefit from a shared corporate knowledge base.
Project managers are in charge and they have complete authority over resources. All team members report to them.
Projectized organizations have no functional manager; if they do, their role will be minimal. Moreover, they won’t have any authority. The projectized structure is the opposite of the functional structure.
In projectized organizations, resources are utilized by the project work. These organizations are only interested in external project work. Usually, they have a few small, functional departments that support activities. Examples include admin, accounting, human resources, etc.
A projectized organization has to be dynamic for its survival. They always have to compete with other organizations to win bids. If their quote is high or technically inferior, they will lose the contract.
The project manager has all the authority. This does not mean they have the absolute power to do anything they desire.
For example, let us say that your project is a part of a portfolio. Some idle equipment is needed by another project under the same portfolio. In this case, the portfolio manager will assign this equipment to the other project. You may or you may not agree with this decision, but you have to follow the order.
Project managers have enough authority they need to complete the project and they can accept the responsibility and its outcome.
Characteristics of a Projectized Organizational Structure
The following are a few characteristics of a projectized organizational structure:
- Projectized organizations are dynamic and adaptive.
- Project managers have full authority over project resources. They control the budget and work assignments.
- Project managers have full-time team members under their control.
- Team members are often collocated for better performance until the project ends.
- When the project is completed, the team is disbanded, and resources are released.
Advantages of a Projectized Organizational Structure
These are a few advantages of a projectized organizational structure:
- Team members are loyal to the project goal.
- Team members report directly to project managers; the line of authority is clear. This reduces conflict and decision making is faster and more flexible.
- A single reporting system helps shorten communication lines, creating effective communication within the team.
- Communication is fast because of a single authority. This helps solve stakeholders’ concerns quickly.
- Being the only authority, project managers can make quick decisions and complete the project faster.
- Communication and cooperation tend to be better because there is a sense of urgency when completing milestones. Hence, new members learn fast.
- Team members become more versatile and flexible due to working on different projects.
- Projectized culture is adaptive. Team members are encouraged to learn from others’ experiences and share their own.
Disadvantages of a Projectized Organizational Structure
These are a few disadvantages of a projectized organizational structure:
- Absolute authority can make project manager arrogant. Lack of power is an issue in a functional organizational structure, while absolute authority can be an issue in a projectized organization.
- Projects always have deadlines and tight schedules, which can make the work environment stressful.
- Poor communication can cause resource duplication if there are multiple projects.
- There is a sense of insecurity among the team members. They know they may lose their jobs once the project is finished. They tend to be less loyal to the organization.
- The cost of employees and equipment can be higher because they are being hired for a shorter period. Moreover, this cost can become much higher if the project is delayed.
- The employees may not be highly skilled in a particular area because they work on so many different projects. This may affect the quality of the deliverable.
Examples of Projectized Organizational Structure
I often receive emails asking for examples of a projectized organizational structure. It is impossible to get a well-known example. Even if an organization is only dealing with projects, they need supporting departments to take care of routine tasks like admin, finance, human resources, etc.
Initially, when the organization is small, it is easier to be a projectized organization; a freelancer taking on a project or hiring temporary staff to complete a task.
However, as organizations grow and become bigger, they need to adapt and they take on characteristics of a strong matrix organization.
Projectized organizations are dynamic and they adapt quickly. In this organizational structure, project managers have a central role. They control everything. The PMO, portfolio manager, or program manager provides support to the project manager. However, project managers are responsible for the project and its outcome.
Are you working in a projectized organization? Please share your experiences in the comments section.
Further readings: Strategic alignment of project management organizational structure