The Project-Based Organisation: An ideal form for managing complex products and systems?

This paper examines the effectiveness of producing so-called CoPS (i.e., complex high value products, systems, networks, capital goods, and constructs) in a project-based organisation (PBO), as compared with a more traditional functional matrix organisation. A simple model is developed to show how the PBO relates to identified forms of matrix and functional organisation and a case study is used to identify some of the strengths and weaknesses of the two organisational forms for CoPS production. On the positive side, the PBO is an intrinsically innovative form as it creates and recreates new organisational structures around the demands of each CoPS project and each major customer. The PBO is able to cope with emerging properties in production and respond flexibly to changing client needs. It is also effective at integrating different types of knowledge and skill and coping with the project risks and uncertainties common in CoPS projects. However, the PBO is inherently weak where the matrix organisation is strong: in performing routine tasks, achieving economies of scale, coordinating cross-project resources, facilitating company wide technical development, and promoting organisation-wide learning. The PBO can also work against the wider interests of corporate strategy and business coordination. Strategies to stimulate organisational learning and technical leadership include the deployment of coordinators along functional lines to cut across project interests and incentives. Project tracking and guidance at the corporate level is also important for achieving broader business goals. The paper illustrates the wide variety of organisational choices involved in producing CoPS and argues that the nature, composition, and scale of the product in question have an important bearing on appropriate organisational form