3.

5 ORGANIZATION
MANAGEMENT
3.5.1. Introduction

 An organization is a deliberately established social unit

composed of people who coordinate their activities to
achieve a common objective.

 Small organizations may require no specialization beyond

distinguishing one individual’s job from another’s.
 However as organizations become larger and involve
more diverse activities, it becomes necessary to divide
major tasks into depart mental responsibilities thus
leading to some kind of structure.
 Dividing the work of the organizations into basic
departmental responsibilities potentially contributes
to effective management in several ways.
 The Potential benefits include:
 Clarifying responsibility and authority within the
organization,
 Facilitate communication and control,
 Improve decision making;
 Differentiate among activities,
 Properties of an organization:
 The main properties of an organization of any form
are:
 Distinct internal processing based on division of
labor
 A hierarchy of authority
 A system of coordination and control
 A collective identity (team work)
3.5.2. Organization Theory and Organization
Management in Ethiopia

 Organization Theory
 It becomes a well known fact that Economic and
Governmental activities by large dominate large
organizations in their operations.
 This creates major thought on:
 views of organizations,
 organizational concepts and their assumptions based
upon, and
 theories and ideas on how organizations can best bring
the integration of social collectives to the organizations.
 Theories of organizations:
 The theories of organizations so far developed can

be summarized as (Lee G. Bolman and Terrence E.

Deal):
1. Rational System theory – The Structural Frame,
2. Human Resources theory – The human resources
frame,
3. Political theory – The Political Frame,
4. Symbolic theory – The Symbolic Frame, and
5. Systems Theory.
 Organization Management in Ethiopia
 The organization management in Ethiopia can be better
explained by assessing the different contextual realities.
Descriptions Ethiopian Construction Organizations

Central issues Scarce resources – vital budgeting principle

System High uncertainty – Not easy to forecast any situation

Problem arises When one realizes some thing is wrong with the performance of the
organization.

Problem solving Often removing the manager with out reliable evidence. They do not
mechanisms look into that there is a possible management problem but the
individual leader.

Organization Often organizations are structured to fulfill those preferences and

design and interests of coalitions. They think only if this is exercised that the
structure structure will fit to its objective

Decision making Pre determined often to fit the coalitions.

Power Ideally decentralized but practically semi-centralized.

Meetings Usually formal but comes out with nothing.

Coordination Poor, formal and informal.

Goals/ roles Pre determined by authorities.

Conflict An inherent character but results in often being non-solvable.

Because only the power that matters.
Planning Often considered as strategies to set objectives and coordinate
activities but usually insufficient time is allocated.
Reorganizing Often not practiced. Recently restructuring of all Ethiopian
organizations occurred due to Government change.
Motivating This is almost an overlooked aspect of management.

Evaluation Used for sanction to exercise power. Often evaluations are strictly
carried out when there is a need to remove somebody in the form of
camouflage.
 From the above table one can easily place the
construction organizations in Ethiopia under two
frames of the theories of organizations

 Political in conjugation with Structural frame.

 This indicates that the construction industry is at its

infant stage towards organization management.
3.5.3. Strategic Management
 What is Strategic Management? 
 To understand strategic management, one must
understand the concept of organizational strategy.
 Organizational strategies are the approaches adopted by
organizations to ensure successful performance in the
market place.
 These approaches are typically set forth in comprehensive
document called the strategic plan.  
 Strategic management is management that bases all
actions, activities and decisions on what is most likely
with in an ethical frame work to ensure successful
performance in the market place.
 Components of Strategic Management
 Strategic management consists of two interrelated activities

A) Strategic planning and

B) Strategic execution.

A. Strategic Planning 
 Strategic Planning is the process by which an organization answers

the following questions:-

 Who are we?

 What are our strength & weaknesses?

 Where are we going?

 What are the opportunities and threats in our business?

 How will we get there?

 What do we hope to accomplish?

 Strategic planning involves developing a written
plan that has the following components:
 An organizational vision,
 Organizational mission,
 Guiding principles,
 Broad strategic objectives, and
 Specific tactics or activities for achieving the broad
objectives.
B. Strategic Execution
 Strategic Execution involves implementing

strategies set forth in strategic planning,monitoring

progress toward their achievement, and adjusting as
necessary.
 Strategic execution is implementation that achieves

maximum efficiency and effectiveness.

3.5.4. Organization Structure
 Organization is the process in which work is arranged,
subunit is established and authority relationships are
designated.
 Thus, an organizational structure is prepared. It
consists of:
 job descriptions
 statements indicating the functions
 official delegations
 policies delegations
 financial procedures
 Several traditional (basic) types of structures are
distinguishable, these are:
I. Functional Organization Structures ( U-form
organization )
II. Product Organization Structures ( H – form
organization )
III. Territorial Organization Structures
IV. Client Centered Organization Structures
V. Matrix Organization Structures
VI. Multiple structures
I) Functional/Line Organization Structure (U –
form organization)
 The functional organization structure divides the

units so that each has a dissimilar set of duties and

responsibilities.
Advantage
 when the work done in an organization is best accomplished by a

specialized task or a sequence of specialized tasks, then a

functional structure of departments can work well.
 associated with technically superior products

 good at enabling specialists to interact and strive for technical

excellence.
Disadvantage
 The more that strategy, technology and environment demand

interdepartmental cooperation, the more of an obstruction the

functional structure can become.
 weak in emphasizing business results and in providing

coordination,
II) Product Organization Structure (H –form
organization)
 The product organization structure divides the units

on the basis of products, projects, or programs.

Advantages
 associated with a better record of meeting schedules

and controlling cots.

 they facilitate innovation

 enables the formation of product-centered cooperation

 highly advantages to companies having a strategy of

growth through diversifying products.

 shapes a pattern of management decision making that

helps the firm's better stay in touch and respond

quickly to the numerous product markets in which they
operate.
 offers potential advantages when it comes to coping

with unstable environments.

Disadvantages:-
 They are more frustrated by ambiguity, conflict,

and multiple levels of management, and they feel

less loyal to their organizations than do
subordinates in functional organizations
 possible increased employee insecurity and

weakened technical excellence in various functional

specialties.
III) Matrix Organization Structure.
 Matrix organization is a result of efforts to combine

both functional and product (or client or territorial)

structures into a new form.
 It begins with a functional structure with different

functional units.
 Next, another structure organized by product or client,

is overlaid upon the original structure.

 The result is that employees are assigned to a basic

functional department and at the same time, they are

assigned to work on a particular product or for a
particular client.
 The matrix structure has been devised to respond to
three conditions.
 First is to respond to two different and conflicting
environmental pressures.
 the needs to have technical excellence in products
and the need to meet unique customer requirements
which include schedule and cost constraints.
 Second, is the requirement to improve the
inadequate communication capacity among
individuals and groups.
 Third, to cater the need for better and flexible use of
human, financial, and physical resources.
Problems
I. Tendencies toward anarchy-confusion about who
reports to whom and a resulting sense of reporting
to no one.
II. Excessive power struggles-functional and product
managers striving for dominance.
III. Groupitis-too many meetings and too much group
decision making to the point of involving
participants in details they don't care about or are
too ignorant of to be helpful.
3.5.5. Types of Construction and Consultancy
Firms

 Persons may involve on a permanent and

professional manner in any economic activities
with the purpose of making profit or gain.
 These activities may include manufacturing,
distribution, service rendering commercial
activities or any other economic activity.
 Physical or juridical persons may undertake
economic activities for gain.
 Below are mentioned juridical persons that can
carry out economic activities:
 1. Public Enterprises - such enterprises are wholly
owned by the state.
 2. Business Organizations - Such organizations
carry out same kinds of economic activities as
traders.
 They run business for the purpose of making profit.
 They are formed on the basis of the commercial
code of Ethiopia (Art. 210).
 There are six forms of Business Organizations under the
Commercial Code of Ethiopia:
A. Ordinary Partnership:
- Involved in non-commercial activities.
- Properties: - Liability, no. of members
B. General Partnership:
- involved in commercial activities.
C. Limited Partnership
D. Joint Venture - In law the term Joint Venture denotes
two concepts of organizations
 engaged in business for the purpose of which is to work

for gain or profit.

E. Private Limited Company
- Commercial Code – Art. 5 -10
- There should be a min of two members and max of fifty.
- Min. Capital for PLC is 15,000.00 ETB.
- It is not possible to transfer share to other company
- Liability is limited.
F. Share Company
- There should be a min of five members.
- Min. Capital for PLC is 50,000.00 ETB.
- Share can be easily transferred.
- Liability is respected to respected shareholders.
 In Ethiopia the following categories are used to
classify construction and consultancy firms by the
Ministry of Works and Urban Development.
3.5.1. Types of Construction Firms
 Construction firms are broadly classified based on

trend of work as follows:

A. General Contractors
B. Building Contractors
C. Road Contractors
D. Specialized Contractors
E. Water works construction contractors
 The first three categories are again divided into ten
grades with different resource requirements.
 The Ministry has placed the basic human and
equipment requirements to attain the different
licenses with different grades.
5.5.2. Types of Consultancy Firms
 Consultancy firms are broadly classified as follows:

A. CA – Consultancy Architects
B. CAE – Consultancy Architects and Engineers
C. HBC – Consultancy Highway and Bridge
D. CE – Consultancy Engineers
E. SC – Specialized Consultancy
 All of the above categories are divided into six

grades with different resource requirements.

3.5.6. Project or Site Organizations
 Different forms of organizational structures are used in

the construction industry.

 The organizational structures can be classified into two:

A. Parent or Head Office Organization

 As the name implies this organization structure is

relatively stable and shall be carefully structured.

B. Project or Site Organization
 On any given project site the main bodies involved in

the construction activity are the contractor and the

consultant.
 Thank You!!!