Last edited 25 Sep 2020

Construction organisations and strategy

[edit] Introduction

Like organisations in any other industry, construction companies must have a strategy for how to grow and develop their business, compete effectively in the market, and remain viable for the long-term.

A company's mission is an enduring statement of purpose which can distinguish one organisation from other similar enterprises. It is considered as a declaration of the company's 'reason for being', a common management tool that addresses an organisation's theory of business, and helps form the basis of its corporate strategy.

An example of a construction company mission statement might be:

'To create long-term shareholder value by providing safe and sustainable engineering, construction and service skills to customers for whom quality, efficiency and reliability are critical.'

[edit] Objectives

Objectives sitting under this mission might include:

Securing and retaining clients and customers.
Providing high quality services, products.
Concern for survival.
A particular company philosophy, such as social responsibility, ethics, sustainability, and so on.
Concern for public image.
Securing and retaining employees.
A sustainable and efficient supply chain.
Concern for employees health safety and wellbeing.

[edit] Strategy

Strategies set out the fundamental steps or pathways that that will be followed to achieve objectives. They provide the formula for success, setting the direction and scope of an organisation over the short, medium and long-term and matching its resources to the changing market so as to meet stakeholder expectations.

Separate strategies may exist for different units of an organisation, as well as at different levels in a business unit.

For any strategy to be effective, it must have components addressing both middle level issues (such as production and marketing), and the upper level issues of integrating the whole organisation into its socio-economic environment.

[edit] Departments in construction companies

To assist in achieving their objectives construction companies will generally organise their activities into a number of discrete functional areas:

[edit] Finance

Financial policy.
Investments and insurances.
Cash requirements, supply of working capital.
Shares register, and decisions on dividends.
Cost control and accounting.
Banking.

[edit] Design

Design, design management, design procurement and co-ordination.
Production drawings and specifications.
Site inspection.

[edit] Estimating

Estimating policy.
Market research in relation to prices.
Checking BoQs and estimates from subcontractors and suppliers.
Preparing schedules of rates.
Establishing the value of variations.
Cost control, monitoring and reporting.

[edit] Purchasing

Policy on stock holding.
Managing orders.
Delivery programmes.
Stock control and reconciliation.

[edit] Construction

[edit] Plant

Managing plant availability.
Policy on plant ownership.
Policy on plant maintenance.
Establishing / negotiating hire rates.
Management of all the company's plant items.

[edit] Personnel

Personnel policy.
Recruitment, interviews and promotion.
Training schemes and executive development.
Staff availability.
Organisational structure.
Motivation and incentive schemes.
Staff appraisal.
Succession planning.

[edit] Marketing

Brand development.
Promotion and publicity.
Exploring new market avenues.
Market research.

[edit] Office management

[edit] Organisation

Very broadly, construction companies comprise functional activity units (FAU) and interfaces. The arrangement of the FAUs and their interfaces give rise to the structure and culture that the company reflects. The arrangement also has important implications for the day-to-day operations of the company.

[edit] Functional activity units

FAUs can be split as follows:

Area of focus: Such as refurbishment for a design firm, or commercial development.
Departments: Such as planning, estimating and purchasing for a contractor.
Subsidiary: Such as a design and build subsidiary or a regional subsidiary for an international contractor.

[edit] Interfaces

Interfaces denote lines of communication and relationships between the FAUs. Generally, there are four types of interface that can be associated with a construction organisation:

[edit] Direct

A direct interface is characterised by the relationship between a superior and a subordinate. It involves the giving of instructions and the obligation to carry them out. This interface is often referred to as 'line relationship' because of its up-down-up lines of communication.

[edit] Lateral

This type of interface arises between managers of equal standing in terms of authority. Lateral relationships exist between executives who report to a superior, but have to co-operate on issues of mutual interest, for which they have to co-ordinate related activities.

[edit] Functional

This form of interface occurs between a specialist who performs an advisory role and the rest of the management team. Authority for the functional interface is usually exercised indirectly through the line interface.

[edit] Staff

This form of relationship involves an auxiliary role. It derives its authority from the executive position for which it acts to provide a supporting function. Examples include special assistants and private secretaries.

[edit] Organisational charts

Organisational charts are a graphical representation of an organisation's structure that presents the hierarchy of FAUs and their formal interfaces. The chart should outline the flow of authority and recognised lines of communication.

The need to maintain a simple and coherent chart means that usually only managerial and supervisory roles are represented in a chart. However, notwithstanding the planned structure expressed by such a chart, an organisation may in practice be driven by a more informal structure.