Formal Organization- Project Management Organization

Project management organization is a concept which helps in coordination between the organization strategies and program management, portfolio management, project management. The structure of Organizational project management is used in aligning the practices of project management with the organization’s structure.

The Organizational project management also attempts to achieve the objectives in time and within the cost and profit goals as the Management specifies. Further, a Project Manager leads and directs a project organization.

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Project Management Organization

Organizational Project Management can involve projects like:

  • The development and/or introduction of a new product
  • A complete redesign of the existing line of products
  • The installation of a new plant, etc.


project management organization


The first step is the appointment of the Project Manager who is usually from the middle management ranks. The Project Manager is responsible for the detailed planning, coordination, and control. Project managers are also responsible for the achievement of the project.

Learn more about Project Managers here.

Further, he must achieve them in the specified time-frame. He operates with a team of qualified personnel which he selects from the different functional departments which are a part of the project.

Furthermore, the Project Managers authority is functional within the limits of the project. Also, as soon as he completes the project, the Management dissolves the PMO.

Positioning Project Management Office with right strategy is a key for effectively aligning the organization’s abilities with the project management. Learn about the project management office here.

Resulting organization structure

A Project Management Organization is independent and cuts horizontally through the normal organizational structure.

Further, projects require quick decisions and actions from various functional areas. Therefore, the flow of information is primarily lateral and not vertical.

Hence, a good project organization has strong horizontal working relationships.

For example, the project is about major product development. Then the engineering, production, marketing departments, and employers need to work closely. However, seniors are pulled in when there are frequent product changes or decisions which affect costs.

Therefore, project organizations do not completely rule out the possibility of vertical communication. While horizontal working relationships are stronger, vertical relationships are important too.

Hence, the Project Manager is more effective if he occupies the same status in the organizational hierarchy as the managers of the functional departments do.

Project Management Organization chart

project management organization

Solved Question on Project Management Organization

Q1. What is the structure of a Project Management Organization?


In a PMO, the project and the organization are separate. Therefore, it is an independent segment with its own set of specialized members. Further, it connects to the home organization through periodic reports and escalations.

Usually, home organizations give complete freedom to the project manager to work within the limits set for the project. Also, communication in a project organization is primarily lateral. However, the Project Managers brings the seniors into the picture in case of frequent changes or decisions involving costs.

Also, in the case of complex projects, sometimes phases move from one functional department to another. In such cases, the Project Manager communicates directly with the senior management and bypasses the functional structure of the organization. Since the authority is centralized, decision-making is quick and the project organization is highly responsive to the demands of the top management.

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