Organization structure and

design

03/11/24 1
 ORGANISING FOR CONSTRUCTION

- Plans and specifications of any construction are to be finally

converted into physical structures and facilities, which
involves the organisation and the coordination of all the
resources required for the project.

- Organistion or organisational structure is the system or

process which helps in achieving the above goal.

- Organisation helps the manager to relate the tasks to people

and to other agencies in order to achieve an economical and
timely completion of the project.
 ORGANISING FOR CONSTRUCTION

General principles for forming an organisational system:

1)Span of management:
The number of managerial levels should be kept at optimum
level. Lesser managerial levels will exceed the manager’s effective
span of control and too many levels will create confusion and
disorder. At higher levels of management, the ratio can vary from 1:3
to 1:5, but at the lower formations it can be as high as 1:15 to 1:20.
 ORGANISING FOR CONSTRUCTION

2) Scalar Principle:
There should be a clear line of authority from top to
bottom levels of management. If this principle is used, the
understanding of authority relationship within an
organisation is made easier.
3) Unity of command:
Every individual in an organisation should be clear as to whom
he has to report and from whom he should take the order.
Each subordinate should be made reportable to only one
superior. Otherwise, it will create confusion, delay and
disorder in the organisation.

4) Delegation of authority:
Whenever any one is expected to shoulder the responsibility of
completing a particular job, he must be given sufficient
authority to achieve the responsibility.
5) Principle of division of work:
Any major work is to be suitably divided and allocated to individuals
such that each person has the qualification and capacity to perform
the assigned work in the most efficient manner.

6) Principles of separation of work:

The work carried out by an individual or team should be checked
and controlled by people other than those who executed the work.
This helps in identifying the mistakes and taking corrective actions.
What Is Organizational Structure?

Organizational Structure
◦ How job tasks are formally divided,
grouped, and coordinated.

03/11/24 7
Key Design Questions and Answers for Designing the Proper
Organization Structure
The Key Question The Answer Is Provided by
the six key elements
1. To what degree are articles Work specialization
subdivided into separate jobs?
2. On what basis will jobs be grouped Departmentalization
together?
3. To whom do individuals and groups Chain of command
report?
4. How many individuals can a manager Span of control
efficiently and effectively direct?
5. Where does decision-making Centralization
authority lie? and decentralization
6. To what degree will there be rules Formalization
and regulations to direct employees
and managers? 03/11/24 8
Work Specialization
 The degree to which tasks in the organization are subdivided
into separate jobs.
 Can be called work specialization or division of labor
 Rather than an entire job being done by one individual it is
broken down into a number of steps, with each step being
completed by an separate individual

Division
Divisionofoflabor:
labor:
• • Makes
Makesefficient
efficientuse
useofofemployee
employeeskills
skills
• • Increases
Increasesemployee
employeeskills
skillsthrough
throughrepetition
repetition
• • Less
Lessjob
jobdowntime
downtimeincreases
increasesproductivity
productivity
• • Specialized
Specializedtraining
trainingisismore
moreefficient.
efficient.
• • Allows
Allowsuse
useofofspecialized
specializedequipment.
equipment.
03/11/24 9
Work Specialization
 During the 1940 this system of work specialization was
introduced and managers found it to be most economic
and efficient
 But by 1960 the diseconomies from work specialization
like boredom, fatigue, stress, low productivity etc. more
than offset the economic advantages
Economies and Diseconomies of Work Specialization

03/11/24 10
Departmentalization
The basis by which jobs are grouped
together so that common tasks can be
coordinated .

Grouping
GroupingActivities
ActivitiesBy:
By:
•• Function
Function
•• Product
Product
•• Geography
Geography
•• Process
Process
•• Customer
Customer
03/11/24 11
Chain of Command
The unbroken line of authority that extends
from the top of the organization to the
lowest echelon and clarifies - who reports
to whom?
◦ Authority:-The rights inherent in a managerial
position to give orders and to expect the orders
to be obeyed
◦ Unity of Command:-A subordinate should have
only one superior to whom he or she is directly
responsible

03/11/24 12
Span of control
The number of subordinates a manager can
efficiently and effectively direct.

03/11/24 13
Span of control
Wider
WiderSpan
Span
•Wider
•Widerspans
spansofofmanagement
managementincrease
increaseorganizational
organizationalefficiency
efficiency
Drawbacks
Drawbacks
•If
•Ifspan
spanbecomes
becomestoo
toolarge,
large,employee
employeeperformance
performancesuffers
suffersbecause
because
supervisors
supervisorsno
nolonger
longerhave
havetime
timetotoprovide
providethe
thenecessary
necessaryleadership
leadership
an
ansupport
support

Narrow
NarrowSpan
Span
• •Mangers
Mangerscan
canmaintain
maintainclose
closeproximity
proximity
Drawbacks
Drawbacks
• •Expense
Expenseofofadditional
additionallayers
layersofofmanagement.
management.
• •Increased
Increasedcomplexity
complexityofofvertical
verticalcommunication.
communication.
• •Encouragement
Encouragementofofoverly
overlytight
tightsupervision
supervisionand
anddiscouragement
discouragement
ofofemployee
employeeautonomy.
autonomy. 03/11/24 14
 Centralization and Decentralization

Centralization
 The degree to which decision making is concentrated at
a single point in the organization.
Decentralization
 The degree to which decision making is spread
throughout the organization.
 Action can be taken more quickly to solve the problems
 More people provide input in the decision making
process
 Employees involved in the decision making process feel
responsible for the decisions which effect their work life

03/11/24 15
Formalization
The degree to which jobs within the
organization are standardized.
In a highly formalized job
◦ The job incumbent has minimum amount of discretion
over what to be done , how to do it and when it is to
be done.
◦ It has job description, lots of organizational rule and
clearly defined procedure for work processes.
If formalization is low in a job then
◦ Employees of great deal of freedom to exercise the
discretion in the work.

03/11/24 16
Mechanistic Structure
 Hierarchal bureaucratic rigid organizational-structure
characterized by
1. Division of labor by functional specialization
2. A well defined hierarchy of authority
3. A system of rules covering the duties and rights of
employees
4. A system of procedures for dealing with work
situations
5. Selection and promotion based on technical
competence and structure

03/11/24 17
 Organic Structure
 Also known as adhocracies are flexible
organizational structure to cope with rapidly
changing environment.
 Is better for organizations where autonomy,
creativity and innovation is required.
 This structure is characterized by
1. Tasks and roles are less rigidly defined
2. Decision making is more decentralized
3. The atmosphere is more collegial
4. Departmental boundaries are flexible.

03/11/24 18
Mechanistic
Mechanistic Versus
Versus Organic
Organic Models
Models

03/11/24 19
Types of organizational Structures
Simple structure
Line organization
Line and staff organization
Functional organization
Divisional organization
Project Oriented organization
Matrix Organization

03/11/24 20
Simple Structure
• A structure characterized by a low degree of
departmentalization, wide spans of control,
authority centralized in a single person, and
little formalization.
AASimple
SimpleStructure:
Structure:
Jack
JackGold’s
Gold’sMen’s
Men’sStore
Store

03/11/24 21
Line organization
 The line structure is defined by its clear chain of
command, with final approval on decisions affecting the
operations of the company still coming from the top
down
 The line structure is most often used in small
organizations—such as small accounting offices and law
firms, the president or CEO can easily provide
information and direction to subordinates, thus allowing
decisions to be made quickly
 Line structures by nature are fairly informal and involve
few departments, making the organizations highly
decentralized

03/11/24 22
IS IT LINE ORGANIZATION….?
Line organization

MD

Engineer

Supervisor A Supervisor B Supervisor C

Labour Labour Labour

03/11/24 24
Line and staff organization
 This type of structure combines the flow of information
from the line structure with the staff departments that
service, advise, and support them
 Line departments are involved in making decisions
regarding the operation of the organization, while staff
areas provide specialized support.
 The line-and-staff organizational structure is necessary
to provide specialized, functional assistance to all
managers, to ensure adequate checks and balances, and
to maintain accountability for end results
 Generally have a centralized chain of command. The
line-and-staff managers have direct authority over their
subordinates, but staff managers have no authority over
line managers and their subordinates

03/11/24 25
Line and staff organization

MD

Legal Administration
Chief Engineer

Estimation Engineer Planning

Supervisor A Supervisor B Supervisor C

Labour Labour Labour

03/11/24 26
Functional and Divisional Organization
Functional Structure –
◦ This kind of organizational structure classifies people
according to the function they perform in their
professional life or according to the functions
performed by them in the organization.
Divisional Structures
◦ This is the kind of structure that is based on the
different divisions in the organization. These
structures can be further divided into:
◦ Departmentation according to Customer, Product,
Area and Time.

03/11/24 27
Functional Structure

Functional CEO
Grouping

Engineering Marketing Manufacturing

03/11/24 28
 Chief manager

Construction manager Quality & Safety manager Accounts manager

SE PE BE QA QC SF AC ST TO
Divisional Structures

CEO
Divisional
Grouping

Product Product Product

Division 1 Division 2 Division 3

03/11/24 30
Project Oriented organization
This type of organization may consist of small
central functional staff for the exclusive purpose
of supporting various projects.
Each has its own functional divisions
This type has a decentralized setup as each
manager has autonomy in managing the projects
There may be many variations in management
of the projects depending on the objective and
nature of the projects

03/11/24 31
Project Oriented organization

03/11/24 32
Matrix Organization
• A structure that creates dual lines of
authority and combines functional and
product departmentalization.

Key
KeyElements:
Elements:
++Gains
Gainsthe
theadvantages
advantagesof
offunctional
functionaland
andproduct
product
departmentalization
departmentalizationwhile
whileavoiding
avoidingtheir
theirweaknesses.
weaknesses.
++Facilitates
Facilitatescoordination
coordinationof
ofcomplex
complexand
and
interdependent
interdependentactivities.
activities.
––Breaks
Breaksdown
downunity-of-command
unity-of-commandconcept.
concept.

03/11/24 33
Matrix Organization

03/11/24 34
Matrix Structure (College of Business
Administration)

Employee

03/11/24 35
New design options
Team Structure
The use of teams as the central device to
coordinate work activities

Characteristics:
Characteristics:
• •Breaks
Breaksdown
downdepartmental
departmentalbarriers.
barriers.
• •Decentralizes
Decentralizesdecision
decisionmaking
makingto tothe
theteam
teamlevel.
level.
• •Requires
Requiresemployees
employeesto tobe
begeneralists
generalistsasaswell
wellas
as
specialists.
specialists.
• •Creates
Createsaa“flexible
“flexiblebureaucracy.”
bureaucracy.”

03/11/24 36
New Design Options (cont’d)
Virtual Organization
A small, core organization that outsourcers its
major business functions.
Highly centralized with little or no
departmentalization.

Concepts:
Concepts:
Advantage:
Advantage:Provides
Providesmaximum
maximumflexibility
flexibilitywhile
while
concentrating
concentratingon
onwhat
whatthe
theorganization
organizationdoes
doesbest.
best.
Disadvantage:
Disadvantage:Reduced
Reducedcontrol
controlover
overkey
keyparts
partsof
of
the
thebusiness.
business.
03/11/24 37
A Virtual Organization

03/11/24 38
New Design Options (cont’d)

Boundary less Organization

An organization that seeks to eliminate the chain
of command, have limitless spans of control,
and replace departments with empowered teams.

T-form
T-formConcepts:
Concepts:
Eliminate
Eliminatevertical
vertical(hierarchical)
(hierarchical)and
andhorizontal
horizontal
(departmental)
(departmental)internal
internalboundaries.
boundaries.
Breakdown
Breakdownexternal
externalbarriers
barriersto
tocustomers
customersand
and
suppliers.
suppliers.
03/11/24 39
Determinants of organizational structure

Environment

Philosophy
Technology And Organizational
Strategy Structure

size

03/11/24 40
Why
Why Do
Do Structures
Structures Differ?
Differ? –– Strategy
Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major
new products and services.

Cost-minimization Strategy
A strategy that emphasizes tight cost controls,
avoidance of unnecessary innovation or marketing
expenses, and price cutting.

Imitation Strategy
A strategy that seeks to move into new products or
new markets only after their viability has already
been proven.
03/11/24 41
The
The Strategy-Structure
Strategy-Structure Relationship
Relationship
Strategy Structural Option

Innovation Organic: A loose structure; low

specialization, low formalization,
decentralized

Cost minimization Mechanistic: Tight control; extensive

work specialization, high formalization,
high centralization

Imitation Mechanistic and organic: Mix of

loose with tight properties; tight
controls over current activities and
looser controls for new undertakings

03/11/24 42
Why
Why Do
Do Structures
Structures Differ?
Differ? –– Size
Size
Size
How the size of an organization affects its structure.
As an organization grows larger, it becomes more
mechanistic.

Characteristics
Characteristicsof
oflarge
largeorganizations:
organizations:
• •More
Morespecialization
specialization
• •More
Morevertical
verticallevels
levels
• •More
Morerules
rulesand
andregulations
regulations

03/11/24 43
Why
Why Do
Do Structures
Structures Differ?
Differ? –– Technology
Technology
Technology
How an organization transfers its inputs into outputs.

• •Characteristics
Characteristicsof
ofroutine
routineness
ness(standardized
(standardizedor
or
customized)
customized)ininactivities:
activities:
• •Routine
Routinetechnologies
technologiesare
areassociated
associatedwith
withtall,
tall,
departmentalized
departmentalizedstructures
structuresand
andformalization
formalizationinin
organizations.
organizations.
• •Routine
Routinetechnologies
technologieslead
leadto
tocentralization
centralizationwhen
when
formalization
formalizationisislow.
low.
• •Nonroutine
Nonroutinetechnologies
technologiesare
areassociated
associatedwith
withdelegated
delegated
decision
decisionauthority.
authority.

03/11/24 44
Why
Why Do
Do Structures
Structures Differ?
Differ? –– Environment
Environment
Environment
Institutions or forces outside the organization that
potentially affect the organization’s performance.

. .Key
KeyDimensions-
Dimensions-
• • Capacity:
Capacity:the
thedegree
degreeto
towhich
whichan
anenvironment
environmentcan
can
support
supportgrowth.
growth.
• • Volatility:
Volatility:the
thedegree
degreeof
ofinstability
instabilityininthe
theenvironment.
environment.
• • Complexity:
Complexity:the
thedegree
degreeof
ofheterogeneity
heterogeneityand
and
concentration
concentrationamong
amongenvironmental
environmentalelements
elements

03/11/24 45
Organizational
Organizational Designs
Designs and
and Employee
Employee
Behavior
Behavior

Research
ResearchFindings:
Findings:
• • Work
Workspecialization
specializationcontributes
contributesto
tohigher
higheremployee
employee
productivity,
productivity,but
butititreduces
reducesjob
jobsatisfaction.
satisfaction.
• • The
Thebenefits
benefitsof
ofspecialization
specializationhave
havedecreased
decreasedrapidly
rapidlyas
as
employees
employeesseek
seekmore
moreintrinsically
intrinsicallyrewarding
rewardingjobs.
jobs.
• • The
Theeffect
effectof
ofspan
spanof
ofcontrol
controlon
onemployee
employeeperformance
performanceisis
contingent
contingentupon
uponindividual
individualdifferences
differencesand
andabilities,
abilities,task
task
structures,
structures,and
andother
otherorganizational
organizationalfactors.
factors.
• • Participative
Participativedecision
decisionmaking
makinginindecentralized
decentralized
organizations
organizationsisispositively
positivelyrelated
relatedto
tojob
jobsatisfaction.
satisfaction.

03/11/24 46
Organization
Organization Structure:
Structure: Its
Its
Determinants
Determinants and
and Outcomes
Outcomes

03/11/24 47