Organization Management in Construction

Paul S. Chinowsky, Anthony D. Songer, Paul S. Chinowsky, Anthony D. Songer

• Publisher: Routledge
• Year: 2011
• Print ISBN: 9780415572613
• eBook ISBN: 9781135147815
• Topic: Technology & Engineering
• Subtopic: Civil Engineering
• Index: Technology & Engineering

Today's construction environment is changing at an unprecedented pace and executives are facing a diverse set of issues – globalization, economics, workforce demographics, and technology. Moreover the traditional issues of competition and delivery are being challenged by new laws and new industry entrants; and the tasks of project and organization management are being overhauled. This all demands greater leadership from senior management.

Construction executives typically reach senior level after many years mastering the art of project management, which has given them very little time or opportunity to learn the concepts and principles of organization leadership – unlike their counterparts in other industries who have been steeped in this.

This book provides a comprehensive overview of the key issues that organization leaders must understand and address. It provides concise summaries by leading international authorities of the ten key strategic management issues, shows how they have emerged, and outlines their potential impact on the construction organization.

1
Introduction

Paul S. Chinowsky and Anthony D. Songer

The engineering-construction industry is one of the driving forces of the world economy with $3.2 trillion in expenditures worldwide (ENR 2000). However, it is an industry with business management practices that need improving, exemplified by a business failure rate that is 34 percent higher than the national average for all industries (Statistical Abstract of the United States 2000). It is an industry organized by size with an expansive gap between the upper echelon of performers and the smaller firms. The industry is characterized by changing forces in technology, economics, marketing, politics, and its workforce. Furthermore, it is an industry plagued by a persistent negative image, despite its economic force.

Concurrent to this negative image, the construction industry continues to stratify as illustrated by the revenue distribution between the small and large contactors. For example in the United States, there are approximately 199,286 construction organizations (US Bureau of the Census 2000). However, 46 percent of the revenue is being accumulated by less than 1 percent of the industry. Adding to this stratification is the increase in global competition affecting engineering and construction organizations in every region of the globe. In today’s marketplace, international competition is increasing as technology is changing the face of industry competition. Specifically, technology is reducing the importance of physical location.

With this increase in competition, engineering and construction, leaders must place additional emphasis on long-term success and survival. However, the fundamental component of the industry, the workforce, is also changing. Technology, immigration, education, and the standard of living are changing the dynamics of this workforce. Furthermore, the construction industry is seen as tedious, dirty, non-technical, non-professional, hazardous, cyclical, and associated with difficult working conditions (Abraham 2002). Despite the numerous construction achievements throughout the world, the construction industry receives one of the lowest ratings for jobs. The 1999 Jobs Rated Almanac ranked the job of a construction worker as 247 out of 250, followed by a fisherman, a lumberjack, and a roustabout (Bodapati and Naney 2001). Compounding this image problem is a low productivity rating. With a productivity growth rate of only 0.8 percent from 1970 to 1986, the construction industry ranked at the bottom of all industries examined during that period (Adrian 1987). Additionally, the construction industry is one of the most dangerous industries. Construction has a disproportionately high level of deaths and injuries, accounting for over 21 percent of deaths in industrial accidents in the United States, while only employing 8 percent of the workforce (CPWR 2007). Finally, after contributing approximately 8 percent of the gross domestic product in the United States, only 0.5 percent of that was expended for construction research, leading to a perception that the industry lacks the ambition to improve and innovate (Bodapati and Naney 2001). While these statistics are from the United States, the global perspective on the industry does not differ significantly.

These changes and forces necessitate altering the traditional perspective of the industry, both from professionals within and observers outside the industry. No longer can industry enterprises be satisfied with continuing long-held family or corporate traditions. Similarly, universities can no longer view the education of future professionals in the same manner. Rather, the question for both industry and academia is how to address the engineering profession and the leaders of the future. What tools are required to successfully lead a construction industry organization? What should be the primary focus of organization leaders? Will these individuals be the integrators of the design-construction process, or will they be the technology experts focusing on satisfying customer requirements, or maybe they will be the surrogate owners, financing, building, and operating projects on an international scale.

What these changes are paving the way for, and what these questions are highlighting is the need for industry leaders to re-examine their individual roles and the influences on the industry. It is becoming increasingly clear that industry leaders will need to adopt a more comprehensive approach to leading an organization. Specifically, leaders will need to move toward an integrator concept where an industry leader is a life-cycle integrator. In this concept, the leader emphasizes the ability to integrate the objectives, plans, and requirements of the business, design, owner, and construction constituencies into a single coherent effort. However, to achieve this integrator profile, the professional will be required to have balance in their personal education, professional development, and knowledge of available resources. Organization leaders will need to balance formal education received in school and through professional development with practical intelligence received through professional experience, and emotional intelligence associated with psychological, sociological, and interpersonal communications and relationships. Currently, this profile is often in a state of imbalance as the engineering leader accentuates a single area of the spectrum of knowledge required to fully charge the knowledge bases that support these three profile components.

In summary, the next generation of industry leader will need the breadth of knowledge to address diverse concerns throughout the project life cycle. The executive must be problem solver, leader, manager of change and relationships. Additionally, this professional will need the balanced profile required to succeed in the new global economy. And finally, this professional will need the tools and education required to proactively address the continued need for advancement within the construction profession.

Current state issues

Changing the profile of an industry leader is not a simple task. If anything, the construction industry is one based in tradition. Change must be associated with a compelling reason and/ or a significant consequence. Although we are not striving to provide this compelling reason directly, we do present in this book the drivers that are establishing the compelling need for change. As an introduction, the issues driving the change in the current direction of the construction engineering and management domain can be summarized as follows.

• Integration vs. specialization – In a strong move away from the trend witnessed over the last half century, the next generation of industry leaders will need to balance the increasingly disparate and specialized views expressed within the context of a project team. Specifically, views from architects, financiers, risk specialists, engineers, owners and others are often in conflict throughout the project timeframe. These conflicts need to be balanced and resolved to ensure the completion of the project that is every participant’s ultimate goal. However, the manner in which this goal is achieved can take many paths including confrontational approaches, coordinated approaches, and balanced approaches, among others. The question for the future of the construction industry is how to reduce the focus on confrontation and increase the focus on collaboration and balance. Rather than focus on increasing knowledge specialization, leaders will need a perspective and context to address the potentially divergent goals represented on a project and weave these perspectives into a unified set of goals and directions.

• Successful intelligence model – The predominant perspective on construction preparation for success has centered on the mastery of practical knowledge. In this perspective, construction professionals were rewarded for their extensive personal knowledge base of operations and project management. The greater that an individual could display experience and ability to plan and organize field operations, the greater the opportunity for long-term advancement within a construction organization. This perspective of construction knowledge development has been slowly changing as a broader success model is emerging that reflects the need for integration. In this context, construction professionals will develop knowledge in each of the successful intelligence areas; practical, emotional, and intellectual intelligence.

• Body of knowledge vs. individualism – What do construction professionals do? What is the definition of a construction professional? What will the construction industry look like in 2050? What services will the construction professional provide in 2050? These questions center on a critical issue for the construction industry – what is the body of knowledge for a construction professional? The lack of consensus on this issue has significant repercussions for every aspect of the construction industry. For the academic side, the lack of an agreed-upon body of knowledge makes it impossible for academic programs to move toward an agreed-upon curriculum. For construction professionals, the lack of this body of knowledge makes it difficult to define what services should be offered by the construction organization. And, for the owner, the lack of this body of knowledge consensus makes it difficult to set expectations for services on individual projects. Although different associations are attempting to address this issue, the changing global environment is making the decision of what is essential knowledge a question that needs to be addressed by each organization.

• Industry-academia divide – Industry and academia are dependent on each other for long-term success. Closer collaboration is required for future industry development. However, industry-academic collaboration has become an exception rather than an expected norm. The reasons for this divide are varied, including lack of trust, lack of respect for respective experience and knowledge, and lack of recognition for respective roles. The result of this divide is clear. Industry professionals and academics are losing the opportunity to enhance their respective professional roles through collaboration. Additionally, the move toward a new generation of construction professional requires each side of the divide to recognize the importance of contributions made by the construction community as a whole.

Although addressing these issues does not guarantee the success of an organization, it does represent a first-step towards an acknowledgement that the construction industry is changing and with it will change the concept of the construction professional. However, the authors do not want to leave the reader with the perception that simply by moving down the road toward addressing these issues will be a final solution. Rather, issues such as measurement of success come into play once an organization moves forward with internal and external changes. Specifically, an organization must evaluate the success of this new perspective using tangible measurements. The substance of these measurements should be a critical priority for the organization as it looks to the future.

Organization impact

What does this change mean to industry organizations? Do organizations need to abandon their core competencies and learn a new area of services? The direct answer is no. However, some alterations will be required. The comfort of knowing who your competition is likely to be before proposals are even submitted is likely to diminish. The opportunity to focus extensively on a narrow band of services is going to diminish. The traditional perspective of growing personnel from entry level positions through a 25 year career to executive positions is already fading quickly. All of these things are going to force change in the traditional construction industry environment. Compounding this issue is the change in the owner perspective. Put simply, owners are getting smarter, owners are getting more demanding, and owners are looking for partners who understand their business and understand how you can make a difference for them. Taken together, this will alter the future look of the engineering or construction office.

At the core of this change is going to be the way in which leaders guide the organization. The new organization is going to require leaders who are more hands-on in their approach while also bringing a greater level of trust to the organization. It is going to take leaders who understand that their value is in the ability to synthesize the “big picture”. Spending time developing new forms to track corporate credit card spending is not where a leader should be spending his or her time. Similarly, understanding that breadth of knowledge is as important as depth of knowledge within the firm is critically important to achieve the balance discussed earlier. Every individual in the organization does not have to have the same background or set of skills. Every person does not have to go through the same training course. Diversity and balance are going to be the keywords of the new corporate environment.

Do all these things add up to changes in the overall organizations? Yes, there is going to be change required and those who adapt to this change will have a sustainable advantage over the competition. Fundamental issues such as education plans, career paths, and leadership selection will need to be re-examined in terms of how they are developed and executed. Strategic thinking will need to make a comeback in terms of setting long-term goals and determining how the organization should be perceived from the outside. The era of living comfortably on existing clients and limited competition is going to close. The organizations that are able to adapt to this are the ones that will succeed in the new environment.

As a final consideration, these changes cannot be completely controlled by organization leaders. A successful transition will require the commitment and work of all individuals in the organization. Without opening up a controversy in terms of education and what is appropriate for employees to learn before and during their careers, we will say that organizations need to examine what type of employees they are hiring, what are their educational backgrounds, what do they want to achieve, and what is their understanding of the types of clients the organization services. It is always important to remember that the weakest link in an organization is the employee who is speaking with a client and does not know the overall goals and direction of the organization.

How do we proceed?

Organization structure is changing. Leadership requirements are changing. The environment in which construction organizations operate is changing. With all of this change, how should organizations in the construction ...

Table of contents

• Contents
• Illustrations
• Contributors
• Preface
• 1 Introduction
• 2 Leading the modern construction organization
• 3 Knowledge management in global environments
• 4 A network and culture perspective on organization management
• 5 Strategic innovation in EPC
• 6 Human resource development: rhetoric, reality and opportunities
• 7 Globalization
• 8 Strategic issues in entering emerging markets
• 9 Project delivery and financing: conventional and alternative methods
• 10 Strategic safety management
• 11 Corporate social responsibility
• 12 Conclusion
• Index