Project based organisations
Contents |
Introduction
In recent years more and more industries are moving towards project based approaches [1]. The traditional way of organizing development is rigid in its structures leading to problems in execution of new and innovative initiatives. This is because the organizational structures inhibits the flexibility necessary to develop in a dynamic environment, and inhibits the flexible nature of projects [2]. This has lead researchers and practitioners to looking at ways of organizing in a more flexible manner; projects. The film industry is a classic example of an industry that has historically been working more of less purely project based; a Project Based Organization [1] [3]. This way of working has reached increased attention in other industries in the last couple of decades, where Michael Hobday's work on Project based organisations[4] has been a key source of inspiration for many researchers to build on [3] [5] [6][7][8][9]. This article will focus the Project Based Organisation5 comparing it to the traditional functional organization.
This article will give an overview of Project Based Organizations (PBO's), mainly focusing on the engineering industry. The article will first present the big idea; the characteristics of PBO's and how they solve the problems that occur in the traditional organizational structures, including an overview of the PBO and traditional functional organization structures and perspectives on how Project, Program and Portfolio management relates to the PBO. It will present an application of the PBO; what strategies exist for transforming organizations and which steps to take to enhance the specific values that a PBO structure brings. lastly the article will present the limitations of PBO's, both giving an overview of the limitations inherent to the PBO, as well as limitations in application.
Big Idea
What are Project based organizations solve?
The Project Based Organization is an organizational form that attempts to create a structure that favors the dynamic and flexible environment of projects.[2] To better be able to understand the project based organization an introduction of its opposite; the traditional functional organization, is necessary.
The functional organization The traditional functional organization, is structured in departments or functional units that are specialized within a certain domain. Classical examples of these functional units or departments are; R&D, Finance and Marketing. The structure of the functional organization is illustrated in figure X, where it can be seen that the departments all run parallel to each other with no links in between. Each department refers to the Senior management, who are in charge of creating the objectives of the organizations vision and strategy. The functional managers thus have to make sure the initiatives within their department align with these to keep the support of Senior Management.[10] This is done through structured documenting practices and well defined formal procedures, such as reporting.
The department structure in the traditional organizations creates silo systems, that makes it well suited for repetitive operations with small incremental changes. However the structure becomes problematic if the organization introduces a higher rate of projects, as there is no room for flexibility or cross domain collaboration in type of organizational structure.
lacks flexibility for fast development. in which it is hard to execute innovative and experimenting initiatives or projects that need competences across specializations.
Project based organisation (PBO) is an organizational structure where projects are the main driver of business, and the project manager has high control over all functions of the project including resources, with only senior management to refer to.
This is contrary to The Project Based organization attempts to create a structure that favors the dynamic and flexible environment of projects.
The Project based organization and the traditional functional organisation
Project, program and portfolio management in the PBO
"An investigation of the influence of organizational design on project portfolio success, effectiveness and business efficiency for project-based organizations Yacoub Petro a,⁎, Paul Gardiner b"
https://www.pmi.org/learning/library/project-based-organizations-strategic-objectives-8119#
Furthermore, PBOs operate mainly in two distinct levels of activities, the organisation level and project level - Organisational capabilities and project organising research Roine Leiringer a , Sujuan Zhang b,∗
Project organising vs. project management - R. Leiringer and S. Zhang
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The project based organisation is in the
In traditional organizational structures i.e. functional organizations, project managers have little flexibility and power over resources. This is because
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 organizational 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 organisation, 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. [2]
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. [2]
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 [8]
- 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 [2]
References that still need reading:
- Liekinger (læs op på denne)
Application
The context of Project based organisations
Pure vs. sub organisation in a mechanistic (do not use this word or use it with description)
Existing strategies for transforming orgnisations
8 step thingy
What to be a ware of in the PBO context
Limitations
of PBO strcuture
Knwoledge sharing and organisational learning:
- 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 [2]
- In PBO there are no structures integrated that incentivise cross project learning [2]. 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 [2]. 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 [8].
- 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. [2] 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. [8]
- Hard to show the importance and impact of the project [2]
The paradox of flexibility and structure
- 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 [7]
- 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 [2].
- For employees PBO's can create anxiety and uncertainty because they do not know where to go next [2] [1].
- The domain specific leadership is dispersed - this means two things:
- The project is dependent on a project manager who is highly skillfull in project management
- 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
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 [8]
- how PBO's can help stabilize specific factors whilst keeping flexibility for the changing nature of projects. [11] ([12] [5]
- How PBO's can be a supportive framework for program and portfolio management and its success, due to several tasks being streamlined across project [6]
- 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 [9]
- Connecting to project management and the PMI (or other standard) – there is multiple levels of project and they form huge complexities within organisations[13] 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. [14]
- The theories on project management and organisational structures have not always been interrelated and investigated as correlating topics and theories. [15]
- Knowledge- transfer is one of the key things to utilised to reap the benefits of PBOs, but is really hard [15]
- Innovation (creativity) in PBO's [13] [3]
- Efficiency… effectiveness…. These are the kay aspect that PBO structures focus on improving more holistically [15]
- PBO influences the leadership, discussing both centralised and decentralised management [14]
Application limitation
- difficult to understand it is a complex field that goes across several domains - management , organisation and project management practices
- PBO har mange definitioner og det skal man være opmærksom på når man søger efter det - og de er alle i en lidt anden sammenhæng her vil vi holde os til
ikke alle forklarer den organisatoriske struktur som ligger bag [1] [3] [8]
Annotated bibliography
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
This book is a great resource for understanding the core principles of project based organisations. The book is about projects and complex products and systems and suggests a form of PBO for the development of such complex and uncertain systems. In it you will find project management and organisational theories in general with a specific chapter dedicated to project based organisations. Here a case study compares the PBO to a functional organisation.
References
- ↑ 1.0 1.1 1.2 1.3 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
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 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
- ↑ 3.0 3.1 3.2 3.3 3.4 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
- ↑ Hobday, M., 2000. The project-based organisation: An ideal form for managing complex products and systems? Res. Policy 29, 871–893. https://doi.org/10.1016/s0048-7333(00)00110-4
- ↑ 5.0 5.1 Pryke, S., 2017. Managing Networks in Project‐Based Organisations, Managing Networks in Project‐based Organisations. Wiley-Blackwell.
- ↑ 6.0 6.1 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
- ↑ 7.0 7.1 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
- ↑ 8.0 8.1 8.2 8.3 8.4 8.5 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
- ↑ 9.0 9.1 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
- ↑ Project Management Institute, Inc. (PMI). (2017). Standard for Portfolio Management (4th Edition) - 1.8 Relationships among Portfolio Management, Organizational Strategy, Strategic Business Execution, and Organizational Project Management. Project Management Institute, Inc. (PMI). Retrieved from https://app.knovel.com/hotlink/pdf/id:kt012S0XW1/standard-portfolio-management/introducti-relationships
- ↑ 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
- ↑ 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
- ↑ 13.0 13.1 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
- ↑ 14.0 14.1 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.
- ↑ 15.0 15.1 15.2 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
