Do i need a seperate dedicated machine to run osx server or can i use some features running it from my MBP We've got 5 desktop devices in our organization which im currently managing using a remote connection client or physically by sitting at each machine. 

Each change i make such as an update / settings change has to be made one by one across all machines. 

I was reading up online and got pointed towards an osx server - http://www.apple.com/osx/server/ - which looks like the sort of thing i need. 

The feature i really liked the look of is the Profile Manager, which looks like it would let me manage the config and updates of machines. 

The other features we dont really need right now for instance, we currently use Dropbox for file sharing and i think this will continue as this has a mobile app (accessible when off site using 3g) which we find really useful.

If i just want to use the Profile Manager, can i setup the server on my day to day machine (2012 MBP - 10.9.2) whilst still be able to use it as before, or do i need to get a dedicated machine to run the server on ? Or is there another option for config and one to many updates on osx ?
You don't need a dedicated machine, as server can be installed on any machine providing it meets system requirements without much change to the actual system, unlike the older osx-server, but it's probably a good idea.

I have installed Server.app before on my MBP to test some features and its worked fine for this. The only problem with installing it on a MacBook is that when the machine is off, the services on the other devices start throwing errors as they are unable to connect to services which they consider should always be available. For instance, Profile Manager can set up MDM on iOS devices, which works great until the server becomes unavailable unexpectedly (the device can connect to the network) — errors ensue.

Obviously other features such as Websites won't work if the machine is down, but this should be fine as you mentioned you won't be using such services.