Republic of the Philippines

PALAWAN STATE UNIVERSITY

Tiniguiban Heights, Puerto Princesa City

College of Engineering, Architecture and Technology

Department of Civil Engineering

CE PC 2 - PROFESSIONAL COURSE 2
(CEM Special Class, MTh, 9:00 AM to 10:30 AM)

Manuscript: Construction Project Organization, Legal Structure,

& Construction Project Requirements

Prepared by:
DELICANA, JOICE B.
GARCIA, ANNE KRISTELLE T.
MOLANO, EDWARD RENZ R.
RIAMBON, MARIANE M.
GROUP 3

Submitted to:
ENGR. ROCKY M. SIORES
Course Instructor

Date of Performance:
February 29, 2024
Date of Submission:
February 29, 2024
Organization – is a group of individuals who are cooperating willingly and effectively for
a common goal.

Construction Project Organization – involves planning, coordinating, and managing

various aspects of a construction project to ensure that it is completed successfully.

The Structural Organization – The structural organization is the formal arrangements

that are established to coordinate all activities in order to implement a given strategy.

The Structural Elements of an Organization

1. Men - These are the different members of organization starting from the very top
to the last workman of the enterprise.
2. Materials - Represents the materials necessary in the distribution of functions or
in the attainment of its objectives.
3. Machine - The tools necessary in producing its designed product.
4. Methods - The procedures and ways used in the course of its action.
5. Money - The financial resources of the organization.

The Major Elements of Organization Structure

● Distribution of functions - The functions to be performed, the groupings of

functions, and the vertical and horizontal task relationships among functions.
● Vertical and horizontal authority relationships - Who has the authority to do
what.
● Communication and decision processes - The manner in which formal
decisions are made and by whom.
● Policies - Guidelines and rules of the organization.

Principles of Good Organization

1. Principles of Objective
2. Analysis
3. Simplicity
4. Functionalism
5. Departmentalization
6. Centralization of Authority and Responsibility
7. Limited Span of Control
 Types of Project Management Organizational Structure

Now when it comes to types of project management organizational structure. Depending

on the nature of the organization operates in, the goals they set for themselves, and the
nature of work being done, a project management organization can be structured in three
ways.

1. Functional Organizational Structure.

In this type of structure, authority-driven decisions like budgeting, scheduling, and

purchasing equipment rest on the shoulders of the functional manager who possesses a
significant level of expertise in the same field. The project manager has little authority
here.
In a functional organizational structure, employees appear to be more skilled in
their respective departments, leading to greater work efficiency. Everyone knows who to
hold accountable if something were to go wrong as responsibilities are predetermined.
Examples of functions within a company are advertising, engineering, human resources,
manufacturing, etc.
2. Project-based organizational structure.

The project-oriented organizational structure is the complete opposite of the

functional organizational structure, even though the organization may still group staff
according to their work functions.

In this structure, a project manager has authority over the decision of the project's
budget, schedule, and the project team. He is at the top of the hierarchical structure with
employees playing supporting roles for the project. What's great about this structure is
that there is a clear, established line of authority which results in faster decision-making
and approval.

3. Matrix Organizational Structure. Matrix organization structure includes features of

project-organized and functional organizational structures. There are three types of matrix
organizational structure: weak matrix, strong matrix, and balanced matrix.

1. Weak Matrix Organizational structure- the project authority would fall into the
hands of a functional manager as it is in a functional organization. The role of the
project manager is more than that of a project coordinator.
2. Strong Matrix Organizational Structure- has some similarities with that of a project-
based organizational structure in that the project manager handles a project. They
have a project manager with considerable authority and project administrative
staff, but still, the staff has to report to the functional manager.
3. Balanced Matrix Organizational Structure- both the project manager and the
functional manager share equal authority for the project. A balanced matrix
organizational structure recognizes the need for a project manager. However, the
project manager does not have full authority over the project, project staff, or
project budget.

Legal Structure

Generally, legal structure is an organizational framework for how a business entity

operates. It is governed by the country’s legal system. It is also called “business structure,
business form, business ownership structure, or corporate structure.”
The proper legal structure depends on the size and type of your business and your
business goals. Later on, we will apply this legal structure concept concerning
construction projects and contracts.

3 main types of legal structures:

1. Sole Proprietorship

In a sole proprietorship, the business's founder remains the sole owner. They retain
complete control over every aspect of the business. This is the easiest business structure
for new or small business owners, as it is cost-effective and there are no other
stakeholders to consider when making decisions.

However, a sole proprietorship offers no legal separation between business and personal
assets or responsibilities. The owner assumes all risk when it comes to taxes and other
legal liabilities, as sole proprietorships are not incorporated. In a worst-case scenario, a
business owner could find their house or car up for seizure for debts or because of legal
action against the business.

2. Partnership

By the contract of partnership, two or more persons bind themselves to contribute money,
property, or industry to a common fund, intending to divide the profits among themselves.
It is important to have a written partnership agreement in place. This agreement should
outline the rights and responsibilities of each partner, as well as how the business will be
managed and how profits and losses will be shared.

3. Traditional Corporation or C Corporation

In general, C corporations tend to be very large companies. It is created when it is

incorporated by a group of shareholders who share ownership represented by their
holding of stock shares. As a separate legal entity, a C Corporation can engage in
business, have its bank accounts, enter into legal commitments, establish its own credit
identity, and even acquire property and assets.

Note: A “corporation” is the business entity itself while “Incorporation” is the act of starting
a corporate business entity.

Factors to consider in choosing the right legal structure

1. Owner liability
As a business owner, it's critical to understand the level of personal liability that you may
face, especially if the service or product you offer involves higher risks. Limited liability
protections are available to owners of both corporations and LLCs, shielding them from
personal liability in the event of claims against their business. This protection is one of the
key benefits of forming an LLC. In contrast, partners and sole proprietors have limited
protection, leaving them more vulnerable to personal liability.

2. Expenses and procedures

Starting a business as a sole proprietorship or partnership does not involve much

expense or paperwork. However, for a partnership, it is essential to draft a partnership
agreement specifying each partner's roles and responsibilities in the company. On the
other hand, establishing a corporation or LLC requires filing articles of incorporation with
the secretary of state's office and paying the associated fees. The required fees and forms
vary from state to state, and an LLC operating agreement might be necessary. Moreover,
the business owners in these structures must elect officers to oversee the company's
management and maintain comprehensive records of crucial business decisions.

3. Taxes

The income tax status of your business is influenced by the type of business structure
you choose. If you opt for a sole proprietorship, partnership, or LLC, you'll fall under the
"pass-through" tax entities category. This means that the taxes on your business's profits
and losses will be passed through to you on your personal income taxes. It's important to
note that even if you don't take any money out of your company during the tax year, you'll
still need to file taxes on all net profits from your business.

On the other hand, corporations are regarded as separate tax entities. This means that
business owners only pay taxes on the profits they actually take from the business in the
form of salaries, dividends, or bonuses. Additionally, corporations are taxed at a lower tax
rate than some individuals. Unlike the "pass-through" structures, corporations offer a
different tax regime that can benefit business owners in various ways.

4. Investment needs

In case your business depends on investors, opting for a corporation could be the ideal
business structure. By structuring your business as a corporation, you can offer shares
of ownership through stock offerings, which is not possible with other business structures.

The Role of a Legal Structure in Construction Contracts.

1. Clarity of ownership and responsibilities

When a business has a well-defined legal structure in place, it can help to minimize the
likelihood of disputes and conflicts among business owners. This is accomplished by
establishing clear roles, contributions, and decision-making authority for each owner. By
reducing disagreements, a clear structure can assist in ensuring the efficient operation of
a business.

2. Personal asset protection

Business owners must take steps to protect their assets, both from a data security

standpoint and from a legal standpoint.

3. Maximize profitability

It is important to note that the profitability of your construction company can be

significantly affected by the tax implications of different legal structures. Therefore, it is
crucial to have a clear understanding of these implications in order to plan your taxes
effectively. It is worth noting that tax treatment can vary greatly, especially among different
types of corporations.

4. Promote investor confidence

Many investors prefer to invest in companies that have clear legal structures and are held
accountable for their actions. C-corporations are particularly attractive to investors
because of their transparent ownership and governance mechanisms, which inspire
greater confidence and allow for larger investments.

5. Ensure business longevity

Your choice of legal structure for your business also affects its longevity and continuity.
For instance, sole proprietorships and partnerships do not have perpetual existence. In
the event of the owner's retirement or death, the company may cease to exist.

Construction Project Requirements

- Are the specific needs and goals that a construction project must meet in order
to be considered successful. These requirements serve as the foundation for planning,
design, procurement, and execution phases of a project.

Construction Project Requirements During the Different Phases of Construction:

 Pre Construction Phase

- The Pre-Construction Phase is the initial stage of a construction project,

focusing on the planning and preparation required before actual construction work
begins. During this phase, the following requirements and activities are typically
undertaken:

Project Proposal - Creating a project proposal for construction requirements is

essential to outline the scope, objectives, and specifications of a construction project.

Feasibility Study - A feasibility study for construction requirements is a crucial step in

determining the viability and potential success of a construction project. This study
assesses various aspects, To assess whether the project is feasible and should
proceed to the design and construction phases.

Contractor Selection and Contracts - A feasibility study for construction requirements

is a crucial step in determining the viability and potential success of a construction
project. This study assesses various aspects, To assess whether the project is feasible
and should proceed to the design and construction phases.

Permitting and Approvals - Obtain all necessary permits and approvals from local
authorities, including building permits, environmental permits, and zoning approvals.

Construction Phase

- The construction phase of a project is the stage in which the actual building or
construction work takes place. This phase involves a set of specific requirements and
activities to ensure the project's successful execution.

Scope of Work - Review and Ensure contractors understand the scope.

Progress Report - Provide regular progress reports to the project owner and
stakeholders. Share updates on milestones achieved, work completed, and any
deviations from the project plan.

Quality Assurance Testing - Conduct required testing and inspections on materials

and systems (e.g., structural, electrical, plumbing) to ensure compliance with standards.

Health and Safety Compliance - Continuously enforce health and safety regulations,
including the provision of personal protective equipment (PPE) and maintaining a safe
working environment. Enforce safety protocols and conduct regular safety inspections.
Project Schedule - Create an initial project schedule that outlines key milestones and
timelines.

Post-Construction Phase

-The post-construction phase of a construction project involves several key

requirements and activities to ensure the successful completion and transition of the
project to its intended use. Here are the essential requirements during the post-
construction phase:

Final Inspection and Punch List - Conduct a final inspection to identify any remaining
defects or incomplete items in the construction work.

Occupancy Permit or Certificate of Completion - Obtain the required occupancy

permit or certificate of completion from local authorities, if applicable. This document
certifies that the construction complies with local regulations and is ready for use.

Facility Management and Maintenance Planning - Develop a comprehensive facility

management plan that outlines ongoing maintenance, repair, and operational
procedures. Establish a maintenance schedule and identify responsible personnel or
service providers.