The project-based organization: an ideal form for managing complex products and systems?

Hobday, M. (2000) « The project-based organisation: an ideal form for managing complex products and systems? » Research Policy 29: 871-893.

Project-based organization (PBO) has been put forward as a form ideally suited for managing increasing product complexity, fast-changing market, cross functional business expertise, and technological uncertainty. This applies particularly to high-value, complex industrial products and systems.

Innovation in CoPS

High-technology, business-to-business capital goods used to produce goods and services for consumers and producers.

As a result of their cost, physical scale, and composition, CoPs tend to be producing projects or small batches.

they are often produced within projects which incorporate prime contractors, system integrators, users, buyers, other suppliers, small and medium-size enterprises and sometimes government agencies and regulators.

The nature of the PBO

In which the project is the primary unit for production organization, innovation, competition.

Within a PBO the project is the primary business mechanism for coordinating and integrating all domain business functions of the firm.

An alternative to the matrix.

Inherently flexible and reconfigurable.

Not suited due to the mass production of consumer goods.

The case of complex equipment Inc.

In project P, the team felt they had achieved a highly effective and professional approach to project management and implementation, with strong team coherence and close identity with project P.

Official client procedures and behaviors on project F were not the similar to project P.

Project F team members reacted defensively to client demands.

Three types of the risk were identified in both divisions:

  • wholly outside the control of the project
  • wholly within the ambit of the project
  • risks subject to negotiation or internalization

In project F the PM was unable to establish a proactive approach to risk.

In project F, organizational learning was centered on the functional departments, on the whole it performed well. Project F outperformed project P.

In project P, the work environment at left little space for formal training or staff development.many of the formal and informal activities associated with organizational learning and improvement were not being performed, such as post-project reviews.

Three other problems of learning and coordination were evident in project P:

  • technical leadership: insecurity was highest towards the end of the project when staff were not sure where they would go next. There was a lack of incentives for human resource development.
  • A second problem was revealed in small projects: the structure was overly elaborate for dealing with small routine projects.
  • Cross project integration in senior management coordination and control: it had become difficult for senior company managers at HQ to keep properly informed and maintain some degree of control and consistency across the activity
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