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The Project-Based Organisation

The PBO has characteristics that require excellence in project management at both the project and corporate levels. Aubry et al. (2007: 332) referred to this as 'a new sphere of management' under which corporate objectives are implemented through projects if the organisation is to maximise its business value. To achieve this aim, Peltokorpi and Tsuyuki (2006) recommended that PBOs adopt project-type processes throughout the organisation. These processes follow the traditional project stages of creating, responding to, and executing business opportunities.


The terminology used to define PBOs tends to accentuate the importance of projects. Among them are the following:

• Organisational project management: transforming the organisation by adopting a strategy to manage 'by projects'.

• Project business: the part of the business that directly or indirectly uses projects to achieve business objectives.

• Managing by projects: a corporate approach to project portfolio, programme and project management.

• Project portfolio management: managing the synergies between multiple projects, thereby adding value to the organisation.

• Temporary projects: projects are created to implement the organisation's strategy and, once accomplished, they are superseded by new projects.

The above definitions indicate that PBOs are a relatively new phenomenon and therefore pose new challenges to management. They will have to understand the implications of becoming a PBO, and its advantages and disadvantages. New dynamism is introduced since business strategy and project management closely interact to meet challenges in the environment. Emphasis is placed on realising new values for the organisation by gaining competitive advantages (e.g. by being first to the market) and innovation (e.g. by releasing new products and services).

While most attention is focused on strategic projects, PBOs also indude nonstrategic projects such as compulsory projects (e.g. in banks to install ATM systems to remain on par with competitors) and project maintenance activities (e.g. to fix errors in an IT system). They mostly do such projects for themselves rather than for external customers or entities. The distinction between internal and external is in aligning corporate and project strategies. With the former, the responsibility rests within the PBO, while for the latter the responsibility is that of the client.


Attempts to manage projects from an organisational perspective have traditionally been done via the project portfolio. What distinguishes a PBO from project portfolio management is the dose alignment within a PBO between the strategy of the business and that of the projects the strategy initiates. In other words, within PBOs corporate objectives are implemented through projects. Aubry et al. (2007) refer to this as the transformation of the organisation. The business now supports a dynamic and tight interaction between business strategy and organisational structure, which is now project based.

By contrast, under project portfolio management, the value generation potential is limited to the value added to the organisation by the synergy that is created between multiple projects. Emphasis is placed on the aggregation of projects making up the portfolio and how they are planned, managed and monitored. The responsibility for the project portfolio is that of senior management who implement and maintain processes and communications relative to the aggregate portfolio. With traditional project portfolio management there is little interaction with organisational strategy.


Aubry et al. (2007:330) viewed a project-oriented firm as 'a dual set of functions: one of governance and one of operational control'. The governance perspective is reflected in the desire to align corporate and project activities to maximise business outcomes while control is exercised at the project level. Governance requires organisation-wide processes and structures to ensure that project potentials are strategically exploited. Control over projects serves to meet cost, time and quality objectives.

Tensions may emerge between corporate and project activities. Aubry et al. (2007) attribute this to friction and failure between the project and the organisation due to differences in what is expected of the project. Within PBOs there is a high expectation of gaining economic benefits from projects, which projects may subsequently fail to deliver. The solution appears to lie in managing expectations. Various options exist, including to 'under-promise and over-deliver', but this will increase the expectations for the next project. It may be best to 'deliver exactly what is promised, every time'. Promises need to reflect reality as perceived by both organisational and project management.

The PBO structure supports unique and transient projects. Novel processes are followed because products made or services provided are 'bespoke' for the beneficiaries of the project (Turner and Keegan 2001). This is in contrast to the traditionally managed firm that works well if markets, products and technologies are slow to change. Mass production dominates because of stable customer requirements and a slowly changing environment. It can be said that the organisation works like a machine, unlike a PBO.

In PBOs, it is important to retain some central functions but they have to be linked into the project networks. They are referred to as support activities and include human resource management, information technology and systems, accounting and finance, and legal services. Projects draw on their support and services as required but do not have direct responsibility for or authority over them.

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