The Four Functions of Management:

Planning, Organizing, Directing, Controlling

Managing Construction Operations

 Management Functions
• Planning
• Organizing
• Directing
• Controlling
• And always .. Leading and communicating
 Overview of Planning

• Objectives
– End states or targets
• Plans
– Means to hit the desired targets
– Strategic, Tactical, Operational
• Planning
– Decision-making process focused on the future of an
organization and how it will achieve its goals
 Types of Plans
• Strategic plans
– Broad future of the organization
– External environmental demands
– Internal resources
• Tactical plans
– Translate strategic plans into specific goals
– Specific parts of the organization
 Types of Plans
• Operational plans
– Translate tactical plans into specific
goals and actions
– Small units of the organization
– Near term
 Types of Plans

Strategic Plans Tactical Plans Operational

Plans
Time horizon Typically 3-5 years Often focused on 1-2 Usually focused on the
years in the future next 12 months or less.
Scope Broadest,originating Rarely broader than a Narrower, usually cen-
with a focus on the strategic business unit tered on departments or
entire organization smaller units of the
organization
Complexity The most complex and Somewhat complex but The least complex,
general, because of the more specific, because because they usually
different industries and of the more limited focus on small
business potentially domain of application homogenous units
covered

Adapted from Exhibit 8.1: Types of Plans: Key Differences

 Types of Plans

Strategic Plans Tactical Plans Operational

Plans
Impact Have the potential to
dramatically impact,
both positively and
negatively, the fortunes
and survival of the
organization
Interdependence High interdependence,
must take into account
the resources and
capabilities of the entire
organization and its
external environments
Can affect specific
businesses but
generally not the
fortunes or survivability
of the entire
organization
Moderate interdepen-
dence, must take into
account the resources
and capabilities of
several units within a
business
Impact is usually
restricted to specific
department or
organization unit
Low interdependence,
the plan may be linked to
higher-level tactical and
strategic plans but is less
interdependent with them

Adapted from Exhibit 8.1: Types of Plans: Key Differences

 Organizational Levels
• Corporate level (Strategic)
– What industries should the firm be in?
– What markets should the firm be in?
– In which businesses should the firm invest money?
• Business level (Tactical0
– Who are our direct competitors?
– What are their strengths and weaknesses? What
advantages do we have over them?
– What are our own strengths and weaknesses?
– What do customers value in our products/services?
 Organizational Levels

• Functional level (Operational)

– What activities must my unit perform well in order to
meet customer expectations?
– What information about competitors does my unit
need in order to help the firm compete effectively?
– What are our unit’s strengths and weaknesses?
 Analyzing the Environment
The Planning Process
• Analyzing the environment
– Forecasts: what does the future look like?
– Environmental uncertainty
• Contingency plans: identify key factors that could affect
the desired results and specify what actions will be
taken if key events change
– Benchmarking
• Investigation of the best results among competitors and
noncompetitors and the practices that lead to those
results
 Setting Objectives
The Planning Process

• Setting objectives
– Priorities and multiple objectives
• Establish which objectives are most important and
which have temporal priorities,
– Measuring objectives
 Financial performance
 Profits relative to sales
 Profits relative to assets
 Many others
 Non-financial performance
 Determining Requirements
The Planning Process

• Determining requirements
– Assess current performance
– What will it take in order to get from current levels of
performance to that level specified in the objectives?
– What drives market share?
– What capital will be required?
 Assessing Resources
The Planning Process

• Assessing resources
– Resources required
• What resources are needed to achieve the stated
objectives?
– Resources available
• Do we have the needed human talent to meet the
requirements?
• Do we have the financial resources available?
• Do we have the required technology?
 Developing Action Plans
The Planning Process

• Developing action plans

– Sequence and timing
• Raw materials, manpower and
components must be brought together in the
right amounts and sequences
– Accountability
• Who is accountable for which actions?
 Implementing Plans
The Planning Process

• Implementing Plans
– Monitoring the implementation
• Monitor the progress of the plan and its
implementation
• Monitor the level of support that the plan receives
as it is being implemented
• Monitor the level of resistance
– Real-time adjustment
 Monitoring Outcomes
The Planning Process

• Monitoring outcomes
– Unanticipated consequences
• Negative unanticipated consequences
• Positive unanticipated consequences
• Feedback loop
– Apply what has been learned to modify and improve the
planning process
 Planning Tools
• Budgets
– Capital expenditure budget
• Specifies the amount of money to be spent on specific
items that have long-term use and require significant
amounts
– Expense budget
• Includes all primary activities on which a unit or
organization plans to spend money and the amount
allocated for the upcoming year
 Planning Tools

 Budgets
– Proposed budget
• Provides a plan for how much money is needed,
and is submitted to a superior or budget review
committee
– Approved budget
• Specifies what the manager is actually authorized to
spend money on and how much
 Planning Tools

• Two budgetary approaches

– Incremental budgeting approach
• From the approved budget of the previous year
present arguments for why the upcoming budget
should be more or less
– Zero-based budgeting approach
• Justify all allocations of funds from zero each year
 Goal Setting
• Attributes of effective goals
– Specific
– Measured
– Agreed
– Realistic
– Time bound
 Organizing
• Even very small companies need to organize.
– If you have a one-body construction company, you should
still have an organization chart showing all of the different
hats that you wear.
• For larger organizations, the organization chart will
show:
• Position titles: should be descriptive.
• The chain of command: authority for each area,
accountability for actions
• Who occupies each position
 The Organization Chart
• First Step: decide on the type of organization, consider span
of control, tall vs. flat, functional vs. geographic
• Second Step: decide what positions you need, create position
titles
• Third Step: assign people to fill the positions.
• TIP 1: Try to avoid picking the people first and then designing
a position to fit the person.
• TIP 2: Careful about Span of Control
 Organizational Chart of a Manufacturing Firm
Board Board Board Board
member member member member

Chief
Executive Legal
Officer counsel

President

V.P Sales/ V.P Human V.P V.P Research

Marketing Resources Production and Development

Industrial Consumer Industrial

Products
Consumer Industrial Consumer Industrial
Products Consumer
Products Products Director- Director- Products Products Products Products
Director- Director- Human Human Director- Director- Director- Director-
Sales Sales Resources Resources Production Production R&D R&D

Western Eastern Western Eastern

Region Region Region Region
Industrial Industrial Consumer Consumer
Products Products Products Products etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.
Sales Sales Sales Sales
Manager Manager Manager Manager
 Directing
• Using authority to cause plans to be
implemented
• Delegating authority to increase efficiency and
effectiveness
• Coordinating a company’s activities
• Selecting and training employees
• Preparing organization charts
 Authority
• Authority is a legal term: the right to take action,
make decisions, and direct the work of others
• How effective formal authority is depends on many
factors.
– How badly does the subordinate need the job?
– How badly does the authority need the subordinate?
– Does the subordinate agree with the bosses’ decisions?
 Types of Authority
• Line Supervisors
– Line supervisors
– President, Director of Construction Activities,
Project Managers, Superintendents, Foremen.
• Staff supervisors
• Chief estimator
• Accountant
• Office manager
 Delegating

• You can delegate the authority.

• You cannot delegate the responsibility.
• Do not set up departments or divisions unless you are will
to delegate the day-to-day control of them to the
managers.
– Train people to do the jobs
– Assign the jobs to them and get out of the way
– Check to see if they are making acceptable progress.
– If not correct the situation

“You can sub-out everything except the blame.”

 Coordination

• Making sure that all departments are

working together toward goals
• Coordination is a function of
communication
• Rules or Procedures
– Might work for routine activities
– Will still need meetings and conversations
 Coordination – How?
• Meetings
• Internet
• Email
• Newsletters
• Staff Assistants
• Liaisons
• Teams & Committees
 Controlling

• Control is the task of ensuring activities have

the desired results
• Control requires targets and goals be set
• Controlling involves setting targets,
measuring performance, and taking
corrective action
• Enron and financial controls: Artur Andersen
 Types of Control Systems
• Steering control (feedforward or precontrol
– Corrective action before problem occurs
– Preventive in nature
– Intermediate milestones
• Concurrent control (yes/no)
– Control as the activity takes place
– Rules and procedures
• Feedback control (post-action)
– Compare results to standard
– Profit at end of project
 Checklist for Effective Control System

1. Controls should reflect nature/needs of activity

2. Should report deviations promptly
3. Should be forward-looking
4. Should point out exceptions at strategic points
5. Should be objective
6. Should be flexible
7. Should reflect the organizational structure
8. Should be economical
9. Should be understandable
10. Should indicate corrective action
 Two Basic Control Approaches

• The Traditional Approach:

1. Set a standards, target, or goal
2. Measure actual performance against standards
3. Take corrective action
• The Commitment-Based Approach:
1. Getting people to want to build in quality
2. Hire the right people and invest in them
3. Foster self-control
4. People centered, sense of community, shared fate
5. Guarantee organizational justice
6. Use financial rewards and profit-sharing
7. Encourage self-actualization
 Control Exercise 1

• You are one of the 4 founders of an innovative firm focusing on

design-build as a delivery system for high performance building. The
firm is 2 years old and growing rapidly, and has 24 employees.
• Your founding group values quality, relationships, transparency,
excellence, and environmental awareness and these shared core
values are largely responsible for your success.
• You envision doubling the number of employees in the next two years
and want to maintain your focus on your core values.
• How do you maintain your values and your growth rate? What type
of control system will you use? Why?
 Control Exercise 2

• College students deal with professors but it is not obvious

how autonomous professors are.
• Duties include teaching, research, proposal preparation,
supervising grad students, writing papers and books,
committee work, service, etc.
• The Dean wants to be sure professors are conducting
themselves professionally and, knowing you are a student
and studying leadership and management, tells you that
perhaps you can suggest a control system that addresses
professorial duties and how they might be controlled.
The Strategic
and Operational
Planning Process
 Planning Dimensions

• Planning
– Determining what you want to accomplish and
developing approaches to achieving your objectives.
• Planning Dimensions:
SWOT Analysis for
Starbucks Coffee
 Setting Objectives
• Objectives
– State what is to be accomplished in singular,
specific, and measurable terms with a target
date.
• Goals
– Are general targets to be accomplished that are
translated into actionable objectives.
 Writing Effective Objectives
• Max E. Douglas’s model for writing effective
objectives:
– (1) the word to, followed by
– (2) an action verb,
– (3) a statement of the single, specific, and
measurable result to be achieved, and
– (4) a target date.
• To achieve a 6% overall return on fourth quarter sales.
Criteria That Objectives Should Meet
 Types of Plans (cont’d)
• Single-Use Plans
– Programs and budgets developed for handling
nonrepetitive situations.
– Program
• A set of activities designed to accomplish an objective over
a specified period of time.
– Program development
• Set project objectives.
• Break the project down into a sequence of steps.
• Assign responsibility for each step.
• Establish starting and ending times.
• Determine the resources needed for each step.
 Types of Plans (cont’d)
• Single-Use Plans (cont’d)
– Budget
• Represents the funds allocated to operate a unit for
a fixed period of time.
• Is a planning tool initially and becomes a control
tool after implementation of the plan.
Standing Plans versus Single-Use Plans
 Types of Plans (cont’d)
• Contingency Plans
– Alternative plans to be implemented if
uncontrollable events occur.
– Developing a contingency plan
• What might go wrong?
• How can I prevent it from happening?
• If it does occur, what can I do to minimize its effect?
Implementing and Controlling Strategies
• Implementing
– Top and middle managers plan, whereas lower-level functional
managers and employees implement strategies.
– Successful implementation requires effective and efficient support
systems.
• Controlling
– The process of establishing and implementing mechanisms to
ensure that objectives are achieved.
– Measuring progress toward achievement of objectives and taking
corrective action when needed.
– Staying within the budget when appropriate or changing it when
necessary to meet changes in the environment.
Appendix

Time
Management
 Learning Outcomes
After studying this appendix, you should be able to:
1. Explain the use of a time log.
2. List and briefly describe the three steps in the time management
system.
3. Define the following key terms:

time management
time management system
 Analyzing Time Use
• The Time Log
– A daily diary that tracks your activities and enables you to determine how you spend
your time each day.
• Analyzing Time Logs
– Determine how much time you are spending on your high-priority (HP) and low-
priority (LP) responsibilities.
– Identify areas where you spend too much time (TT).
– Identify areas where you do not spend enough time (NT).
– Identify major interruptions (I) that keep you from doing what you want to get done.
– Identify tasks that could be delegated to someone else (D).
– How much time does your boss control (B)? How much time do your employees
control (E)? How much time do others outside outside your department control (O)?
How much time do you actually control (M)?
– Look for crisis situations (C).
– Look for habits, patterns, and tendencies.
Daily Time Log
 A Time Management System
• Key components of a time management system:
– Priorities
– Objectives
– Plans
– Schedules
• The Time Management Process
– Step 1. Plan each week.
– Step 2. Schedule each week.
– Step 3. Schedule each day.
Weekly Planner
Weekly Schedule
Daily Schedule
 A Time Management System
(cont’d)
• Scheduling Tips
– Don’t be too optimistic; schedule enough time
to do each task.
– Once tasks are prioritized and scheduled, focus
on only one at a time.
– Schedule high-priority items during your “prime
time,” when you perform at your best.
– Try to set aside a regular time-slot for activities
or events that you cannot anticipate.
– Do not perform an unscheduled task before
determining its priority.