3.4.1 List of Duties

The conduct of a construction contracting business involves certain duties, whether the business is large or small. These duties will be carried out by only a few persons in a small organization, whereas many people will be involved in a larger company. In making up a list of company duties, the question invariably arises as to how detailed such a list should be. The answer is that a level of breakdown should be used that is appropriate for the size of the company and the number of employees involved. It seems reasonable to suggest that the larger the company, the finer and more refined the subdivision of duties should be.

The more detailed the thinking concerning the definition of all of the duties that define the requirements for effective and profitable operation, the less likely it is that something essential will be overlooked. The following list of duties that pertain to different functional levels in the organizational management structure of a company will be used for illustrative purposes. However, it should be noted that this listing is provided as an overview and general guide, and is not intended to be complete or comprehensive or applicable to every construction company. It should also be noted that a given company might include some of these duties within different functional divisions.

Executive

1. Scope of operations
2. Company organization
3. Business organization
4. Long-range planning
5. Physical facilities
6. Capital improvements
7. Operating procedures and policies
8. Contract negotiation and execution
9. Financial structure
10. Investment
11. Banking
12. Construction loans
13. Legal matters
14. Auditors and audits
15. Legislative matters
16. Public relations
17. Industry associations
18. Labor policy
19. Safety policy
20. Quality assurance and quality control policy
21. Personnel policies and personnel relations
22. Salaries, bonuses, pensions, and profit sharing
23. Education and training plans
24. Professional development plans

Accounting and Payroll

1. General books of accounts
2. Subsidiary records
3. Cost records and reports
4. Historical cost database
5. Financial reports
6. Tax returns and payments
7. Billing
8. Collections
9. Bank deposits
10. Payment of invoices
11. Assignments
12. Personnel records
13. Payrolls and records
14. Wage and personnel reports to public agencies
15. Office services

Procurement

1. Requisitions
2. Purchase orders
3. Subcontracts
4. Change orders
5. Inventories
6. Ordering and control of stores
7. Expediting
8. Licenses
9. Insurance, for the company and for projects
10. Subcontractors' insurance
11. Owners' contract bonds
12. Bonds from subcontractors
13. Releases of lien
14. Guarantees and warranties
15. Routing and scheduling materials
16. Building permits
17. Checking and approval of invoices
18. Information on prices and sources of supply
19. Verification of quantity and quality of deliveries

Estimating

1. Awareness of projects announced for bid
2. Decision to bid
3. Visiting the site
4. Obtaining bidding documents and contract documents
5. Mailing bid invitations
6. Prebid conferences
7. Quantity takeoff
8. Materials quotations
9. Subcontractor proposals
10. Pricing of proposals
11. Checking estimates
12. Preparation of proposals
13. Bid bond
14. Delivering proposals
15. Bills of materials and subcontracts
16. Pricing change orders

Construction Operations/Project Engineering

1. Project planning
2. Construction schedules
3. Project budgets
4. Schedules of values
5. Project cost accounting
6. Project monitoring
7. Project cost breakdowns for pay purposes
8. Periodic project pay requests
9. Shop drawings
10. Project cost reports
11. Project cost control
12. Project schedule control
13. Field and office engineering—submittals, requests for information (RFIs), etc.
14. Safety procedures
15. Personal protective equipment (PPE)
16. Safety training
17. Internal accident and near-miss reports
18. Accident reports to insurance companies
19. Relations with owners and architect-engineers
20. Labor relations
21. Quality assurance/quality control procedures

Construction

1. Hiring craft labor
2. Supervision of construction
3. Coordination of subcontractors
4. Timekeeping
5. Labor cost coding
6. Project cost data
7. Project accident and near-miss reports
8. Project safety programs
9. Project progress reports
10. Construction methods
11. Storage of materials on project sites
12. Labor discipline and dismissal issues
13. Scheduling construction equipment

Yard Facilities

1. Receipt, storage, and warehousing of project materials
2. Maintenance and repair of construction equipment
3. Storage of construction equipment
4. Maintenance and issue of stores
5. Issue, receipt, and repair of hand tools
6. Transportation
7. Equipment rental
8. Prefabrication and subassembly
9. Spare parts

3.4.2 Division of Duties

After the duties have been listed, the next step in the development of an organizational plan is to subdivide these duties into groups so that the duties in each group can become the assigned responsibilities of a single individual. To illustrate, suppose the business is a small partnership consisting of two partners and an employed bookkeeper. One partner is in charge of the office and the other supervises the field operations. The three people concerned must, in a collective way, carry out all of the duties listed for company operations. The executive duties would normally be carried out by both partners acting together. The bookkeeper would perform the accounting and payroll tasks. The office partner could be responsible for all duties related to procurement and estimating, and be responsible for the bookkeeper and all of the bookkeeping operations. The field partner's duties could include those associated with all construction operations, and company yard facilities. It is obvious that the duties could be distributed among the three participants in any way desired. The experience, education, expertise, and talents of individuals will normally be the basis for the allocation of company responsibilities. It is important that every duty be assigned and conversely, that every position created include responsibility for a specific list of duties. The list of duties for any given position is referred to as its job description.

From the foregoing, it is clear that a member of a small construction company will normally be responsible for a considerably broader range and diversity of duties than would be the case in a large company. It is an intrinsic characteristic of a large organization that most of its members have relatively narrow job responsibilities and will tend to be considerably more specialized. To illustrate, a small firm may have one person who does all the takeoff, pricing, bidding, and purchasing for the company. A large contractor may well employ several people to accomplish the same things, each being involved with only a limited aspect of the total process.

3.4.3 Organizational Structure and Organization Chart

The organizational procedure discussed thus far ensures that the employment positions established for the company will accomplish each duty that has been identified as being necessary for effective business operation. The next step is to link these positions together into an integrated company operational structure.

It is common practice in the construction industry to establish jurisdictions or departments within the company. Each department usually is roughly equivalent in authority and although interrelated with the others, each department operates semi-independently of the others.

This is referred to in management as developing a functional form of organizational structure, that is, one that is formed by partitioning the work to be done into major functional areas. The functional system of management has the advantage that an individual or group can specialize to some extent in a particular aspect of the business. Semiautonomous departments are created, each of which performs a specialized function. How far this horizontal division is carried depends on the size of the company involved and on the wishes of its management. Each department is assigned a specific area of responsibility (e.g., estimating) and is headed by a manager who possesses training, experience, and skill in that particular aspect of the business.

Each of the departments thus created is then divided vertically. Vertical division refers to the establishment of lines of supervision, with each individual along a line being accountable to the person above and acting in a supervisory capacity to those below. The farther down a position appears on the organizational hierarchy, the more limited is the responsibility and authority of the person concerned.

The company's organizational structure is depicted in pictorial form in organization charts, showing every position of responsibility, and all lines of supervision and authority. These charts provide an understanding of the company's structure at a glance. The organizational chart is a particularly efficient way to establish clearly in the minds of the employees involved, where their individual positions fit within the overall company organization, along with the identities of their supervisors, and those whom they supervise, and the nature of their duties. It constitutes an established, permanent reminder of job responsibilities. Such a chart also underscores for employees the fact that the business is well organized and that top management knows at all times who is responsible for what. A company organization chart has been shown to be well worth the necessary thought and effort that it requires, in terms of thinking through all company functions and duties and the fixing of responsibilities. It is also very useful in fitting new personnel into the organization.

Figure 3.1 depicts a typical organizational structure of a small contracting company being operated as an individual proprietorship.

The organization chart for a small partnership is presented in Figure 3.2.

Figure 3.3 is a typical organization chart that might pertain to a moderately large corporate firm. It should be recognized, however, that the organizational structure of construction companies can be infinitely varied, and the charts shown are intended only to illustrate typical or frequently utilized frameworks. The organizational structure and the assignment of duties depicted in these charts are for illustrative purposes only, and the allocation of duties is not intended to be complete. It should be noted that within a company, a person's name will appear with each position shown, along with a list of major job responsibilities.

At this stage of development, the organization chart has established a business team that, in a collective and coordinated manner, will perform all of the duties and functions necessary to allow the organization to function efficiently and profitably. There should be no misunderstanding among participants concerning their job duties, responsibilities, authorities, or with regard to their position in the company.

A valuable accompaniment to the organization chart is an operating chart that serves to establish and define the working relationships among company personnel. The chart shows who participates, and to what degree, when a given activity is performed.

An example of an operating chart is shown in Figure 3.4. Listed across the top of the chart are all of the positions, and the people who are involved in a given function, along with the extent and nature of their involvement. Listed on the left are the functions for which an individual is responsible and the nature of this responsibility. This serves as an amplified job description. This figure is not intended to be complete or to apply necessarily to the operations of any given construction firm, but it does illustrate the type of information that can be conveyed by such a chart, which is a very effective component of the company organizational plan.

3.4.4 Staffing

The organizational structure devised must now be staffed; that is, a person must be assigned to each of the positions created. A company consists of what its people make it, and it is impossible to overemphasize the importance of management selecting the right person for each position it has defined. In the construction industry, supervisory personnel are typically selected on the basis of their field construction knowledge or their technical ability rather than on their management training or experience. The reasons for this are plainly apparent.

However, it should be pointed out that the selection of an individual for a supervisory position only on the basis of construction competence is no guarantee that the most effective person will thereby be obtained. Certainly, detailed knowledge of the construction process is an important attribute for the person who will manage the construction process, but other qualifications are also required. Positions on the lower rungs of the organizational ladder are concerned primarily with specific and technical details. Correspondingly, it is entirely appropriate that people be selected for such positions largely on the basis of their job knowledge, because their management function is limited. However, in selecting individuals for progressively higher positions in the management of field operations, more and more attention must be paid to managerial ability and general experience in the industry. It is now well understood that technical ability alone does not assure managerial success.

Similarly, careful thought and detailed analysis are in order, for determining the qualifications for, and the people who are selected for, all of the field operations of the company. In a literal sense, a company can be said to be what its people make it to be.

3.4.5 Communications

The proper functioning of a business depends on the exchange of information of many kinds, both within the firm itself and with external agencies. A good system of company communications is essential for smooth and profitable operation. Top management must be kept apprised of job costs and job progress. Procurement personnel must receive purchasing information concerning materials and subcontractors required for a new project. The project superintendents must be kept advised of contract changes, such as drawing revisions and change orders. Procurement people must keep the yard and the projects aware of the delivery status of materials, and be told of the nature and extent of delivery shortages or damage. Information regarding all job accidents must be conveyed from the projects to company management. The payroll department must be informed concerning hirings and layoffs. Information on back charges against material suppliers and subcontractors must get to the accounting department. These are only a few examples of communications within a company. Numerous examples could also be cited of the need for effective communications with external agencies such as owners, architect-engineers, materials suppliers, subcontractors, banks and other lenders, insurance companies, sureties, and governmental agencies at various levels of government, as well as with the general public.

Communications needs that are repetitive and routine in nature can be met by the establishment of set procedures. The next section discusses the manual of policies and procedures, which has as one of its principal purposes the description of routine communications processes.

Periodic meetings of various groups within company management are a necessity. These meetings provide an opportunity to check and communicate the current status of operations, convey information, exchange ideas, resolve misunderstandings, and decide on future courses of action. Also, this mode of communication can help to establish and maintain team spirit. Brainstorming sessions of such groups have proven to be extremely effective in producing new ideas and management innovation.

To disseminate company information of general interest, bulletin boards, and a company publication are very effective. Issued periodically, the publication can contain matters of interest to company employees and to external constituencies of the organization.

3.4.6 The Manual of Policies and Procedures

Company organization and operation charts are very useful and effective management devices, but they alone cannot completely describe the total workings, details, and interrelationships of the organization. There is an obvious need for further development and more detailed and comprehensive descriptions of the company plan. Once the organizational structure has been established, written company policies and operating procedures can be prepared that augment the organization chart and operation chart. These policies and procedures should be set forth in a manual made available to all company personnel concerned. If a loose-leaf manual is used, it is easy to make revisions and add new sheets. In larger organizations, manuals are often issued in separate sections, each of which pertains to the operation of a single department.

Decision making is the essence of management. Some business situations requiring decisions are unique and must be handled separately and individually. However, other situations are recurring and routine. Company rules and regulations or policies provide standard decisions for such repetitive cases. Policies serve as guides for action by all levels of company management and provide uniform and consistent guidance in the handling of problems that recur frequently. Obviously, policies are designed to meet specific situations. Such rules and regulations enhance the effectiveness of the organization and are important to the conduct of everyday business affairs.

Operating procedures establish general rules governing communications, the flow of paperwork, and other routine company operations. Such rules remove much of the necessity for decision making from office routine and allow duties to be assigned to the lowest practical management level. The very act of reducing these procedures to writing helps to clarify ambiguities, removes areas of overlap, and reveals discrepancies and other shortcomings in the organizational plan. The written procedures ensure uniformity of action, are valuable in training new personnel, and reduce the need for close supervision.

The first step in writing any such set of company procedures is generally to have the supervisor of each department consult with his personnel and then write down the procedures that apply to his own area of responsibility. These various procedures are then incorporated into a single set of rules through a series of interdepartmental meetings in which the proposed procedures are coordinated and adjusted.

The policies and procedures manual must be explicit concerning the keeping of records. Records of various kinds are indispensable to the conduct of a business. Government agencies require that certain kinds of business records be kept. In addition, company records pertaining to project costs, shop drawings, equipment maintenance, inventory, job progress, estimating, personnel, and other aspects of the business are of significant importance. Although too few records can be costly, excessive record keeping can become equally expensive. It makes no sense to keep records, other than those required by law, that are not actually used and whose potential value does not at least equal their cost of preparation.

Record forms should be carefully selected so as to yield a maximum of information with a minimum of effort and clerical time. The manual can include samples of all standard record forms, with explanations and illustrations regarding their use. Printed forms for records and communications are very effective and can save a great deal of time. They simplify the task of adhering to company policies and procedures, and make it possible to use clerical people with less supervision. Additionally, when information is repeatedly presented in the same format, it can be quickly understood by all who make reference to it.

Another matter to be covered by the operating manual concerns routine company reports—who prepares them, when they are prepared, and to whom they are to be routed. Effective decision making depends to a large degree on the timely and continuous flow of needed management information. Reports on project costs, accident experience, current financial status, cash projections, and similar matters present vital operating information in a condensed and summary form for use by company management.

3.4.7 The Employee Handbook

Either as a part of the manual of policies and procedures or as a separate document, every company should prepare and distribute to all of its employees, an employee handbook that describes company personnel policies. The handbook should describe every facet of established company personnel procedures, in detail, for the employees. By putting such information into writing, and by providing the employee handbook to all employees, the company can be assured that all employees are informed so that they will know what expectations are. The handbook can do much to establish consistency in company operations and serves to not only set forth the rules of company policy but also to convey company philosophy and expectation.

The employee handbook can serve to enhance morale and sense of belonging. It can help minimize such personnel problems as turnover, absenteeism, and low productivity. By establishing a set of specific policies, the employee handbook also provides those who manage and enforce company policies with invaluable guidance and a solid basis for action in making future personnel decisions.

Matters regarding employee compensation should be discussed, together with a description of how the company rewards merit and superior performance. Company policy on hours of work and overtime should be included. Also included should be a discussion of how the firm deals with tardiness and absenteeism. Vacation time is an important topic, including how the time is accumulated and rules for compensation. Company policy on drugs and alcohol is an especially important aspect of a personnel manual, as is a description of the company safety policy including penalties for violations.

The employee handbook should address itself to how disputes between employer and employee are handled. The employee should be advised of available means of solving problems, and lines of communication should be provided and kept open. A company open-door policy can be very helpful in such matters.

Matters of discipline and causes for termination should be addressed. In addition, a full description of company benefits is needed, along with a reminder of what the company pays, in addition to base pay, to provide these benefits. Opportunities for further training and professional development can be included.

National contractor professional associations such as the Associated General Contractors of America (AGC), Associated Builders and Contractors (ABC), and National Association of Home Builders (NAHB) can provide their contractor members with valuable guidance in developing an employee handbook. It should also be noted that if the contractor employs union craft workers, the content of the employee handbook must be coordinated with the elements of the collective bargaining agreement.

The handbook should be written in language the employees can understand, and should continuously convey a positive image of both the company and the relationships it intends to develop and maintain with all of its employees. In an overall sense, the handbook should stress the company's desire to create and maintain an atmosphere of mutual concern and mutual respect regarding working conditions and personnel relationships.

3.4.8 Plan Implementation and Adjustment

To plan and formulate a company organization requires considerable time and effort. All members of the team must be consulted, and many decisions must be made concerning a wide range of details and relationships. When the organizational plan has reached an advanced stage, a meeting of company personnel should be called to discuss, debate, and finalize the pertinent issues.

Next, the plan can be finalized and implemented. There will then be a period of adjustment and readjustment, as people adapt to the plan, and as the plan is modified so as to work more smoothly and more efficiently. In this regard, it must be recognized that no organizational plan can apply very long without being corrected and revised. As business conditions evolve, and as company size, personnel, and attitudes change, so must the company organization be altered to suit current circumstances. Therefore, the policies and procedures document should contain provisions for the periodic review and adjustment of both the organizational plan and the manual of policies and procedures.

3.6.1 Decision Making

When decisions are needed, the company policy and management plan should ensure that effective business decisions are made promptly and positively. A common source of management difficulty is the failure of some member of the organization to make needed business decisions in a timely manner. While some decisions cannot be rushed and must receive careful consideration, any unnecessary delay in decision making generally only makes the situation worse.

Decisions rarely please everyone. However, indecision, procrastination, and vacillation serve only to further exacerbate the matter that requires a decision, and to frustrate those awaiting the decision. At each level of the organization, there should be an individual whose function it is to decide on operational courses of action when decisions are required. This person should have the benefit of being able to consult with and to seek recommendations from others as needed, but should realize that he or she has full responsibility for making and implementing the decision, and also has the responsibility for the outcomes of the decision.

3.6.2 Personnel Development

People should be provided the opportunity to acquire or improve the skills, attitudes, and abilities necessary to effectively perform the work that is assigned to them. Based on an appraisal of individual strengths and weaknesses, a plan for the personal improvement of each employee in a company is an important management responsibility. Such programs can pay huge dividends, not only in terms of improving employee competence and productivity, but also in terms of enhancing employee morale, and job satisfaction.

Among the many ways in which this can be accomplished is by encouraging and supporting continuing education, training, and professional development through any of a variety of methods, such as providing for the employee to attend formal courses and seminars. When the company pays all or a part of the attendant costs and allows time off from work to do this, the effect is even more dramatic.

Encouraging membership and participation in construction professional associations, along with such measures as encouraging committee participation, job rotation, and coaching on the job, can also be effective.

3.6.3 Training of Replacements

One of the keys to company success and continuance is the matter of seeing to the development and support of aspiring talent. People do, in fact, become ill and miss work, or retire, or die, or leave the company and must be replaced. In cases of sickness or other temporary absence, someone must fill in. Management must develop means for maintaining company operations when events of these kinds occur.

Additionally, people currently in the company should be encouraged to develop to their full potential and level of aspiration. The person in a position of job responsibility who, because of a dominant personality or fear of his job security, does not develop likely successors from among subordinates, is not an effective worker or manager and is not serving the best interests of the company.

Additionally, the company should always be on the lookout for new talent that can contribute. Whether in office functions or in field operations, or whether in staff positions, craft positions, or management positions, new infusions of new ability, intellect, and personality, when needed, can be expected to have positive effects on company operations.

3.6.4 Motivation

People within the organization should be encouraged, inspired, and impelled to do what needs to be done. One of the key factors in employee motivation is the human need for a feeling of recognition, self-esteem, and satisfaction. In this regard, it should be noted that it has repeatedly been demonstrated that money (wages or salary) is not the only compelling element. Working with other people in a professional and nurturing environment is the primary means of employees securing a feeling of recognition and importance. It has been shown that most people want to feel they are part of a team and that they are contributing in a positive way in something they know is bigger than themselves.

Managers and employees at all levels do well to learn more about the elements of human motivation and job satisfaction. It has been demonstrated repeatedly that motivated and satisfied workers, regardless of their rank or position in a company, are more productive, and work more safely.

One of the tests of a good manager is his ability to build a closely knit, effective operating group. To do this, employees should be given the opportunity to display their talents and capabilities, and there should be a suitable reward system or other outward manifestation of recognition for achievement.