Concept of Project Based Organizations (PBO)

In today’s turbulent market, a lot of organizations is still seeking for a strategic advantage over others and a lot of them has actually seek Project Based Organization (PBO) as a way to propel them for greater height and thus, gain a strategic advantage over other companies. However, there are still questions how they can best make use of this new organization structure approach to create a synergy between company business mission, strategy, and project as well as portfolio management

Project Based Organizations refer to organizational forms that involve the creation of temporary systems for the performance of project tasks or activities. PBOs are gaining increased attention as an emerging organizational form, but there is very little knowledge on how PBO function in practice and what value or benefits in adopting the practice of Project Based Organizations. Needless to say, there are not many findings on how the extensive use of unique and temporary endeavors like projects can help influence the strategy and organizations design.

Project Based Organizations

By making using of project management best practices, PBO will help organization to become more dynamic, flexible and responsive when dealing with a turbulent environment. This PBO approach will ensure organization to be more creative and innovative when coping and responding quickly to the ever changing market demand.

Employing Project Based Organizations

In order to deploy project based management more effectively and efficiently, organization need to engage the top management to recognize this new approach of embracing project management best practices. They need to engage the right attitudes throughout the organization. In doing so, it will help the organization to fully reap the benefits of this new formidable and competitive weapon so as to fight for continue business growth and making sure the corporate will gain a better chance to survive in today’s highly competitive market.

Establishing executive ownership and responsibility for project based management with the organization is equated with authority in organization structures, the closer something is to the top, the higher its level of authority, acceptance, adoption and autonomy is perceived to be by the organization. It has to be a top-down approach whereby we need to engaged CEO, senior management of the company and sell them the ideas of how Project Based Organizations concept is able to propel the company to greater height.

Positioning the project based management function at the top in a hierarchical organizational structure establishes its autonomy and thus ownership of the responsibility for setting up, distributing, supporting, and managing the application of project management best practices. Enterprise-wide adoption of project based management best management called for single ownership of the function. Establishing common practices across an organization at all levels is difficult, if not impossible, without a clearly established sole ownership. We do believe, however that establishing a PBO is the right thing to do, because global competition in the marketplace will continue to increase. Therefore, project based management is one of the best answers for surviving global competition.

We need to first identify the roles, responsibilities of senior management team and their business function when structuring the PBO. Once we have identified their function focus and agreed upon their roles, we will then need to proceed to clarify relationships between these functions, like who is leading, supporting and following. This will help to ensure clarification on how these units can work or function together in a team. For example, typical teams in IT might include a strategic management team, an innovation management team, a project/program management team and a product management team. Each team is comprised of more than one unit and there are overlaps between the teams. The objective of this structure is to create team accountability.

Traditional Organization Structure and Its Disadvantages

Traditional management has been applied since twenty century and is well developed on the core principles of standardization, specialization, common goal, hierarchy organization, planning and control and external-reward. A traditional organization is constructed based on those core principles of traditional management and functioned through vertical and horizontal operations which are a hierarchic structure with various functional departments as the vertical operation and a work process designed for specific generalized task models by using Standard Operating Procedural to link individual functional. The disadvantages of this structure are;

  1. Project members from each project teams are dispatched from functional departments; this normally causes conflicts between functional departments and project teams when the resources and priority of urgency are conflicting.
  2. Hard to assess employee performance since employee can belong to functional department and project teams. This will always cause confusion and unhappiness to employees’ involved.
  3. What project he/she participates is decided by the project manager and department head instead of self-actualization, which reduces the performance of both personal development and organizational learning.
  4. Hierarchy structure, functional department operation model and Standard Operating Procedure are characteristics of a traditional organization, which makes its disable in dealing with changes.
  5. Contention of resources between functional department and project team, which will develop conflicts within organizations, resulting in disharmony and distrust.
  6. No organizational synergy due to lack of inadaptable interactive relations between functional departments.
  7. Lack of ability to adapt to changes in related to market uncertainty or other external factors. This is caused by rigid, stagnant Standard Operating Procedures which are regulated according to generalized task model and therefore not capable of responding to any changes conditions timely.

The Project Based Organizations Structure and Operation

A project based organization is a structure that facilitates the coordination and implementation of project activities. Its main reason is to create an environment that helps enhance interactions between team members with a minimal disruptions, overlaps and conflict. One of the important decisions of project management is the type of organizational structure that will be used for the project.

Every project has its unique characteristics and the design of an organizational structure should consider the organizational environment, the project characteristics in which it will operate, and the level of authority the project manager is given. One of the main objectives of the structure is to reduce uncertainty and confusion that typically occurs at the project initiation phase. The structure defines the relationships among members of the project management and the relationships with the external environment.

In PBO project managers have a high level of authority to manage and control the project resources. The project manager in this structure has total authority over the project and can acquire resources needed to accomplish project objectives from within or outside the parent organization, bind only to the scope, quality, and budget constraints identified in the project.

In the PBO, project members are assigned specifically to the project and report directly to the project manager. The project manager is responsible for the performance appraisal and career progression of all project team members while on the project. This leads to increased project loyalty. Complete line authority over project efforts affords the project manager strong project controls and centralized lines of communication. This leads to rapid reaction time and improved project based organizations are more common among large and complicated projects.

Challenges of Project Based Organizations Implementation

To adopt a project-based organization presents some challenges to senior managers:

  • Project Manager has little or no “position power.” The position power which is so prominent in functional organizations will change when project-based organization is implemented. Project Manager will have minimal control over the career path of project members. Instead, project members require an independent career path over which they themselves have control and to which the project work can contribute.
    Senior managers need to develop project managers and project management so that the project managers can lead based on influence rather than positional authority.
  • Conflicts arise over project member time and resource requirements. Thus senior managers must have a good plan and work schedule priority. Alternatively, senior manager need to come out with special reward scheme to allocate scarce resources-individuals that will help to maximize the value of the project.
  • No clear Organizational boundaries. Project management often requires seamless cooperation among organizational units. If project managers/members see evidence that cooperation is not valued, then achieving cooperation is going to very hard. Senior management needs to create a structure where cooperation is rewarded
  • Time and organizational pressures abound. Senior management must be ready to support the best practices that will help to reduce project time. This includes forming a core team system, having a project goal vision, allowing more time for project planning so as it won’t interfere with project operations, facilitating communication with customers, and supplying necessary resources.
  • Project members do not know one another. Effective project teams require a high level of trust and openness. The climate of trust and openness will need to be a top-down approach. If senior managers are not trustworthy, truthful, and open with each other, there is little chance that project members will be so with one another. Trust and openness are the antithesis of most bureaucratic organizations. Senior managers coming from a less trusting organization will have difficulty developing high levels of trust.

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