ADAMA SCIENCE AND TECHNOLOGY UNIVERSITY

DEPARTMENT OF CIVIL ENGINEERING

Course Title: Construction Planning and Management

Course No : CEN 5316/4207
Credit: 3
Lecture : 2 hrs/wk

Tut: 3 hrs/wk
Instructors: Kokebe Y. and Surafel L.
 Chapter 5

Organization Management
 5.1. Introduction

• An organization is a deliberately established social unit

composed of people who coordinate their activities to
achieve a common objective.

• Small organizations may require no specialization beyond

distinguishing one individual’s job from another’s.
• However as organizations become larger and involve
more diverse activities, it becomes necessary to divide
major tascks into depart mental responsibilities thus
leading to some kind of structure.
• Dividing the work of the organizations into
basic departmental responsibilities potentially
contributes to effective management in several
ways.
• The Potential benefits include:
 Clarifying responsibility and authority within
the organization,
 Facilitate communication and control,
 Improve decision making;
 Differentiate among activities,
• Properties of an organization:
• The main properties of an organization of any
form are:
 Distinct internal processing based on division
of labor
 A hierarchy of authority
 A system of coordination and control
 A collective identity (team work)
 5.2. Organization Theory and Organization
Management in Ethiopia
• Organization Theory
• It becomes a well known fact that Economic and
Governmental activities by large dominate large
organizations in their operations.
• This creates major thought on:
 views of organizations,
 organizational concepts and their assumptions based
upon, and
 theories and ideas on how organizations can best bring
the integration of social collectives to the organizations.
• Theories of organizations:
• The theories of organizations so far developed
can be summarized as (Lee G. Bolman and
Terrence E. Deal):
1. Rational System theory – The Structural Frame,
2. Human Resources theory – The human resources
frame,
3. Political theory – The Political Frame,
4. Symbolic theory – The Symbolic Frame, and
5. Systems Theory.
• Organization Management in Ethiopia
• The organization management in Ethiopia can be better
explained by assessing the different contextual realities.
Descriptions Ethiopian Construction Organizations

Central issues Scarce resources – vital budgeting principle

System High uncertainty – Not easy to forecast any situation

Problem arises When one realizes some thing is wrong with the performance of the
organization.

Problem solving Often removing the manager with out reliable evidence. They do not
mechanisms look into that there is a possible management problem but the
individual leader.

Organization Often organizations are structured to fulfill those preferences and

design and interests of coalitions. They think only if this is exercised that the
structure structure will fit to its objective

Decision making Pre determined often to fit the coalitions.

Power Ideally decentralized but practically semi-centralized.

Meetings Usually formal but comes out with nothing.

Coordination Poor, formal and informal.

Goals/ roles Pre determined by authorities.

Conflict An inherent character but results in often being non-solvable.

Because only the power that matters.
Planning Often considered as strategies to set objectives and coordinate
activities but usually insufficient time is allocated.
Reorganizing Often not practiced. Recently restructuring of all Ethiopian
organizations occurred due to Government change.
Motivating This is almost an overlooked aspect of management.

Evaluation Used for sanction to exercise power. Often evaluations are strictly
carried out when there is a need to remove somebody in the form
of camouflage.
 From the above table one can easily place the
construction organizations in Ethiopia under
two frames of the theories of organizations:
 Political in conjugation with Structural frame.
• This indicates that the construction industry is
at its infant stage towards organization
management.
 5.3. Strategic Management
• What is Strategic Management?
• To understand strategic management, one must
understand the concept of organizational strategy.
• Organizational strategies are the approaches adopted by
organizations to ensure successful performance in the
market place.
• These approaches are typically set forth in
comprehensive document called the strategic plan.
• Strategic management is management that bases all
actions, activities and decisions on what is most likely –
with in an ethical frame work –to ensure successful
performance in the market place.
• Components of Strategic Management
• Strategic management consists of two interrelated activities
A) Strategic planning and
B) Strategic execution.

A. Strategic Planning
• Strategic Planning is the process by which an organization
answers the following questions:-
 Who are we?
 What are our strength & weaknesses?
 Where are we going?
 What are the opportunities and threats in our business?
 How will we get there?
 What do we hope to accomplish?
• Strategic planning involves developing a
written plan that has the following
components:
 An organizational vision,
 Organizational mission,
 Guiding principles,
 Broad strategic objectives, and
 Specific tactics or activities for achieving the
broad objectives.
B. Strategic Execution
• Strategic Execution involves implementing
strategies set forth in strategic planning,
monitoring progress toward their achievement,
and adjusting as necessary.
Strategic execution is implementation that
achieves maximum efficiency and
effectiveness.
 5.4. Organization Structure
• Organization is the process in which work is
arranged, subunit is established and authority
relationships are designated.
• Thus, an organizational structure is prepared. It
consists of:
 job descriptions
 statements indicating the functions
 official delegations
 policies delegations
 financial procedures
• Several traditional (basic) types of structures
are distinguishable, these are:
I. Functional Organization Structures ( U-form
organization )
II. Product Organization Structures ( H – form
organization )
III. Territorial Organization Structures
IV. Client Centered Organization Structures
V. Matrix Organization Structures
VI. Multiple structures
I) Functional/Line Organization Structure (U –
form organization)
• The functional organization structure divides
the units so that each has a dissimilar set of
duties and responsibilities.
Advantage
• when the work done in an organization is best accomplished
by a specialized task or a sequence of specialized tasks, then a
functional structure of departments can work well.
• associated with technically superior products
• good at enabling specialists to interact and strive for technical
excellence.
Disadvantage
• The more that strategy, technology and environment demand
interdepartmental cooperation, the more of an obstruction
the functional structure can become.
• weak in emphasizing business results and in providing
coordination,
II) Product Organization Structure (H –form
organization)
• The product organization structure divides the
units on the basis of products, projects, or
programs.
Advantages
• associated with a better record of meeting schedules
and controlling cots.
• they facilitate innovation
• enables the formation of product-centered
cooperation
• highly advantages to companies having a strategy of
growth through diversifying products.
• shapes a pattern of management decision making that
helps the firm's better stay in touch and respond
quickly to the numerous product markets in which they
operate.
• offers potential advantages when it comes to coping
with unstable environments.
Disadvantages:-
• They are more frustrated by ambiguity,
conflict, and multiple levels of management,
and they feel less loyal to their organizations
than do subordinates in functional
organizations
• possible increased employee insecurity and
weakened technical excellence in various
functional specialties.
III) Matrix Organization Structure.
• Matrix organization is a result of efforts to combine
both functional and product (or client or territorial)
structures into a new form.
• It begins with a functional structure with different
functional units.
• Next, another structure organized by product or
client, is overlaid upon the original structure.
• The result is that employees are assigned to a basic
functional department and at the same time, they
are assigned to work on a particular product or for a
particular client.
• The matrix structure has been devised to respond to
three conditions.
• First is to respond to two different and conflicting
environmental pressures.
• the needs to have technical excellence in products and
the need to meet unique customer requirements
which include schedule and cost constraints.
• Second, is the requirement to improve the inadequate
communication capacity among individuals and
groups.
• Third, to cater the need for better and flexible use of
human, financial, and physical resources.
Problems
I. Tendencies toward anarchy-confusion about
who reports to whom and a resulting sense of
reporting to no one.
II. Excessive power struggles-functional and
product managers striving for dominance.
III. Groupitis-too many meetings and too much
group decision making to the point of
involving participants in details they don't care
about or are too ignorant of to be helpful.
 5.5. Types of Construction and Consultancy
Firms
• Persons may involve on a permanent and
professional manner in any economic
activities with the purpose of making profit or
gain.
• These activities may include manufacturing,
distribution, service rendering commercial
activities or any other economic activity.
• Physical or juridical persons may undertake
economic activities for gain.
• Below are mentioned juridical persons that
can carry out economic activities:
• 1. Public Enterprises - such enterprises are
wholly owned by the state.
• 2. Business Organizations - Such organizations
carry out same kinds of economic activities as
traders.
• They run business for the purpose of making
profit.
• They are formed on the basis of the
commercial code of Ethiopia (Art. 210).
• There are six forms of Business Organizations under
the Commercial Code of Ethiopia:
A. Ordinary Partnership:
- Involved in non-commercial activities.
- Properties: - Liability, no. of members
B. General Partnership:
- involved in commercial activities.
C. Limited Partnership
D. Joint Venture - In law the term Joint Venture denotes
two concepts of organizations
• engaged in business for the purpose of which is to
work for gain or profit.
E. Private Limited Company
- Commercial Code – Art. 5 -10
- There should be a min of two members and max of fifty.
- Min. Capital for PLC is 15,000.00 ETB.
- It is not possible to transfer share to other company
- Liability is limited.
F. Share Company
- There should be a min of five members.
- Min. Capital for PLC is 50,000.00 ETB.
- Share can be easily transferred.
- Liability is respected to respected shareholders.
• In Ethiopia the following categories are used to
classify construction and consultancy firms by the
Ministry of Works and Urban Development.
5.5.1. Types of Construction Firms
• Construction firms are broadly classified based on
trend of work as follows:
A. General Contractors
B. Building Contractors
C. Road Contractors
D. Specialized Contractors
E. Water works construction contractors
• The first three categories are again divided
into ten grades with different resource
requirements.
• The Ministry has placed the basic human and
equipment requirements to attain the
different licenses with different grades.
5.5.2. Types of Consultancy Firms
• Consultancy firms are broadly classified as
follows:
A. CA – Consultancy Architects
B. CAE – Consultancy Architects and Engineers
C. HBC – Consultancy Highway and Bridge
D. CE – Consultancy Engineers
E. SC – Specialized Consultancy
• All of the above categories are divided into six
grades with different resource requirements.
5.6. Project or Site Organizations
• Different forms of organizational structures are used in
the construction industry.
• The organizational structures can be classified into
two:
A. Parent or Head Office Organization
• As the name implies this organization structure is
relatively stable and shall be carefully structured.
B. Project or Site Organization
• On any given project site the main bodies involved in
the construction activity are the contractor and the
consultant.
• Thank You!!!