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., co mplex high value products, systems, networks, capital goods, and constructs ) in a project-based organisation (PBO), as compared with a more traditiona l functional matrix organisation. A simple model is developed to show how t he PBO relates to identified forms of matrix and functional organisation an d 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 or ganisational structures around the demands of each CoPS project and each ma jor customer. The PBO is able to cope with emerging properties in productio n and respond flexibly to changing client needs. It is also effective at in tegrating different types of knowledge and skill and coping with the projec t risks and uncertainties common in CoPS projects. However, the PBO is inhe rently 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 corpor ate strategy and business coordination. Strategies to stimulate organisatio nal learning and technical leadership include the deployment of coordinator s along functional lines to cut across project interests and incentives. Pr oject tracking and guidance at the corporate level is also important for ac hieving broader business goals. The paper illustrates the wide variety of o rganisational choices involved in producing CoPS and argues that the nature , composition, and scale of the product in question have an important beari ng on appropriate organisational form. (C) 2000 Elsevier Science B.V. All r ights reserved.