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SBEC 4883

CONSTRUCTION BUSINESS
PRACTICES

Prepared For: Prof. Madya Dr. Zakaria Bin Mohd. Yusof


Prepared By:
1. ASMA BAGHERPOURHAMEDANI
A12BE4010
2. WAN AHMAD SHAHIRAN BIN WAN MOHAMED SALLEH
B14BE0061
3. WAN KHAIRI BIN WAN ZAKARIA
A13BE0169

Contents
1.0 INTRODUCTION TO CONSTRUCTION BUSINESS.................................................2
1.1 CONSTRUCTION ECONOMY............................................................................2
1.1.1 THE OBJECTIVES OF CONSTRUCTION ECONOMY......................................2
1.1.2 THE IMPORTANCE OF THE STUDY OF CONSTRUCTION ECONOMICS.........2
1.2 CONSTRUCTION BUSINESS.............................................................................3
1.3 CONSTRUCTION MARKETS............................................................................. 4
1.3.1 DEVELOPS STRATERGIES FOR CONSTRUCTION MARKETING PLANS.........4
1.4 PARTIES IN CONSTRUCTION BUSINESSES.......................................................5
1.4.1 INTRODUCTION........................................................................................ 5
1.4.2 TEAM MEMBER IN CONSTRUCTION PROJECT............................................5
1.5 TALENT MANAGEMENT FRAMEWORK FOR THE CONSTRUCTION INDUSTRY....8
1.5.1 ATTRACTING............................................................................................. 9
1.5.2 SELECTING............................................................................................... 9
1.5.3 ENGAGING............................................................................................. 10
1.5.4 DEVELOPING.......................................................................................... 11
1.5.5 RETAINING............................................................................................. 12
1.6 INTRODUCTION TO BUSINESS MANAGEMENT..............................................13
1.6.1 ROLE OF BUSINESS................................................................................13
1.6.2 ADDING VALUE....................................................................................... 13
1.6.3 OPPORTUNITY COST...............................................................................13
1.6.4 DIVISION OF LABOR............................................................................... 14
1.6.5 BUSINESS SECTORS............................................................................... 15
1.6.6 REASONS FOR SECTORAL CHANGE........................................................15
1.6.7 BENEFITS OF SECTORAL CHANGE..........................................................16
1.6.8 ROLE OF ENTREPRENEURSHIP...............................................................16
1.6.9 CHALLENGES OF START-UP BUSINESS....................................................16
1.7 PRINCIPLES AND PRACTICES OF BUSINESS MANAGEMENT...........................16
1.7.1 8 Best Practices in Business Management.............................................16
1.7.2 GENERAL BUSINESS SKILLS...................................................................20
REFERENCE.............................................................................................................. 22
1.0 INTRODUCTION TO CONSTRUCTION BUSINESS

1.1 CONSTRUCTION ECONOMY

Economics in general is about the choice of the way in which scarce resources are
allocated between all their possible uses to ensure maximum return. Seeks to ensure the efficient
use of resources available to the construction industry, and to increase the rate of growth of
construction work in the most efficient manner. Consists of the application of the techniques and
expertise of economics to construction projects, and secure costeffectiveness for the client.

1.1.1 THE OBJECTIVES OF CONSTRUCTION ECONOMY

The objectives of construction projects, from the client's point of view include:
To achieve maximum return from the project concerned
To minimize construction costs within the criteria set for design, quality and space
To minimize any social benefits
To maximize safety, quality and public image
To minimize risk and uncertainty

1.1.2 THE IMPORTANCE OF THE STUDY OF CONSTRUCTION ECONOMICS

1. The rapid technological and sociological changes


Effects on managing risks, avoiding unpleasant surprises, ensuring value for money and
speeding up project delivery time is important for clients.

2. Construction projects are more complex


Client requirements are becoming more complicated and more demanding, for example
of complexities mean that there are more opportunities for the cost of a project to get out
of hand.

3. The modern practice in design


Where new ideas, techniques, materials and components are used. There are wider range
of products and has produced variety in construction. The traditional methods of
estimating are unable to cope in these circumstances to achieve value for money and
more balanced design.

4. Elimination of waste
The move towards elimination of waste and a greater emphasis on the use of the worlds
scare resources which have necessitated a desire for improved methods of forecasting and
control of costs.
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5. World recession
Which has generally produced a shortage of funds for capital purpose and construction
has resulted in the soaring costs of construction which implied a greater caution on the
part of the clients.

1.2 CONSTRUCTION BUSINESS

Owning a business can be one of the most fulfilling ways to make a living. This is
especially true in a country like Malaysia where the economy is flourishing. In Malaysia, a
business operate as a sole proprietorship, partnership or a company. A business can be any form
of trade, commerce, craftsmanship, occupation, profession or other activities that is carried out
for the purpose of maximizing profit.
Demand and supply in the construction industry is also the best choice to involve in this
business. In general, demand for the construction industry output comes from housing, industrial
and commercial buildings, social-type construction and refurbishment, repair and maintenance.
The determination of construction demand is complex due to the aforementioned characteristics
of the construction industry.

Private
-Housing
-Industrial
-Commercial
-Infrastructure

Goverment
-Public hospital
-Public School
-Administrative
building
-Infrastructure
-Quaters

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Construction industry has the particular difficulty that every building is different, a
unique prototype, developed by a team of consultants, contractors and other suppliers that may
never have worked together before and may never work together again. Complexity in the
construction industry creating business opportunities inside. For example be a supplier of raw
materials, labor or service expertise in a particular field in a project.

1.3 CONSTRUCTION MARKETS

Marketing is much more than selling or advertising. Marketing is the strategic plan that
you develop for your organization that looks at your construction company's strengths and
weaknesses, the areas in which you have a competitive advantage in the market, that you will
target your sales focus on, the demographics of your chosen market, and the pricing structure that
you plan to use. Each component is a part of the larger strategy and depends on the other for
success. As with most issues involving a construction business, planning and preparation are
paramount, as well as measuring the results.

It's important to understand the general steps necessary to create and implement a
construction marketing plan for your business. The size of the marketing budgets will vary, as
will the intended target market. Development of a marketing strategy comes down to similar
steps that can be used for any size organization. It doesn't need to be expensive, but it must be
thorough and thoughtfully analyzed. Your marketing plan, just like your financial plan, must be
monitored and adjusted as needed, and it must also be adaptable to changing competitive
environments. Market conditions vary across the construction industry, with different rates of
growth in residential, public, retail, civil engineering and office building sectors, making it
important to identify the niche where you want to compete

1.3.1 DEVELOPS STRATERGIES FOR CONSTRUCTION MARKETING PLANS

1. Look for opportunities in niche sectors where you have specialist skills.
Firms offering specialized services win almost twice as many bids as firms offering
general construction services. Specialization means that you have fewer competitors for
particular types of job and you can also develop a reputation as the expert in a sector.

2. Analyze the strengths and weaknesses


Develop a plan for dealing with the weaknesses. Use the analysis to identify opportunities
and threats to our business. Focus on improving areas of the business that would enable
you to take on more profitable projects. Compare our capability with your competitors' to
provide a benchmark for developing our business.

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3. Identify the factors that differentiate your business
In a competitive tender, emphasize factors that are important to the project, such as speed
of completion, use of innovative design techniques or materials, or sustainable building
techniques. Demonstrate value to the client to move the decision away from one that is
purely based on price.

4. Create an effective website


Provide comprehensive information to clients who are carrying out preliminary research
before selecting a short list of potential suppliers. Include details of your company's
experience, areas of specialization and capability. Emphasize the skills and experience of
your workforce and include details of successful projects.

5. Develop a communications plan to target existing clients and new prospects


Publish an electronic newsletter to keep existing clients up to date with developments in
your company. Maintain contact between projects to ensure that your firm is short-listed
for future work. Ensure that prospects have up-to-date profiles of your company. Monitor
announcements of new construction projects in the trade press and online tender
databases. Prepare a company profile and capability presentation so that you are prepared
for the tender process.

1.4 PARTIES IN CONSTRUCTION BUSINESSES

1.4.1 INTRODUCTION

Projects to design and construct buildings can involve large numbers of people, and on
major projects many thousands of people. The structure and composition of the project team
tends to change through the duration of the project; some team members might only have a very
brief involvement, bringing specialist knowledge or supplying specialist components during a
particular phase, whilst others, such as the client, project managers or lead consultants may be
involved for many years.

1.4.2 TEAM MEMBER IN CONSTRUCTION PROJECT

From the construction point of view, project team or project integration often refers to
collaborative working practices, methods and behaviours that promote an environment where
information is freely exchanged among the various parties. It is the nature within the
construction team where various skills and knowledge is shared by eliminating traditional
barriers that separates the design process and the construction activities in return to improved
project delivery(Baiden and Price, 2011).

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The typical design and construction team in construction (Territories, Northwest, 2013)

1.4.2.1 COLLABORATIVE PRACTICES

For consultants to work effectively as a team however, they should adopt collaborative
practices as early in the project as possible. This can include procurement routes (such as
partnering), clarity of organisation, co-location, financial motivation (such joint 'pain or gain'),
problem resolution procedures and information management procedures. The requirement to
adopt such practices should be included in appointment documents.

Establishing collaborative practices is of particular importance on building design and


construction projects, as they are likely to involve bringing together large numbers of diverse
disciplines, many of whom will not have worked together before. They are also likely to involve
the co-ordination and integration of a great deal of complex information. Failure to establish
clear and efficient project-wide procedures and collaborative practices can be disastrous.

This has become increasingly true as project structures have evolved from straight-
forward client - consultant - contractor relationships to more integrated structures with complex

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financing arrangements, early engagement of the supply chain and the introduction of sub-
contractor and supplier design. The adoption of building information modelling is likely to
accelerate this trend.

1.4.2.2 INTEGRATE PROJECT TEAM

On publicly-funded projects, the government favours the creation of an integrated


project team where a system of collaborative working is adopted between all of those involved
in the delivery of the project.

The integrated project team is a particularly important concept for public projects as the
recommended procurement routes (set out in the Government Construction Strategy) are private
finance initiative (PFI), prime contracting and design and build. Under these routes, a single,
integrated supply team (including designers, contractors, specialist suppliers and facilities
managers) is appointed, responsible for delivering (and sometimes, financing and operating) the
entire project. The Government recommend that this appointment is made after the preparation
of the brief (or output-based specification), before any design work has been undertaken.

1.4.2.3 TEAM MANAGEMENT

In some organisations, teams build naturally as people work together to achieve a


common goal, but this can take a considerable amount of time. The one-off, project-based nature
of design and construction demand faster results.

Approaches to team building can differ, depending on the type of project, the managerial
style of the team leader, and the specific types of people on the project team. However, a crucial
step in the team building process is the kick-off, or start up meeting. This is a chance for the team
members to get to know each other, establish relationships and lines of communication, identify
problems, set goals and objectives and obtain commitments.

As the nature of the project team will change over time, it will be necessary to have many
start-up meetings as new members join the team (see for example: Specialist contractors start-up
meeting, Consultant team start-up meeting and Pre contract meeting).The roles of team members
can be constructive or destructive. Constructive roles move the group towards action and
accomplishing results, while destructive roles hinder the accomplishment of group goals.

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1.4.2.4 CONFLICT CAN ARISE BETWEEN PARTIES WHEN:

Work boundaries and role definitions are not clear (ambiguous jurisdictions).
It is not clear who is in charge.
Instructions are not clear, or are inconsistent.
Parties try to achieve different or inconsistent goals (conflict of interest and personality).
Communication difficulties create misunderstanding.
There are disagreements concerning scheduling and timing constraints.
There are conflicting ideas about the sequence of activities.
There are differences of opinion between and within the project team and support groups.
There are disagreements about technical issues.

This picture can be further complicated by a multitude of stakeholders and third party
dependencies, all of which may be able to influence the success of the project. It is vitally
important therefore that the entire project team structure, its interfaces, roles, responsibilities and
risks are properly considered at the beginning of the project, and strategies put in place to
optimise collaborative practices.

1.5 TALENT MANAGEMENT FRAMEWORK FOR THE CONSTRUCTION


INDUSTRY

In the competitive marketplace that exists today, talent management is a primary driver
for organizational success. Our society has moved from the Industrial Age to the Age of
Intellectual Capital. Many experts refer to this as the Era of the Knowledge Worker. Companies
are now competing on the basis of the skills and talents of their employees and are discovering
that, by attracting and retaining the best and the brightest employees, the company can achieve
higher than average market share and elevated profits. These knowledge assets are not the
same as those that were sought after in the Industrial Age, such as plants, equipment, and
inventory. The intellectual capital consists of the knowledge and experience of every employee
in the organization. The word talent is now being more narrowly defined as a core group of
leaders, technical experts and key contributors who can drive their businesses forward. A
management consulting firm for the construction industry, FMI, claims that organizations that
strategically address the need to develop talent through recruiting and hiring, training,
development, performance management, career pathing and evaluation will maintain a
competitive advantage and win the talent wars.

Economic and demographic changes in todays workforce have turned the competition
for talented employees into a strategic imperative. Companies are vying for top employees for
many reasons. The primary reasons are demographic shifts, increased turnover, economic growth
and globalization.

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From this model, all actions regarding talent management can be derived. In this
framework, there are five key elements: attracting, selecting, engaging, developing, and retaining
employees.

1.5.1 ATTRACTING

The responsibility to recruit top-tier talent is often left up to the recruiters ability to source and
screen for the bright talent. This task not only takes time, but also requires money, especially if
an executive search firm is used. A company needs to be creative when developing a recruitment
strategy and should avoid the more traditional methods of recruiting when attracting Generation
Y. Recommended strategies for this generation include interactive networking sites, Open
Houses (for prospects and their parents), referral programs, internships, and job boards, such as
Career Builder.

1.5.2 SELECTING

As small construction firms find themselves struggling to identify a niche that can set their
firm apart from larger more established companies, the area of selection can become equally as
challenging. Traditional hiring practices include examining resumes, checking references and
conducting interviews. The subjective nature of evaluating resumes and answers to interview
questions makes these practices less reliable and the legal ramifications for employers providing
references have made these methods less useful. Including an objective measure of performance,

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such as psychological assessment, in combination with other recruitment tools can greatly
improve a companys chances of matching the right person to the job. Behavioral interviews,
personality assessments and job knowledge tests can serve as valuable selection, promotion and
placement tools (FMI, 2007).

1.5.3 ENGAGING

Attracting and selecting the talent can appear to be the simplest of the phases. Although
pay and benefits may initially attract employees, top-tier organizations have now realized the
importance of employee engagement. Engagement is much different than satisfaction. A satisfied
employee is happy with current pay, benefits and atmosphere. This contentment may cause
hesitation to show any extra initiative or achievement; thus, it creates a worker who is
comfortable with the status quo. Alternatively, engaged employees demonstrate virtuous qualities
like: innovation and creativity; taking personal responsibility to make things happen; authentic
desire to make the company successful as well as the team; and having an emotional bond to the
organization and its mission and vision. Engaged employees are not difficult to spot in an
organization. They are high-impact peoplethe go-to people in a company. They are willing
to go the extra mile to help the customer and usually understand how this effort makes a
difference on the bottom line (Gostick & Elton, 2007).

However, one should not misunderstand or devalue satisfaction. Both satisfied and
engaged employees are valuable to an organization. A survey conducted by The Jackson
Organization of 200,000 employees found that only 40 percent were identified as being both
highly engaged and highly satisfied. It is critical for organizations to address low engagement
scores such as the 46% of employees that are described in this survey. These are workers that
actually interface with the customer. Often times, it is the employees who can increase or
decrease market share through the level of customer care. This sentiment was reinforced by a
2006 survey of 14,000 workers which shows 65 percent of employees are currently looking for
work. This equates to two-thirds of employees who are looking for greener pastures, and who are
thus not satisfied or engaged (Gostick & Elton, 2007).

When HR managers measure their own companys engagement, they immediately want
to find ways to improve engagement among all ranks. In fact, many find themselves hoping that
engagement will automatically improve, and hope that the disengaged employee will switch
gears and become engaged. This transformation is not likely. In many instances, employee
engagement is a product of strong leadership. The opportunity and challenge for HR, working
with senior management, is to increase the strength of employee engagement. This engagement
can best be accomplished by recognizing that there are four different generations that are
working in companies. These generations include: the traditionalist born between 1900-1945;
(10% of the workforce); boomers born between 1946-1964 (45% of the workforce); Gen-Xers
born between 1965-1980 (30% of the workforce); and Millennials born between 1981-2000
(15% of workforce).

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With each generation comes a separate and distinct protocol for increasing engagement.
For example, the traditionalists are the most satisfied and often the most engaged because they
are not dealing with the challenges of child care, are retired and more apt to be working for the
fun of it. Baby boomers are in need of energizing; they are commonly referred to as work-a-
holics and are commonly stressed-out. This group is also the one that express the lowest
satisfaction with their immediate manager or supervisor.

Young workers are uneasy on the job, not because of inexperience or difficulty adjusting,
but because of their expectations. They seek a different kind of workplace/employment balance.
From day one, this group has watched their parents struggle in corporate America and decided
early on to count on having multiple careers. This age group is searching for a robust and
engaging workplace that encourages collegiality, teamwork and fun. They are looking for ample
opportunities to learn and grow, including assignments that are challenging and involve
flexibility and leeway. They are also looking for immediate feedback from their supervisor or
mentor. They are looking to work for someone who appreciates an individual employees point-
of-view and encourages their development. At SEI Investments, 46 percent of the workforce is
under 35-years-old, and 19 percent is under age 27. The company believes that an open dialogue
and free exchange of ideas among junior and senior staff alike drives creativity and innovation
(Dychtwald, Erickson, & Morison, 2006).

1.5.4 DEVELOPING

Because of the unique characteristics that exist within each generation, strategies should
be tailored specifically for each in order to engage them. There are, however, common threads
that increase retention. Gostick and Elton (2007) report that employees will stay where there is: a
quality relationship with his or her manager; opportunities for personal growth and professional
development; work-life balance; a feeling of making a difference; meaningful work; and
adequate training.

In a nationwide survey of workers and their preferences, the opportunity to learn and
grow and try new things ranked third among 10 basic elements. It ranked higher than more pay,
more vacation, flexible schedule, flexible workplace, work that is personally stimulating, and
even by a slight margin, a workplace that was enjoyable (Dychtwald, Erickson, Morison, 2006).
Employees at all job levels value learning; however, people in small companies value learning
more than those in larger ones and those employees who work more than 50 hours per week
show above-average preference for learning. People in professional and business services,
information and technology, and construction show a significantly above-average preference to
learn and grow than workers in other industries. Therefore, these findings support the value of
companies becoming what David Garvin of the Harvard Business School refers to as a learning
organization which is skilled at creating, acquiring, interpreting, transferring, and retaining

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knowledge and then modifying its behavior purposefully to reflect new knowledge and insights
(Dychtwald, Erickson, Morison, 2006, p. 164).
1.5.5 RETAINING

The likely question for most practitioners becomes, Now that weve trained them, how do we
keep them? Employee retention is closely linked to a companys performance management
system. It is recommended that a compensation package clearly articulates clear expectations of
performance, skills, experience, and behavior. This system should be designed to drive top
performance at every skill level within the organization. It is recommended that compensation
and benefits support the organizations overall goals not just in recruiting and retention, but also
in business performance, commonly referred to as the HR Scorecard, in which people and
strategy are linked with performance (Beckler, Huselid, Ulrich, 2001). Performance management
systems should also address how the different generations in the workplace view feedback and
the drivers of employee retention. While Boomers generally assume theyd spend one to five
years in a position before being promoted, Generation Y want to know where they are going to
be next month (Dychtwald, Erickson, & Morison, 2006). Seventy-one percent of top performers
who received regular feedback were likely to stay on the job versus 43% who didnt receive it.
These statistics indicate that even among peak performers, feedback plays a vital role in an
employees decision to stay in a job (Cappelli, 2008).

Among the most important factors driving employee retention, especially in the United
States and Europe, are opportunities to develop and advance in their careers. According to a
recent study, one of the best predictors of turnover is whether an employee had recently received
training (Cohn, Khurana & Reeves, 2005). Other studies confirm that executives who feel they
have been made to wait longer for promotions are more likely to become disenchanted and quit.
A survey of Generation Y would wait only an average of 10 months for an opportunity to
develop before concluding that advancement was blocked and they should move on (Fairis,
2004). In this case, its more than simply having a deep bench of ready andavailable talent should
the person decide to move on: it involves having a succession planning process focused on long-
term organizational implications.

Most traditional succession plans simply focus on which individuals should advance to
the next position in a hierarchy of jobs, commonly referred to as a job ladder. Today, succession
planning should focus more specifically on talent assessment and force human resource
professionals to ask, Whos ready for the job? The difference is that the determinations are
made well in advance of the vacancy. Therefore, the purpose of a succession plan becomes two-
fold: to identify which jobs will come vacant at what time, and which individuals will be in the
pipeline with the necessary skills, talent and expertise to fill them. More elaborate plans attempt
to ascertain which individuals at each level are equipped with the right attributes to become
candidates for promotion to senior positions later in their careers. As the number of skilled
workers decrease and the Generation Y seek out positions that promote more work/life
balance, the number of executives ready for advancement will decrease.

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1.6 INTRODUCTION TO BUSINESS MANAGEMENT

1.6.1 ROLE OF BUSINESS

Input
Process

Output

Combination of human, physical and financial resources to create output, businesses exist to
satisfy the needs and wants of people, organizations and governments

1.6.2 ADDING VALUE

Adding value is increasing price of the products by improving packaging or adding features, and
also leads to profit making by allowing a business to sell its products for more than its
production costs.

1.6.3 OPPORTUNITY COST

This next best alternative foregone while making a choice is known as Opportunity Cost, its
because of the fact that choice involve opportunity cost, the factors of production have to be used
in the most efficient way and therefore Specialization

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1.6.4 DIVISION OF LABOR

The separation of a work process into a number of tasks, with each task performed by a separate
person or group of persons.

Business Functions
1. Human Resources (Personnel)

Manpower Planning
Job Analysis and Job Description\
Determining Wages and Salaries
Recruitment and Selection
Training and Develepment
Employee Welfare And Motivation
Labour Management Relations
Performance Appraisal

2. Marketing
Conducting Market Research
Price Planning
Customer Relationship Management
Identiying New Business Opportunities
Product Planning
Distribution Planning
Consumer Analysis

3. Finance
Advice on the financial and tax implication of business decisions
Management of wages
Raising Finance
Preparation and monitoring of annual budgets and forecasts

4. Production (Operations)
Production and planning
Purchasing department
Stores department
Manufacture of products

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Design and technical support department

1.6.5 BUSINESS SECTORS

1. Primary Sector
Larger sector in underdeveloped & developing countries
Less capital investment
Less use of machinery
Agriculture constitutes the major part

Despite employing 51% of the workforce, it produces just 15% of the National GDP.

2. Secondary Sector
Takes the output of the primary sector and manufactures finished goods
Important sector to promote economic growth and development
Important source of income in developing countries

Employing 22% of the workforce and contributing 26% of the nations GDP

3. Tertiary Sector
Significant contribution to GDP in developed countries
Provides key inputs to most other business
Transformation of goods through providing services

4. Quaternary Sector
The portion of an economy that is based on knowledge applicable to some
business activity that usually involves the provision of services

Examples: Consultancy (offering advice to businesses) and R&D (research,


particularly in scientific fields)

1.6.6 REASONS FOR SECTORAL CHANGE

Cultural Changes
Development of Markets
Market orientation

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Rampant migration
Focus on customer relationship management

1.6.7 BENEFITS OF SECTORAL CHANGE

Creation of more jobs


Gradual movement towards Tertiary sector
High capital investment towards Government
Increase in countrys GDP
Decrease in imports & increase in exports

1.6.8 ROLE OF ENTREPRENEURSHIP

Bringing together the factors of production


Contributes towards growth of economy
Reduces unemployment

1.6.9 CHALLENGES OF START-UP BUSINESS

Obtaining Finance
Market potential
Cash flow problems
Customer loyalty towards other brands
Regulations
Finding the right staff
Uncertainty

1.7 PRINCIPLES AND PRACTICES OF BUSINESS MANAGEMENT

1.7.1 8 Best Practices in Business Management

A great business leader is someone who can motivate their team and follow business
management best practices for success. Business management is the process by which a
company gets its employees to produce the greatest results with the least amount of effort using
the resources available to them. There are eight best practices for business management as
bellow:

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1. Engage Workers
Alienated workers do not care about performing their jobs. All they care about is getting a
paycheck and advancing their own interests. The first thing a manager needs to do is find
out how to make his employees care about the company's vision. Engaged workers are
not only more enthusiastic and productive; they also become less passive, taking
responsibility for their performance and attracting fresh talent to the company.

2. Reward Effort
No one likes their work to go unrecognized. Recognition of effort and achievement
thanks for a job well done makes employees feel valued. It seems like an obvious
point, but often business management training overlooks the positive impact of
appreciation. Some managers might even feel that being too "touchy-feely" undermines
their authority. On the contrary, reward motivates people to achieve more and helps to
build company loyalty.

3. Be Vulnerable
Vulnerability is a recurring theme in Lencioni's business management articles. He
believes that managers need to stop being anonymous figures in the lives of junior
employees and that getting to know employees is one of the best ways for management to
engage their workers. He also sees vulnerability as crucial in team dynamics; without
being able to speak openly and put one's ideas on the spot, it is impossible for teams to
build trust.

4. Stay Committed
When team members don't trust each other, they devote a lot of time to avoiding conflict
rather than airing their real opinions and working to find common ground. A state of
perpetual ambiguity ensues, in which clear goals and strategies fail to emerge out of
group discussion. Lencioni labels this lack of commitment the "third dysfunction" of
team dynamics. It can lead to poor decision making and stifle productivity. Staying
committed to the team's initiative means creating an atmosphere where conflict is
welcomed, not feared, because differing perspectives help to shape a clear goal.

5. Seek Clarity
A problem with many companies is a lack of alignment among managers, who either stop
working to fulfill the company's vision or never understood what that vision was.
Lencioni points out that company's need to focus on alignment of core principles by
asking the following six questions:

Why do we exist?

How do we behave?

What do we do?

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How will we succeed?

What is most important, right now?

Who must do what?

Without leaders developing and sharing a clear sense of the company's vision, its
values, its strategic goals, and its delegation of responsibilities, the best business
management education in the world won't matter, because the company will lack purpose
and direction.

6. Create Cultural Cohesiveness


Here, "culture" doesn't refer to socioeconomic status or ethnicity. Rather, it means a sense
of shared values that, with the right level of engagement, will lead to the development of
productive and efficient outcomes. It is a good business management practice to make
new hires based on an alignment with the company's core values and its vision, because
workers with shared values make good team members. Diversity of race, gender, and
socioeconomic status is a positive thing because it increases collective insight. But,
diversity in values can lead to a company's downfall.

7. Focus Team Effort


Sometimes managers invest the bulk of their energy on making sure that the team gets off
on the right foot, hosting retreats to boost solidarity and being attentive to ideas as they
first come out. It's essential to focus on ongoing team dynamics, however, to make sure
that members don't get distracted by individual activities that lead them off track.
Consistent reassessment and realignment of team goals is the way to achieve the best
results.

8. Hold Regular Meetings


In an overview of his book, The Advantage, Lencioni has this to say about the importance
of meetings to a company's success: "No action, activity or process is more central to
creating a healthy organization than the meeting." He suggests that, in order to be fully
successful, management should do the following:

Create separate meetings for tactical and strategic business planning.

Assess a tactical agenda only after the team has reviewed its progress against
goals.

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Make sure there is enough time allocated for the clarification, debate, and
resolution of major issues.

Meet quarterly outside the office to review what is happening in the industry, the
company, and the team.

Meetings provide the organization with a regular forum on core values, allowing
members to realign principles and give perspective on business practices.
In order to succeed in a competitive field like business management, you need to stay true
to yourself before you can hope to have a meaningful impact on the organization you
represent. Ultimately, the best practices are ones that focus on your developing authentic
connections among yourself, the junior employees, and the company as a whole.

There are 14 main principles in business management as you can see in the following:

1. Division of Work
Managers should divide work among individuals and groups. This ensures that effort and
attention will be focused on special portions of the work. Output can increase if
employees are specialized. This is because they become increasingly skilled and efficient
in their fields.

2. Authority
Fayol defined authority as the right to give orders and the power to exact obedience.
The managers should have the power to give orders. But they should also remember that
with authority comes responsibility.

3. Discipline
It is essential to maintain discipline. However, the methods for doing this can vary.
Successful company will need the common effort of workers. You can apply penalties to
inspire this common effort.

4. Unity of Command
It is best if employees have only one direct supervisor.

5. Unity of Direction
Teams, which have the same goal, should work under one managers direction. They

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should use one plan. This will guarantee that the action is coordinated properly. Unity of
direction means the entire firm will move in the same direction.

6. Subordination of Individual Interests to the General Interest


The interests of any one employee should never be given more importance than the
interest of the group. Even the managers interest comes after the group.

7. Remuneration
Fair remuneration should be given to everyone. This ensures employee satisfaction.
Remuneration includes both financial and non-financial compensation. There are many
variables which should be considered before deciding a workers rate of pay. Some of the
variables are:

Cost of living

Supply of qualified personnel

General business conditions

Success of the business

8. Centralization
Centralization refers to how involved employees are in the decision-making process.
Managers should aim for a suitable balance. Fayol defined this as lowering the
importance of the subordinate role. Decentralization means to increase the importance.
The degree of centralization or decentralization a firm should adopt depends on the
specific organization.

9. Scalar Chain
Employees should know their position in the organizations hierarchy. Where they stand
in the chain of command is critical. Managers in hierarchies belong to a chain like
authority scale. Each manager has a certain amount of authority. The President has the
highest authority. The first-line supervisor has the least authority. It is important for lower
level managers to inform upper-level managers about their work activities. The existence
of a scalar chain is essential. It is necessary to adhere to it.

10. Order
The workplace should be clean and safe for all employees. Everything should be in its
place. All the people related to a specific type of work should be treated as equally as
possible. This is good for efficiency and coordination.

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11. Equity
Managers must always be fair to staff. They are expected to maintain discipline when
needed and act with kindness when it seems right.

12. Stability of Tenure of Personnel


Managers must make an effort to reduce employee turnover. They should give priority to
Personnel planning. Recruitment and Selection Costs are usually related to hiring new
workers. Increased product reject rates also cost a lot. Retaining productive employees
should be a high priority of management.

13. Initiative
Employees should have the necessary level of freedom they need to make and conduct
plans. Management should encourage worker initiative. New or extra work activity
undertaken through self-direction is an example.

14. Esprit de Corps


Organizations should always attempt to promote team spirit and unity. Management
should inspire harmony and general good feelings among the workers.

1.7.2 GENERAL BUSINESS SKILLS

Though there are many business skills that a successful entrepreneur will have, the following
five skills are the ones that you absolutely need to make your business successful:

Sales

This one is a no-brainer--of course you are going to need sales skills in order to run your
business! After all, marketing can drive customers in to your business, but sales are going
to be what keeps them coming back and keeps putting money into your pocket. It is no
wonder why most entrepreneurs actually come from a sales background!

Planning

Taking one bad step can make or break your business, especially when it is still in the
early stages of development. Entrepreneurs that are successful with their ventures make a
plan and stick to it, thinking out every risk, benefit, and cost of an option available to
them. They also make their plans realistic and factor in things such as time and budget in
order to make their plans a reality.

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Communication:

Communication is an underlying skill for many others in business (sales included).


Communication is how you will be able to cultivate loyal employees, charm customers
into coming back time and time again, and court investors and other sources for
increasing revenue for your business. This skill can also come in handy when dealing
with vendors or any other necessary business services that may apply to your venture--
being friendly in business-to-business relationships is a sure-fire way to be treated a little
bit better, therefore making at least one aspect of your job a little bit easier.

Customer Focus:

Successful entrepreneurs keep a narrow focus--on the customer that is paying their bills.
They do not forget that everything that they do is for the customer, since the customer is
the one that is allowing them to do anything in the first place. A good business owner will
always have time for a customer, whether they have a complaint or praise. Having good
customer focus will mean that you see every customer as an opportunity to do better and
grow, versus an annoyance or a difficulty.

Curiosity:

The best business skill has always been a healthy curiosity. This will lead you to look into
what your competitors are doing, and it will also allow you to utilize new technologies to
the best of your ability to streamline your business and even reach out to new customers.
When the only limit you have is what you can imagine and apply, just about anything is
possible.

REFERENCE

Link website

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http://smallbusiness.chron.com/develop-strategies-construction-marketing-plans-
18465.html
http://www.constructionbusinessowner.com/topics/marketing/construction-marketing/6-
steps-develop-effective-construction-marketing-plan
https://www.slideshare.net/AprajitaVerma2/11-introduction-to-business-management

Lecture note
Cost study
Construction Business Practice

Articles
Talent Management Framework For The Construction Industry, Deborah Philips, Georgia
Institute Of Technology, Atlanta, Georgia,USA

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