The importance of office physical layout has never been studied by scholars andentrepreneurs from the perspective of managing human resources in project-basedorganizations (PBOs) from a managerial perspective. This paper believes that officephysical layout has great influence on organizations’ working efficiency in PBOs. Withthe increase of PBOs, it requires a new context for human resource management (HRM).The paper mainly focuses on the impact of office physical layout on communication andinnovation in PBOs. In the literature review part, the paper collects together relevantresearches, experiments, and theoretical studies on physical layout, PBOs,communication and innovation, and finds out the gaps between the empirical situationsand current theoretical studies. Moreover, the relations between office physical layout,communications, innovation and organizational competitive advantage will be explored.The discussions and analysis are based on the premise that if people can maximize theopportunity of communication in PBOs through office physical layout, the possibility ofknowledge transfer and knowledge integration, creativity and innovation will also belargely improved. To testify this premise, we spent five months research time andfocused on four companies in Sweden and took interviews with their senior managers.The paper also does comparisons with the office physical layout in PBOs and in otherorganizations to find out whether organization’s natures will influence its working waysand their office physical layout. The implications of the work for both future researchand practice are taken into our considerations. The result of this research shows officephysical layout indeed has great impact on employees’ communication, innovation andworking efficiency. However, different organizations should take into their empiricalconditions into consideration when designing their office physical layout.