Lesson 2 Construction Project Organization PDF

# BOHOL ISLAND STATE UNIVERSITY ## College of Engineering, Architecture, and Industrial Design (CEAID) ## Main Campus, Tagbilaran City **Vision:** A Premier Science and Technology University for the formation of world-class and virtuous human resource for sustainable development in Bohol and the co...

# BOHOL ISLAND STATE UNIVERSITY ## College of Engineering, Architecture, and Industrial Design (CEAID) ## Main Campus, Tagbilaran City **Vision:** A Premier Science and Technology University for the formation of world-class and virtuous human resource for sustainable development in Bohol and the country. **Mission:** BISU is committed to provide quality higher education in the arts and sciences, as well as in the professional and technological fields; undertake research and development and extension services for the sustainable development of Bohol and the country. # CONSTRUCTION METHODS & PROJECT MANAGEMENT ## Lesson No. 2 ### Objective: - Describe the process of organizing - Discuss the designation and why it is important for the managers to designate - Know what is Organization and Management and how are they related to each other. # ORGANIZATION & MANAGEMENT ## Introduction The driving force behind every organization is its management team wherein different teams operate in different ways. There is no universal accurate management to define the one that is best. Just the concept that explains why some operations were managed successfully in the past to suggest what can be done for the future success. The organizational structure of small enterprise may be very simple. The owner is usually the manager and has daily contact with all the people of his organization. He establishes the policies and assigns the job to be done and follow up on the job for the purpose of direction and coordination. As his company grows bigger, the problem of organization for grouping, supervising and serving operations become more complex. The company may have the most modern plant and equipment, a highly skilled and experienced labor force, ample materials and financial resources, yet become failure in its purpose of making profit. There may be reasons and circumstances responsible behind its failure, and most frequent reason is **POOR MANAGEMENT**. ## What is organization? Organization is a group of individuals who are cooperating willingly and effectively for a common goal. It is nothing more than the mechanism by which administration directs, coordinates and controls its business. It is indeed the very foundation of administration. To be specific, organization seeks to know who is to do and what is to be done. Organisations are structured to promote better management. However, it is the performance of the people who fill the positions that determines the success of the enterprise and not the organization design itself. A good executive may be able to secure good results, with a poor organization, and a good organization may produce good results from a poor executive. But the ideal set up is a combination of a good organization and good executive. ## When an organization is structurally ill designed, when it passes for a makeshift arrangement, administration is made difficult and ineffective. On the other hand, when it is logical, clear cut and streamlined, the paramount need of administration has been met. Apparently, there is no ideal organization designed to emulate. A management structure is only a vehicle used to attain the objectives and goals of an institution, and therefore, must be realistic and responsive for the call for a change of those needs. ## Reasons for Organizing Organizing is undertaken to facilitate the implementation of plans. In effective organizing, steps are undertaken to breakdown the total job into more manageable man-size jobs. ## Organizing Defined Organizing is a management function which refers to "the structuring of resources and activities to accomplish objectives in an efficient and effective manner." ## The Purpose of the Structure The structure serves some very useful purposes. They are the following: 1. It defines the relationships between tasks and authority for individuals and departments. 2. It defines formal reporting relationships, the number of levels in the hierarchy of the organization, and the span of control. 3. It defines the groupings of individuals into departments and departments into organization. 4. It defines the system to effect coordination of effort in both vertical (authority,) and horizontal (tasks) directions. When structuring an organization, the engineer manager must be concerned with the following: 1. Division of labor - determining the scope of work and how it is combined in a job. 2. Delegation of authority - the process of assigning various degrees of decision-making authority to subordinates. 3. Departmentation - the grouping of related jobs, activities, or processes into major organizational subunits. 4. Span of control - the number of people who report directly to a given manager. 5. Coordination - the linking of activities in the organization that serves to achieve a common goal or objective. ## The Formal Organization The formal organization is "the structure that details lines of responsibilities, authority, and position." The formal structure is described by management through: 1. Organization chart 2. Organizational manual and 3. Policy manuals. The organization chart is a diagram of the organization’s official positions and formal lines of authority. The organizational manual provides written descriptions of authority relationships, details the functions of major organizational units, and describes job procedures. ## Informal Groups There are instances when members of an organization spontaneously form a group with friendship as a principal reason for belonging. This group is called an informal group. It is not a part of the formal organization and it does not have a formal performance purpose. The informal organization, useful as it is, is "vulnerable to expediency, manipulation, and opportunism," according to Valentine. Its low visibility, Valentine added, makes it "difficult for management to detect these perversions and considerable harm can be done to the company." ## Types of Organizational Structures Organizations may be classified into three types. They are the following: 1. **Functional organization:** This is a form of departmentalization in which everyone engaged in one functional activity, such as engineering or marketing, is grouped into one unit. 2. **Product or market organization:** This refers to the organization of a company by divisions that bring together all those involved with a certain type of product or customer. 3. **Matrix organization:** An organizational structure in which each employee reports to both a functional or division manager and to a project or group manager. ### Functional Organization Functional organization structures are very effective in smaller firms, especially "single-business firms where key activities revolve around well-defined skills and areas of specialization." Functional Organizations have certain advantages. They are the following: 1. The grouping of employees who perform a common task permit economies of scale and efficient resource use. 2. Since the chain of command converges at the top if the organisation, decision- making is centralized, providing a unified direction from the top. 3. Communication and coordination among employees within each department are excellent. 4. The structure promotes high-quality technical problem-solving. 5. The organization is provided with in-depth skill specialisation and development. 6. Employees are provided with career progress within functional departments. The disadvantages of the functional organization are the following: 1. Communication and coordination between the departments are often poor. 2. Decisions involving more than one department pile up at the top management level and are often delayed. 3. Work specialisation and division of labor, which are stressed in a functional organisation, produce routine, non-motivating employee tasks. 4. It is difficult to identify which section or group is responsible for certain problems. 5. There is a limited view of organizational goals by employees. 6. There is limited general management training for employees. ### Product of Market Organization The product or market organisation, with its feature of operating by divisions, is appropriate for a large corporation with many product lines in several related industries. The advantages of a product or market organisation are as follows: 1. The organisation is flexible and responsive to change. 2. The organisation provides a high concern for customers’ needs. 3. The organisation provides excellent coordination across functional departments. 4. There is easy pinpointing of responsibility for product problems. 5. There is emphasis on overall product and division goals. 6. The opportunity for the development of general management skills is provided. The disadvantages of the product or market organisation are as follows: 1. There is a high possibility of duplication of resources across divisions. 2. There is less technical depth and specialisation in divisions. 3. There is poor coordination across divisions. 4. There is less top management control. 5. There is competition for corporate resources. ### Matrix Organization A matrix organisation, according to Thompson and Strickland, "is a structure with two (or more) channels of command, two lines of budget authority, and two sources of performance and reward.” Higgins declared that "the matrix structure was designed to keep employees in a central pool and to allocate them to various projects in the firm according to the length of time they were needed." The matrix organisation is afforded with the following advantages: 1. There is more efficient use of resources than the divisional structure. 2. There is flexibility and adaptability to changing environment. 3. The development of both general and functional management skills are present. 4. There is interdisciplinary cooperation and any expertise is available to all divisions. 5. There are enlarged tasks for employees which motivate them better. *The matrix organisation has some disadvantages, however. They are the following:* 1. There is frustration and confusion from dual chain of command. 2. There is high conflict between divisional and functional interests. 3. There are many meetings and more discussion than action. 4. There is a need for human relations training for key employees and managers. 5. There is a tendency for power dominance by one side of the matrix. ## Types of Authority 1. **Line authority**: A manager's right to tell subordinates what to do and then see that they do it. Line departments perform tasks that reflect the organization's primary goal and mission. In a construction firm, the department that negotiates and secures contracts for the firm is a line department. The construction division is also a line function. 2. **Staff authority**: A staff specialist's right to give advice to a superior. Staff officers may be classified into the following: a. **Personal staff**: Those individuals assigned to a specific manager to provide needed staff services. b. **Specialized staff**: Those individuals providing needed staff services for the whole organization. 3. **Functional authority**: A specialist’s right to oversee lower level personnel involved in that speciality, regardless of where the personnel are in the organisation. Functional authority is one giver to a person or a work group to make decisions related to their expertise, even if these decisions concern other departments. This authority is given to roost budget officers of organisations, as well as other officers. ## The Purpose of Committees Committees are very useful most especially to engineering and manufacturing firms. When a certain concern, like product development, is under consideration, a committee is usually formed to provide the necessary line-up of expertise needed to achieve certain objectives. Committees may be classified as follows: 1. **Ad hoc committee**: One created for a short-term purpose and have a limited life. An example is the committee created to manage the anniversary festivities of a certain firm. 2. **Standing committee**: It is a relatively permanent committee that deals with issues on an ongoing basis. An example is the grievance committee set up to handle initially complaints from employees of the organization. ## The Structural Organization Structural Organisation is the formal arrangements that are established to coordinate all activities in order to implement a given strategy. Thus, structure reflects the anatomy of a firm through its focus on mechanisms and processes that link both vertically and horizontally the various parts of an organisation. ## Structural Elements Of An Organisation: 1. **Men**. These are the different members of the organisation, starting from the very top to the last workman in the enterprise 2. **Materials**. Represents the materials necessary in the distribution of functions or in the attainment of its objectives. 3. **Machine**. The tools necessary in producing its desired output. 4. **Methods**. The procedures and ways used in the course of its actions. 5. **Money**. The financial resources of the organization. ## Major Elements of Organizational Structures: 1. **Distribution of functions**: The functions to be performed, the groupings of functions, and the vertical and horizontal task relationships among functions. 2. **Vertical and horizontal authority relationship** (who are the authority to do what) 3. **Communication and decision processes**. The manner in which formal decisions are made and by whom. 4. **Policies**. The decision, rules or guidelines established. The common failure of management is its failure to adopt its organizational structure, policies and procedures, to the growth in size and complexity of the enterprise. According to Peter Drucker, traditional structures are no longer adequate for today's complex organizations. A management structure is a means of attaining the objectives and goals of an institution. Thus, should be responsive to respect needs and changes on those needs. ## Principles Of Good Organisation Business organizations has conditions peculiar to itself. A set of rules cannot be laid down that would be applicable to organizations of all enterprises. However, certain underlying principles can be given and among them are: 1. **Principle of Objective**. A clear and compete definition of the objective must be known. Any business concern or any individual must adhere to a definite purpose or aim. For example, if the aim is to make plans and construct a project, then, the entire organization must be built with that idea, and those in the company must think and act in terms of the quality of work. The objectives serve as the guide to future planning and action. It integrates policies, projects, and programs. It enables everybody to act consistently according to a common goal. 2. **Analysis**. A sound business judgment attempts to build an organization through full knowledge of the requirements of the business. There should be a study as to whether the project could be finished at the right time and at the right price the client will be able to pay. 3. **Simplicity**. The simplest organization that will serve to attain the desired objectives is considered the best. All activities which are not absolutely necessary, should be eliminated, and those retained should be handled in the simplest practical way. Creation of position should be based on paramount necessity and all activities which do not pay in terms of pesos and centavos, should be eliminated. 4. **Functionalism**. The organization should be built around the main functions of the business and not around the individuals. A function is a normal or characteristic way of doing a task that stands out distinctively by itself. If an organization of any concern is built around the functions, proper distribution of work could easily be done, thus, eliminating any one man to become so powerful and so dependable upon to be indispensable. 5. **Departmentalization**. In big organization, the scope of operations can be very broad, necessitating departmentalization to achieve a smoother flow of operations. Departmentalization can be through functions, products, location or by projects of the organization. 6. **Centralization of Authority and Responsibility**. In every organization there should be centralized executive control or command authority. This is necessary in order to have authority and responsibility definitely fixed. When there is unity of command, every person knows what he can perform within his scope of authority, knows the things for which he is responsible of, and also whom to report to or consult in case of problems or doubts. 7. **Limited Span of Control**. The number of subordinates an executive can manage effectively. ## Organization and Business **BUSINESS** has been defined as an organization of people with varied skills, which uses capital and talents to produce goods or services, which can be sold to others of more than their costs, or it may be considered as; the system through which the economic activity was organized by those who seek to make profit. Fundamentally, most construction enterprises are selling the time of their workers, their machineries, plant, equipment and money. The efficient use of the time and these assets will determine the amount of profit to be realized, which is the primary goal of investing efforts and capital in construction business. To be effective, human activities can be coordinated. Efficient coordination requires much more than an organizational framework. At the top of the foundation is coordination. This is the attribute that integrates all the elements of an organization into an operating unit. Experienced proved that higher accomplishment is dependent upon the interest and willing cooperation of both the project supervisor and the workers.