02/11/2020

SBEC 4763

Site Organisation

FACILITATOR
DR. WAN YUSOFF WAN MAHMOOD
Email: [email protected]
HP: +60 19 755 8088

Lecture Outline
Introduction
Definition of organization
The needs for organization structure
Organization structure
Important of organization structure
Organization culture
Organization model
Forms of organization structure

Lecture Outline
Type of organization structure
Organizational sub-system
Factors which influence organizational
structure
Characteristics of an organization
Project Organization
Structure of project participants
Example – Project/Site organization
structure

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INTRODUCTION
Good organizational structure does
not by itself produce good
performance… poor organizational
structure makes good performance
impossible, no matter how good
the individual managers may be.

Peter Drucker - The Practice of

Management

What is an Organization?

What is an Organization?

A social unit of people,

systematically structured
and managed to meet a
need or to pursue collective
goals on a continuing basis.

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What is an Organization?

An Organisation is two or
more people working
together to achieve a
common goal

What is an Organization?
An organisation is a relative
enduring grouping of people in
a structured evolving system
whose coordinated efforts are
meant to reach the goals in a
dynamic environment

What is an Organizational
Structure?

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What is an Organizational Structure?

Organization
structure is a
framework within
which an
Organization
arranges it’s lines of
authorities and
communications
and allocates rights
and duties.

Why do we need an
Organizational Structure?

Why do We Need an Organizational

Structure?
All Organizations have a
management structure that
determines the relationships
between functions and positions and
subdivides and delegates roles,
responsibilities and authority to carry
out defined tasks.

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What is the features of the

Organizational Structure?

Features of Organizational Structure

1. Change of command: The continuous
line of authority that extends from upper
level of organization to lowest level of
organization and clarifies who reports to
whom.
2. Authority: The rights inherent in a
managerial position to tell people what
to do and expect them to do it.

Features of Organizational Structure

3. Responsibility: The obligation or
expectation to perform. Responsibility
brings with it accountability.
4. Unity of command: The concept that a
person should have one boss and should
report only to him.
5. Delegation: The assignment of authority
to another person to carry out specific
duties.

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Importance of Organizational
Structure
1. Impacts effectiveness and
efficiency.
2. Reduces redundant actions.
3. Promotes teamwork.
4. Improves communication.
5. Contributes to success or failure.

Organizational Culture

1. The Role Culture

2. The Power Culture
3. The Person Culture
4. The Task Culture

Handy’s Model of Organizational Cultures

The Role Culture The Power Culture

The Person Culture The Task Culture

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Handy’s Model of Organiza/onal Cultures

Organizational Culture
• The Role Culture
– Often stereotyped as a bureaucracy and
The Role Culture The Power Culture
best depicted as a Greek temple.
– The role organization rests its strength in its
pillars, I.e. finance, design, production.
– The work of the pillars and interaction
between them are clearly defined by rules
and procedures.
The Person Culture The Task Culture
– Pillars are only joined at the top by a
pediment of senior managers.
– The role is more important than the
individual.

Handy’s Model of Organiza/onal Cultures

Organizational Culture
The Power Culture
• Frequently in small entrepreneurial
The Role Culture The Power Culture
organizations.
• All power emanates from the center with
rays of power and influence spreading
through the organization.
• Its structure is best depicted as a web.
• There are few rules and procedures.Handy’s Model of Organiza/onal Cultures
• Decisions areCulture
The Person The Task Culture
based on influence rather
than logical grounds.
• Control is exercised from the center by the
selection of key individuals.

The Role Culture The Power Culture

Organizational Culture
The Person Culture
The Person Culture The Task Culture
• Unsual in manufacturing organizations.
• The group only exists to support the
needs of the individual, i.e. law firms,
consultancy groups.
• A loose affiliation exists between
members; the culture has little
structure and only exists whilst mutual
benefit continues.

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 Handy’s Model of Organiza/onal Cultures

02/11/2020

The Role Culture The Power Culture

Organizational Culture
The Task Culture
• It is a team culture where the outcome, the
The product
Person Culture The Task Culture
result, the of the team’s work is the
common enemy that obliterates all other
individual objectives.
• The culture responds well to change and thrives
in a fast changing well-motivated environment.
• Respect is based on performance and abilities,
not positions.
• The culture is well represented by a net pulling
together functional people to achieve a specific
objective.

Person

Power Task
Policy

Breakdown Innovation

Steady State

Role

Source: Charles Handy - Understanding Organization

Organizational Model
• Mechanistic model
• Organic model
• Hybrid model

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Mechanistic model

• Bureaucratic and hierarchical

• Very departmentalized
• Vertical chain of command
• Narrow spans of control
• Highly formalized

Organic model

• Cross-functional/hierarchical teams
• No department focus
• Flat ‘command’ structure
• Diversified control
• Highly informal

Hybrid model
• A hybrid of mechanistic and
organic
• The hybrid structure, being
flexible, might be a mix of loose
and tight properties, such as
light controls over current
activities and loose controls for
new undertakings

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Forms of Organizational Structure

1. Tall Organizational Structure

2. Flat Organizational Structure
3. Virtual Organizational Structure
4. Boundary less Organizational
Structure

Forms of Organizational Structure

1. Tall Organizational Structure
•Large, complex organizations
often require a taller hierarchy.
•In its simplest form, a tall
structure results in one long
chain of command similar to
the military.

Forms of Organizational Structure

1. Tall Organizational Structure
•As an organization grows, the
number of management levels
increases and the structure
grows taller. In a tall structure,
managers form many ranks and
each has a small area of
control.

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Tall Organizational Structure

Tall Organizational Structure

Forms of Organizational Structure

2. Flat Organizational Structure
•Flat structures have fewer
management levels, with each level
controlling a broad area or group.
•Flat organizations focus on
empowering employees rather than
adhering to the chain of command.

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Forms of Organizational Structure

2. Flat Organizational Structure
•By encouraging autonomy and
self-direction, flat structures
attempt to tap into employees’
creative talents and to solve
problems by collaboration.

Flat Organizational Structure

Flat Structure/Hierarchy

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Flat Organizational Structure

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Forms of Organizational Structure

3. Virtual Organizational Structure
•Virtual organization can be thought
of as a way in which an
organization uses information and
communication technologies to
replace or augment some aspect of
the organization.
•People who are virtually organized
primarily interact by electronic
means.

Forms of Organizational Structure

3. Virtual Organizational Structure
•For example, many customer
help desks link customers and
consultants together via
telephone or the Internet and
problems may be solved
without ever bringing people
together face-to-face.

Forms of Organizational Structure

4. Boundary less Organizational
Structure
• A boundary less Organizational structure is
a contemporary approach in
Organizational design.
• It is an organization that is not defined by,
or limited to the horizontal, vertical or
external boundaries imposed by a pre-
defined structure.

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Forms of Organizational Structure

4. Boundary less Organizational
Structure
• It behaves more like an organism
encouraging better integration among
employees and closer partnership with
stakeholders.
• It’s highly flexible and responsive and
draws on talent wherever it’s found.

Type of Organizational Structure

• Functional Organization
• The Matrix Organization
• The Projectized Organization
• Composite Organization

Functional Organization
• This structure derives from the
assumption that each unit should
specialize in a specific functional area
and perform all the tasks requiring its
expertise within its specialization.
• This form of structure works well in
repetitive, stable environments,
because there is little change in the
work to be carried out.

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Functional Organization
• To get the work done usually requires
a relatively low level of integration
because of a chain-of-command
structure, and documented rules and
procedures.
• The functional organization offers the
most fundamental and stabilizing
arrangement for large companies

Functional Organization

Chief Executive
Project coordination

Functional Functional Functional

manager manager manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Functional Organization
Chief Executive
Project coordination

Marketing Human
Finance Engineering Production
& Sales Resources
Staff

Staff Staff Staff Staff Staff

Staff Staff Staff Staff

Staff Staff Staff Staff Staff

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Matrix Organization
• The matrix organization can be
viewed as a project organization
superimposed on a functional
organization with well-defined
interfaces between project teams
and functional elements.
• In the matrix organization, assigning
specific resources of each functional
unit to each project eliminates
duplication of functional units.

Matrix Organization
• Each project has a manager who
must secure the required resources
from the functional groups.
• The two must act as partners to co-
ordinate operations and the use of
resources.
• However, it is the project manager
who is ultimately responsible for the
success or failure of the project.

Matrix Organization
• In the matrix type of organization
the range can be from weak to
strong.
• Weak matrices maintain many of
the characteristics of a functional
organization, and the project
manager’s role is more of a
coordinator, or expediter, than a
manager.

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Matrix Organization
• In similar fashion, strong matrices
have many of the characteristics of
the projectized organization –
fulltime project managers with
considerable authority, and full-time
project management administrative
staff.

A Matrix Organization
PRESIDENT

MARKETING HUMAN
FINANCE AND SALES RESOURCE ENGINEERING MANUFACTURING

PROJECT A

PROJECT B

PROJECT C

A Matrix Organization

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Weak Matrix Organization

Balanced Matrix Organization

Strong Matrix Organization

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Projectised Organization

• In this type of organization, projects

are performed within each unit.
• This type of structure results in a
duplication of resources, as
different organizational units in a
range of projects perform similar
activities and processes.

Projectised Organization
• A second disadvantage, due to
the limited tenure span of projects,
is that work assignments and
reporting hierarchies are subject to
continuous change.
• This can have an effect on career
paths and professional growth.

Projectised Organization
Chief
Executive
Project coordination

Project Project Project

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

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Pure Project (Projectised) Organization

Chief Executive
Project coordination

Project 1 Project 2 Project 3 Project 4

Finance Finance Finance Finance

Resource Resource Resource Resource
Sales Sales Sales Sales
Engineering Engineering Engineering Engineering
Production Production Production Production

Composite Organization
• Many organization involve in
composite structure at various level.
• For example, even a fundamentally
functional structure may create a
special project team to handle a
critical project.
• Such a team may have many of the
characteristics of project team in a
projectized organization.

Composite Organization

• The team may include full time staff

from different functional
departments, may develop its own
set of operating procedures, and
may operate outside the standard,
formalized reporting structure.

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Composite Organization

Functional Organization
The Projectised Organization
Projectised Organization
The Matrix Organization

Organizational Subsystems
There are five organizational
subsystems that perform essential
functions. These subsystems and their
roles are as follows:
• Boundary spanning
• Production
• Maintenance
• Adaptation
• Management

1. Boundary spanning
• These subsystems deal with
input and output transactions.
• On the input side, they acquire
needed supplies and materials.
• On the output side, they create
demand and market the
output products or services of
the organization.

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2. Production

• These subsystems produce

the products and services
of the organization.
• It is within these
subsystems that the
primary transformation is
carried out.

3. Maintenance
• This subsystem is responsible for
the smooth operation and
upkeep of the organization.
• Maintenance includes;
§ Hard elements, such as
machines, buildings, etc., and
§ Soft elements, such as morale,
compensation, comfort, etc.,
to meet human needs.

4. Adaptation
• This subsystem is responsible for
organizational change.
• It scans the environment for
problems, opportunities and
other developments.
• In its responsibility profile it deals
with the responses needed to
adapt the organization for
change.

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5. Management
• This subsystem is responsible for
directing and coordinating the other
subsystems of the organization.
• It provides direction, strategy, goals
and policies for the entire
organization.
• In addition, it is responsible for
developing the organization structure
and directing tasks within each
subsystem.

Factors which Influence Organisation

Structures
There are an environment that will
influence an organization:
•Government: Safety regulations,
minimum wage, tax codes, action
guidelines, etc., are government
legislation which impinges on and
strongly affects the operations of
many organizations.

Factors which Influence Organisation

Structures
• Financial resources: The availability of funds
can be impacted by the value of the
company’s stock, government (not-for-
profit) funding, interest rates, insurance
premiums, current conditions in capital
markets, and many other issues.
• General economic conditions: When
conditions are favorable, an organization
may benefit; if unfavorable, an organization
could suffer.

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Factors which Influence Organisation

Structures
• Human resources: The supply or non-
availability of appropriate individuals from
the labor market can be an important
factor for the effectiveness of an
organization.
• Technology: Since most tools, techniques
and methodologies are imported into an
organization, technology can significantly
impact on organizations.
*Technology - how an organization transfers its inputs into
outputs.

Factors which Influence Organisation

Structures
• Culture: This includes the physical
environment within which the organization
sits, as well the ethnicity, education and
values of society’s population (workforce
and consumers), changes in gender
availability, etc.
• Markets: This refers primarily to customer
demand for the goods and services
produced by an organization and the effect
an organization can have on consumers.

Factors which Influence Organisation

Structures
•Industry: The competition determines
how much of an organization’s
resources must be directed into
marketing, what the marketing
strategy should be, the target of profit
margins, etc. The industry within which
the organization operates is impacted
on and is impacted by these
organizations

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Factors which Influence Organisation

Structures
•Raw materials: Essential inputs
required by an organization. The
availability and cost associated
with raw material supply can
significantly affect the nature,
operations and survival of an
organization.

Factors which Influence Organisation

Structures
• The existing of uncertainty in a business
and societal world in which the
organization is merely a small element,
an organization’s structure can be
affected.
• As uncertainty can be more of a threat
to some organizations than to others,
management may try to adjust an
organization’s structure to minimize the
effects of uncertainty.

An Organization as an Environmental Subsystem

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Characteristics of Organizations

• Organization Structures
• Specialization
• Hierarchy
• Centralization v. Decentralization
• Rigidity v. Flexibility

Organization Structures
• Structure is the skeleton of the business.
• It creates enough standardisation of
roles and procedures to allow work to
be performed economically and to
keep the organisation in tune with the
procedures of the firms it does business
with.
• It facilitates control by creating a
communications network of instructions
and feedback.

Organization Structures
• Hence, the purpose of
organisation structure are;
§ to ensure that work is
allocated rationally,
§ there are effective links
between roles, and
§ the employees are properly
supervised and co-ordinated

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Organization Structures
• When designing or improving an
organisation, senior managers must
ensure that:
§ Tasks and responsibilities are
allocated to groups and individuals,
including discretion over work
methods and resources;
§ Individuals are grouped into sections
or larger units and the units
integrated into the total organisation;

Organization Structures
§ Formal relationships are set up, spans of
control specified and the number of
managerial levels decided;
§ Jobs are clearly defined, but are not too
rigid or specialised;
§ Authority is delegated and procedures
are set up for monitoring its use;
§ Communication systems are created,
improving information flow and co-
ordination;

Organization Structures
§ Procedures are developed for
performance appraisal and
reward.

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Specialization
• Most organisations have introduced
specialisation in the belief that it leads
to better use of people and resources,
but it has drawbacks too.
• It leads to fragmentation and the
need to control and integrate tasks
more tightly.
• Specialisation leads to isolation and
can cause co-ordination problems.

Specialization
• Most organisations have introduced
specialisation in the belief that it leads
to better use of people and resources,
but it has drawbacks too.
• It leads to fragmentation and the need
to control and integrate tasks more
tightly.
• Specialisation leads to isolation and
can cause co-ordination problems.

Specialization
• In professional and technical jobs,
specialisation can create challenge;
in clerical and manual jobs it can lead
to boredom.
• Highly routine jobs, requiring little
learning, are not a humane use of
people because their full potential
cannot be tapped.

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Specialization
• Drucker (1968) offers three simple
guidelines for improving routine jobs:
§ a job should be a distinct step in
the work flow, so that the worker
can see the result;
§ the design of a job should allow the
worker to vary his pace;
§ a job should provide an element of
challenge, skill or judgement.

Hierarchy
• Most organisations are hierarchical.
• They are made up of a series of tiers, each
having authority over the levels beneath
them.
• The number of levels in the hierarchy may
vary from two in a small building firm to a
dozen or more in some large organisations.
• The size of the firm largely dictates the
number of tiers, although management
may decide to widen spans of control to
limit the number of levels.

Hierarchy
• A small organisation can opt for a shallow
structure with few levels of management
or it can keep spans of control small,
making the structure taller. It will usually
choose the former.
• A large organisation has a more difficult
choice. It is necessary to maximise the
span of control to prevent the structure
becoming too tall, but clearly there are
limits beyond which effective supervision
becomes very difficult.

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Centralisation v. Decentralisation
• An important structural feature
affecting an organization's efficiency is
the degree to which it is centralized or
decentralized. This can be measured
by:
§ The extent to which managers
delegate authority and decisions
from the top to the lower levels in
the business;

Centralisation v. Decentralisation
§ The extent to which the administrative
functions of the firm are carried out at
head office, rather than being spread
through the organisation. For
instance, some contractors have a
central buying department for all
material purchases. Others allow
managers in different areas or
divisions to organise their own
purchasing.

Centralisation v. Decentralisation
• However, no organisation is likely to be
totally centralised or decentralised. Most
firms strike a balance between the two.
What this balance should be depends on
several factors:
§ The size of the organisation. This is
important because the larger it gets,
the harder it becomes to control
everything from the top, without
depriving junior managers of authority
and autonomy.

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Centralisation v. Decentralisation
§ The type of work the firm undertakes.
This is important for two reasons -
diversity and pace of change. If its
operations are diverse, it is difficult
for the top managers to keep track
of everything. If conditions are
changing fast, it is better to leave
more of the judgements and
decisions to people on the spot.

Centralisation v. Decentralisation
§ Staff capabilities and motivation. A
decentralised organisation is often
more satisfying for people to work
in, but staff must be competent
and willing to make the necessary
decisions. This means that the
organisation must have good
calibre employees in key positions
in its decentralised units.

Advantages & Disadvantages

Decentralization (Fryer, 1997)
Advantages Disadvantages

Makes junior posts more challenging Makes overall control more difficult

Decisions are taken by those who Difficult to keep track of decisions

have to live with the results taken

Encourages people to show initiative Difficult to keep an overall

and creates greater commitment perspective and safeguard the
among employees interests of the whole organisation

Easier to judge a manager's Creates higher administrative costs

performance when he is responsible owing to duplication of specialists
for a decentralised unit

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Rigidity v. Flexibility
• The degree of rigidity can vary a lot from
organization to organization depending on
their size.
• The larger the firm, the more formal and
inflexible it is likely to be.
• Its also vary from department to
department
• For example, in a construction firm, the
buying department is likely to be more rigid
than the estimating department, whose
workload is usually varied and
unpredictable.

Rigidity v. Flexibility
• There are several indicator of
rigidity in a company, as
described below:
§ Rules and Procedures
§ Organisation Charts
§ Job Description and
Organisation Manual
§ Paperwork and Committees

Project Organization
• A leader or a manager of a successful companies
or project generally attribute a significant part of
that success to good organisation.

• But the problem lies in determining what a “GOOD

ORGANISATION” is for each of great variety of
institutions that are engaged in very different
activities on all kind of scale with the contrasting
economic, social, political and cultural settings
which make up the world’s patchworks
96

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Project Organization
Before a plan or a project can be successfully
implemented it is crucial that it is:
§ Appropriately organised (design an
organisation)
§ Adequately staffed, and
§ The activities are being directed towards
achieving the objectives
But before we go further into how a corporation,
company or project is organised, it is most
appropriate to understand the key
considerations in its designing or development.

Project Organization
Project Success Factors
In thinking about organisation, it is
critical to think again about the five (5)
project success factors;
• AGREEMENT among project team,
customer (client) and management on the
goal of the project.
• A PLAN that shows an overall path and
clear responsibilities which is used to
measure progress during the project.
98

Project Organization

Project Success Factors

• CONSTANT, EFFECTIVE
COMMUNICATION between everyone
involved in the project
• A controlled SCOPE
• MANAGEMENT support

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Project Organization
Project structure
The project manager must closely examine
the way the project should be structured by
asking questions such as the following:
§ Should activities be grouped differently?
§ Should jobs or tasks be broken down into
narrow areas of works and responsibilities
so as to secure SPECIALISATION? Or

Project Organization
Project structure
§ Should the degree of SPECIALISATION to
be kept to the minimum in order to simplify
communication and to offer greater scope
and responsibility in their work
§ Should the authority to make key decisions
be CENTRALISED at the headquarters or
DECENTRALISED to different managers?

Project Organization

Project structure
§ Should it has a TALL STRUCTURE with many
layers of managers or people with each
having a narrow span of control?
§ Should activities be grouped differently?
Should it be organised into FLAT STRUCTURE
with few layers of managers or personnel?

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Project Organization

Project structure

§ Should the project be managed like a

“TIGHT SHIP” with many rules, procedures
and control or “LOOSELY” with few rules
and regulations?

Structure of Project Participants

Client

Design Sector Design Sector

Architect
Quantity Surveyors Engineers (C&S, M&E)

LINE OF DEMARCATION

Main Contractor

Sub-Contractor Supplier
Production Sector Production Sector
104

Project Participants

Client Consultants

Main Contractor Supplier

Sub-Contractor NSC

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Project Participants

Client Structural/Services
Engineer
Architect
Quantity Surveyor

Local Authority Clerk of Work

CIDB

Main Contractor DOSH

NSC SC NS Supplier

THE CONSTRUCTION PROJEC T TEAM

Client Main
The project contractor
manager
Sub
contractor
Architect
THE
CONSTRUCTION
Nom. Sub
PROJECT TEAM contractor

C&S
engineer

suppliers
M&E
engineer
Bankers
Landscape Quantity
107

architect Surveyor

Client accept tender and enter

into contract with contractor

Client appoints and enter into Client

contract with consultants

The project
manager C&S M&E Landscape Quantity Main
Architect engineer engineer architect Surveyor contractor

Contractor enter into contract with

sub-contractors and suppliers

THE CONSTRUCTION PROJECT

TEAM Nom. Sub Sub
contractor contractor suppliers
and their relationship
108

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Example:FINANCIAL
PROJECT OR SITE
PROPOSAL
ORGANIZATION STRUCTURE
Construction OPERATIONAL
Management FUNCTIONAL
MANAGEMENT
• System Implementation
Construction • Management Procedures
Manager • Project Management
• Plan Insurance
• Wages
Assistant Site Manager Site • Administration
(Sub-contract Management) Manager

Planning Quantity Purchasing Quality & Health & Environm ent

Surveying Performance Safety

Section Section Section Foreman Section SUPERVISORY

Foreman Foreman (Ext. Works) Foreman MANAGEMENT
(Drainage) (Concrete) (building) • System Implementation
• Working Instructions
• Working Practices

G ang Leaders

Tradesm an

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