Sewon Kim Kevin Tran Mary Svennerborg

Contents  The size of construction firms  The size of business  The small firm  The medium-sized firm  The large-sized firm  References

1. The size of construction firms  ‘Modernising Construction ’ (National Audit Office 2001) reported that there are over firms operating in the construction industry and many of these are small contractors.  The current annual turnover of the top 100 contractors in terms of annual turnover is shown next table. This indicates that the vast majority are either medium-sized or small.

Turnover(₤ million)Number of firms Less than – – – – – – – Top 100 contractors and house builders

2. The size of business  Drucker(1989) suggested an interesting approach that is in respect of defining the four stages of business growth ① Small Business ② Fair-Sized Business ③ Large Business ④ Very large Business

2. The size of business Small business  It is distinguished from the one-man proprietorship by requiring a level of management between the man at the top and the workers. Fair-sized business  The role of the managing director has become a full- time position. He is required to concentrate his efforts on guiding and managing the affairs of the business. In the majority of construction firms in this category, the tendency is to develop a departmental approach to the various sections of the organization.

2. The size of business Large business  A large construction organization may be managed by a main board of directors, supported by departmental directors and regional and technical directors. Very Large business  This is characterized by the fact that the overall business objectives and resulting actions must be organized on a team basis. Each position requires the full-time services of several people.

3. The small firm

3. The Small firm  National statistics categorise the small firm as a business with between 1 and 24 directly employed staff. The number of firms in the UN is in the order of with 91% employing less than 10 people. ① Company background ② Business control procedures ③ On the role of the principal

3. The small firm ① Company background  The business is managed by the principal or owner with three employed staff. Sixty percent of the work is obtained by negotiation and the rest from competitive tenders. Turnover after 2 years of trading is in the order of ₤800,000 and the largest project undertaken to date is ₤250,000.

3. The small firm ① Company background  The business is managed by the principal or owner with three employed staff. Sixty percent of the work is obtained by negotiation and the rest from competitive tenders. Turnover after 2 years of trading is in the order of ₤800,000 and the largest project undertaken to date is ₤250,000.

Contact with clients / architects etc Preparation of tenders / obtaining work Submission and adjudication decisions Pre-contract arrangements Letting of subcontracts Planning – programming of work Interim certificates / final accounts Payment to subcontractors / suppliers Establishing policy All decision making PRINCIPAL OWNER RESPONSIBLE FOR: Organisation Structure – Small Company

Project Organisation Small Company Principal Construction site manager Subcontractors Construction site manager Subcontractors

3. The small firm ② Business control procedures  The principal’s major concern is providing a personal service to clients and ensuring that projects are completed on time at a reasonable profit. Maintaining client contact during a project is considered essential to the success of the business. Management checks are made on project profitability and monthly site meetings are attended by the principal. The majority of the principal’s time is spent on preparing tenders for new work and chasing round his existing projects.

3. The small firm ③ On the role of the principal  The principal tends to make all decisions, and tends to do everything himself, which is the typical small company approach to managing a construction enterprise.

4. The medium-sized firm

 The medium-sized firm has developed from expansion of the small business, brought about by the increase in workload, turnover and business diversification. The core business may have been refurbishment work, but the company may now be offering a design and build or a work package service to clients. Many such options are available as a business expands.

Must be established at Medium-sized Team approachStrategic planPolicy objectivesDelegation of responsibilityControl & Reporting proceduresChannels communication

4. The medium-sized firm ① Company Background

Organisation Structure Medium-sized company ChairmanManaging Director Commercial manager director Estimating/ Surveying director Senior estimator Buyer/ scheduler Senior surveyor Contract surveyor Contracts director Contracts manager Construction Site managers

Project Organisation Responsibility lies with contracts division Sites are serviced by head office-buying/surveying Head Office Contracts director Contracts manager Construction manager Subcontractors engaged on project

4. The medium-sized firm ② Business control procedures Input to projects to aid management Wages, personnel, surveying measurement, valuation services, buying and overall project planning Head Office Control of the various functions Cover construction management, estimating and surveying Managing cash flow Director Programming and progress reviewing Reporting on progress Contracts Manager Short-term planning The coordination of subcontractors Construction Manager

5. The Large-Sized Firm

 Develop originally from the expansion of a medium-sized business.  Growth is by acquisition when separate business join together via either  a merger or a takeover.  Employ between people therefore the organisation structure must be designed to meet the specific needs of the company.

Business Unit Approach to Project Management

5. The Large-Sized Firm Organisation Structure- Large Company  Organisation structures tend to be based on the individual preferences of the owners or directors and are very much personal to each type of business. ○ nature and source of firm ’ s respective workloads and their expertise available are possible explanation for difference.

5. The Large-Sized Firm Grouping Arrangement  Functional  Product/Service  Geographical  Customer  Capital  Project

5. The Large-Sized Firm

Head office is responsible for providing services to all projects in the form of … Head office support may be provided from a single head office or may be regionalised in order to serve its customers ’ needs better.

References  Burke, R.(2003) Project Management, 4 th edn. John Wiley&Sons.  Drucker, P.F. (1989) The practice of Management. Butterworth-Heinemann.  Lavender, S. (1996) Management for the Construction Industry. Pearson Education.  Winch, G.M. (2002) Managing Construction Projects. Blackwell Publishing.  Clutterbuck, D.&Crainer,S. (1990) Makers of Management. Macmillan Press.