C421

LU 2
Week 2

Construction Project
Management
Project Organization
Project Organization
Besides large companies employing millions of workers, there are equally large
numbers of self-employed individuals engaged in the actual construction work
and allied activities, like whitewashing, painting, plumbing and fixing of
mechanical or electrical fixtures.

Companies that specialize in construction

are among the most diverse and in-depth
structural organizations. Here we will
discuss these in greater detail.
A Construction company
Tenah (1986) defines a construction company as a group of specialized
individuals responsible for designing, estimating, bidding, procuring, and
obtaining resources for a construction project.

These companies, whether one-person or larger, aim to provide services

for profit. Common functions include general administration, estimating,
contract management, design, engineering, purchasing, accounting, and
field construction management.

The company's organization is the resource framework.

Structure of Construction
Organizations
It is rare for two construction companies to have an exactly similar kind of
organization structure. In fact, it is often jokingly said that there are as many
organization structures as there are construction companies.
Even for the same construction company, the organization structure may not
remain same over a long period of time. The organization structure keeps on
evolving and it depends on several factors such as technology, complexity,
resource availability, products and services, competition and decision-making
requirements (Kerzner 2004).

These are a few:

Military, Line and Staff, Departmental, Centralized Functional, Decentralized
Multidivisional
CONSTRUCTION
ORGANIZATIONS
Military/Line Type Organization

One of the oldest types of

organizations.
The communication follows
vertically in such an arrangement.
For example, owner will command
manager/supervisor, who in turn
will command the foremen 1, 2
and 3. The foreman, in turn, will
command workers directly under
them.
Advantages: Disadvantages:
•Easiest to establish and explain. •High expectation from authority
•Unity of control. holders.

•Strong discipline. •Efficiency heavily dependent on

authority.
•Employees assigned fixed roles
and responsibilities. •Lower-level advice may be ignored
due to lack of communication.
•Quick decision-making and quick
•Lack of specialized skill of experts.
adaptation to changing needs.
•Potential for favouritism in the
structure.
 Line & Staff Organizations

The staff specialists advise

the line managers in
performing their duties.

These staff positions are

purely advisory. The staff
personnel can recommend
but they do not have authority
to implement those
recommendations.
Advantages: Disadvantages:
•Line employees execute tasks. •Lacks clear authority structure.
•Staff employees provide advisory •Suitable for large organizations
services. needing specialized skills.
•Offers growth opportunities and •Potential for conflict, hindering
training opportunities. company growth.
•High-quality problem-solving due to •Difficulty distinguishing line function
careful decision-making. from staff function.
Departmental Organization, Authority,
Communication and Contact
The departmental or functional
organization has departments with
department heads.
The department heads have control
of the functions allocated to them
and they are free to communicate
directly with the field forces.
In this organization structure, the
top-hierarchy people are relieved
from much of the heavy burden.
 Centralized Functional Organization
In this form, the centre of power is concentrated at the top of the
organization. The departments are arranged by important functions, each
headed by a manager who reports to a chief executive officer. The chief
executive officer coordinates the activities of functional departments.

Advantages: Disadvantages:
• Simple reporting mechanism for • Over-specialization and narrow vision of
easier administration. key personnel.
• Logical and cost-effective • Limited development for project
organization of functions. managers.

• Maintains power and prestige of • Difficulty in achieving economic growth

major functions. due to slow response from functional
management.
• Minimizes duplication of efforts.
• Lack of coordination between functional
• Ensures tight control at the top. departments, increasing the chief
executive officer's burden.
 Decentralized Multidivisional Organization
In this arrangement, the departments are separated based on the project market or region. Each unit
is relatively self-contained in that it has the resources to operate independently of other divisions. The
division manager has almost total authority to establish division strategy and to manage internal
operation. It is like dividing a company into several smaller companies, except that each division
manager is generally subject to some degree of evaluation and control by the central corporate office.

Advantages: Disadvantages:
• Quicker decision-making and efficient divisional organization. • Unnecessary and potentially cost-ineffective
• Divisional focus on end result, allowing quick adaptation to increase in managerial and functional staff.
changing business conditions. • Divisions may lack cooperation incentives, leading
• Easy identification of output and responsibility. to coordination issues.
• Operation of divisions as profit centres. • Difficulty in coordinating customer relations and
R&D activities due to divisional autonomy.
• Removal of corporate executives from operational details for
focus on corporate matters.
• Enhancement of project managers' motivation and
development prospects.
• Increased likelihood of innovation and creativity.
Organising for Project Management
The inherent challenge here is to organize people from
different specializations and different departments into an
effective project team.
The challenge gets further compounded when several different
organizations with different objectives are involved in the
project.
Depending on the extent to which the authority is delegated to
a project manager and the mode in which the power is
delegated, the project management structure can be divided
into categories such as—(1) functional, (2) matrix, and (3)
project forms of organization.
 Classical (Functional)
Employees are categorized by
specialty, such as human
resources development,
construction, engineering,
tendering, and finance, and
work under one executive.
These groups are further
subdivided into sections, such
as civil, electrical, and
mechanical.
Advantages of functional Disadvantages of functional
organizations: organizations:
•The degree of efficiency is high since •The structure as such is unstable as it
the employees must perform a limited lacks disciplinary control.
number of activities. •The structure is slightly complicated as
•There is a greater division of labor and, it has several layers of sections.
thus, the advantages of functional •The responsibility for unsatisfactory
organizations are inherent in this results may be difficult to fix under such
structure. structure.
•The specialized groups can enhance •There may be conflict among
the possibility of mass production. employees of equal rank.
Pure Project/ Product
Management
Pure project or product
organizations support ongoing
projects, with resources
directed towards successful
completion.

Project managers have

independence and authority,
while departments report
directly to the project manager
or provide supporting roles.
Advantages: Disadvantages:
• Project manager maintains full project • Potential duplication of efforts.
authority and control.
• Difficulty in finding project managers
• Strong, open communication lines and flexible with diverse management and
system for quick response to project needs. functional expertise.
• Project is the primary concern of project • High administrative duties and
employees, bringing together administrative, potential job stress.
technical, and support personnel.
• Fear of career growth impediments
• Employee appraisal based on project leading to departmental departures.
performance.
• Resource focus focuses on achieving
organizational goals, not providing specific
functions.
 Matrix organizations
The matrix organizations have evolved from the classical functional model. They
combine the advantages of both the classical and the pure project/product structures.
A matrix organization can take on a wide variety of specific forms, depending on which
of the two extremes (functional or pure project) it most resembles.
Advantages: Disadvantages:
• Facilitates quick response to • Takes years to develop, especially for new
changes, conflicts, and project needs. companies.
• Allows for flexibility in establishing • Requires more effort in defining policies,
independent policies and procedures procedures, and authority relationships.
for each project.
• Balance of power between functional and
• Offers better balance between time, project authority must be monitored.
cost, and performance.
• Functional managers may bias due to
• Project manager has authority to personal priorities.
commit company resources.
• Faster reaction times in fast-changing
• Maintains a strong base of technical projects compared to pure project
expertise. authority structure.
 Traits of a project manager
The typical responsibilities of a project manager and a project coordinator include, coordinating
and integrating of subsystem tasks; assisting in determining technical and manpower
requirements, schedules and budgets; and measuring and analysing project performance
regarding technical progress, schedules and budgets.

According to Forsberg et al. (1996), a project coordinator’s function is to:

• Know how the organization ‘works’;
• Provide expediting help to the project and support organizations;
• Provide independent assessment of project information and status to the project manager;
• Ensure planning and milestones are satisfied; and
• Ensure control procedures are being adhered to.
The project manager should be responsible for coordinating all project activities; making project
recommendations; fixing a design and preparing drawings and specifications for tender and
construction; preparing all estimates; and administering all contracts and issuing certificates.

Common traits of a PROJECT MANAGER

•Human Skills •Problem Solving skills •Prudent-Risk-Taker

•Conceptual Skills •Communication skills •Fairness
•Technical Skills •Right Temperament •Commitment
•Attitude •Creativity •Conflict Resolution
•Common sense •Experience in relevant field
•Open Mindedness •Leadership skills
•Adaptability •Master basic skills
•Inventiveness •Administration skills
A project managers skills and
performance can be enhanced by:
•Increasing pre-appointment training
•Establishing a mentor system
•Careful selection of potential Project Managers
•Identify the career path requirement early
•Determining which key skills to foster
 Traits of a Project Coordinator
TEAM BUILDING SKILLS CONTRACT IMPLEMENTATION PROJECT-ORGANIZATION
SKILLS SKILLS
-Concern for conciliation
-Concern for ego -Reliance on systematic -Relationships with clients,
approach consultants and contractor
-Psychology
-Understand contract clauses -Coordination for achieving
-Analytical skill quality
-Concern for Health and Safety
-Motivating skill -Liaison Skills
-Monitoring skills
-Belief in spirit -Knowledge of Project Finance
-Maintaining records
-Timeliness
-Follow up quality
-Facilitating skills
-Interpersonal skills -Forecasting skills

-Communication skills -Planning skills

-Knowledge of the Subject
-Resource usage skills
 Factors behind the success of a
Construction organization
• Construction industry is risky and often has low entry barriers, leading
to increased bankruptcy.
• Successful companies are those that complete projects within budget
and meet quality standards.
• However, project success doesn't guarantee future organizational
success.
• A shift from project success to corporate success is needed for
construction organizations.
• More studies are needed to understand the sector's success
parameters.
• Despite extensive research on project success factors, few studies are
available on construction organizations' success parameters.
Q and A
To Do After This
Session:

Group Activity 2

Lu 2 Revision Questions

Lu 2 Prescribed Reading