Organizational Configurations and Project Capability Development: Lessons from Construction

Project capabilities have been described in the literature as the appropriate knowledge, experience and skills to perform pre-bid, bid and project execution activities. Embedded within the organizational context of the project- based organization (PBO) that possesses them, their development often requires reconfiguring structures, redesigning processes and even renegotiating organizational norms. This paper explores the relationship between the organizational configurations PBOs adopt, and the effectiveness with which they develop their project capabilities. The paper is derived from a qualitative, comparative case study research, undertaken in the tradition of critical realism and within the context of construction. Two multinational engineering-procurement-construction organizations were examined through the analysis of documentary and semi-structured interview data. Their cross- case comparison and discussion of emerging findings in light of the extant literature suggest that the divisionalization inherent in multi-business-unit PBOs influences negatively their effectiveness in developing project capabilities. At the same time however, it emerged that: i) integrating organizational learning mechanisms with reporting routines, ii) the presence of a corporate-wide ‘techno-structure’ with executive authority and iii) standardized processes related to project selection, team formation and project execution, contribute to overcoming the barriers that divisionalization creates. Due to the nature of the organizations studied, the significance of this paper and its findings lie with the fact that they contribute both to our knowledge regarding the management of PBOs, as well as our knowledge regarding the management of multinational corporations (MNCs), widely examined within the field of mainstream strategic management.