Project-Based Organizational Structure

Organizational structure is how people work together to accomplish a goal, such as providing products and services. Its purpose is to define the roles and responsibilities of those involved and set up lines of authority to achieve the desired end result. Typically, businesses such as manufacturers use a traditional hierarchy structure. But, with the shift from a manufacturing-based to information-based economy, the traditional structure is not flexible enough to support vast amounts of information and rapidly evolving technology along with the growing array of products and services it is producing. A flexible organization is one that is able to draw on a variety of resources and specialists without overlap, disruptions or conflicts in daily operations. The project-based organization (PBO) structure has been developed to be flexible and address the unique needs of the information economy.

Description

A project-based organization is a temporary structure to which resources are assigned to work on a unique, complex but short-term project. For example, some traditional hierarchical organizations may set up temporary project-based teams to develop and test a new product or to improve an existing system. It draws resources from throughout the organization to work on a project, involves the client and may include collaboration with business partners and other organizations. This structure is common in information technology, consulting, marketing, advertising, legal and financial services, as well as the entertainment and construction industries. In addition, an entire organization may be an assembly of PBOs that are constantly changing and reorganizing as projects are completed and new ones started.

Structure and Staffing

Project-based organizations are structured around the needs of the project. This includes team and reporting structures, processes and strategies used. The structure involves all internal and external resources needed to complete the project, including both in-house and consulting specialists. When specialists complete their portion of the work, they exit the project and may be assigned to a new project.

Project Coordination

Coordination is an essential function in a PBO. The project has a work breakdown structure (WBS) that divides the project into manageable units that may be worked on consecutively or concurrently. The project manager must coordinate all of these components to achieve the final outcome. In addition, it is essential that the workers in each unit understand the work of the other units and collaborate with one another because the various functional units may depend on other units.

Client Involvement

The client plays a vital role in the PBO and is involved throughout the project, unlike typical organizations in which the client buys a completed product without any input to the development process. The PBO works with the client to define the project, its scope and project milestones. The client makes incremental payments to the organization as the project progresses and must approve and accept the final output before the last payment is made. The organization may also provide ongoing support after project completion depending on the nature of the project.

References

• Project Management Course; Matrix Organizational Structure -- History and Styles; Scott Jameson; February 2008
• Linkoping University Department of Management and Engineering: The Project-Based Organisation: An Ideal Form for Managing Complex Products and Systems?; Mike Hobday; 2000
• Impacto4dev: Project Management for Development Organizations; Poala L. Diaz; 2007
• Lab Space: Organizational Structures, Project-Based Companies