Organization Structure

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Organization Structure
CEM 520 CONSTRUCTION CONTRACTING
ADMINISTRATION Module 2.0 Unit 2.2 By MOHAMMED
JALALUDDIN LECTURER CONSTRUCTION ENGINEERING
MANAGEMENT DEPT
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Presentation Outline

• Organization Structure
• Definition of Organization structure
• Definition of Key Words hierarchy of authority,,
  span of control, line versus staff
• Types of organization structure
• Functional
• Matrix
• Pure Project
• Advantages disadvantages of organization
  structures
• Suitability of Each Organization structures

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Objectives of Class

• Describe Legal Structure and organizational
  structure
• Explain the basic characteristics of
  organizational structure as revealed in an
  organizational chart (hierarchy of authority,,
  span of control, line versus staff).
• Recognize different types of legal structures and
  make comparison

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Management organization

• Definition Organization structure establishes
  the relationship between the project
  participants, together with defining their
  duties, responsibilities and lines of authority
  and lines of communication.
• It answers following questions
• Who is in charge?
• who does each individual report to?
• How is the project organized in its parent
  organization.
• Diagram representing the connections between the
  various departments within an organization
• - Provides information about the various tasks
  performed within an organization and the formal
  lines of authority between
• them

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Organizational Structure The Basic Dimensions of
Organizations
Hierarchy of Authority - a configuration of the
reporting relationships within organizations
(i.e., who reports to whom) Tall organizations -
have many levels in the hierarchy Flat
organizations - have few levels in the
hierarchy - many organizations have been
restructuring by flattening their
hierarchy - results in job losses,
particularly among middle-level managers
Division of Labor - process of dividing the many
tasks in an organization into specialized
jobs - the more tasks are divided into separate
jobs, the more those jobs are specialized,
i.e., the narrower the range of activities
Span of Control - the number of subordinates in
an organization who are required to report to
each manager Wide span - many subordinates
report to a manager - typical of flat
organizations Narrow span - few subordinates
report to a manager - typical of tall
organizations
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Organizational Structure The Basic Dimensions of
Organizations (cont.)
Line and Staff Positions Line positions -
positions in which people can make decisions
related to basic work Staff positions -
positions in which people make recommendations
to others but are not involved in decisions
concerning day-to- day operations - line and
staff personnel often hold different views about
the organization - such differences may be
conflict-arousing
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Management Organization/Organization Structure A.
Types Of Organization Structure

• Three basic organizational structures
• Functional
• Project
• Matrix

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A. Functional

• Also called Traditional organization structure.
• Based on the sub-division of disciplines into
  separate departments together with vertical
  hierarchy
• vertical lines of authority
• work that is partitioned according to specialties
  of discipline (i.e., the function).
• Objective is to emphasize technical excellence.

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A. Functional Organization
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3-1
A. Functional Organization
Project Coordination
Red boxes represent staff engaged in project
activities
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Advantages of Functional Organization

• Simple
• Lines of communication within department are well
  established
• Clearly defined responsibility and authority for
  work within the departments

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Disadvantages of Functional Organization

• No Single point of responsibility as project
  scope moves from one department to another
  department leading to coordination chaos
• It offers excellent facility within its own
  department but for a multi-disciplined projects
  which calls for interaction with other department
  then the system may be lacking
• Lengthen the lines of communication and slow
  down the response time
• Formal line of communication is through the
  functional managers
• Competition conflict between functional
  departments
• Department work may take priority over project
  work

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Suitability

• The functional organization is the primary client
• The project is small

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B. Pure Project Organization

• Similar to the functional organization structure
  except all the departments are dedicated to the
  project
• The Project Manager has high level of authority
  to manage and control the project resources
• Self contained unit within own technical staff
  and administration
• Typical for Large project, e.g NASA, Concorde

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B. Pure Project Organization
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Advantages of a Pure Project Organization

• Relatively simple means of working on a project.
  Conflicting responsibilities are minimized
• Accountability is clearly placed in one person
• PM has full authority over project
• Strong/short communication channels
• High level of commitment to project schedule,
  technical and cost goals
• Clearly defined customer focus
• Rapid reaction time due to ability to make swift
  decisions

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Disadvantages of a Pure Project Organization

• Lack of big picture companywide orientation
• Duplication of effort increases organizational
  costs
• Difficult to share individuals/expertise across
  projects
• Tendency to retain personnel longer than needed
• Uncertainty about job after the project

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Suitability

• Large projects
• Long-term projects
• Crash projects emergency response
• Projects that change into permanent functional
  organizations

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C. Matrix Structure

• Matrix structure has same format as a
  mathematical matrix
• The matrix organization is a combination of
  functional and pure project
• A mix or hybrid structure, incorporating both the
  functional and pure project approaches with the
  hope of optimizing the strengths and minimizing
  the weaknesses of each
• A pure project organization overlaid on the
  functional divisions of the parent firm
• Vertical lines of represent the functional
  department

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C. Matrix Structure
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Advantages of a Matrix Organization

• The project is the point of emphasis
• Because the project is overlaid on the functional
  divisions, the project has reasonable access to
  the reservoir of technology in all areas
• Access to entire technology of firm
• PM responsible for the project
• Reservoir of technical talent reduces duplication
  therefore cost
• Flexible utilization of personnel across projects
• Provides a project-customer focal point
• No worry about life after project

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Disadvantages of a Matrix Organization

• Violates one-boss principle
• Authority and responsibility lines are at times
  unclear
• Communication may be chaotic
• more effort and time are needed to initially
  define policies and procedures
• response time may be slow
• PM controls administrative decisions (when and
  what the people assigned to the project will do)
  functional managers control who will be assigned
  to the project

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Suitability

• Moderate priority, moderate size projects
• Projects where efficiency is paramount need
• When project activities closely correlate with
  those inside the functional organization

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The Matrix Structure

• Strengths (cont.)
• More flexibility
• Efficient allocation of specialists
• Economies of scale
• Weaknesses
• Confusion created
• Stress placed on workers
• Increased ambiguity
• Unclear reporting relationships
• Power struggles
• Role conflicts
• Unclear expectations

• Description
• Combines two forms of departmentalization
• functional
• product
• Breaks unit of command
• Dual chain of command
• Strengths
• Facilitates coordination
• Complex and independent activities
• Better communication

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Choosing an Organizational Form

• Functional Form
• focus is on in-depth application of a technology
• Most of the talent/expertise resides in one
  functional area
• Pure Project Form
• firm engages in a large number of similar
  projects (construction)
• one-time, highly specific unique tasks that is
  not appropriate for a single functional area (
  product development marketing, design
  engineering, manufacturing engineering, quality
  engineering)
• Matrix Form
• integration of inputs from several functional
  areas
• involves reasonably sophisticated technology
• technical specialists are not required full-time

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Choosing a structure

• Size of project
• Strategic importance
• Novelty, need for innovation
• Need for integration ( depts. involved)
• Environmental complexity ( of external
  interfaces)
• Budget, time constraints
• Stability of resource requirements
• Small project focused entirely on the functional
  department?
• Large project involving many different
  departments?
• Significant project, separate from the normal
  business, which will create a new department?
• New product launch?

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CONCLUSION

• Functional Form
• focus is on in-depth application of a technology
• Most of the talent/expertise resides in one
  functional area
• Pure Project Form
• firm engages in a large number of similar
  projects (construction)
• one-time, highly specific unique tasks that is
  not appropriate for a single functional area (
  product development marketing, design
  engineering, manufacturing engineering, quality
  engineering)
• Matrix Form
• integration of inputs from several functional
  areas
• involves reasonably sophisticated technology
• technical specialists are not required full-time