Organizational Theory

Project-based organizations are those whose operations consist primarily of projects. These organizations fall into two categories:

• Organizations that derive their revenue primarily from performing projects for others - architectural firms, engineering firms, consultants, construction contractors, government contractors, nongovernmental organizations etc.
• Organizations that adopted management by projects

These organizations tend to have management process in place to facilitate project management. For example, their financial systems are often specifially designed for accounting, tracking, and reporting on multiple simultaneous projects.

Nonproject-based organizations often lack management systems designed to support project needs efficiently and efectively. The absence of project-oriented system usually makes the project management more difficult. In some cases, non-project-based organizations will have departments or other subunits that operate as project-based organizations with systems to match.

The project management team should be acutely aware of how the organization's systems affect the project. For example, if organization rewards its functional managers for charging staff time to projects, then the project management team may need to implement controls to ensure that assigned staff members are used effectively on the project.



Functional Organization


Projectized Organization


Weak Matrix Organization


Balanced Matrix Organization


Strong Matrix Organization


Composite Organization