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Implications of Project-Based Organisations

When considering the transformation to a PBO, a range of implications should be evaluated for their impact.


The arrival of projects is stochastic; they are difficult to predict because they arise in response to market needs. This complicates business planning with its long-term view of the environment and the opportunities it offers. Projects in a dynamic market environment cannot be planned with confidence as to their frequency and timing. This has a number of implications. For example, with the possibility of multiple projects under consideration at any one time, project managers may be expected to supervise more than one project, or it becomes increasingly difficult to always have the right level of project skills available at any one time.


For project managers, the rapid growth in projects within the organisation poses resource challenges. Project managers may have to come to an arrangement with each other to share limited organisational resources. There could be competition for scarce project talent. Agreement will have to be reached as to how best to allocate employees across projects taking into consideration their skill levels and those that are required. Each project will have to make its own case to gain a share of the resources available in the organisation.


The role of project managers is broadened as they are now closely entwined in the operations of the business itself. They are not only expected to be effective technically in the discipline of project management but also to have the necessary aptitudes to integrate the project within broader business activities. Success of projects determines the survival and future prosperity of the organisation. Expectations are further broadened when projects extend beyond organisational boundaries. When establishing a supply chain project, for example, the needs of both supplier and customer have to be considered.


The challenge for the organisation is to design a business model that best suits itself. Options range from a pure PBO to one that also includes elements of the traditional functional and/or matrix organisational structure. The decision on the best configuration is determined by the number and nature of the projects. Should the volatility of projects be large then the emphasis would be on a pure PBO structure, while the reverse would apply for projects that are infrequent and similar. The greater the number and diversity of projects, the more pronounced are the characteristics of a PBO.

Advantages of Project-Based Organisations

There are a number of advantages associated with the PBO approach to conducting business.


As indicated earlier, by its nature a PBO offers increased opportunities for creativity and innovation. The organisation's products and services and project management processes are improved because of the close interaction

between business strategy and project activity. Business strategy determines the changes needed to meet market needs while project management satisfies those needs through the completion of projects. Both interact to increase business value.


The nature of projects allows a high degree of flexibility and responsiveness. In its simplest form, each project is a temporary endeavour to produce a unique product or service. It is a new undertaking and covers new ground. Not surprisingly, projects are staffed by professionals who are attracted by the dynamic nature of project work and exposure to different knowledge and skills. They become experienced in responding to challenges that are new to the organisation and themselves.


Knowledge management becomes important because of the rate at which project knowledge is created. Superficial or ineffective knowledge management causes opportunities to be missed or to be under-exploited. Project teams are encouraged to create 'lessons learned' repositories in which they carry forward their experiences and knowledge to subsequent projects, thereby improving the overall standard of project performance. The PBO itself benefits from an emerging knowledge culture as knowledge sharing and transference become pervasive.


The design cycle required for new products, services and processes is completed more efficiently and effectively. The structural flexibility of PBOs facilitates the allocation of physical and human resources to endeavours that are of most benefit to the organisation.

In addition, PBO structures circumvent the traditional barriers to organisational change which require formal planning and change management. Projects benefit from well-established project management processes and the greater availability of project management expertise in comparison to scarcer change management skills.

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