The Project Oriented Organization

Until recently, most organizations tended to specialize in a relatively small number of products and services. Today, almost every organization—from corporations to small businesses to not-for-profit organizations—faces the challenge of responding to constantly changing demands from their customers and clients. Older manufacturing and service models have given way to the project model, a model requiring new skills and paradigms. The project-oriented organization usually has most if not all of the following characteristics:

There is an ongoing mix (portfolio) of short-term and long-term activities centered on producing products and services. In order to remain competitive and to meet rapidly changing needs of customers and clients, organizations engage in strategic planning to identify activities to increase revenue, reduce costs, improve services, keep pace with competitors, or comply with regulatory requirements. This portfolio continues to grow and will require pruning as time goes on. The projects that survive usually must be proven to align with the organization’s overall mission and promise a good return-on-investment.

Instead of annual budgets, there are budgets dedicated to each initiative. Each project generally will have its own budget and a project sponsor who negotiates funding approval for the undertaking. These budgets usually require both preliminary and final estimates based on an evolving picture of the project requirements.

There is a recognition of a need for repeatable processes for managing work in the organization. At some point, it becomes clear that many initiatives have very similar sets of activities, reporting requirements, and problems. Organizations begin to see the advantage of standardizing their approach to projects. This is the true beginning of the project-oriented organization.

There is a preponderance of work involving multiple departments or lines of business. Instead of being centered in one functional area of the organization, work almost always crosses departmental lines and requires collaboration among several different areas. Individuals needed for the work frequently report to different line managers who make staff available to the project but who maintain authority over them. The project manager’s authority is more or less secondary to that of the line manager.

There is a recognition of the need for a common vocabulary for communicating with internal and external customers. Because multiple initiatives are under way, with many of their participants widely distributed within the organization, it becomes increasingly necessary to have consistent terminology and approaches to defining goals, objectives, and deliverables; performing tasks; reporting progress; and dealing with risks and changes of scope. Without a common vocabulary, customers inside and outside the organization are likely to become frustrated in their dealings with the new initiatives as they come along. Consistency in approach and definition of terms helps keep everyone “on the same page”—both within the organization and outside—in communicating with clients and customers.

There is a commitment to developing leadership skills throughout the organization. Project-oriented organizations realize that leadership is just as important as technical skills and familiarity with project management tools and techniques. The ideal project manager is one who knows how to lead and inspire, how to negotiate and resolve conflict, how to spur groups to become high-performance teams. Project management programs in these organizations emphasize not only the mechanics of program management but also the so-called “soft skills.”

There is a commitment to continuous improvement of project delivery: on time, under budget, and according to specification. Organizations that are truly committed to continuous improvement recognize the need for consistent approaches to projects that use common ways of measuring progress and capturing lessons learned not only at the end of every initiative but also throughout the entire project delivery process. As lessons learned inform new projects, project teams measure success not only in terms of meeting objectives within defined schedules and budgets but also in terms of achieving greater efficiencies compared with previous project work. They also continually look at their current methods of project delivery to see where they might improve their general approach. Best practices become the starting point but become redefined as even better practices emerge.

Article added at: 11.16.2006 by Kelly Huston