DOMINGO SAVIO PRIVATE UNIVERSITY

TOPIC 5
“ORGANIZATIONAL STUDY”
The preparation and evaluation of an investment project requires, in addition to the aspects studied so far,
taking into consideration the organizational aspects of the company that would be created with said project.
Underestimation and lack of analysis of these aspects can lead to erroneous conclusions about its
profitability. Each investment project has its own characteristics, which define its organizational structure in
accordance with the specific requirements required for its execution.

The organizational study seeks to determine the operational capacity of the organization that owns the
project in order to know and evaluate strengths and weaknesses and define the structure of the organization
for managing the investment, operation and maintenance stages. That is, for each project, the organizational
structure must be determined in accordance with the requirements demanded by the execution of the
project and the future operation.

The administrative component of the company must guarantee three basic variables for management:
organizational units; human, material and financial resources; and work plans. An organizational structure
must then be designed that guarantees the achievement of the company/business objectives. This structure
refers to the relatively fixed relationships between positions in an organization, and are the result of the
processes of division of labor, departmentalization, spheres of control and delegation. Departments group
jobs according to some common element. The sphere of control determines the appropriate size of
subordinate units under the responsibility of a supervisor at each level of the organization.

Delegation should consider how to distribute authority and decentralize decision-making.

The relevance of the study of the organizational aspects of the company lies in the fact that the structure
adopted has its impact on the cash flow (expenses and operating costs) that can determine the profitability
or not of the investment. The design of the organization's structure fundamentally requires the definition of
the nature and content of each position in the organization. This allows estimating the cost in remunerations.

The organization that assumes the project has a double economic influence on its evaluation: an effect on the
investments and costs associated with a specific size of operation and an indirect effect on the operating
costs derived from the administrative procedures associated with a size, technology and complexity of the
designed organizational structure.

5.1. Objective of the Organizational Study

PREPARED BY: MBA LIC. JUAN CARLOS RIOS

 DOMINGO SAVIO PRIVATE UNIVERSITY

Specifically, the objective of the organizational study is to determine the optimal Administrative
Organizational Structure and the administrative work plans with which the project will operate once it
is put into operation.

5.2. Process for organizational study

V There must be agreement between the organizational structure and the objectives.

V Prepare a list of administrative activities necessary to achieve the objectives.

V Define activities that will be subcontracted and which will be done directly

V For activities that will be addressed directly, group related or related tasks and activities into
subsystems.

V Identify the specific functions that each subsystem must fulfill.

V Identify the Human Resource needs of each subsystem.

V Assign functions and define positions for each administrative unit or work group.

V Preparation of the Organization Chart

V Description of the functions of each position.

5.3. Organizational factors

The most relevant organizational factors that must be taken into account when preparing the project are
grouped into four specific decisional areas, according to Sapag (2000):
> participation of external project units (administrative outsourcing)
> organizational structure size
> administrative technology
> complexity of administrative tasks

All of these factors have their expression in the operational management costs, which must then be
quantified to be included in the project's cash flow.

Almost all projects present two types of administrative outsourcing: operational relationships (with suppliers
and clients); and coordinating and supervisory units in the organizational structure of the project (such as:
external audits, construction contractors, accounting services, training courses, preventive maintenance,
maintenance of information systems) that allow operating with a smaller structure.

PREPARED BY: MBA LIC. JUAN CARLOS RIOS

 DOMINGO SAVIO PRIVATE UNIVERSITY

The size of the project is the factor that apparently has the greatest influence on the design and size of
the organizational structure. However, it is possible to take advantage of economies of scale over a
certain magnitude.

The analysis of the organizational aspects must also take into account the physical space required, the
administrative staff, the support staff, the offices, the facilities, the furniture, the vehicles, the control
system, the printing of forms, the dispatch of correspondence. , office supplies, etc. It should not be
forgotten that the administrative structure of a company can be as dynamic as the company itself, however,
it is usually assumed for estimation purposes that said structure would remain over time. Of course, if growth
is anticipated, it could, for example, replace some external service that justifies its provision by the same
company (think of companies that have their own marketing or HR departments, such as PDVSA or P&G).

Once the most convenient structure for the initial organization has been chosen, a general organizational
chart of the company is prepared, which shows how the positions and hierarchy would look within the
company.

5.4. Administrative structure

In this way, the Administrative Structure refers to the way in which the activities of the organization are
divided, grouped and coordinated in terms of the relationships between managers and employees, between
managers among themselves and also between employees.

PREPARED BY: MBA LIC. JUAN CARLOS RIOS

DOMINGO SAVIO PRIVATE UNIVERSITY

PREPARED BY: MBA LIC. JUAN CARLOS RIOS