ABSTRACT
This chapter presents the increasing importance of projects in generating economic activity and the consequent change in organisational structure. It contrasts the characteristics of project-based and product-based organisations, highlighting the important role that projects play in implementing organisational strategy. To take maximum advantage of projects, vertically structured organisations are flattened so that they can respond quickly and efficiently to fast-changing market conditions. The questioning of traditional organisational arrangements has resulted in a preference for project-based approaches. This new structure is termed the project-based organisation (PBO) or multi-project organisation, and first emerged in the 1990s. Production only occurs when the order is received and hence the project itself has to be flexible in the way it responds. High-level decisions have to be made as to whether or not to go ahead with the project. Functional Matrix Organisation (FMO) tends to conduct centralised activities such as research and development (R&D) that benefit the organisation.
