School Of Civil Engineering and Architecture

Construction Technology and Management Chair (Post-Graduate Program)

Construction organization and Labour management(COTM6012)

Effects of organization management on performance of a construction

management in Defense Construction Enterprise

By:

Getaneh Admasu

Edris Abdella

Haykel Omer

Tamrayehu Taye

To: Worku H.K(Ph.d)

May, 2022
Abstract
The construction industry traditionally evaluates success based on individual project
performance. Because of this evaluation technique, there has been extensive focus to improve
the efficiency and success of individual projects. This focus has resulted in a consistent
evolutionary change in project management methods, However, in the changing economic
world, a resurgence of interest is occurring in the importance of organization management to
the success of companies within the industry. For an industry that has had the success of the
individual project as the primary determining factor of success, this change in accepted
thought will be slow to occur. Specifically, the impact of organization management practices
on project success has to be determined and demonstrated before wide spread acceptance.
However a bridge currently needs to exist that connects organization management practices a
project success. Construction projects in the Defense Construction Enterprise suffer from
many problems and complex issues in performance such as cost, time and quality. The
objective of the study was to assess the influence of resource management related factors,
stakeholder management related factors, procurement management related factors, and quality
management related factors on project performance in Defense Construction Enterprise as a
case study. The research was primarily based on primary data collected through a structured
questionnaire. Among quality management related factor that affect the performance of
projects, lack of quality management system and lack of management commitment and
leadership towards quality were the two most important factors that affect the performance of
projects. . The results of the study may suggest that the enterprise need to give more emphasis
on resource and stakeholder management to enhance project performance.

Key words: Construction project, Management, Organization

Introduction
Construction industry has complexity in its nature because it contains a large number of
parties such as clients, contractors, consultants, stakeholders, shareholders, regulators and
others. An organization is a set-up where individuals from diverse backgrounds, different
educational qualifications and varied interests come together to work towards a common goal.
Organizational Management: The process of organizing, planning, leading and controlling
resources within an entity with the overall aim of achieving its objectives. The organizational
management of a business needs to be able to make decisions and resolve issues in order to be
both effective and beneficial.

In Defense Construction Enterprise, there are many construction projects fail in performance.
In addition, performance measurement systems are not effective or efficient to overcome such
this problem. There is evidence that the performance of the construction project in DCE is
poor in terms of time, cost and quality performance. There are various resource, stakeholder,
procurement, and quality management related factors which lead to failure of construction
project performance in terms of time overrun, cost overrun, and quality problem

Problem statement
The need to obtain successful projects calls for the need to also undertake optimum practices.
Performance of group of projects managed by an organization may differ from performance
of another group of projects with similar characteristics but managed by another organization.
The kind of project management practices carried out by the different organizations for
achieving project success may also influence variation in the performance of the projects. The
significance of such differences in performance of the groups of projects is therefore
necessary for determination of the characteristics of influential project management practices.
There would therefore be the need to promote optimum practices and a second look taken at
others that confront the success of building projects. What are the effects of organization
management on performance of a construction projects.
Literature review

Organization Success Factors

The first step to extending success factor research is to recognize the two parts of a
construction enterprise, the organizational part and the project part. These enterprise
components are traditionally identified by the different cultures exhibited by individuals
actively engaged in the respective activities. Specifically, these cultures are defined as
corporate or organizational culture, and the culture exhibited by a company at a project level,
project culture (Riley, and Clare-Brown, 2001). The success of these two individual cultures
is dependent on a clear understanding of the other. This relationship between the cultures,
organizational and project can be extrapolated to the relationship between organization and
project management.

Organizational-Related Factors

Pollack (2007) stated that traditionally project management is deeply rooted in project-related
factors such as clients, consultants, suppliers, subcontractors, labor and equipment, contract
management, external factors, and project management tools/ techniques. However, recently
theoretical frameworks on organizational factors such as leadership, organizational culture,
innovation, learning organization, and communication and their impacts on project
management have gained prominence. The organizational-related factors considered in this
research have been studied in isolation in the existing construction literature as summarized in
the remainder of this section.

 Leadership

 Organizational culture

 Innovation

 Project performance indicators: - Many of the previous studies have mainly focused
on project performance indicators such as time, cost, and safety performance (e.g.,
Memon et al., 2014; Mosly, 2015; Sambasivan et al., 2017; Sambasivan & Soon,
2007). There are a few studies that have looked at quality performance in the
construction industry (e.g., Cheung, Suen, & Cheung, 2004; Jha & Iyer, 2006).
However, there is a shortage of studies related to simultaneous evaluation of all the
five indicators (time, cost, safety, quality, and financial) in the construction industry.
Simultaneous evaluation can provide understanding of the relative impacts of these
multiple indicators.
Organizational-Related Factors vs Performance

Construction organizations need:

(1) proper leadership at the top to ensure things are happening as planned (Oliveira et al.,
2012), (2) a good organizational culture to ensure that project management teams perform to
expected levels (Saunila, 2014),

(3) to find innovative ways to competitively carry out project tasks in order to save cost and
time and in a safe manner (Saunila, 2014), and

(4) to learn from past projects and other means to establish a learning organizational culture to
sustain and grow the business (Hardness, Nilsson, & Nuldén, 2005). According to the
leadership theory, transformational leadership can bring quantum changes in organizations
(Bass, 1985), while transactional leadership brings in efficiency and effectiveness in
operations (Burns, 1998). Similarly, other leadership theories such as servant leadership, path-
goal leadership, situational leadership, evolutionary leadership, outstanding leadership,
implicit leadership, and community leadership are distinctively associated with different
environments.

Methodology
To conduct this term paper we referred, made a literature reviews on previously done works
on this area that's broadly on organization management and on organizational management in
construction specifically and then we embarked on gathering relevant information from the
chosen company(contractor) through questionnaire. The study proposal will identify the
organization management factors affecting project success, a qualitative approach that will be
used. The Secondary data will be collected from the reports and other relevant documents of
the Tilahun Abebe G.C to obtain quantitative data regarding the original budget and schedule
of the projects addressed and the actual spending of the same. Questionnaires will be
distributed to all stake holders involve in the project. The responses from these parties and the
literature review help to identify the factors affecting the project Success.

Results and Discussion

The study was based on the factors affecting the construction projects performance in defense
construction enterprise. It sought to investigate whether resource management, procurement
management, stakeholder management, and quality management related factors influence
projects performance. Based on the objectives of the research stated, the following summaries
were made in relation to the findings:

 The survey revealed that the major resource management related factors that affect the
performance of the projects are cash flow and financial difficulties, price escalation of
construction material in the market. Material wastage on projects, breakdown and
failure of construction equipment in the enterprise, changes in material types and
 specifications during construction, and unavailability of construction material in the
market.
 The survey revealed that the major procurement management related factors that affect
the performance of the projects are lack of an effective and efficient Procurement
planning, procurement control mechanism, and contract management in the enterprise.
 Most of respondents agreed that the major stakeholder management related factors
that affect the performance of the project are lack of stakeholder attribute assessment,
lack of Stakeholders involvement in decision making process, lack of stakeholder
identification, and lack of stakeholder communication and engagement.
 Most of respondents agreed that among quality management related factor that affect
the performance of projects, lack of quality management system and lack of
management commitment and leadership towards quality were the two most important
factors that affect the performance of projects.

Conclusion
Based on the objectives of the research stated, the following conclusions were made in
relation to the findings:

 Weak quality management system and lack of management commitment and

leadership towards quality were the two most important quality management factors
that affect the performance of projects.
 Poor stakeholder attribute assessment, lack of Stakeholders involvement in decision
making process, lack of stakeholder identification, and lack of stakeholder
communication and engagement were the most important stakeholder management
related factor factors that affect the performance of projects.
Recommendations for Policy Intervention
Based on the research findings, the following recommendations should be put into practice for
the enterprise who aims at performing better in construction projects.

 The enterprise is recommended to use advance payment properly to avoid the cash
flow and financial problems. It should be aware of the business environment risks in
their cost estimation and enough contingency allowances should be there to guard
against the increasing material prices.
 The enterprise should see that minimum amount of waste should be produced and also
the site should be kept clean in order to minimize material wastage in the project site.
The enterprise is advised to set up effective and efficient construction equipment
management system so as to manage it construction equipment .It is also important for
the enterprise to revise the contract document prior to the start of project execution to
avoid changes in material types and specifications during construction. The enterprise
is also recommended to set up effective and efficient resource planning and
forecasting to avoid shortage of construction material and improve the performance of
projects.
 Project Stakeholders are people who are subjected to, part of, or have decision making
over the project and it is significant to identify and effectively manage them in order to
avoid project delays or failures. Accordingly, the enterprise is recommended to
establish a mechanism to manage different kind of stakeholders.
 Procurement management practices have increasingly played an important role in
project performance. The enterprise should adopt a formal procurement planning
mechanism that provides the basis for organizing the work on the projects, facilitate
efficient resource utilization, integrated with the budgeting, and reduces costs.
Procurement control mechanism needs to be well developed and clearly detailed so as
to reduce the number of risks which may arise during project implementation and
increase the chance of achieving project‟s objectives. Contract management
influenced project performance through contract type, acceptance criteria, and dispute
resolution mechanism etc. The study recommends the introduction of contract
management training to employees who are involved in the contract management
activities in the enterprise.
 Quality management is critically required for a construction company to sustain in
current construction market which is highly challenging and competitive and it has to
provide the environment within which related tools, techniques and procedures can be
deployed effectively leading to operational success for a company. Taking in this into
account, the enterprise should adopt appropriate quality management system to
enhance it project performance. Likewise, Management commitment to quality and to
continuous quality improvement is very important in each phase of the building
process. Management must participate in the implementation process and be fully
committed to it if quality management practice is to succeed.
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