In today's fast-paced and changing business environment, organizations are more than ever forced to adapt to emerging changes to remain competitive. For this reason, organizations are implementing more and more of their activities in the form of projects. For the project to successfully go through all its phases and benefit the organization, it is crucial to choose a competent project manager and gather a quality project team. Team management in most situations is accompanied by a series of challenges, especially if you take into account the fact that more and more organizations operate globally and that employees are geographically dislocated. Furthermore, working from home can be characterized as a flexible work arrangement that organizations offer to their employees, but employees are sometimes forced to work at home (e.g. during the pandemic caused by the COVID-19 virus). This paper aimed to investigate the perception of project managers about the challenges of managing project teams when team members work from home. Empirical research on the perceptions of project managers of performance resuts of project team members when working from home was conducted through an online survey questionnaire on a sample of 56 project managers in the Republic of Croatia. Respondents evaluated the extent to which the stated claims about team performance refer to their team when team members were present at their working location and when they worked from home. The results of the research showed that working from home does not have a positive effect in increasing the work performance of project team members, but that project team members have higher work performance when they are physically present at their workplace.