Management Practice V 01

CONSTRUCTION
Management Practice in the Construction Industry in Ireland.

April 2012
Draft no.01
Brian O' Hanlon
The object of this paper was to produce a report card for the Construction industry in Ireland in 2012 based upon standard theories contained in management science.
Brian O Hanlon - April 2012
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Contents
Chapter 01 ..........................................................................................................................................................3 Introduction to Management ...............................................................................................................................3 Chapter 02 ..........................................................................................................................................................4 Organisational Environment ...............................................................................................................................4 Chapter 03 ..........................................................................................................................................................5 Planning and Decision Making ...........................................................................................................................5 Chapter 04 ..........................................................................................................................................................6 Leading and Leadership .....................................................................................................................................6 Chapter 05 ....................................................................................................................................................... 15 Organising and Controlling .............................................................................................................................. 15 Chapter 06 ....................................................................................................................................................... 27 Communication ................................................................................................................................................ 27 Chapter 07 ....................................................................................................................................................... 35 Motivation ........................................................................................................................................................ 35 Chapter 08 ...................................................................................................................................................... 41 Human Resource Management....................................................................................................................... 41 Chapter 9 ......................................................................................................................................................... 44 Strategic Management..................................................................................................................................... 44 Chapter 10 ....................................................................................................................................................... 55 Company Case Study ...................................................................................................................................... 55 Works Cited ..................................................................................................................................................... 62
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Chapter 01
Introduction to Management
Awaiting Further Completion
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Chapter 02
Organisational Environment
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Chapter 03
Planning and Decision Making
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Chapter 04
Leading and Leadership
I have decided to answer the question above, somewhat out of sequence. I formed a conclusion based on studies, that the path-goal theory by (House R. J., 1971), (House & Mitchell, 1974) and (Evans, 1970) required a greater deal of reflection than the others.
Path-Goal Theory
In (House R. J., 1996), the author remembers struggling in the early 1970s to find a theory, which could explain why the same leadership behaviour had different effects from one sample to another. Following a publication by (Evans, 1970), it became clear to Robert House, that leader behaviors are contingent on the context in which the leaders and followers worked. (Evans, 1970) and (House R. J., 1971), argue that motivation on the part of subordinates to perform a task in the course of work, can be improved by the leader behaving in a way such as to offer clarification to subordinates on what the goals are, and how they are to be achieved. . . . the motivational function of the leader consists of increasing personal payoffs to subordinates for work-goal attainment . . . and making the path to these payoffs easier to travel by clarifying it, reducing road blocks and pitfalls, and increasing the opportunities for personal satisfaction en route. (House R. J., 1971)
(House & Mitchell, 1974) suggested that leader behaviour ought to complement the environment of subordinates and to provide coaching, guidance, support and rewards necessary for effective performance. (House R. J., 1996) mentioned that a limitation of early path-goal theory, was its inability to address the effect of leaders on groups or work units. (House R. J., 1996) described other limitations of the original theory, where leadership of an entire organisation was concerned, and on the subject of strategic leadership, or leadership as it relates to change. We still do not have theories of leadership as it relates specifically to major organisational change, political behaviour or strategic competitive organisational performance. (House R. J., 1996) Page 6
Brian O Hanlon - April 2012 (House R. J., 1996) views the latter as important areas for future research and enquiry. In the re-formulated theory (House R. J., 1996), discusses the problem that his original 1971 seminal path-goal theory has yet to be fully tested in laboratory and/or real world contexts. Much of (House R. J., 1996) deals with that issue, of how to improve measurements, which researchers could use to test the original theory.
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The issue of approximate measurement is important for future development of the field of organisational behaviour. The use of existing approximate measures of constructs should be seriously questioned. (House R. J., 1996) In the re-formulated theory expressed in (House R. J., 1996), the author devotes space to discussion about participative leader behavior. The author speculates on the effect of participative leader behaviour to increase subordinate authority and ability to carry out their intentions, thus leading to greater effort and performance.
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One of the advantages of path-goal theory as claimed by (House & Mitchell, 1974) is that it makes satisfaction of subordinates needs contingent on effective performance. (House R. J., 1996), underlines the fact that path-goal theory, rested on the earlier work done by (Vroom V. , 1964), who assumed that individuals calculate work outcomes contingent on the level of effort to be expended, which will maximise the attainment of attractive outcomes. The path-goal theory (House R. J., 1971) deals with the issue of leaders and the provision of resources, which the subordinates may need to carry out a task. The correct identification of the resources needed by subordinates, must depend upon adequate clarification by the leader of the nature of the task at hand. Successful organisation of a construction project will depend on the ability of leaders to correctly assess the types of resources needed and when they are required. But it doesnt always work, and it is not uncommon in construction to have surplus of resources at an inappropriate time, or visa versa. (House R. J., 1996) mentions that path-goal theory led to his formulation of charismatic leadership in the later 1970s, which built on the seminal work of David McClelland and his theory of personality (McClelland & Winter, 1971). According to McClellands theory, the psychological nature of human beings can be explained fairly well by the operation of three motives. I speculated that effective military combat leaders arouse the power motive; effective leaders of social groups arouse the affiliative motive; and effective leaders of salespersons, profit center managers, entrepreneurial firms, and scientists and engineers arouse the achievement motive. (House R. J., 1996)
Much of the original work on the measurement of leader behaviour was conducted between 1950s and 1960s at Ohio State University (Fleishman, 1957), (Stogdill, 1965). Problems with some measurements used in research according to (House R. J., 1996), include the failure to capture leader coaching, goal clarification, path clarification or the use of contingent rewards. 2 Later in the paper I will discuss (Conde, 2010). Page 7
Fiedlers Contingency Model
In writing this paper, I have invested a lot more time in investigation of (Evans, 1970), (House & Mitchell, 1974) and the path-goal theory of leadership. My investigation has led me to the conclusion, that much of current leadership theory rest upon that foundation. The (Fiedler, 1964), contingency model of leadership was quite a leap forward in the science of organizational behaviour at the time of its first publication. In summary, what the publication of (Fiedler, 1964), achieved was a clean break with the past and the dominance of the leadership theories expressed by (Taylor, 1903), (Taylor, 1911), (Taylor, 1912). During the later 2000s decade, I was employed by a real estate development company in Ireland. An intriguing design manual (Hascher, Jeska, & Klauck, 2002), which I and others used, attempts to describe the latest thinking about design of workplaces. Theorists such as (Carr, 1999), (Sennett, 1998), (McGregor, 1960), (Duffy, 2008) are referenced in the design manual.
Figure 1 - Larkin Office Building, Frank Llyod Wright, completed 1903.
(Hascher, Jeska, & Klauck, 2002), focusses on that break away from Taylor-ism (Taylor, 1903), (Taylor, 1911), in thinking about the design of a workplace to house a modern organisation.
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In de-standardised work, human qualities such as intelligence and fantasy regain the importance that Taylor-ism had suppressed. (Hascher, Jeska, & Klauck, 2002)
In (Hertzberger, 2005), the famous Architect described one of his office building projects from the 1970s as not a building, but a settlement. (Hertzberger, 2005), stated that at the time of construction there was a revolution taking place in society of how the workplace was seen.
Figure 2 - Herzberger's Centraal Beheer, built in Apeldoorn, Holland. Completed in 1974.
The disadvantage, with contingency theory of (Fiedler, 1964), is that it suffers from influence of the prevailing trends in 1960s organisational behaviour theory. According to (Bennis & Nanus, 1985), (House, 1996) prior to the introduction of Path-Goal Theory in the early 1970s, the leadership literature was dominated by concerns for task or person orientation in leadership. It was the ambition of (House R. J., 1971), (House & Mitchell, 1974) to break away from the task or person concern in (Fiedler, 1964), and into new territory with the science. In modern day leadership literature such as that by (Goleman, McKee, & Boyatzis, 2002), the task and person orientations has not vanished. (Fiedler, 1964), does have application in certain circumstances encountered today in the construction industry. In the six styles of leadership, (Goleman, McKee, & Boyatzis, 2002) refer to the affiliative style. The application of that style of leadership is deemed to be appropriate in the context where deep divisions exist in a team or organisation. That is, a situation where one must coax the enterprise back from the brink of its own self-destruction.
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Brian O Hanlon - April 2012 The affiliation style as described by (Goleman, McKee, & Boyatzis, 2002), is one in which the focus moves to the person, and not the task. The logic of the approach, is that until the people involved in the enterprise are, brought together, differences patched up and so forth it is futile to try to attempt any particular task goals. I.e. The first goal should be to get people feeling better, and then focus on what needs to be achieved. In a lecture delivered at the Society of Project Management, (Bailey, 8th April 2009), spoke a lot about this kind of situation, where dispute resolution issued in the construction industry. (House R. J., 1996) expressed the notion that a good theory of leadership is one that can remain standing for long enough, for a better theory to come along. What is most destructive in academia is a situation, where the intellectual foundations on which several decades of work have been built collapses. This is what occurred in the late 2000s when economists in universities around the world found themselves going back to the drawing board when some of the basic suppositions about how financial market works came crashing down.
Rather, with each new theory advanced it will likely be necessary to develop and validate measures specifically design to test the theory. (House R. J., 1996)
Vroom-Yetton Jago Contingency Model
Before I begin on Vroom-Yetton Jago model of decision making planning, I would like to draw some attention to the views expressed in (Brooks, 1974), (Brooks, 2010). Namely, the distinction drawn between participative design creation, and participative design review. The design portion of the construction process is widely understood to be important. The design stage is when the flexibility still exists to allow the team to change or adjust specifications. The point expressed in (Brooks, 2010), is that a singular chief architect is valuable during the design creation stage. But in parallel with design creation, are regular design reviews. During the design reviews, there is benefit to be gained from a participative approach. Following these intermediate design reviews, (Brooks, 2010) argues that the chief architect or designer may wish to retreat into their own private space. He uses a Bernard Baruch quotation:
There is no substitute for the dreariness of labour and the loneliness of thought. (Brooks, 2010, p. 53)
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Brian O Hanlon - April 2012 I will posit that only two of the five processes of decision making, described in the theory (Vroom & Yetton, 1973), (Vroom & Jago, 1988), are commonly used in the construction industry. I base this speculation on personal observation in the industry over two decades in Ireland. In the case of the Autocratic A1 process (Vroom & Jago, 1988), it appears to me that the leader is so isolated this process can be regarded as defining theoretical boundary condition. Where the Consultative C2 process (Vroom & Jago, 1988), is concerned I have significant doubts as to how it could be applied in a construction industry context. In reading about another industry, such as the hi-tech or computer science, there have been documented examples of successful research and development institutions or R&D departments within large companies where the Consultative C2 process (Vroom & Jago, 1988), was used with success. Those examples are captured in literature and lore, because they are rare and wonderful. One example, Xerox Parc Laboratories of the 1970s, enjoyed almost unlimited financial assistance and support from its parent organisation. It enjoyed a privilege of being able to hire a huge percentage of the available experts in computer engineering in the world at the time (Hiltzik, 2000).
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(Kay, 1997), (Kay, 2003) the famous computer scientist who worked at Xerox Parc Laboratories tells a story of where members of the group, sat around together for hours, on bean bags, to discuss the most challenging (and interesting) problems they could think of. Alan Kay comments that never since the 1970s at Xerox Parc has he enjoyed the same experience again. In Kays own words, he never found people again that he could argue with, in such a productive manner. This observation by (Kay, 2003), has shines a lot of light on motivation. I will return to (Kay, 2003), later on in the chapter on motivation. From a point of view of commercial implementation, Xerox Parc Laboratories, did not deliver commercial benefits to the parent company. Despite, the efforts of a close knit team of expert and innovators working over a decade long period (Kay, 1997). The Consultative C2 process and the Group G2 process (Vroom & Jago, 1988), appear to describe a work process very similar to that which (Kay, 2003) experienced. That is the my reason for scepticism about processes C2 and G2 being applied in a construction industry context. In (Prietula & Simon, 1989), the authors discuss the development of expert systems to assist with decision making in organisations. The article contains sobering comments about the limitations of such systems. In (Prietula & Simon, 1989), the hypothetical situation of a company chief executive who loses a valuable
The view today is that it would be impossible to create the equivalent of Xerox Parc Laboratories even the most powerful global corporations can assemble at best a percentage of 3-5% of the worlds best talent in a particular field. But the point is, is that given a hypothetical opportunity where a company did have a monopoly on all of the finest human resources, it would make sense to adopt the Consultative C2 or Group G2 process as presented in (Vroom & Jago, 1988). Page 11
Brian O Hanlon - April 2012 employees is described. The article describes the process of realization that the manager goes through, step by step, in trying to assess the damage to his organisation by the departure of the valued employee.
An expert scheduler is intimately familiar with the products, resources, machines and the people who run them. Keeping in mind the subtleties inherent in these factors, an expert scheduler can weave a schedule that optimizes yield and minimizes downtime. (Prietula & Simon, 1989)
(Prietula & Simon, 1989), point out that experts can exist at multiple levels in an organisation. Experts can exist from the top to the bottom, from the centre to the periphery.
. . . the foreman begins to see that all the problems arising in daily operations are not new and independent of each other. He learns to ignore the irrelevant patterns of activity and concentrate on the critical ones. (Prietula & Simon, 1989),
In various writings and lectures over the years, project manager of the IBM/360 project during the 1960s, (Brooks, 1974), (Brooks, 2010) emphasizes the importance of peer review involving many stakeholders and personnel with many different backgrounds and types of expertise. There is one case that Brooks cites of a painting crew involved in the design review process for an offshore oil exploration platform. The leading design engineers were questioned in the presentation by the painting crew, about certain steel components that ought to be made from heavier gauge steel. When the chief engineer probed further, he learned from the painting crew that it would be impossible to paint certain steel components when the exploration rig set out to open seas. This led the engineering team to re-configure some parts of their design, to allow the painting crew to safely access and maintain the paint finish for the structure. Had this problem not been spotted early in the design process, where a solution was easy to implement it would have cost the enterprise a considerable amount. (Brooks, 2010) uses a movie making industry analogy to distinguish between the role of a Director and that of a Producer. While it is the job of the Producer to make sure that the project gets done, and is responsible for a whole task of organising, hiring, implementation and resource management it is the sole responsibility of the movie projects Director, to maintain the conceptual integrity of the project. This role of the movies Director is crucial according to (Brooks, 2010), and the Directors credit is always the last one on the list in the final print to celluloid. Consider what might happen, if during the course of executing the movie making project, the Director was not in charge. The chances are that a movie of some kind would eventually get made. Perhaps the movie would be made faster without a Director, or slower. Page 12
Brian O Hanlon - April 2012 But there is an excellent chance that the final celluloid of a move project which had no Director present, would not bear a true resemblance to the initial movie script. That would be very bad for the financial investors in a movie making project. That which does encourage investors in the movie making business to support a project in the first place, is the merits of the original script. In fact, the buying and selling of licenses to movie scripts is one of the major financial speculation activities carried out by Producers in the movie industry that stage of the process often goes on for years and decades before an project finally receives a green light. Sometimes the Producer cannot find the right director, or the right investor, or a certain kind of script may not be in demand at a certain time. Having found a promising looking script, the last mistake the investors and the Producer of the movie would wish to make is to hire the wrong movie Director. (Brooks, 2010) explains that the value of the Director, or chief Architect figure, is the same in many kinds of engineering projects. In the Chapter Five, Organising and Controlling of this paper, I will discuss implications of structure in an organisation with reference to views expressed by Sungard software company CEO, Cristobal Conde (Conde, 2010). Conde is keen to point out the fact, that in the flatter organisation, it is possible to gain the benefit of expertise from across the entire staff population.
Expertise is based on a deep knowledge of the problems that continually arise on a particular job. (Prietula & Simon, 1989)
The worst thing in the hypothetical scenario as sketched out by (Prietula & Simon, 1989), is that the company executive does not understand how the departed employee (the valuable human expert), fitted into the organisation. The executive only had some vague idea, that in certain situations the employee had been able to assess situations very quickly, and consistently known what right course of action to take. (Brooks, 2010) draws our attention to the example of the global positioning system and the job performed by the chief system architect on that project. (Brooks, 2010) states that it was the job of the chief Architect on that project to distribute the finite resources of the budget, whatever it is, amongst the various design units. The purpose of giving the chief Architect this control, according to (Brooks, 2010), is to ensure the conceptual integrity of the project is maintained whatever else happens. The chief architect of the Global Positioning System engineering project, 'kept some microseconds in his pocket, to bail out the parts of the project that may get into un-anticipated technical difficulties'. In the construction industry in Ireland, the government approved standards and regulations, are the means for how the chief Architect can create 'wiggle room' and to know in the back of his or her mind, there is some slack left in the system - that if the project did run into difficulties - there could be some low cost trade-off's Page 13
Brian O Hanlon - April 2012 made to solve things. The way that Architects in construction are trained now, the architect is not the guy in the middle any longer who tries to manage budgets - but he/she is the guy in the middle who tries to blow the budgets. The culture has grown up, that if you aren't pushing the envelope on all fronts, you are not trying hard enough. I have observed how the old-style architect, in practice, go to pains to manage his budgets in the various technical sub-specialities. It does require an individual who can operate in the centre, and who has sufficient technical expertise, or awareness in the sub-specialities, to be able to actively manage the budgets. In building Architecture, we have forgotten what the Architect at the centre is supposed to do. I believe this is one of the reasons why building construction projects have gone up hugely in cost. The building architect in 2012, does not see it as their responsibility to manage budgets.
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Chapter 05
Organising and Controlling
(Linehan, Greaney, & Foster, 2010), state that organising for a construction project can be a complex process. The industry is highly fragmented, through the extensive use of sub-contracting. The design process and the assembly process are separated. Part four of the British Standards document on Design Management Systems states the following. The management hierarchy should be described in an organization chart that shows the formal relationships between levels of management and staff and the delegated responsibilities. Each member of staff should be provided with a written job description. (BSI, BS 7000: Part 4: 1996)
In (Linehan, Greaney, & Foster, 2010) the authors describe the process that one goes through to organise a construction project. The jobs to be done are identified, grouped together logically and a pattern of authority is established between each job, and each work unit. (Linehan, Greaney, & Foster, 2010) state that the assessment process in performance management is linked to job definitions and is rigorous and objective. Performance management was one of the management practices that (Linehan, Greaney, & Foster, 2010) found had a role to play inside the 80,000 employee construction materials company CRH. In comparing the construction industry to others, where similar challenges or organisation are encountered, the movie making industry makes for an interesting comparison. Movie making does involve a lengthy design process, where a lot of creative individuals have to somehow work together. The group may not know one another, and do not have much time to get acquainted over the short duration of the movie project.
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(Brooks, 2010) has written in favour of movie making organisation, to look at how certain design and build challenges ought to be undertaken. The distinction made in the movie making industry between the Producer and Director has a lot in common with a distinction made in (Mintzberg, 1979) between the Operating Core and the Supporting Staff. Page 15
In the diagram shown, are the five key areas of an organisational structure as identified in (Mintzberg, 1979). According to (Mintzberg, 1979), (Mintzberg, 1983), a division of labour and of job specification can lead to more efficient use of organisational resources. Organisation involves the division of labour into distinct tasks and then achieving coordination and control between those tasks.
The Strategic Apex
The strategic apex of an organisation has assumed many different forms throughout history, and in different culture. In certain societies the males are positioned at the apex. In other societies it is the females who run things. In the modern era, in the larger corporations the members of the strategic apex are featured in articles and in broadcasting. The individual who comprise the strategic apex are carefully hand chosen by the organisation in order to project an image of confidence, ambition, security, sensitivity or ruthlessness or whatever the organisation needs at a specific point in time. That is to say, a changing of personnel at the strategic apex is frequently undertaken and will demonstrate (both internally and externally), that a real change of direction has taken place, a brand new strategy has arrived or simply that an organisation has a renewed sense of its own purpose, its own mission. A huge part of our perception about politics and government affairs is conveyed through print and screen media to the general public by the image projected by the strategic apex. It is clear that at times a well Page 16
Brian O Hanlon - April 2012 managed change at the highest level of an organisation is a crucial part if a strategic goal or mission is to be accomplished. But it is also clear that in recent times, the levels of incentive given to figure heads in many large organisations has grown beyond all kind of logic. (Fish, 2009)
Who are these people who think that they need this money? It just drives me crazy. (Fish, 2009)
(Bennis & Nanus, 1985) is noted in this publication for changing the focus in organisational behaviour theory away from management and towards the idea of the leader. (Bennis & Nanus, 1985) express a wellconstructed argument that in modern times, there is a deficiency of leaders in society and in business. An alternative view is expressed by former chief executive at Intel Corporation, Andy Grove (Grove A. S., 1996), (Grove A. S., 2005), (Burgelman, Grove, & Meza, 2005), (Tedlow R. S., 2006) has expressed a sceptical view of the modern cult of the leader in organisations. Grove argues that this modern obsession with finding leaders, can prevent us from recognise the true value of good management. Grove worked his way up through the ranks inside Intel Corporation and it gave Grove a very deep respect for the skills of middle managers. Craig Barrett who succeeded Andy Grove as chief executive, also seems to reinforce those views of Grove. (Barrett, 2009) made plain in his talk at Stanford, that problem solving was a crucial strength of those who worked beneath him at Intel Corporation for three decades. Furthermore (Barrett, 2009) argued, that a majority of chief executives in companies do come from an engineering background, and not a legal or financial one. (Barrett, 2009) attributes this to the problemsolving and decision making capabilities, which is so much a part of engineering. In (Friedman, 2005) the author makes similar observations.
The Middle Management
According to (Burgelman, Grove, & Meza, 2005), being a senior executive president or board chairman in a company only means that an individual was very good at something twenty years ago. In (Burgelman, Grove, & Meza, 2005), the authors express an admiration for middle management in companies. The middle managers are the individuals are who are on the front lines, and they know how the organisation actually operates. In (Dell, 2007), the interviewee describes in Dell Corporation that they have something called a Directors Day. It involves sending the directors that sit on the board to the manufacturing centres owned by the Corporation to see how things are actually done and speak to people directly involved with day to day operations. When the directors return they are required to tell the executives what they learned. Page 17
Brian O Hanlon - April 2012 In (Dell, 2007), the interviewee articulated his fear that boards of directors are good at delivering PowerPoint presentations, without knowing how the organisation actually operates.
The Operating Core
(Dell & Fredman, 1999) provides a classic example of the importance of the operating core as presented by (Mintzberg, 1979). What (Dell & Fredman, 1999), reveals is that in the late 1980s the company had horrible inventory management problems.
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The challenge in the industry was that there were large technology shifts periodically. Success or failure was not so much contingent upon how a company performed between key transitions. It was contingent upon the management skills exercised at the key transition points. The challenge was how to manage in a way so that the technology transition could occur without the company having to write down massive losses each time, for holding onto old inventory. The managers at Dell Corporation identified this problem which existed at the operational core. Fortunately for Dell Corporation, it transformed itself in three to four years from having terrible inventory management capabilities to being world leaders in that part of their operations.
The Supporting Staff
At the support staff level as described by (Mintzberg, 1979), there are a vast array of different service providers which the company must subscribe to at one time or another, in order to function. Indeed, many professional firms that are licensed to provide services of various sorts in the construction industry may be considered to be working as supporting staff. That means, that companies who take a major portion of the responsibility for how designs are created, implementation plans are In 2012 I became involved in a high court case regarding a pre-maturely aborted project on the Dublin citys river front, which the Irish Central bank intends to occupy in coming years. I was informed by personnel close to the court proceedings that the fall out from this multi-million euro project is valued at many times the actual budget for its construction. The point to be underlined about the construction industry, at least in the private sector, is how minimal the larger employers operation can be. One veteran architect who has practiced in the architectural profession in Dublin city since the 1960s, and has witnessed several deep recessions in the industry, claims that
Many times in (Dell & Fredman, 1999), the authors contradict the popular notion that success experienced by Dell Corporation was a simple, un-interrupted line on a graph headed upwards. Page 18
Brian O Hanlon - April 2012 property developers can operate out of the trunk of their automobile. That is, they require almost no direct employees at all. That architect also noted that in times of boom construction activity, the property development company may find it is strategically beneficial to directly employ a number of staff in-house to cope with the burden of administration and decision making required. But that in the recession, the property development company will shed this staff overhead in lightning speed again, and return as she described, to operating out of the automobile trunk. This is the structure of the construction industry in Ireland, and indeed throughout the entire world. The Employers in the construction company commonly referred to by professional construction consultants as their clients (some consultants will use less complementary labels) appear and disappear intermittently. It is similar to the phenomenon of the dry spell in a desert. When the heavens break open and the ground suddenly becomes saturated, life may burst out from everyplace and display all of the colours of the rainbow. Then the heavens stop sending rains again, and the desert landscape soon returns to being. The term often given to the most senior position in an architectural or engineering consultancy is the rain maker. In fact, the attribute most valued in these firms is never technical skill but the ability to make the rain happen so that the firm can get itself wet. The unfortunate thing about the Supporting Staff part of the construction industry organisation is that many a very competent engineer or architecture professional has witnessed a promising career fail, because they could not learn how to perform the rain dance.
The Techno-Structure
(Mintzberg, 1979) describes the Techno-Structure as being the other side of Middle Management, from the Supporting Staff. A very interesting point was made in (Schein, Delisi, & Kampas, 2003). The main author Edgar H. Schein worked directly as a consultant to Ken Olsen, who was chief executive and founder of Digital Equipment Corporation. (Schein, Delisi, & Kampas, 2003) records the fact that DEC were quite unique in terms of organisational structure in north America, because it hired so many engineers and those engineers had what Schein calls two ladders along which they could progress inside the company. That is, in DEC the engineer could work his or her entire life within the company and graduate to promotions in that manner.
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Brian O Hanlon - April 2012 Or alternatively, the engineer could decide they needed a break from the engineering side and move into management within the company instead. However, the key point emphasized by (Schein, Delisi, & Kampas, 2003) is that the engineer did not get penalized for doing so. The author noted that in other corporations that one had to stay on one or other ladder. Otherwise, the work and dedication that one had invested through the years would be erased if one changed career ladder. (Dell, 2007) also described an interesting case in his company, where the chief financial officer found himself out-matched by the size of his job in the 1980s. The company has grown and grown at a staggering rate, and the CFO simply could not keep pace. According to (Dell, 2007), the individual in this case did not choose to throw in the towel and simply walk away from Dell Corporation (as many did). Instead the individual who had been Dell Corporations CFO, became their Treasurer. Years went by and the job of being Treasurer also became too large for what the skills of this individual could manage. Again, instead of choosing to eject from Dell Corporation, the individual decided to move to a different position, as chief investment liaison officer. (Dell, 2007) describes that in all three positions the individual distinguished themselves by giving excellent service to the company, and as a consequence ended up becoming much wealthier than many of those who left.
The Communications Revolution
Mintzberg and others could not have foreseen the communication revolution, when they scripted their management theories, even as late as the 1980s. I will discuss to some degree the revolution in communications technology that has occurred since the time of (Peters & Waterman, 1982), and how this revolution in communications technology continues to have a serious impact on how organisational structure (Sennett, 1998), (Carr, 1999), (Weinberger, 2002), (Friedman, 2005), (Tapscott & Williams, 2006), (Sennett, 2007), (Shirky, 2008) . Many at the beginning of the 20 century took it for granted that great corporations and bureaucracies were in the process of forming themselves and that great wealth and profit was being amassed as a result of that activity. A question was asked by (Coase, 1937) in a very famous academic paper. Why do firms come together at all, involving the combination of many people and resources in synchronisation? (Coase, 1937) questioned the whole premise of having larger organisations at all. He asked the question, would it not make more sense to have lots of smaller, discreet companies instead? It is the question that (Schumacher, 1973) also wrestled with. (Schumacher, 1973) was a part of a wave of environmentally conscious writers, who questioned why everything in the modern world needed to be so large. Page 20
th
Brian O Hanlon - April 2012 (Toffler, 1980) is an original text, which hailed the coming of electronic typewriters, electronic cottages and the electronic frontier, and shows the influence of (Schumacher, 1973) in many ways. A recent text such as (Schewe, 2006), probes into the question. Why do we build so many large power plants to electrify the grid? (Benkler, 2006) poses the same question about broadcasting, where one witnessed a huge capital investment in centralised broadcasting facilities. Authors including (Benkler, 2006) argue that the march of progress in information technology and mobile communications, is leading to a divestment of capital resources into smaller and smaller units owned by a larger and large number of individuals. In the modern era, it becomes harder for the few to control the many (Kelly, 1994), (Turner, 2006). In popular culture, characters such as 'Dirty' Harry Callahan (Eastwood, 1983) expressed a disdain for large centralised organisations. The Callahan character complains of, . . . being swept away by, waves of corruption, apathy and red tape. (Eastwood, 1983)
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(Sennett, 1998), (Sennett, 2007) admits to being one of the extreme left-wing 1968 generation who tried to prophesize that technological progress would free people from the tyranny of bureaucracy and tedious routine. But (Sennett, 1998), (Sennett, 2007) is seeking to challenge his own original assumptions. He asks question, was it a good thing to get rid of bureaucratic organisation?
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There is some renewed interest today in (Coase, 1937), who tried to explain the advantages of having a large organisation. (Coase, 1937) asserted that operational units will be merged together into a large organisation to the degree to which savings can be achieved in overheads of communicating and transacting between business units. The converse of the theory expressed by (Coase, 1937), would be that fragmentation of business units will occur to the degree to which operational efficiencies cannot be obtained from being integrated.
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There can be no doubt, that modern organisations through use of information technology, can divide up labour and tasks to a degree never been seen before (Friedman, 2005). (Gilder, 2000), talks about the death of distance. According to (Thacker, 2009), no two points in the globe need to be more than fifty milliseconds apart from each other, in terms of computer networking speed. Some of the things I had read in (Friedman, 2005) at the time of its publication, about the dispersed digital production of the movies series, Star Wars (written and directed by George Lucas), came to bear in the Irish construction industry in the late 2000s. The 1980s was a decade which witnessed the launching of popular magazines such as Wired, whose major motivation appears to have been, to look at ways in which computers be connected and used as tools for communication, as much as being a tool for data processing. (Kelly, 1994), (Turner, 2006) 7 See also (Carr, 1999), (Carr, 2003), (Carr, 2008). 8 Refer to section ten of this paper, where I have made some reference to the work (McAfee, 2006), (McAfee, 2009). Page 21
6
Brian O Hanlon - April 2012 Construction detailing production for large projects in Ireland was being outsourced to Eastern Europe, where the labour for producing such documents was cheaper. Management consultants McKinsey in New York send their draft PowerPoint presentations to India at the close of business and return in the morning to find a beautifully rendered set of slides, left by the tooth fairy. But in fact, have been created overnight in India, while McKinsey employees were asleep. The scholar can find evidence of theory like that expressed in (Coase, 1937), when reading a high quality work about construction project delivery systems such as (Koch, Molenaar, & Gransberg, 2006). The construction industry today is trying to resolve the difficulties created by its own fragmentation. In their publication about preparing for Design-Build project delivery, (Koch, Molenaar, & Gransberg, 2006) cited research carried out at Reading University (Bennett, Pothecary, & Robinson, 1996), in relation to early contractor involvement in projects.
Certainty of completion on time increases with the earlier the contractor is involved in the design process. (Koch, Molenaar, & Gransberg, 2006)
In Ireland we have introduced a new form of Design Build contract for government projects. But it is claimed that true Design Build companies do not exist in Ireland. We have not got full Design Build coordination and integration of resources.
The worst result in meeting quality requirements occurred in projects where the designer was a subcontractor and a significant proportion of the design was completed by the owner in the RFP [Request for Proposal]. (Koch, Molenaar, & Gransberg, 2006)
According to (Linehan, Greaney, & Foster, 2010), one of the disadvantages of the centralised organisation is that common policies may not be appropriate throughout the whole organisation. That was evident in the Federal Bureau of Investigations (PBS, 2002) attempt to set up its own dedicated anti-terrorist unit. A very interesting comment made in (PBS, 2002), in relation to the organisational structure of the Federal Bureau of Investigations. The documentary shows that one senior FBI official, Mr. John O Neill who died on September 11 , 2001, had been on the trail of the plot for some time, and had been ignored within the organisation. You never knew what the FBI knew. (PBS, 2002)
th
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Brian O Hanlon - April 2012 Top-down management got started because the bosses either knew more or they had access to more information (Conde, 2010). That no longer applies. A lot of people have access to identical amounts of information. (Conde, 2010) claimed that employees should be able to stand out, irrespective of their organisational ranking. Employees must be allowed to develop a reputation for expertise that is irrespective of where they sit in the org chart. Experts such as (Peters & Waterman, 1982) or (Christensen & Raynor, 2003) write about the skunk works. The idea of a smaller unit within the larger organisation dedicated to achieving a specific goal and which does not follow the exact same protocols as the parent organisation. In todays competitive environment, it could be argued the smaller skunk works units are being created adhoc using new electronic collaborative platforms. Authors such as (Raymond, 1999) have studied this new flat organisational structure in some depth. (Brooks, 2010), who builds some argument in response to (Raymond, 1999).
They do it because recognition from their peers is, I think, an extremely strong motivating factor, and something that is broadly unused in modern management. (Conde, 2010)
Not only is the company global, the individuals who make up the teams inside of the company are dispersed globally (Conde, 2010). According to (Conde, 2010), work needs to be done on the structure of collaboration. How do you get people organised?
By having technologies that allow people to see what others are doing, share information, collaborate, brag about their successes that is what flattens the organisation. (Conde, 2010)
(Conde, 2010) suggests that bosses should step back from the decision making process, and instead monitor the activity happening on the electronic collaboration platforms.
Teams working together for the duration of a project. Empowered to make decisions, these units can react directly to problems and customers requirements without having to waste time going through functionaries higher up in the hierarchy. (Hascher, Jeska, & Klauck, 2002)
(Conde, 2010) tries to explain his opinion in more detail. That early on, he was very command and control oriented as a leader, and felt that his decisions would be better. He discovered the problem of working long Page 23
Brian O Hanlon - April 2012 hours in his youth, was that he ended up with a type of leadership style that did not scale. It proved detrimental as his organisation grew. (Conde, 2010) describes having the problem of hiring world-class people but then trying to micro-managing them. (Conde, 2010) claims that micro-management only spirals down.
If the very best people leave, then the people youve got left actually require more micromanagement. (Conde, 2010)
Then that second tier of people leave, and you end up having to implement a huge organisational micromanagement structure that ends up consuming huge resources to run. In reading the (Conde, 2010) interview, one can see the ideas advocated by (Peters & Waterman, 1982), are still alive and put into use two decades later. The famous business management author, Tom Peters is reputed to have said once, Throw away your business cards. In (Peters & Waterman, 1982), the authors developed the idea of something called an Adhocracy. The concept of an Adhocracy was integrated into the organisational diagram in (Mintzberg H. , 1983), (Mintzberg & McGugh, 1985) as part of development of the earlier theory and diagram in (Mintzberg H. , 1979). (Peters & Waterman, 1982) described a need for older organisations to re-invigorate themselves, and realise their potential for innovation. It was the task of the Adhocracy to find out where exactly in the organisation the really great new ideas existed, and what small back-room teams were developing them. The idea of throwing away ones business cards, was intended to convey a notion that individuals should no longer be defined by their position, as printed on their business card. The Adhocracy had the function the authors believed of running counter to the procedures and practices set up by the Bureaucracy in the old company. The Adhocracy according to (Peters & Waterman, 1982), was a small unit established inside of a large corporation on purpose. The purpose of which was to counteract stagnation experienced by many great American corporations nearing the end of the 20 century. Those companies which had grown up in America since the early days of (Taylor, 1903), (Taylor, 1911) needed to re-invent themselves in many ways. (Brooks, 1974), (Brooks, 2010) emphasized the importance of the maverick within an organisation. (Brooks, 2010) describes an individual within the IBM corporation, whose task it was to travel around within the organisation, lighting little flames of inspiration wherever he went. The difficulty that (Brooks, 2010) describes with such an individual is that it is very different to tie them down to just one task. They want to pick up the next task, and forget the one behind them. Page 24
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Brian O Hanlon - April 2012 The construction industry is very carefully segregated into different disciplines, and much of the reason for that is so that disciplines are not given an opportunity to mix together. There seems to be value in the practice of keeping human resources in the construction industry separated from one another, and rooted within their own sub-culture. The U.S. military for instance, created a distinct unit known as the U.S. Marines, in part because they wanted the fighting element of the army to be segregated away from the less combat-oriented (more logistical oriented), units of the army. This is a solution used time and time again, to try and overcome the disadvantage posed by the large organisation. The point was brought home to me in relation to construction, when I had a complaint (about our structural engineering department), to make to my superior in the architectural department. My superior reminded me of the fact that structural engineers, unlike architects, have to think about safety in every single aspect of their duties. Anything that a structural engineer specifies, or designs, or authorizes if it did not work according to plan may result in injury to persons. My architectural superior reminded me, that in some aspects of the architects work, safety of users has a major input. But for much of the time, the architect is not as pre-occupied with safety issues as the engineer must be.
Some final words about modern organisations
Former Sun MicroSystems chief executive Scott McNealy, was famous for saying, Your privacy is gone: Get over it, (Sprenger, 1999). One of the strategies he implemented within the company was shared desk space. According to McNealy, no employee even needed a designated work space in the modern era. If one has one hundred employees to facilitate, it would be wise to try to accommodate them with less than one hundred individual workstations. Each work space available would be shared between several workers. This made sense to McNealy for his organisation, because people werent at their desks most of the time anyhow. People in the modern era, apparently are very mobile and flexibility they can work from anywhere, anytime.
Frank Duffys latest book Work and the City describes a situation in the modern brittle city (a concept borrowed from Sennett), that office space is only 50% used for a third of each working day. Which represents a colossal drain on the finite resources of individuals, corporations and society as a whole. (Hascher, Jeska, & Klauck, 2002)
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Brian O Hanlon - April 2012 The term always on has been coined by (Gershenfeld, 1999) and others to describe the reality of being always connected to the network and to information, as one moves about on ones daily business. (Carr, 1999), (Carr, 2003), (Carr, 2008) describes the situation of the modern worker in his writings. In one such story, (Carr, 2008) tells of the career mother who has hidden a blackberry mobile communications device in the bathroom at home, so as to be able to escape from the family dinners to read messages. The conclusion reached by (Gershenfeld, 1999), was that some individuals will cope well in the new lifestyle of being always on. Others will not.
9
Refer to (Conde, 2010) comments in later section on CRH case study.
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Chapter 06
Communication
It is fair to say that construction companies are constantly dealing with change at some level. It would be difficult to choose a moment, when an organisation in the built environment isnt undergoing organisational change. The bread and butter of the construction industry is, change. A major work or study could be conducted on the matter. One example of such work is (Boyd & Chinyio, 2006). The work states that the act of building to house a new organisation, or re-house an existing organisation implies that change will be deeply experienced by the client. The designer and contractor should be aware that the construction client will change while the construction project is still taking place. If the construction client did not want to change, they would not have tried to build a new facility in the first place. When a retailer begins trading from a new premises, things can go very good or very bad. By the act of changing from one facility to another, the organisation is going to experience change in some way. It is the primary role of designers and contractors in the construction industry to think about change. The entire history of construction projects can be understood from that point of view. One author who has consistently asked why is Frank Duffy (Duffy, 2008), co-founder of the DEGW company in London.
10
As a result of the fact that change is so embedded in the job carried out by construction professionals, it follows that communication is important. In order to transmit messages and meaning to the intended recipients, the enterprise of construction has to develop all kinds of techniques.
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Design unit leaders should be aware of and approve where necessary all communications between their design unit, other design units and the design team leader. (BSI, BS 7000: Part 4: 1996)
10 11
Refer also to (Ricks, 2005). A talk once delivered to Engineers Ireland Project Management Society in Dublin was a tour-de-force in Page 27
explanation about communication systems (Gaffney, 2008).
Brian O Hanlon - April 2012 (Linehan, Greaney, & Foster, 2010) defined communication as a process of creating, transmitting and interpreting information between two or more people. One could argue strongly, that a communications system is never noticed to such a degree as when it disintegrates.
Figure 3 - Design Team Organisation, (BSI, BS 7000: Part 4: 1996)
A structural engineer told me of his first assignment in the early 1940s to assemble a pre-fabricated aircraft hangar building, which the American army had shipped to Northern Ireland. The engineer never succeeded in putting together the structure and the Second World War ended. The army did not provide an assemblers manual, and the structure was too complicated, even for a young engineer to figure out. The experience did convince him of the value of proper documentation on construction projects. According to (Linehan, Greaney, & Foster, 2010), the primary purpose of communication is to achieve coordinated action. One of the best recorded histories of a communication system break down, that I know is (Blunden, 2004), an autobiographical book about a database software company in Minnesota. The company employed a couple of thousands workers, and enjoyed a significant slice of the north American market. At some stage in the past, the software code which ran the database had all its instruction markers removed. The reason offered was that computer memory needed to be saved. All of the helpful hints and instructions that had existed in the code since project inception were gone. It is like an academic paper which contained references using the Harvard referencing system. But someone came along and erased the bibliography.
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Brian O Hanlon - April 2012 According to (Blunden, 2004) this faux pas had the immediate effect that it granted enormous power on two senior software engineers in the company. After a time, it became obvious to management in the company that the two engineers held all of the power. The unthinkable then occurred. The two engineers had a disagreement and stopped communicating with each other, as engineers sometimes do. The population of employees inside the database company divided into two factions, two sides of a fence. Operations became quite dysfunctional. All strategy and operations had to negotiate the reality of a company that was split into two. This type of situation occurs with information systems used in the field of construction design. There is builtin motivation for the designers to break their own information system, so that a greater amount of power can accrue to the individuals who are able to fix problems. Following his employment at the database company (Blunden, 2004) carved a career for himself in the maintenance of old software code. He became so good at that task because he understood the nature of the problem so well. For much of the decade of the 2000s may own career in working with information systems used in construction followed a similar path. I worked for industrial facility owners who had paid several times to have their facility surveyed and drawn up by one Architecture professional after another.
It is only slightly facetious," wrote RAND researcher Jeff Rothenberg in Scientific American, "to say that digital information lasts forever--or five years, whichever comes first." (Brand, 1998)
Authors such as (Perrow, 2007), have examined cases where communications structures, if poorly designed have been responsible for all kinds of operational weaknesses.
One of the illustrations in (Perrow, 2007), are diagrams of communication for Homeland Security in the United States. In the first illustration (Perrow, 2007), showed a nice legible diagram for how Homeland Page 29
Brian O Hanlon - April 2012 Security is supposed to work. In a second illustration he showed the communication back-channels and subroutines, that have been implemented by the U.S. House of Representatives.
The point to emphasize is that where rules of communications are firmly established and designed to function well, things do happen at the operational level, which undo sensible thought process.
Designers should communicate formally through established channels such as team meetings; they may also communicate informally provided the outcome of such communications is recorded and validated. (BSI, BS 7000: Part 4: 1996)
At Bolton Street College of Technology in Dublin, the lecturer and architect Noel Jonathan Brady would tell a story about Norman Foster architectural practice and the construction of the Shanghai Bank headquarters (Foster). The project begun in 1979 and completed in 1986 was executed before the arrival of computer aided design. Norman Foster Architects based in London, hired a second architectural firm based in Shanghai for no other reason, except to guarantee accurate coordination of all documents. The Shanghai architectural firm took every piece of drawing information issued for the project by the different professional firms, and using Page 30
Brian O Hanlon - April 2012 transparent drafting film would painstakingly compare the coordinates, the set-out points and dimensional coordination. The Foster designed project, was so complex and required such a high tolerance in construction that this added layer of management was needed. Mistakes in the design and construction if not identified would be too expensive to fix. The story serves as an example of how seriously the matter of communication was taken in top levels in construction, before we had e-mail or computers on desks. Foster Architects were exceptional in the level of control they implemented to assist them in managing their projects. I know of architects who were employed at Foster architectural firm, who worked for five years doing nothing more than door handles. One person, in the firm, had no other responsibilities except to manage the specification and design of one item for every project and every client.
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Viewing this through a lens of (Taylor, 1903), (Taylor, 1911) may serve to illustrate the logic. Productivity improvement by means of division of labour. What generally happens is that everyone in an architects office has a go at specifying door handles. Nobody quite knows what they are doing. Lessons learned from past projects are not captured. The mistakes are repeated and it adds to the bottom line price for the employer. Worst of all, a contractor may receive instructions from the same architect which change over time, or conflict with each other. Employers who know best do hire Norman Foster & Partners, because they understand the firm will exert its control over a project and that expensive mistakes arising out of poor communication are less likely to happen. The logical procedures exercised by Fosters and others have made their way into todays standards. For instance, the section on communication channels of (BSI, BS 7000: Part 4: 1996).
The design team leader should be the focus for communications within the design team and, where necessary, approve all communications between the design team, external agencies and the client. (BSI, BS 7000: Part 4: 1996)
Michael Tweed, one of the few top-class architects and project managers in Ireland used an analogy to illustrate what a good communication system should be. He would remind staff of the Airfix model airplane box kits, which children of young ages can understand and use the enclosed instruction pages to assemble the model.
13
I will make some reference to (Prietula & Simon, 1989), who have some interesting perspectives to share about experts in companies. Please see the last section ten of this paper in relation to the CRH case study contained in (Linehan, Greaney, & Foster, 2010). 13 If the analogy of the Airfix model kit does not appeal to the reader, it is also worth considering the more adult assembly kit and attached instructions, when one purchases flat pack furniture from stores like IKEA and Argos. Without any prior training or knowledge in furniture manufacture, many people are able to execute the assembly task and without the need for a helpline phone number or any great support mechanism than the few sheets of paper instructions. Page 31
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Brian O Hanlon - April 2012 When drafting a document needed to instruct a contractor how a task is to be carried out in construction, one should approach it like one is creating the instructions for a model airplane kit. The information should lead the assembly team through the correct sequence of steps. Tweed would suggest that, if you can draw a construction document with fewer lines on a page, then do it with fewer lines on the page. The few lines the easier it is to focus on the intended instruction. Where revisions to drawings are needed one can use a revision cloud to highlight the change and the reader does not have to search through a maze to find it. The less lines, there are on a document the easier will be the process of communication. Consider the situation where a person is sending out a resume to apply for a job. People are encouraged to customise the resume according to the intended recipient. There is no sense we are told in sending out the same resume a hundred times. The employers who read the resume are not all the same. The tradespersons who read construction documents are not all the same. Investing some effort to customise a resume affords the candidate a better chance of being considered. Any miscellaneous information, which will not assist the candidate is eliminated. Tweed did not have much regard for construction documentation created in general by consultant firms in Ireland. Rarely do the construction documents read with the clarity of the model airplane kit. Draftsmen are not encouraged to reduce the amount of information on drawings to only that which the tradesperson needs. Drafting resources are scarce. The more hours that a consultant has to put into drafting, the less profit the consultant will make. Draftsmen are encouraged to over provision documents with text, dimensions, gridlines and paraphernalia of all kinds. The tradesman needs to study the document at length to find what is relevant (which costs them time and money not the consultant). Construction blueprints in Ireland are not tailored specifically to requirements of the tradesperson reading them. This is part of the reason why expensive mistakes are made. A situation has been allowed to deteriorate over decades. Contractors have sued for claims against the Architect for not including X or Y on a drawing. At this stage, the attitude of consultants is to throw everything on the drawing, in the hope of preventing legal suites later on. When things such as Building Information Modelling come along, it will not offer the magic bullet solution. The major obstacle is a lack of willingness across the industry to strive for more robust and reliable standards in communication. The construction industry in Ireland is facing even more project management problems in the coming years, as groups involved in construction projects communicate increasingly over networks and do not meet one Page 32
Brian O Hanlon - April 2012 another face to face. strategy. (Brooks, 2005) remarked that when a parent phones their child a long distance away, it only takes the parent seconds to recognise the mood and disposition of their child. This is how well tele-collaboration technology can work, where the investment of time and patience has previously been put in, face-to-face. The point is made by (Brooks, 2005) that where the two tele-collaborators have not spent extensive time getting to know one another face-to-face, the tele-collaboration will suffer. (Brooks, 2010) cites one very interesting case, where senior generals in charge of the air and the ground U.S. army forces, had shared a bunk room together at Westpoint. Afterwards, in their careers these men were able to tele-collaborate extremely well, which led to very successful combined operations between the two branches of the military.
14
Many authors (Thackara, 2005), (Brooks, 2010) have asked about this organisational
Construction Manager versus Architect
The communication system breakdown as described in (Berman, 2002) is one which is deeply embedded in standard procedure and standard forms of contract in north America. (Berman, 2002) contrasts the role of the 'Architect', a discipline which has been around since before ancient Greece to the role of the Construction Manager, who has been around since a US Federal government report of 1970,
15
asking for ways to obtain better value for money.
On September 3, 1968 a Federal Government study of the construction contracting procedures of the Public Buildings Service, General Services Administration was approved. The purpose of which was to study all reasonable alternative means of construction contracting with the hope of finding which method was most advantageous for the construction of public buildings. The government was looking for the best method to reduce construction times and cost. In fact, the real impetus behind the study was that the government hoped that the best method would result in the avoidance of contracts with contractors who are prone to contract disputes, are unduly claim-conscious, or take cost cutting actions that are incompatible with quality construction. (Berman, 2002)
Refer to (Weinberger, 2002), (Tapscott & Williams, 2006), (Shirky, 2008) who have tried to grapple independently with this subject of the modern loosely tied, loosely bound organisation, facilitated by means of information technology. The space available in this paper doesnt allow me to go into detail. 15 March 17, 1970, Final Report on Public Buildings Service Construction Contracting to the Honorable Robert L. Kunzig, Administrator of General Services. Page 33
14
Brian O Hanlon - April 2012 (Berman, 2002) describes the scoping conflict which occurs in the American construction industry where both Architect and Construction Manager professionals are involved in the same project under standard AIA, CMAA and AGC forms of contract.
16
The problem is in deciding who does what, when and how. There are standard agreement contracts published by all of the professional bodies in north American construction, which are supposed, in theory to coordinate the roles and responsibilities of Owners, Architects, Construction Managers and Contractors. What the author of the research, (Berman, 2002) found when he sent out questionnaires and compared all of the pre-drawn contract types, was that the roles and responsibilities were ambiguous and sometimes the contracts contained contradictions. Both the Architect professional and the Construction Management professional try to lobby the Owner at the start of the project, to provide 'services'. The Architects try to bring in-house, a construction manager to expand their piece of the pie. The Construction management team bring in design capable person(s), to expand their piece. The Owner who is trying to obtain a service from someone can find themselves unsure of who is meant to do anything. (Berman, 2002) discovered from his research, that it wasn't even clear from the standard contracts, who was responsible at all stages. It boiled down to the legal wording in the contract. (Berman, 2002) pointed to the use of certain legal terminology such as 'assist'. The CM or the Architect is supposed to 'assist' the Owner to do X, Y or Z. But what does assist mean? Does the Owner have to carry the responsibility for everything? If so, then why does the Owner need the Architect or the CM?
The American Institute of Architects (AIA), the Construction Management Association of America (CMAA), and The Associated General Contractors of America (AGC). Page 34
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Chapter 07
Motivation
Figure 4 - Diagrammatic illustration of Maslow's Hierarchy of Needs
It is difficult, when one thinks about the construction industry in Ireland to understand how the theory of employee motivation as presented in (Maslow, 1943), (Maslow, 1954), could have relevance. What is bothersome about (Maslow, 1943), is the notion that food and shelter (physiological needs), are placed at the bottom of the pyramid hierarchy which is used to explain (Maslow, 1943). There must be a variety of reasons why individuals from Irish society may choose to enter the construction industry ambition, arrogance, delusion, hubris, or simply a mistaken confidence in ones ability to change the world. I cannot see evidence that intelligent people could view Irish construction as a way to make a bread and butter. Irish construction is simply too risky and thankless. There are safer refuges where one can go to satisfy a primary need. The construction industry will always attract racketeers, profiteers and misfits. From personal experience of seeing how the story ends, it is like watching the Titanic going doing. The big and exciting splash followed by Page 35
Brian O Hanlon - April 2012 sheer hopelessness.

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But each generation in Ireland produces a new generation of opportunists in
construction who want to be big. Further down in the section, I will attempt to look at the theory of (McClelland D. C., 1961), which rests upon the work (Maslow, 1943), (Maslow, 1954). I was sufficiently impressed by (McClelland D. C., 1961), to feel it deserved my effort in this paper. A lot can be judged by statements from both young and the old in the construction professions in Ireland. A Construction Management student speaking in 2011 summed up the attitude. His assertion was, one gets into construction, to make money as quick as possible. I know of one professional architect who operated a practice in the 2000s from Lesson Street in Dublin city, who decided he would get out. He was a young enough man and having hired two of my college classmates to run his architectural practice one morning he threw the keys on the table and departed. (Coppola, 1972) describes the attempts of the character Michael, played by Al Pacino, to extract himself from the sordid underworld where his father had made a fortune. What motivates the character of Michael is the belief that he can make the familys operations legitimate. Then we have the famous quotation from part three of the trilogy.
Just when I thought I was out of it, they pull me back in. (Coppola, 1990)
If one speaks in conversation to any number of construction professionals in their mature years in Ireland, one will hear some version of that comment. Mature construction professionals in Ireland who are now reaching retirement age, have experienced four or five serious recessions in their careers. The fact in the minds of many, it seems to be clear, is that nowhere in Irish construction does evidence exist that would support the (Maslow, 1943) hierarchy of needs. Nobody it would appear, from conversation, expect self-actualisation, belongingness, esteem or security of psychological need satisfaction. The original work in (Maslow, 1943) cannot be considered the very good lens through which to view construction enterprise. The fact is though, I am only making a straw man out of Abraham Maslow, which is too easy to knock down. (Cutcher-Gershenfeld, 2006), in in writing commentary updates to the original classic work (McGregor, 1960), states that in later years Abraham Maslow continued to work on leading edge research into behaviour and motivation. (Cutcher-Gershenfeld, 2006) highlights one citation contained in (Senge, 1990), of a report by Abraham Maslow about the key individual in a high-performance team. In the years, 2009 and 2010 in Ireland, I saw my last four employers go into bankruptcy and a firth one left the country permanently. The rising tide of demand for construction services that lifted so many boats receded out and never came back. Page 36
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The task was no longer separate from the self . . . but rather he identified with his task so strongly that you couldnt define his real self without including the task. (CutcherGershenfeld, 2006)
There are large segments of construction professionals, who only remain viable in this enterprise because they are not the primary bread winner for their family. Data will never be compiled, to confirm or deny this assertion, because construction professionals are proud individuals. When we did experience in Ireland a huge ramp up in volumes of production in the construction industry few had the scale of company needed to partake in design or engineering of larger projects. There a conscious decision on the parts of many construction professionals in Ireland, not to become involved in large scale projects. There is a strategic management decision made to not undertake the risk of large budget projects but instead to remain small, less risky and a lot more sustainable. This motivation seems perfectly understandable and rational, given the nature of the industry. None of the above, can bring a scholar closer to an understanding why, the faculties for construction professions in Ireland are full of students who wish to take this career path. We have no convincing explanation of what motivates these young Irish people except total naivety and innocence. In the chapter above on leadership theory, I referenced the teachings of computer science pioneer and innovator, Alan Kay. I will return briefly to Kay now, because he has something interesting to say about motivation that is also relevant to the construction industry. Since 2001, Kay has been involved with a research institute that is focusses on the study of education techniques for children; ways to learn and teach in the modern world (VPRI, 2001). Listening to (Kay, 2003) deliver a lecture one can sense a deep understanding about psychological and human behaviour.
The incredible disparity between the number of human beings who are basically instrumental reasoners, and those who are basically interested in ideas. This has been studied in a variety of different ways. It seems that we normal human beings are basically instrumental reason-ers. The instrumental reason-er is a person who judges any new tool or idea, by how well that tool or idea contributes to his or her current goal. Most of us are very goal oriented. We are working on things. Somebody comes up with something new. Our ability to accept it or reject it, if we are instrumental reason-ers depends on whether we can see it contributing to our current goal. But the other five percent Page 37
Brian O Hanlon - April 2012 are primarily motivated by ideas. So when a new idea comes along, that appeals to them, they will transform themselves and their goals in the presence of that idea. (Kay, 2003)
The construction industry in Ireland (or in any other country), I believe is a representation of the 95% to 5% ratio that (Kay, 2003) refers to. Much in the construction industry does depend on that five percent. Namely, architects and talented engineers who are motivated by the ideas that they encounter in their professional life. Their motivation, I think, is different from that of the majority in the construction industry. Many of the architects and most talented engineers I have known to date, will willingly transform themselves and their goals in the presence of a great new idea.
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McClellands Theory of Needs.
Achievement motivation is a non-conscious concern for personal involvement in competition against some standard of excellence and unique accomplishment. (McClelland, 1985)
The acquired-needs theory published in (McClelland D. C., 1961), explains the behaviour of individuals in the construction industry a lot better than Maslows theory ever could. (McClelland D. C., 1961), said that three types of needs achievement, power or authority and affiliation are needs that individual acquires over time, based on life experiences and challenges that they may encounter. The person (McClelland D. C., 1961), would claim is moulded significantly by their experience in the world. What is remarkable about (McClelland D. C., 1961), and which in the opinion of this paper sets it apart from (Maslow, 1943), is a possibility that one may satisfy all of the needs described in (McClelland D. C., 1961), without having to satisfy all of the needs expressed by (Maslow, 1943). That is, (McClelland D. C., 1961), can describe the individual in the construction industry who make achieve remarkable things in their lifetime, but still fail to meet their basic need of making an acceptable, long term, financial income. In (McClelland D. C., 1961), (McClelland & Burnham, 1976), there is ample scope to define many of the true motivations present in individuals who work in Irish construction. The affiliation motive is present to the large degree, and always has been, in those individuals involved at the implementation and execution stages of construction projects.
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The same is true of many of those men and women I worked with in the development industry.
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Brian O Hanlon - April 2012 Quantity Surveyors as professionals in the construction industry are markedly different to architects or engineers. Quantity Surveyors by the very nature of their task, must expend effort in dealing with the construction and assembly crews deeper and further than the Main Contractor. The tendency in traditional contracts and procurement systems in construction is for the Architect or Engineer to be cut off in terms of personal access at the level of the Main Contractor representatives. But it is exceedingly possible that Quantity Surveyors through means of experience, become motivated as their work on projects by the affiliation motive, to a degree that no other construction professionals do. Architecture professionals on the other hand will have to gain more of a power or authority motivation as presented in (McClelland D. C., 1961). The power motivation is important to those individuals who believe in some way, that they are changing the world, making things better for society. Indeed, at the planning stages of a construction project the motivation ought to be less one of affiliation and more one of power and authority. Of course, construction professionals cannot hire each other. Construction professionals are hired by a community of individuals known in the industry as Developers, or Builders to use the title of (McDonald & Sheridan, 2008). Reading of (McDonald & Sheridan, 2008) or (Kelly S. , 2010), will inform the reader of two aspects of the motivation of those in the Irish construction industry. Firstly, is the conscious attempts made by one party to try to compete directly against another. Secondly, that when a project is finished the individual is only motivated to do the next project, to succeed even bigger the next time. Both of those traits is similar to what (McClelland D. C., 1961), (McClelland & Burnham, 1976) refer to as achievement motivation .
Individuals with high achievement motivation set goals that are challenging, pursue them persistently and vigorously, take intermediate levels of calculated risk, assume responsibility for goal attainment, anticipate obstacles, establish strategies for goal accomplishment and for overcoming obstacles, and seek and use feedback information. (McClelland, 1985)
The section above looked at the different disciplines and levels in Irish construction, and this paper will argue that the three motivation types described by what (McClelland D. C., 1961), (McClelland & Burnham, 1976) are present in different measures in those different disciplines and levels of the industry. In (McClelland D. C., 1965), (McClelland & Winter, 1971), (McClelland D. C., 1976), the authors looked at the issue of a national economy and motivation on the part of leader figures. This work is also interesting in the context of the Irish construction industry.
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(Ross, 2009), (Kelly S. , 2010) and several other works published at the time, explain the key importance of national leaders in Ireland in setting policies required to keep the construction industry production high all through the 2000s decade in Ireland. Page 39
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Brian O Hanlon - April 2012 Unless one is highly motivated individual, one is unlikely to succeed in the area of construction. In the profession in particular, if one is not motivated to grab every piece of low hanging fruit, then one will not be hired. It is ironic, is that of those who were highly motivated, fail to make a rudimentary living in the industry today. Consider the economic equation of a medieval knight at the time of the Crusades. Each knight needed several war horses and a team of assistances to manufacture and maintain armour and take care of the stable. In the construction industry, because consultants work on percentage fees it takes millions worth of construction activity by a society in order to support each individual construction professional. This is why construction professionals do travel around the globe from one boom town to the next, endlessly selling hype and moving on before the bubble bursts. In Ireland we have trained far too many knights, and there are never enough wars to be waged. According to (Linehan, Greaney, & Foster, 2010), human resources management emphasizes the importance of leadership in creating vision, innovation and employee commitment at all levels of the organisation.
The difference between a vision and a hallucination is that other people can see the vision. (Andreessen, 2010)
Marc Andressen (Andreessen, 2010) said that the most difficult thing in starting a company is trying to talk people out of quitting. It is an enormous pity that the motivation found amongst Irish construction professionals in trying to scrape a living, cannot be diverted towards other real market opportunities and harnessed for productive use.
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See Wall Street Journal, (Sonne & Enrich, 2012).
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Chapter 08
Human Resource Management
(Linehan, Greaney, & Foster, 2010) refer to (Legge, 1995) and the contrast between hard or soft human resource management techniques. It is an important distinction, and one from which the scholars of management science can learn a lot. (Linehan, Greaney, & Foster, 2010) note that in hard HRM human resources are acquired, used and dispensed with as corporate level planning and decision making requires. (Tedlow R. S., 2001) writing about the early career of IBM company founder Tom Watson Senior said the following.
John Patterson, the founder of National Cash Register Company and Tom Watson's first boss, dealt with people in three stages. First, he shattered a man's spirit and obliterated his previous identity and self-conception. Then he built him up, buttressed his self-esteem, and paid him lavishly. Then he fired him. (Tedlow R. S., 2001)
Senior Contracts Managers in Irish construction companies have acquired a reputation, of not being close or personal with any of their subordinates. The reason being is, that it makes the situation easier for all parties, when it comes to the time when staff are fired. It feels to employees less like they are being stabbed in the back, if their leader is also a villain. The construction industry in Ireland is the only one in which three hundred thousand employees can be simultaneously fired and no one bats an eyelid. Such is the tolerance level for the abuse wreaked among the society by the industry. The wretched cycle has been embedded into the Irish culture for generations. The worst situation in the construction industry appears to be a case where a leader is a nice guy, and then has to terminate employees. A villain enjoys begrudging respect. But the less villainous leader is damaged community in construction may feel that he or she is too soft for the job. In Ireland, one can study the intersection of leadership style and the human resource management technique pursued by companies. It frequently happens that a command and control style of leadership, described by
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Brian O Hanlon - April 2012 (Goleman, McKee, & Boyatzis, 2002), is preferred by a manager or executive at the same time as they choose to enforce a hard version of human resource management.
21
It is the double speared attack on the employee in the construction industry that makes it feared (and also perhaps, respected), by so many. (Goleman, McKee, & Boyatzis, 2002) point out to readers, that while command and control style is very appropriate in situations of emergency once the emergency period has elapsed and things return to a more even keel a successful leader, must be able to change out of that gear, and exercise a leadership style other than command and control. The problem is, is that few in the Irish construction industry are expected to do so. There are more than a few exceptionally talented and highly qualified engineers I have worked alongside in my career who were on speed dial for the situations of emergency where the services of a command and control style of leadership was need. On occasions where there was no emergency, the engineers phone does not ring at all. The Irish construction industry is guilty in this charge, in the opinion of this paper, of acquiring and dropping human resources indiscriminately. Some construction professionals believe they are consultants, when in reality they are only hired periodically to swing the heavy axe. The talented civil engineer (or Architect, or Quantity Surveyor), who is prized in the industry for being ruthless is left to waste in their career. No Employer wants to know them, once the crisis has passed. (Linehan, Greaney, & Foster, 2010) have described the soft approach to human resources management, as one which views the employee as integrated into a work process that values trust, commitment and communication. The real question is, is the Irish construction industry able in the 21 century to acknowledge the full meaning of soft human resources management? Many Irish construction companies will see it as more advantageous to keep a heavy axe hidden in the background. It is often the female practitioner in civil engineering, quantity surveying and other professions in Irish construction, who has suffered. Women are viewed as being capable of swinging the heavy axe, operating under conditions of stress and not taking nonsense. The ultimate outcome, observed by (Goleman, McKee, & Boyatzis, 2002), is that an axe-wielding employee will be banished to the wilderness. The problem gets concealed underneath the speeches about equal opportunities in construction.
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In common with other career fields such as the military, where casualties are expected and rapid deployment of resources in pursuit of a goal or mission achievement is required. Page 42
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Brian O Hanlon - April 2012 Further evidence of a need to develop different kinds of leadership techniques can be noticed in (BSI, BS 7000: Part 4: 1996).
Individuals may need to perform several functions for instance, within a design practice a principal may have several differing roles to play, as follows: a) as a member of the executive, having responsibilities for the well-being of the practice; b) as a senior functional manager, having specific duties such as design facility manager or administration manager; c) as a design unit leader, having responsibilities for managing a design unit and executing a particular commission; d) as a specialist, providing a consultancy service to other designers. (BSI, BS 7000: Part 4: 1996)
The point about staff turnover experienced by some companies operating in the construction industry in Ireland is worth mentioning. It appears that in some companies the rate of staff turnover is alarmingly high, even during years in Ireland that experienced robust economic and construction output. It is a very deep issue and one which this paper does not have the resources to examine properly. At one firm I worked for a junior Architect went out for fresh air during a morning tea break. He walked down the driveway and was never seen or heard from again. What did not surprise me was the action. What really shocked me was the fact that no one in the organisation seemed to care. It had been going on for years and was the subject of laughter amongst staff. The firm in question is one of the oldest in the country. The difficulty in Ireland is that there are a very few incumbent organisations in construction and competitors do not seem to survive long enough to offer a serious challenge.
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Chapter 9
Strategic Management
The strategic management process is a theoretical model of how management could work. It does not mean however, there are a prescriptive series of steps that an organisation and its management can simply follow. In each circumstance, it would be a challenge to interpret the strategic management process correctly, and how it should work. All that the strategic management process provides the ineffectual management team with is a very high level flow chart diagram of indicative actions and arrows between those actions. It does not give the management team anything else. On the one hand the strategic management process is infinitely flexible, and on the other it is vague. In the hands of a good management team, the theoretical strategic management process, could establish a quite sophisticated and useful control process for an organisation. It would enable the management team to understand the real impact of their various policies or decision making on their organisation The point which needs to be emphasized most about the strategic management process is that it endeavours to span the divides between strategy incubation on the one hand execution stage planning and real results in the field. The idea then, is to allow information captured somehow at the end of the strategy implementation process to funnel back to the origins of this whole enterprise, so that a new round of the whole process can begin again. Page 44
Brian O Hanlon - April 2012 Almost all diagrammatic illustrations of the strategic management process contain a strategic formulation, implementation and evaluation box or bubble of some kind. The manner in which the boxes or bubbles of the diagram are connected with each other varies in complexity.
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Some of the most convincing diagrammatic interpretations of the strategic management process I have studied are those based on a systems thinking perspective. The diagrams illustrate a way to connect the distinct actions of definition, assessment, change and evaluation. (Senge, 1990) is a useful reference for the scholar beginning in a career and who is on a path to seek a better understanding of how a strategic management process may work. (Senge, 1990) should always be a first source of reference for the scholar of organisational behaviour management, who needs to develop an awareness about systems thinking. Systems thinking is a quite scientific area, based on several standard archetypes, and (Senge, 1990) does make some of the archetypes accessible to the scholar. Strategic management it is stated is an on-going process. According to the strategic management process, it is the internal and external environmental forces, which do lead to change in an organisation. Systems thinking in the manner explained by (Senge, 1990), is all about understanding of change, and why change is happening. One of the most valuable aspects of (Senge, 1990), is that it tries to explain by means of example, how managers are prone to misdiagnosis of change when it occurs, and that in turn may lead to further poor strategic formulation. One could say an awful lot about the subject of change in the construction industry. The presence of change on so many different levels in construction is what makes the need for good strategic management processes so acute.
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Consider the example of the large building program worth a total three billion euros in value, undertaken over a number of years by Dublin Airport Authority. The following are from notes I recorded of a talk given by Dublin Airport Authoritys Landside & Utilities Workstream Manager (Gaffney, 2008).
In 2002, 15 million passengers were processed at Dublin Airport. By 2007, that number had risen to 23 million passengers. By the time, the brand new Terminal 2 is complete Dublin airport will have the capacity for 35 million passengers and an extra 20 aircraft boarding gates. This affords a lot more capacity for long haul flights.
Those who are familiar with the ideas of Cybernetics presented in (Wiener, 1948), (Bateson, 1972), will understand the more subtle aspects of the theory of strategic management process. That is well beyond the scope of this paper. 23 See further down in section about CRH case study about Andy S. Grove. Page 45
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Brian O Hanlon - April 2012 (Sudjic, 1992) describes the airport as a building type which is almost a permanent construction site. Throughout the 20 century there never seemed to be sufficient airport capacity. It is like the computer industry. By the time you build it, it is already out of date. Chapter seven in (Sudjic, 1992), The Airport as City Square is a chapter on the history of Heathrow airport beginning in the Second World War and finishing with the new Terminal Four. The title of the chapter, The Airport as City Square is indicative of change. The airport is the space in which new arrivals to a city form first impressions. In the past, that role had been performed by large urban spaces and boulevards. Now the role is played by the citys airport terminal building. Many of the management textbooks including (Linehan, Greaney, & Foster, 2010), speak about defining the strengths and weaknesses of an organisation, and trying to customise ones business plan or strategy around those strengths. This is the standard playbook as taught to students of management studies all around the world. It should be noted that this management approach has vulnerabilities and flaws, and I would refer readers to such texts as (Christensen & Raynor, 2003), to understand why. In particular (Christensen & Raynor, 2003), attack the notion that a core competency that when identified, is used to formulate a business strategy. In fact, (Christensen & Raynor, 2003) explain how many businesses have gone bankrupt as a result of following the standard playbook on strategic management processes. The reason as explained in (Christensen & Raynor, 2003), is that business strategies formulated using the strategic management process encourage getting rid of parts of the business which are not deemed to be a core competency. (Christensen & Raynor, 2003) argue that something which is not a core competency today, may become one, in five or ten years time. (Christensen & Raynor, 2003) relate upon the example of Intel Corporation a few years ago. Intel had contemplated getting out of the chip fabrication business altogether. Intel believed that their core competency was designing microchips rather than manufacturing them. Christensens team who were consultants at Intel argued the opposing view. Christensen argued that as time went on, there would be overwhelming competition microchip design from companies who did not own their own manufacturing facilities. By having the ability to manufacture the chips, Intel could be guaranteed large market share in that space. Intel realised, that by following the strategic management process playbook and identifying their strengths at a given time, would have led them to pursuing a bad commercial strategy. We can draw lessons in the construction industry, from (Christensen & Raynor, 2003).
th
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Brian O Hanlon - April 2012 One of the key stages of the strategic management process is implementation. The problem is that some companies are better at implementing their sub-goals, than their primary ones. Over time, a company may become biased towards strategic planning which emphasizes the secondary target. (Kay, 1997) is a veteran of a many information technology building projects and can talk from experience about organisational strategy. He notes that the effect on a whole industry can be very negative, when the sub-goals replace the primary goals. (Kay, 1997) claims that when Intel Corporation gained control over the development of the personal computer industry, the software side of the strategy never again held the primary position that it should have done. Intel according to (Kay, 1997) is a hardware company and they understood software. In the construction industry in Ireland, we are witness to many a case where the sub-goals became the primary goals. The emphasis in Ireland during the decade of the 2000s was on increasing output for the sake of it. The primary goal of health and safety of workers on construction sites was neglected until the courts started prosecuting Employers. In Ireland, we did not observe the assessment and evaluation parts in the strategic management process. We did not assess the need for having the right project in the right location. Everything in the construction industry became geared towards over production. Increasing production by itself, a secondary objective came to be seen as the winning strategy.
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It all rested squarely upon an inaccurate assumption that demand was insatiable in the Irish property market that one could never build enough. As strange as this type of strategy may appear today, at the time, very few parties did voice their objection.
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Those who did were extremely unpopular.
Emergent Strategies
In chapter nine of (Linehan, Greaney, & Foster, 2010), the question of emergent strategies is raised. on what happens in construction.
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There is an aspect about emergent strategies that I would like to expand upon. I believe it could shed light
A widely published author and professor at MIT Sloan School of Management, Edgar D. Schein, wrote something about his time spent as a consultant to Ken Olsen, the CEO of Digital Equipment Corporation. In (Schein, Delisi, & Kampas, 2003), the author reached a very interesting conclusion.
24 25
Citation needed if possible. Citation needed if possible. 26 See (Mintzberg & McGugh, 1985) also.
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Brian O Hanlon - April 2012 (Schein, Delisi, & Kampas, 2003), claims that organisational culture is like unset concrete to begin with. The material is very flexible. You can do anything with it. You can mould it into whatever shape that you need. But (Schein, Delisi, & Kampas, 2003) claim if essential strands of DNA, are not incorporated into the organisation by a certain stage in its creation the organisation is very unlikely to accept those strands later on, as a transplant. When the concrete sets, it is permanent. Companies that experience success early will have a bias towards the strategy that first delivered its success. Such was the case at Digital Equipment Corporation claim (Schein, Delisi, & Kampas, 2003). It is said that for a team coach, the hardest thing to do is to go into the dressing room at half time in a match final and change the playbook that has got the team to the final. In (Dell & Fredman, 1999), one of the most brilliant observations ever written in business literature was made. Michael Dell began a global company from his dormitory room at college. Dell worked in his own company building it up his entire life. According to (Dell & Fredman, 1999), the breakneck speed of growth of his company was a source of much concern. The company was growing so fast, that it risked not having the kind of management it needed to sustain its growth. It must have taken rare common sense on the part of Michael Dell to do so, but his solution was to replace his top management several times as the company grew and grew. In the earliest days, he had managers who knew how to handle a company that made profit in the range of hundreds of thousands of dollars. But soon, Dell found himself owning a company that no longer made profits of hundreds of thousands. It made profits of hundreds of millions. Soon after that, the hundreds of millions became billions worth of profit.
The job grows faster than the person. (Dell, 2007)
(Dell & Fredman, 1999) argue that the kind of management needed to operate at different levels is not the same. It is not a wise thing for a small company to being a large multi-national corporation, without changing management staff and structure a few times over. By their nature, construction companies created before the cycle of an economic boom can experience a similar kind of hyper-growth. One construction professional in Ireland compared it to the rugby sport and what is termed a rolling maul. Company directors in construction companies can pick up so much momentum that nothing stand in their way. Some of the projects being envisioned in Ireland during the 2000s, were of a similar scale to the New Town projects that were conceived and some built in the United Kingdom during the post WWII era. Page 48
Brian O Hanlon - April 2012 Some operational strategies used in construction in Ireland during the 2000s decade were better able to scale up to the task than others. It is worth referencing the publication (Bamford, Ernst, & Fubini, Feb 2004), on the subject of Joint Ventures. The Joint Ventures was typical of the kind of strategy that companies in the Irish Construction had their eyes on during the boom years of the 2000s.
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Where larger government contracts are concerned, the Joint Venture model allows smaller firms to join together to simulate a larger organisation and to undertake large projects. The Shannon Tunnel project in Limerick city, for instance, was conducted under a joint venture agreement between four separate companies (each were quite large companies in their own right). Each member handled a part of the Shannon Tunnel project, which they were expressly qualified to undertake.
Miles and Snow Business Strategy
(Miles & Snow, 1978) define an organisation as, both an articulated purpose and an established mechanism for achieving it. Recently, (Fiss, 2011) added high praise for the typology of generic organizational configurations presented by (Miles & Snow, 1978).
In fact, as Hambrick (2003) has noted, it presents one of the most widely tested, validated, and enduring strategy frameworks of the last 25 years, with researchers finding strong and consistent support for the typology across a variety of settings ranging from hospitals to industrial products and life insurance. (Fiss, 2011)
Construction professionals in Ireland at the moment are taking advantage of the slowness of business to build up their capabilities and awareness of information technology tools. Tools that can help them to carry out their work more efficiently. A series of seminars is being hosted at this time of writing by CITA, the Construction Information Technology Alliance group on the topic of Building Information Modelling. CITA is a wide ranging organisation, composed of members from all of the professional institutes and associations in Irish construction. The rhetoric that one hears at the CITA seminars in Ireland in 2012 does seem to draw influence from (Darwin, 1859). Folk who do not get themselves organised and hop on board the new technological wave,
Also refer to later chapters in (Kelly S. , 2010), with regard to partnership structures and difficulties in the development business. Page 49
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Brian O Hanlon - April 2012 will be left behind. case.

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It assumes perfect competition in the Irish construction market. That is far from being the
"Efficient organisations establish mechanisms that complement their market strategy, but inefficient organisations struggle with these structural and process mechanisms". (Miles & Snow, 1978)
The group who see themselves as forward thinking and progressive in Irish construction today, can be profiled according to (Miles & Snow, 1978), as the Prospectors.
"The Prospector is typically a small but growing organization continually in search of new product and market opportunities. Change is a prime challenge for this organization, and the administrative challenge is thus how to facilitate rather than control operations". (Fiss, 2011)
The typology in (Miles & Snow, 1978), offers a means by which to understand the debate in Irish construction at the moment about information technology. On the one hand there are the Prospectors and on the other hand are the Defenders.
"In contrast, the Defender is more typically a large and established firm that aims to protect its prominence in a product market". (Fiss, 2011)
My own allegiance in the great CITA seminar debate of 2012, is somewhere in between the two extremes. I find it difficult to rationalize why this may be. It is strange that I am acquainted with many of the Prospectors, but for some reason, I find it difficult to join up with them. Perhaps this is why (Miles & Snow, 1978), had to invent the Analyzer profile.
The reason for this lies in the hybrid nature of the Analyzer, which has to be able to accommodate both stability and change, indicating that the ideal profile of Analyzers will be marked by rather complex structures (Miles and Snow, 2003: 79). (Fiss, 2011)
Perhaps my scepticism about the position of the Prospectors in the argument over information technology adoption and the construction industry in Ireland, has something to do with the fact that I studied a text such as (Carr, 2003). In his work, (Carr, 2003) described a law of diminishing returns in regards to technology (Moore, 1991) is a widely respected text and provides a useful model in existence for two decades now, for understanding the technology adoption cycle. This reference is to be preferred over (Darwin, 1859). Page 50
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Brian O Hanlon - April 2012 adoption. At a certain point, everyone jumps on the bandwagon, and one ends up running like the mouse inside the wheel in its cage. One reaches the point, where there are no significant competitive advantages to be gained by adopting more information technology aids. One is simply running to keep level with the competition. This is in contrast, to earlier stages in the technology adoption cycle where the technology is more primitive but does deliver a strategic advantage. (Carr, 2008) looks at the commoditization of information technology and compares it to the electricity supply system. Every business today expects to have electricity to operate but does not expect to gain any strategic or competitive advantages by having it.
Strategic Human Resources Management
(Linehan, Greaney, & Foster, 2010), state that the traditional personnel management, industrial relations, organisational behaviour and strategic operational management disciplines are combined together today inside of the HRM role. What stands out immediately from reading the chapter about human resources management in a text such as (Linehan, Greaney, & Foster, 2010), is the breath of things that HRM can touch upon. It should come as no surprise that a viable route to job promotion inside of modern companies is the HRM ladder. In (Mintzberg H. , 1989), the author suggests that managers in an organisation are continually changing the roles that they play, depending on the day of the week or the needs of a particular circumstance. The successful manager has to fulfil many different functions. (Mintzberg H. , 1989) suggested three major categories, into which the ten different roles of a manager fitted interpersonal, informational and decisional.
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I believe a very excellent development upon the theories of (Mintzberg H. , 1989), is the (Kelley & Littman, 2005) publication about the IDEO design company.
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The (Kelley & Littman, 2005) publication is very accessible to read and understand. Similarly, in my experience the publication of (Goleman, McKee, & Boyatzis, 2002) is an excellent manual, for those trying to learn about leadership styles in the construction industry. (Linehan, Greaney, & Foster, 2010) claim that a human resources management perspective aims to arrange organisational objectives in a strategic way. Consider the diagram presented as early as (Construction Industry Training Board, 1979). The informational aspects of leadership are discussed above in section three, on leadership. In (Ricks, 2005), the architect voices some of his approval for IDEO design company and methods having worked together on some construction projects. Page 51
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I was sceptical, in 2012, of whether the 'Management Science' on the curriculum in third year Quantity Surveying/Construction Management, fitted in anywhere, to my scheme of things. It was with some surprise that I saw in 1979, someone had put the human behaviour side of management into the picture. It seems that the whole block of the 1979 diagram, to do with organisational behavior is something the industry is only scratching the surface of today. In the 1950s construction overtook agriculture in north America as the single largest industry (Koch, Molenaar, & Gransberg, 2006). Many of the large civil engineering road building projects started immediately after the Second World War on a scale never seen before (Caro, 1974). Many of the largest and most influential American construction companies were formed then. The post war years in America were a good time to start a construction business. One could still enter the market as a relatively small player, without much of a track record. Afterwards, that changed and the established players in construction crowded out the market. The real estate company that Gerald D. Hines (Hines, 2012) founded in the post war era, is now a gigantic operation spread across many countries the globe. Recently, Hines has bid to take over the development of the Page 52
Brian O Hanlon - April 2012 Battersea Power Station site on Londons river side from the distressed Irish company Treasury Holdings. (Hancock, 2012) The problem in many industries which are dominated by large incumbent players, is that organisational changes that are overdue, do not happen. According to GK VanPatter of Humantific management consultants, there is a problem today of outdated skills being present in a vast number of organisations.
"Suffice it to say that under numerous headings, there is a massive skill adaptation shift underway among adult humans." (VanPatter, 2010)
The largest and most powerful construction companies having been formed a half a century or more ago, when it was deemed logical to separate the Designing and Contracting roles.
The passing of professional licensing laws in the United States during the 1920s and 1930s further emphasized this separation of design and construction. (Koch, Molenaar, & Gransberg, 2006) In the early 21 century, we are trying to put the two roles back together again. Design Build procurement removes the contract between the Employer and the Designer. The first chapter of (Koch, Molenaar, & Gransberg, 2006) talks of outdated skills that are lying around in construction procurement agencies, real estate holding companies and all sorts of managers of building stock. The authors emphasize the point, that in order for the Design Build procurement system to bed in, and be successful, a lot of people at various levels have to re-learn skills etc. The case study on the CRH company in (Linehan, Greaney, & Foster, 2010) does place emphasis on obtaining a healthy mix of different skills and experience within the organisation. One of the issues that (Koch, Molenaar, & Gransberg, 2006), attempted to clarify in relational to DesignBuild, is the distinction between legal contracts, procurement systems and a project delivery system. The notion of a project delivery system is intended to convey a wider mission or purpose. If one looked at Design Build as a new form of contract only then one would fail to see the large mission to create a Design Build project delivery system. The latter will involve a large amount of strategic human resources management. The construction industry is not the only industry in the present day, which is experiencing a severe level of change in its environment. Many other once large and powerful industries such as media and entertainment have also fought against the progress of technology, and the threat of being marginalised by new distribution systems for products such as the Internet. Page 53
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Brian O Hanlon - April 2012 (Burgelman, Grove, & Meza, 2005), have coined the term information turns, which happens faster and faster in more efficient industries such as that of information technology.
The speed of development of technology of one kind, as compared to the speed of development of technology of another kind, depends on how fast you can learn from the result of one experiment, and turn around and apply it to another experiment. (Grove A. S., 2005)
(Burgelman, Grove, & Meza, 2005) is described by the authors as a collection of case studies about companies finding themselves in different degrees of change, and contains a lot of detailed analysis of different strategies tried out in the past which led to successes and failures. One of the co-authors, ex. Intel CEO, Andy S. Grove has devoted the remaining years of his live to solving the problems in the health care industry in the United States (Grove A. S., 2005), (Nocera, 2005).
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Chapter 10
Company Case Study
Since the mid-1970s, the group has expanded through inorganic growth (acquisitions or buying firms), and organic growth (developing existing businesses, financed by the reserves of the company), into an international manufacturer . . . Western Europe, North America, Eastern Europe, South America, Turkey, China and India. (Linehan, Greaney, & Foster, 2010).
There are a lot of good ideas contained in the business strategy of CRH company as presented in the case study in (Linehan, Greaney, & Foster, 2010). However, it should be possible to criticise some of the ideas contained in the CRH strategy as a means to understanding them better and for broad discussion purposes.
CRH and the organisational environment
(Linehan, Greaney, & Foster, 2010) define the organisational environment refers to the forces that make an impact externally and internally. Commentators in Ireland will draw attention to the fact that reason Irelands domestic economy has never fully established itself, but amazingly we produce large successful international corporations such as CRH, Smurfit Kappa and the mobile communications empire of Denis OBrien. Commentators will claim it has much to do with the following. Claims are made about Afghanistan. Afghanistan does not have a domestic economy of any consequence, being a somewhat primitive, third world, war lord society. But it has proven itself capable of being the destination for launching of global organisations. In Afghanistan it is the forces of law and order which do not apply. In Ireland it is the forces of competition. (Linehan, Greaney, & Foster, 2010) talks about the reserves accumulated by CRH, which enable it to go on acquisition sprees around the globe. The big question is, where do these reserves come from? UK grocery chains operating in Ireland, can earn many times more profit than they enjoy in their home market. In Ireland, the consumer pays way over the odds for services and products. There is not sufficient Page 55
Brian O Hanlon - April 2012 competition in the market in Ireland, and as a result companies will consistently use Ireland as a springboard from which to launch attempts at world domination. That is exactly the pattern that the property development industry in Ireland followed throughout the 2000s. Journalist Richard Curran claims that Irish property moguls paid Paddy prices for much of their acquisitions in London. At the much hyped Irish Property Developers conference in Dublin in 2007, the presentations all focused on a notion that a small band of leveraged Irish borrowers could storm into eastern Europe and swipe the profits from under the noses of Baltic and former Communist block states. That excursion was to be funded by the Irish banks such as the former Anglo Irish bank. Irish banks began to acquire banks in eastern European countries, in anticipation of this Irish (and very ill-fated), version of Operation Barbarossa. It can be argued (O'Brien, 2009), (Casey, 2009) at this stage, the Irish population are tired of outward invasions in search of global dominance, and would appreciate in the 21 century some better governance at home.
st
What explains Irelands slump-slump-soar-slump record is not bad government, but a governance vacuum; it is not what government gets wrong, but what successive governments have neglected to do. This is to be seen in each of the three periods of chronic economic underperformance suffered since the middle of the 20th century. (O'Brien, 2009)
The other thing that economist Dan OBrien has said consistently during this recession (and a point that this paper agrees with), is that Ireland should stop producing builders. We dont need any more builders. We have enough builders.
Finland has got Nokia, Ireland has got CRH. (Johnston, 2009)
The comment by (Johnston, 2009) was not intended as complimentary. It is an observation about missed opportunities and waste in the Irish system of growing enterprise and producing companies to be proud of.
31
According to (Barrett, 2009), the way Nokia corporation changed the game in mobile communications, was to adopt a different strategy to that of the existing incumbent Motorola. Motorola had been sitting for years on its existing technology of analogue mobile communications devices. But Nokia came to a decision that digital
Johnston is of particular historical interest, being one of the early Irish scientists who worked in the new Lemass supported semi-state companies, such as Aer Lingus at the time of their initial launch. Johnstons perspective and comparison between Irelands enterprise culture and that in other European countries is of interest (Johnston R. H., 2006). Page 56
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Brian O Hanlon - April 2012 mobile communications represented the future in the market. Nokia put all of its eggs in that basket and as a consequence says (Barrett, 2009), changed the whole nature of competition. In (Moore, 2011), the speaker mentions the problems that Nokia is experiencing today. (Moore, 2011) cited the new chief executive of Nokia, and the first question he asked was, Apple corporation introduce the iPhone product in 2007 and Nokia still has no response. According to (Barrett, 2009), research and development budgets are extremely important in todays corporation. (Barrett, 2009) cites the co-founder of Intel, Gordon Moore who once pronounced that a company cannot save its way out of a recession, it can only invest its way out. In (Barrett, 2009), the speaker cautioned that companies such as Intel or Microsoft spend six to seven billion dollars in research and development annually. But that any global corporation can be swiftly brought to its knees through the determined efforts of a couple of smart people with almost no budget. (Barrett, 2009) cited the examples of Netscape in the 1990s, and Yahoo and Google companies in the early 2000s as being three of the only serious threats to the incumbent Microsoft. None of which came from a large corporation, but from universities where a couple of smart students had a smart idea.
CRH spanning the globe
In the CRH case study (Linehan, Greaney, & Foster, 2010) make reference to the delegation of authority in decision making to local managers, within the CRH network of companies, who are familiar with local conditions.
CRH is a de-centralised group with many subsidiary companies operating under a wide range of local and regional brand/trade names. (Linehan, Greaney, & Foster, 2010)
(Linehan, Greaney, & Foster, 2010) describe a certain balance which has to be achieved within the CRH company, between de-centralised and centralised management. The centralised management according to (Linehan, Greaney, & Foster, 2010) is needed so that the group of companies pursue certain strategic goals. In (Barrett, 2009), the speaker describes the reality of the Intel manufacturing corporation which had facilities spread throughout the globe. (Barrett, 2009) states that each facility was unique. Barrett believed that each Intel manufacturing facility should be standardised according to one model, which repeated itself around the globe. (Barrett, 2009) stated that by having each facility like a branch of McDonalds, would mean that products designed by Intel could be made at any facility. If production of the same widget could be achieved Page 57
Brian O Hanlon - April 2012 successfully at any Intel plant around the world, then it would free up resources in Intel Corporation to pursue many new strategic objectives. (Barrett, 2009) describes a meeting in which he assembled together over twenty plant managers from around the globe in a conference room at one stage. The various Intel plant managers valued their autonomy. They always tried to optimise their production lines individually. They seemed unwilling to give up that autonomy. (Barrett, 2009) explained that minor advantages achieved by local optimisation of the 200 stage production process for semi-conductors, was the source of major vulnerability in the company. This paper also wishes to make reference to (McAfee, 2006) and (McAfee, 2009) which study several large global companies Staples in the office supplies business, or Starbucks in coffee stores and how they have made use of networking technology, to monitor cash register machines in their stores throughout the world. According to by (McAfee, 2006), (McAfee, 2009) it has assisted those companies in launching ambitious strategies, to reach further around the globe. Cash register machines have evolved to a degree to which control and monitoring of operations can occur anywhere in real time. The Staples office supplier, or Starbucks coffee stores chain can grow, and grow while having surveillance over every part of the network.
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Technology it was claimed by the New Left would liberate people, and allow them to pursue avenues of freedom they had never enjoyed previously (Sennett, 2007). But the idea of communications technology used to control human beings, as stated in (Lessig, 1999) is a view that has a lot of merits. During the last ten years in Ireland, we have seen a lot of consolidation of ownership of the most successful construction professional. Large multi-national construction companies have used their capital to buy out individual firms in countries such as Ireland. The strategy was one of buying the market share, rather than going through a long process of competing to win a share. Conversation with students of Quantity Surveying, who take up internship positions in these firms, does reveal the degree to which information technology, is used to join these remote outposts company, back into some global information system. What has been created through means of information technology is rather like an internal walled garden, in which the global construction company can access its own information resources. From conversations, I began to relate this to the business model of Starbucks and Staples office suppliers as described (McAfee, 2006), (McAfee, 2009).
33
(Bryant, 2010) does emphasize the role that digital media

34
plays in creating this flatter structure to his company organisation.
I had some difficulty in locating the exact source of this research, which I know I came across recently. Hopefully in a future writing project, I can return to this thread of argument in more elaborate detail. 33 Refer also to (Conde, 2010). 34 Refer to chapter above on Organising and Controlling for additional discussion of (Bryant, 2010). Page 58
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Brian O Hanlon - April 2012 CRH and Human Resource Management
(Linehan, Greaney, & Foster, 2010) in the section entitled CRH Case Study, identify the existence of management development programmes and succession planning as being key to the internal organisation of the CRH company. The performance management process is used to identify training needs for new tasks and to improve performance among employees.
The strong correlation that nearly every organisation makes among upward mobility, success, and compensation puts great pressure on the employee who wants to become an expert in his or her current post. (Prietula & Simon, 1989),
(Linehan, Greaney, & Foster, 2010) in their chapter on Human Resource Management commented that performance management in the large CRH company enables the management to find out a lot more about their employees, and to make better use of each individuals talents and expertise. (Prietula & Simon, 1989) contends that a company leader who is aware of the experts in a company, will have valuable insight into how the organisation functions. Experts are valuable to any company, because they remove the need for the control hierarchy to respond to every single problem that can arise.
Teams working together for the duration of a project. Empowered to make decisions, these units can react directly to problems and customers requirements without having to waste time going through functionaries higher up in the hierarchy. (Hascher, Jeska, & Klauck, 2002)
Authors such as (Prietula & Simon, 1989), (Sennett, 2008) have consistently made reference to the 10,000 hours of effort required to become fully proficient in playing the piano, learning to write software or gaining a competency in any craft. In (Sennett, 2008), the author tries to argue that in modern life this dedication and perseverance to gaining mastery of some craft is not widely respected anymore.
Research shows consistently that in the most vigorous vocations, like medicine, around ten years of serious effort are necessary before a person can approach levels of performance regarded as expert. (Prietula & Simon, 1989)
(Prietula & Simon, 1989) argue that the human resources strategy inside too many modern organisations is to promote staff too quickly, and remove them from departments or task at which they excel. According to Page 59
Brian O Hanlon - April 2012 (Garvin, 2009), a historical assessment of the life and career of former Irish Prime Minister, Sean Lemass Lemass had been Minister for Enterprise in Ireland for several years and when his time came to assume the higher office, he was not elated becaues it meant leaving behind his work in Enterprise.
To foster innovation, the company has to allow experts to stick with their jobs. (Prietula & Simon, 1989)
Marc Andressen, a veteran of the dot.com bubble of the 1990s, and recently turned venture capitalist, in (Andreessen, 2010) reinforced the idea that an aspiring entrepreneur should work to develop a craft, and then build a company around the craft.
Many of the most successful technology enterprises were launched as products, observes Marc Andreessen, serial entrepreneur, including Facebook, Twitter, and others. He states that tools created this way are based purely on market demand, making these applications much more compelling. To the contrary, companies that establish themselves first and then work to craft an application have their achievements, but they are more likely to plummet into failure. (Andreessen, 2010)
(Huang, 2009) in particular did express a scepticism in relation to the value of succession planning in large companies. (Huang, 2009) would much rather work inside the successful company that he founded to make sure the companys board of directors will have a wide choice of candidates to choose from to promote when the right time comes.
NVIDIA Co-founder and CEO Jensen Huang reports that most of his time on the job is spent brainstorming with managers and leaders and helping them brainstorm through tasks and opportunities. He believes it is essential to train talent to effectively control a different product line, a new geography, or even to take his place. Succession planning of a closed set of hand-picked individuals is a toxic process, says Huang. It's best to treat all employees as a next generation of leaders to build a better environment and long term stability. (Huang, 2009)
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Brian O Hanlon - April 2012 In one large construction company I worked for in Ireland, the son of the boss was referred to as the Dauphin.
35
The views expressed by (Prietula & Simon, 1989), are reinforced by management consultants around the world today such as (VanPatter, 2010).
Pin-pointing your experts will allow you to evaluate them, reward them appropriately, and (you hope) retain them. (Prietula & Simon, 1989),
That is a view reinforced and made very plain by venture capitalist Marc Andressen at a talk to Stanfords entrepreneurship corner (Andreessen, 2010).
Probably the two hardest parts of running these companies: number one is recruiting, and number two is talking people out of quitting. And by the way, at first recruiting seems like the hard part. And then later you realize talking people out of quitting is the hard part. And by the way, if you ever got through this and you find yourself talking to people out of quitting all the time, it's completely normal. You can't believe how often it happens at successful companies. (Andreessen, 2010)
The Dauphin of France strictly, The Dauphin de Viennois was the title given to the heir apparent to the throne of France from 1350 to 1791, and from 1824 to 1830. The word is literally the French for dolphin, as a reference to the animal they bore on their flag. Page 61
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CONSTRUCTION

Management Practice in the Construction Industry in Ireland.

Brian O' Hanlon

Brian O Hanlon - April 2012

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Brian O Hanlon - April 2012

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Awaiting Further Completion

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Awaiting Further Completion

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Planning and Decision Making

Awaiting Further Completion

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Leading and Leadership

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Fiedlers Contingency Model

Figure 1 - Larkin Office Building, Frank Llyod Wright, completed 1903.

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Figure 2 - Herzberger's Centraal Beheer, built in Apeldoorn, Holland. Completed in 1974.

Vroom-Yetton Jago Contingency Model

Brian O Hanlon - April 2012

Organising and Controlling

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The Strategic Apex

The Middle Management

The Operating Core

The Supporting Staff

The Communications Revolution

Some final words about modern organisations

Refer to (Conde, 2010) comments in later section on CRH case study.

Brian O Hanlon - April 2012

explanation about communication systems (Gaffney, 2008).

Figure 3 - Design Team Organisation, (BSI, BS 7000: Part 4: 1996)

Construction Manager versus Architect

asking for ways to obtain better value for money.

Brian O Hanlon - April 2012

Figure 4 - Diagrammatic illustration of Maslow's Hierarchy of Needs

Brian O Hanlon - April 2012 sheer hopelessness.

But each generation in Ireland produces a new generation of opportunists in

Brian O Hanlon - April 2012

McClellands Theory of Needs.

See Wall Street Journal, (Sonne & Enrich, 2012).

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Human Resource Management

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Those who did were extremely unpopular.

The job grows faster than the person. (Dell, 2007)

Miles and Snow Business Strategy

Brian O Hanlon - April 2012 will be left behind. case.

Strategic Human Resources Management

Brian O Hanlon - April 2012

Brian O Hanlon - April 2012

Company Case Study

CRH and the organisational environment

CRH spanning the globe

(Bryant, 2010) does emphasize the role that digital media

plays in creating this flatter structure to his company organisation.

Brian O Hanlon - April 2012 CRH and Human Resource Management

Brian O Hanlon - April 2012

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