What is a Projectized Organization Structure?

Fahad Usmani, PMP

June 15, 2024

Today, I will explain the projectized organization structure.

Organizations must adapt to stay profitable in this tough market, be results-oriented, and improve their operations and working conditions.

They should use a suitable structure, whether functional, projectized, matrix, or other, to achieve their business goals.

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

Please note that project and projectized are different terms. Projectized is a classification for an organization that deals with projects; many experts call projectized organizations project-oriented or project-based.

Projectized Organizational Structure

In projectized organizations, all activities are managed through the projects. Here, organizations encourage employees to share their lessons, allowing others to learn and benefit from a shared corporate knowledge base.

Project managers are in charge of their projects, have complete authority over resources, and all team members report to them.

Projectized organizations do not have functional managers; if they do, their role will be minimal, and they will have no authority. The projectized structure is the opposite of the functional structure.

In projectized organizations, resources are utilized for the project work. These organizations are only interested in external project work. Usually, they have a few small, functional departments that support activities, such as 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. They will lose the contract if their quote is high or technically inferior.

The project manager has all the authority, but this does not mean they have the absolute power to do anything they desire.

For example, let us say that your project is part of a portfolio, and you have idle equipment needed for another project under the same portfolio. In this case, the portfolio manager will assign this equipment to the other project. You may or may not agree with this decision, but you must follow the decision.

Project managers have the authority to complete the project and can accept responsibility for 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.
The team is disbanded when the project is completed, 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 improve because there is a sense of urgency when completing milestones. Hence, new members learn fast.
Team members become more versatile and flexible when 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 managers 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, making the work environment stressful.
Poor communication can cause resource duplication if there are multiple projects.
The team members feel insecure. They know they may lose their jobs once the project is finished, so 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.
Because they work on so many different projects, the employees may not be highly skilled in a particular area, which may affect the quality of the project deliverable.

Examples of Projectized Organizational Structure

I often receive emails asking for examples of a projectized organizational structure. It is impossible to find a well-known example. Even if an organization only deals with projects, it needs supporting departments to handle 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 take on the characteristics of a strong matrix organization.

Summary

Projectized organizations are dynamic and adapt quickly. In this organizational structure, project managers have a central role and control everything. The PMO, portfolio manager, or program manager supports the project manager, but project managers are responsible for the project and its outcome.

Further readings: Strategic alignment of project management organizational structure

Fahad Usmani, PMP

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.

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