projectized organization structure

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.

I have discussed the matrix and functional structures in separate blog posts. Now we will discuss projectized organizations.

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.

Summary

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

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Speak Your Mind

    • Farhana, giving a well known example of projectized organization is not possible. Usually all big organization has matrix structure. Very small organization can have projectized characteristics.

  • I am not understanding how persons are selected in projectized organization they select from functional departments or from outside.After ending of projects how they loose their jobs

    • It depends. A part of project team can be hired from outside and others may be taken from the organization’s pool.

      Team members were informed at the time of hiring that they will have to look for another job once the project ends.

  • Pls what organization structure would you suggest a construction company which operates as and when it is contracted to , to adopt?

  • please which organizational structure is suitable for a construction company that deals with projects as and when they get contracts

    • I can not think of any large pure projectized organization. A small contractor or a small company dealing with projects can be an example.

    • Mostly big organizations follow strong matrix structure instead of purely projectized. I have seen some projectized organizations but they are too small and are local. Can not think of any big international projectized organization structure.

  • Hi Fahad,
    I have discovered your blog 2 days ago and already read all your notes. They are really helpfull, thanks a lot! I have scheduled my exam for next week so I hope you will see my question before 🙂

    As I am reading one last time the PMBOK, I’m getting confused with the notion of “Project-Based Organizations” (1.5.2.1 of PMBOK fifth edition) as it seems very similar to projectized organization.

    Yet, it is written “PBO can be created by different types of organization (i.e. functional, matrix, or projhectized).” I really can’t see how a PBO can be used in functional organization….

    If you could clear my mind it would be wonderful
    Thanks in advance!

  • Dear sir,
    Good Morning… I have two questions and i hope that you will give me very good answers of b/m questions for my information,please.
    Q1: Define procurement management for projectize organization? & at least 8 key importance/Highlights/Quality objectives for procurement department in projectize organization.
    Q2.Select Industry & Domain; give Any industry/domain example and their procurement process .What are the best procurement principles for your project and organizational Success .

  • What are good examples of industries where companies tend to use a projectized organisation structure? The ones I thought of so far are development, IT, event management, and consulting. What are the others?

    • Although, it is difficult to see pure projectized organization, I see that many small construction companies have qualities of the projectized organizations.

  • This is a great site. I am also doing an assignment and trying to find names of companies that use a projectized organizational structure. Any help would be greatly appreciated!

    • There are hundreds of thousands are projectized organizations using projectized organization. It would be difficult to provide you a list of it.

  • One of the many disadvantages of a fully projectized organizational structure is that the project management teams lack defined roles and responsibilities on projects. How can this situation be avoided.
    AndyG.

  • Thanks for adding you some thoughts,i am much more learn from your thoughts.Good Bye
    Regard,s
    Muhammad Hanif Khan
    Student Of MBA(3.5year)/MS
    Kohat University Of Science & Technology_Kohat
    Khyber Pakhtoonkhawa,Pakistan

  • Further disadvantages for Projectized Organization Structure:

    1. Individuals commence to rut out from the project at the latter part if they get a new project elsewhere.
    2. Replacement recruiting is difficult at the latter part of a running project for the vacant positions.
    3. Longer learning curve required for responsibility transfer and bridging the knowledge gap.

  • Another challange for projectized organizations to consider is resource leveling. There may be periods in the project that have more work going on than others. Keeping those people gainfully employed the entire project can be difficult. Or the leadership has to ensure the right people are available when they need them if they are not going to be employed the entire time. Things can get tricky if a team member you were counting on is snapped up by another employer when you need them!

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