Project based organisations

Revision as of 19:54, 9 April 2023

Big Idea

What are project based organisations?

Project based organisation (PBO) is an organisational structure where projects are the main driver of business. In a pure project based organisation the project manager will have control over all functions of the project, with only senior management to refer to. This means that the functional units, ie. R&D, finance, marketing etc. are integrated in each project in the PBO instead of going across multiple projects. Furthermore, because projects are the main driving force, each project organisation structure looks different. This is because projects drive the business and therefore also shapes the organisational structure. Figure 1 illustrates that projects are the driving force of the project based organisation, whilst the functional units and their expertise is the driving force of a functional unit, they are respectivly in the top of the organisational diagram. Furthermore it illlustrates how in the PBO, the functional units are integrated under each project and that each project in the PBO looks slightly different in the organisational structure, i.e. the functional units may be placed differently and some may be more important to some projects than others. The project based organisation stucture gives the project manager authority over resources. This high level of control that lie with the project managers of each project in the PBO leads to high flexibility within the project. ^[1]

Figure 1: Project based organisation structure and functional organisation structure (Created by J. Steinfurth, inspired by ^[1]

Why choose a project based organisational structure?

The purpose of introducing a project based organisation is that it has the ability to deal with fast change as well as being proactive to uncertainty and project risk. Furthermore, PBO's have an openness in the organisational structure that makes it easier to work across organisations and include external stakeholders in the project process. Thus the PBO becomes an enabler for co-creation in projects. PBO's are proven to be useful when dealing with complex products or systems where the clients needs may change through the progression of the project as they gain more knowledge. ^[1]

The PBO terminology

The definition of a project based organisation can be hard to determine. This is because in litterature there are several terms and forms of project based organisations. This is partly because the project based organisation is dependent on context and therefore changes with it, which makes it difficult to define. Furthermore, the PBO can exist as a pure form like described above, but can also be diluted. In the diluted form "in which the needs of the project outweigh the functional influence on decision making"^[1].

In the following will be given an overview of some of the terms that can refer to a form of PBO or organisational form that uses similar core principles ^{[2] [3] [4]}:

• Project based organisations
• Project led organisations
• Project based enterprises
• Project based industry
• Project based firms
• Multiple project organisation
• Temporary organisations

The different terms are often used in different context and highlight a specific field of study, eg. temporary organisations are often PBO's but refer to the study of the organisational structures whereas literature using the term project based organisation is often in the crossing between the two fields of study; project management and organisational structures^[2].

In this article the term PBO is used to cover these different terms. Furthermore, the term "pure PBO" is used when refferring to a PBO that is not diluted but in the given form described above.

The key characteristics of project based organisations

The article has already given an overview of some the characteristics of project based organisations. This paragraph will present these in more detail, and explain the underlying mechanisms and principles of the characteristics.

• projects as driver of business
  • PBO are contextual: level of product or system innovation influences the given organisational structure as well as the project management

• The power of the project manager
  • Project manager is dependent on distributing the management
  • PM has huge power over project and this is the key to agility and flexibilty that is inherent to PBO's, but is also leaves the PM with huge responsibility - Project management becomes of vital importance
  • Cross functional business expertise is needed in PBO
  • Advantage: the PM's authority leads to flexibility

• The structure of PBOs and its advantages in project work
  • open structure leads to innovation - temporary collaboration forms
  • co-creation and inclusion of the client in the project progress
  • prime contractors can look very different - PBO structure helps adapt to the best possible way of operating with the specific client
  • only one main contact point - that can take action on the spot without asking 5 functional units permission
  • flexible structure leads to proactive to uncertainties

• project shape the organisation
  • kownledge capabilites resources are achieved and shaped through the project ^[4]
  • prime contractors can look very different - this shapes the communication etc.

• pure PBO or diluted to PLO
  • PBO can exist within a static organisation
  • Some of the weaknesses of PBO can be lessened or converted to strengths by "diluting" the pure PBO
  • What does the PBO look like when embeeded in a static organisation - describing the mechanisms between the flexibility of the PBO and the static nature of the parent organisation (Mahura og Birillo) (læs op på denne)

• How PBO's are different from the Matrix organisation ^[1]

References that still need reading:

• Liekinger (læs op på denne)

Application

The context of Project based organisations

A case study

• Not yet specified (will be chosen later to fit the context of the rest of the wiki article)

A guide to PBO

Still to be researched. Here a kind of step by step guide is though to be created from relevant litterature.

Limitations of PBO

• Knowledge sharing is one of the key limitations of PBO's - because the PBO handles everything in a flexible way the formal structures for knowledge sharing and developing skills ^[3] The underlying mechanism are the formal structure eg. that reporting is missing or done in different ways from project to project. Reporting is adapted to the projects' needs but makes it harder to communicate across projects ^[1]
  • In PBO there are no structures integrated that incentivise cross project learning ^[1]. Therefore actions needs to be taken explicit to help these constraints and to effectivise project work.
  • No time set aside for learning and skill development ^[1]. This is further strenghtened in pure PBO's where you always need to be moving to the next project as the business depends on it. Therefore, there is no formal time set aside to learn from the previous projects.

• Learning is not only internally in the PBO or organisation, but learning how to establish good collaboration relationsships is missed. Here lies potential for improving collaboration processes ^[4].

• Projects within the PBO, or if part of a static organisation become isolated and have a hard time communicating their benefits etc. to senior management and learn across projects this can create tension acroos the company wide processes. ^[1] This can furthermore make project teams become disconnected, which again adds to the tension across projects, that should learn from eachother and not diconnect from one another. ^[4]
• Hard to show the importance and impact of the project ^[1]

• how the framework has flexibility as a core, and this can also be a limitation because project-based organisation can differ so much it becomes more difficult to understand and generalise across project based organisations ^[5]

• Pure PBO may be risky - it depends on project which means you always need to be moving to the next project to keep being in business ^[1].

• For employees PBO's can create anxiety and uncertainty because they do not know where to go next ^{[1] [2]}.

• The domain specific leadership is dispersed - this means two things:

1. The project is dependent on a project manager who is highly skillfull in project management
   1. becasue there are no functional units - it is hard to divide in domains - everybody needs to know a little bit of everything - you do not utilise specialities as much

Opportunities that arise from the mapped out limitations

One of the key opportunities that arise from the limitations found in the litterature is that project and programme management are of vital importance to target some of the limitations of the PBO. The PBO has a lot of valuable characteristics and advantages. By targeting some of the limitations

• organisational structures instead of operational project management – the framework and context of the project management has an influence on the management and the success of the project ^[4]
• how PBO's can help stabilize specific factors whilst keeping flexibility for the changing nature of projects. ^[6] (^{[7] [8]}

• How PBO's can be a supportive framework for program and portfolio management and its success, due to several tasks being streamlined across project ^[9]

• how knowledge sharing and learning can happen within the organisation to help learn across the project - and when this is is relevant and when it is not ^[10]

• Connecting to project management and the PMI (or other standard) – there is multiple levels of project and they form huge complexities within organisations^[11] The different levels may be called programs and portfolios, and need management as well, and this management need to be and embedded part of the context of the project, programs and portfolios. ^[12]
• The theories on project management and organisational structures have not always been interrelated and investigated as correlating topics and theories. ^[13]
• Knowledge- transfer is one of the key things to utilised to reap the benefits of PBOs, but is really hard ^[13]
• Innovation (creativity) in PBO's ^{[11] [3]}
• Efficiency… effectiveness…. These are the kay aspect that PBO structures focus on improving more holistically ^[13]
• PBO influences the leadership, discussing both centralised and decentralised management ^[12]

References

1. ↑ ^{1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11} Davies, A., Hobday, M., 2005. The project-based organisation, in: The Business of Projects: Managing Innovation in Complex Products and Systems. Cambridge University Press, pp. 117–147. https://doi.org/10.1017/CBO9780511493294.007
2. ↑ ^{2.0 2.1 2.2} Bakker, R.M., 2010. Taking Stock of Temporary Organizational Forms: A Systematic Review and Research Agenda. Int. J. Manag. Rev. 12, 466–486. https://doi.org/10.1111/j.1468-2370.2010.00281.x
3. ↑ ^{3.0 3.1 3.2} Thiry, M., Deguire, M., 2007. Recent developments in project-based organisations. Int. J. Proj. Manag. 25, 649–658. https://doi.org/10.1016/j.ijproman.2007.02.001
4. ↑ ^{4.0 4.1 4.2 4.3 4.4} Leiringer, R., Zhang, S., 2021. Organisational capabilities and project organising research. Int. J. Proj. Manag. 39, 422–436. https://doi.org/10.1016/j.ijproman.2021.02.003
5. ↑ Turner, R., Miterev, M., 2019. The Organizational Design of the Project-Based Organization. Proj. Manag. J. 50, 487–498. https://doi.org/10.1177/8756972819859746
6. ↑ Jerbrant, A., 2013. Organising project-based companies: Management, control and execution of project-based industrial operations. Int. J. Manag. Proj. Bus. 6, 365–378. https://doi.org/10.1108/17538371311319070
7. ↑ Jerbrant, A., Karrbom Gustavsson, T., 2013. Managing project portfolios: balancing flexibility and structure by improvising. Int. J. Manag. Proj. Bus. 6, 152–172. https://doi.org/10.1108/17538371311291071
8. ↑ Pryke, S., 2017. Managing Networks in Project‐Based Organisations, Managing Networks in Project‐based Organisations. Wiley-Blackwell.
9. ↑ Petro, Y., Gardiner, P., 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business efficiency for project-based organizations. Int. J. Proj. Manag. 33, 1717–1729. https://doi.org/10.1016/j.ijproman.2015.08.004
10. ↑ Mahura, A., Birollo, G., 2021. Organizational practices that enable and disable knowledge transfer: The case of a public sector project-based organization. Int. J. Proj. Manag. 39, 270–281. https://doi.org/10.1016/j.ijproman.2020.12.002
11. ↑ ^{11.0 11.1} Söderlund, J., Hobbs, B., Ahola, T., 2014. Project-based and temporary organizing: Reconnecting and rediscovering. Int. J. Proj. Manag. 32, 1085–1090. https://doi.org/10.1016/j.ijproman.2014.06.008
12. ↑ ^{12.0 12.1} Project Management Institute, I. (PMI), 2017. 1.8 Relationships among Portfolio Management, Organizational Strategy, Strategic Business Execution, and Organizational Project Management. Stand. Portf. Manag. (4th Ed.
13. ↑ ^{13.0 13.1 13.2} Sundqvist, E., Backlund, F., Chronéer, D., 2014. What is Project Efficiency and Effectiveness? Procedia - Soc. Behav. Sci. 119, 278–287. https://doi.org/10.1016/j.sbspro.2014.03.032