Project Based Organizations Essay

2638 Words Sep 30th, 2010 11 Pages

The purpose of this section is to describe a project based organization and compare it to other basic organization types: functional and matrix organizations. Many companies will not perfectly fit either of these definitions. Yet in most cases one will be able to identify the basic organization type that most closely matches a company’s structure.

A functional organization groups employees and activities by functions (e.g. marketing, engineering, finance). Each function is typically led by a function manager, who reports to the senior management of the company. A key advantage of functional organizations is that knowledge, skills and facilities for each functional
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This is according to Dean and Bowen (1994, p. 394) a “crucial requirement for long term organizational success” (Orwig & Brennan, 2000, p. 356). The organization’s structure and business procedures are both flexible and reconfigurable, and are likely to change depending on the profile of the project, particularly the size, complexity, and length. (Hobday, 2000).


Project managers in PBOs focus on the success of their project and therefore compete for resources (employees, budget, support functions). Hobday (2000) criticizes the structural characteristics of PBOs and mentions that in “coordinating processes, resources and capabilities across the organization as a whole” (Hobday, 2000, p. 892) the project based organization is weak. Lindkvist (2004) further argues that resource efficiency and innovation are conflicting objectives. On the other hand one can argue that PBOs have the potential to be very effective at managing projects, because projects are what they base their entire business on. Consistent and effective project management standards and methods are a strong driver for project performance.
(Cooke-Davies, Crawford, & Lechler, 2009). Therefore establishing and implementing project management standards should be a priority of PBOs. To

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