LEC 3 CMPM LECTURE (2019) PDF

1  LECTURE III CONSTRUCTION PROJECT ORGANIZATION Project management is the art of directing and coordinating human and material resources throughout the life of a project by using modern management techniques to achieve predetermined objectives...

1  LECTURE III CONSTRUCTION PROJECT ORGANIZATION Project management is the art of directing and coordinating human and material resources throughout the life of a project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality and participation satisfaction. Trends in Modern Management Major developments in management reflect the acceptance to various degrees of the following elements: 1. The management process approach 2. The management science and decision support approach 3. The behavioral science approach for human resource development 4. Sustainable competitive advantage. These four approaches complement each other in current practice, and provide a useful groundwork for project management. The management process approach The management process approach emphasizes the systematic study of management by identifying management functions in an organization and then examining each in detail. Thus, the manager's job is regarded as coordinating a process of interrelated functions, which are neither totally random nor rigidly predetermined, but are dynamic as the process evolves. Hence, management functions can be organized into a hierarchical structure designed to improve operational efficiency, such as the example of the organization for a manufacturing company shown in Figure 1 Figure 1: Illustrative Hierarchical Structure of Management Functions 2 The management science and decision support approach The management science and decision support approach contributes to the development of a body of quantitative methods designed to aid managers in making complex decisions related to operations and production. In decision support systems, emphasis is placed on providing managers with relevant information. In management science, a great deal of attention is given to defining objectives and constraints, and to constructing mathematical analysis models in solving complex problems of inventory, materials and production control, among others. The behavioral science approach The behavioral science approach for human resource development is important because management entails getting things done through the actions of people. An effective manager must understand the importance of human factors such as needs, drives, motivation, leadership, personality, behavior, and work groups. Sustainable competitive advantage Sustainable competitive advantage stems primarily from good management strategy. Strategy is creating fit among a company's activities. The success of a strategy depends on doing many things well - not just a few - and integrating among them. If there is no fit among activites, there is no distinctive strategy and little sustainability. In this view, successful firms must improve and align the many processes underway to their strategic vision. Strategic positioning in this fashion requires: Creating a unique and valuable position. Making trade-offs compared to competitors Creating a "fit" among a company's activities. Project managers should be aware of the strategic position of their own organization and the other organizations involved in the project. The project manager faces the difficult task of trying to align the goals and strategies of these various organizations to accomplish the project goals. Effects of Project Risks on Organization The uncertainty in undertaking a construction project comes from many sources and often involves many participants in the project. Since each participant tries to minimize its own risk, the conflicts among various participants can be detrimental to the project. Only the owner has the power to moderate such conflicts as it alone holds the key to risk assignment through proper contractual relations with other participants. Risks in construction projects may be classified in a number of ways. One form of classification is as follows: 1. Socioeconomic factors o Environmental protection o Public safety regulation o Economic instability o Exchange rate fluctuation 3  2. Organizational relationships o Contractual relations o Attitudes of participants o Communication 3. Technological problems o Design assumptions o Site conditions o Construction procedures o Construction occupational safety Organization of Project Participants The top management of the owner sets the overall policy and selects the appropriate organization to take charge of a proposed project. Its policy will dictate how the project life cycle is divided among organizations and which professionals should be engaged. Decisions by the top management of the owner will also influence the organization to be adopted for project management. In general, there are many ways to decompose a project into stages. The most typical ways are: Sequential processing whereby the project is divided into separate stages and each stage is carried out successively in sequence. Parallel processing whereby the project is divided into independent parts such that all stages are carried out simultaneously. Staggered processing whereby the stages may be overlapping, such as the use of phased design-construct procedures for fast track operation. There are two basic approaches to organize for project implementation, even though many variations may exist as a result of different contractual relationships adopted by the owner and builder. These basic approaches are divided along the following lines: 1. Separation of organizations. Numerous organizations serve as consultants or contractors to the owner, with different organizations handling design and construction functions. Typical examples which involve different degrees of separation are: o Traditional sequence of design and construction o Professional construction management 2. Integration of organizations. A single or joint venture consisting of a number of organizations with a single command undertakes both design and construction functions. Two extremes may be cited as examples: o Owner-builder operation in which all work will be handled in house by force account. o Turnkey operation in which all work is contracted to a vendor which is responsible for delivering the completed project Matrix Organization – An arrangement on which each project manager must negotiate all resources for the project from the existing organizational framework. 4  Figure 2 A Matrix Organization Project Oriented Organization - It consist of a small central functional staff for the exclusive purpose of supporting various projects, each of which has its functional divisions as shown in Figure 3. Project oriented organization has a set-up where each project manager has autonomy in managing the project. Figure 3: A Project-Oriented Organization To illustrate various types of organizations for project management, we shall consider two examples, the first one representing an owner organization while the second one representing the organization of a construction management consultant under the direct supervision of the owner. 5 Example of Matrix Organization of an Engineering Division The Engineering Division of an Electric Power and Light Company has functional departments as shown in Fig. 4. When small scale projects such as the addition of a transmission tower or a sub- station are authorized, a matrix organization is used to carry out such projects. For example, in the design of a transmission tower, the professional skill of a structural engineer is most important. Consequently, the leader of the project team will be selected from the Structural Engineering Department while the remaining team members are selected from all departments as dictated by the manpower requirements. On the other hand, in the design of a new sub-station, the professional skill of an electrical engineer is most important. Hence, the leader of the project team will be selected from the Electrical Engineering Department. Figure 4 The Matrix Organization in an Engineering Division Example of Construction Management Consultant Organization When the same Electric Power and Light Company in the previous example decided to build a new nuclear power plant, it engaged a construction management consultant to take charge of the design and construction completely. However, the company also assigned a project team to coordinate with the construction management consultant as shown in Figure 5. 6  Figure 5: Coordination between Owner and Consultant Since the company eventually will operate the power plant upon its completion, it is highly important for its staff to monitor the design and construction of the plant. Such coordination allows the owner not only to assure the quality of construction but also to be familiar with the design to facilitate future operation and maintenance. Note the close direct relationships of various departments of the owner and the consultant. Since the project will last for many years before its completion, the staff members assigned to the project team are not expected to rejoin the Engineering Department but will probably be involved in the future operation of the new plant. Thus, the project team can act independently toward its designated mission. SEPARATION OF ORGANIZATION Traditional Designer-Constructor Sequence - the owner often employs a designer (an architectural/engineering firm) which prepares the detailed plans and specifications for the constructor (a general contractor). The designer also acts on behalf of the owner to oversee the project implementation during construction. The general contractor is responsible for the construction itself even though the work may actually be undertaken by a number of specialty subcontractors. The owner usually negotiates the fee for service with the architectural/engineering (A/E) firm. In addition to the responsibilities of designing the facility, the A/E firm also exercises to some degree supervision of the construction as stipulated by the owner. Traditionally, the A/E firm regards itself 7 as design professionals representing the owner who should not communicate with potential contractors to avoid collusion or conflict of interest. Field inspectors working for an A/E firm usually follow through the implementation of a project after the design is completed and seldom have extensive input in the design itself.. The owner may select a general constructor either through competitive bidding or through negotiation. Public agencies are required to use the competitive bidding mode, while private organizations may choose either mode of operation. In using competitive bidding, the owner is forced to use the designer-constructor sequence since detailed plans and specifications must be ready before inviting bidders to submit their bids. If the owner chooses to use a negotiated contract, it is free to use phased construction if it so desires. The general contractor may choose to perform all or part of the construction work, or act only as a manager by subcontracting all the construction to subcontractors. The general contractor may also select the subcontractors through competitive bidding or negotiated contracts. The general contractor may ask a number of subcontractors to quote prices for the subcontracts before submitting its bid to the owner. However, the subcontractors often cannot force the winning general contractor to use them on the project. Bid shopping refers to the situation when the general contractor approaches subcontractors other than those whose quoted prices were used in the winning contract in order to seek lower priced subcontracts. Bid peddling refers to the actions of subcontractors who offer lower priced subcontracts to the winning general subcontractors in order to dislodge the subcontractors who originally quoted prices to the general contractor prior to its bid submittal. Professional construction management refers to a project management team consisting of a professional construction manager and other participants who will carry out the tasks of project planning, design and construction in an integrated manner. Contractual relationships among members of the team are intended to minimize adversarial relationships and contribute to greater response within the management group. A professional construction manager is a firm specialized in the practice of professional construction management which includes: Work with owner and the A/E firms from the beginning and make recommendations on design improvements, construction technology, schedules and construction economy. Propose design and construction alternatives if appropriate, and analyze the effects of the alternatives on the project cost and schedule. Monitor subsequent development of the project in order that these targets are not exceeded without the knowledge of the owner. Coordinate procurement of material and equipment and the work of all construction contractors, and monthly payments to contractors, changes, claims and inspection for conforming design requirements. Perform other project related services as required by owners. Professional construction management is usually used when a project is very large or complex. 8 INTEGRATION OF ORGANIZATION Owner-Builder Operation - In this approach an owner must have a steady flow of on-going projects in order to maintain a large work force for in-house operation. However, the owner may choose to subcontract a substantial portion of the project to outside consultants and contractors for both design and construction, even though it retains centralized decision making to integrate all efforts in project implementation. Example: DPWH Organization The District Engineer's Office of the Department of Public Works and Highway may be viewed as a typical example of an owner-builder approach as shown in Figure 6 Figure 6: DPWH Organization Turnkey Operation- An arrangement where the owners delegate all responsibilities of design and construction to outside consultants/builders. A contractor agrees to provide the completed facility on the basis of performance specifications set forth by the owner. The contractor may even assume the responsibility of operating the project if the owner so desires. This approach is the direct opposite of the owner-builder approach in which the owner wishes to retain the maximum amount of control for the design-construction process. Leadership and Motivation for the Project Team The project manager, in the broadest sense of the term, is the most important person for the success or failure of a project. The project manager is responsible for planning, organizing and controlling the project. In turn, the project manager receives authority from the management of the organization to mobilize the necessary resources to complete a project. 9 The project manager must be able to exert interpersonal influence in order to lead the project team. The project manager often gains the support of his/her team through a combination of the following: Formal authority resulting from an official capacity which is empowered to issue orders. Reward and/or penalty power resulting from his/her capacity to dispense directly or indirectly valued organization rewards or penalties. Expert power when the project manager is perceived as possessing special knowledge or expertise for the job. Attractive power because the project manager has a personality or other characteristics to convince others. In a matrix organization, the members of the functional departments may be accustomed to a single reporting line in a hierarchical structure, but the project manager coordinates the activities of the team members drawn from functional departments. The functional structure within the matrix organization is responsible for priorities, coordination, administration and final decisions pertaining to project implementation. Thus, there are potential conflicts between functional divisions and project teams. The project manager must be given the responsibility and authority to resolve various conflicts such that the established project policy and quality standards will not be jeopardized. When contending issues of a more fundamental nature are developed, they must be brought to the attention of a high level in the management and be resolved expeditiously. In general, the project manager's authority must be clearly documented as well as defined, particularly in a matrix organization where the functional division managers often retain certain authority over the personnel temporarily assigned to a project. 10 11