This chapter examines the organisational dimension of project capabilities, focusing on how leading firms structure their productive activities. It asks: What is the most efficient and appropriate organisational structure for firms engaged in project business? In contrast to traditional functional and matrix organisations, the so-called project-based organisation (PBO) has been put forward as a form ideally suited to managing increasing product complexity, especially when confronted with fast-changing markets, the need for cross-functional business expertise and customer-focused innovation. This applies particularly to the high-value, sophisticated capital goods which underpin the production of consumer goods and services. Some studies suggest that the PBO is a natural organisational form for CoPS producers, especially when several partner suppliers are engaged with the user through the various stages of innovation and production (Hobday, 1998; Gann and Salter, 1998).

Research has explored the potential advantages of PBOs, tensions between project- and corporate-level processes and the suitability of PBOs for producing service-enhanced products (Brusoni et al., 1998; Gann and Salter, 1998). Also, focusing on the project rather than the firm, the new product development field points to the benefits of strong projects in NPD, the leadership requirements for ‘heavyweight’ project teams (Clark and Wheelwright, 1992) and the need for the greater professionalisation of project management as projects assume increasing importance across various high-technology industries (Pinto and Kharbanda, 1995).