1. introduction cm 2014

COTM 5104: CONSTRUCTION MANAGEMENT
Chapter 1
Introduction
GETANEH GEZAHEGNE
March 2014
School of Civil and Environmental Engineering

ContentsContents
Introduction
1. Construction Industry
2. Domestic Construction Industry
3. Fundamentals of Management
AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 2

1. Construction Industry1. Construction Industry
1.1. General
 Construction: is a process of constructing something by
man for one purpose or another. It may be a road, bridge,
dam, dwelling place, an airport, commercial building,
etc.
 Construction types:
 Residential buildings;
 Institutional and commercial buildings;
 Specialized industrial construction; and
 Infrastructure and heavy construction.
 Construction Industry (CI)) is an industry which is
involved in the planning, execution and evaluation of
all types of civil works.

1.1. General
 Project: is some form of human activity that has a
beginning, a productive phase and an end, creating
something that did not exist before.
 Construction Project: is an investment of scarce
resources with a definite objective, time horizon and
geographical boundary.
 Construction projects are mostly constructed on the
ground and exposed fully to the local environment.
 A construction project has different scale and
complexities. It ranges from improvements to large
investments. But, every project is:
 An investment of resources, and
 A cause of irreversible change.

1.1. General
 Common characteristics of construction projects:
 It has a specific starting and finishing time.
 It has usually geographical and sometimes
organizational boundary.
 It has clearly defined set of objectives.
 It entails the investment of scarce resources in the
expectation of future benefits.
 It may be planned, financed and implemented as a unit.

1.2. Study of Construction
 Study of Construction mainly covers two themes:
1. Construction Technology: Relates to methods and
techniques used to place the physical materials and
elements of construction at the Job site.
2. Construction Management: Addresses how available
resources will be applied.
Money Manpower
Materials Machines

1.2. Study of Construction
 Many great construction projects
mark significant milestones in
human history:
1. Great Pyramids;
2. Brooklyn Bridge;
3. Panama Canal; and
4. Euro/channel tunnel.

1.3. Construction Industry Category
 Construction Industry can be categorized into three major
sectors:
i.i. Transport and Communication SectorTransport and Communication Sector - Road, Railway,
Airway, and Telecommunication related physical works;
ii.ii. Water and Energy WorksWater and Energy Works – Hydropower development,
transmission lines, wind power, irrigation projects; and
iii.iii. Buildings and Other Physical InfrastructuresBuildings and Other Physical Infrastructures.
 CI is among the leading industry in producing
employment and contribute to the over all national
development.

1.3. Construction Industry Category
Transportation Infrastructure
Urban development
Energy supply
Water supply
The ConstructionThe Construction
IndustryIndustry

1.4. Construction Industry Attributes
1.4.1 Nature of Construction Industry:1.4.1 Nature of Construction Industry:
 Requires big capital investment thus is highly affected by
the economy of the nation.
 Consumes much of the national budget in developing
countries like Ethiopia.
World Total 3.41 Trillion $
Asia 1,113 Billion $
Europe 1,017 Billion $
North America 885 Billion $
Latin America 241 Billion $
Middle East 101 Billion $
Africa 56 Billion $
1. US $819 B (8.2%)
2. Japan $618 B (13.9%)
3. Germany $253 B (11.4%)
4. China $181 B (17.0%)
5. UK $109 B (7.7%)
Ethiopia $ 402 M(59.8%)

A. Nature of production:A. Nature of production: mainly on site.
 Changing supply-chain relationship and production site.
 Exposed to inclement weather condition.
 Seasonal disruption.
 Health and safety concerns.
B. Nature of productB. Nature of product
 Large, heavy, durable, expensive, heterogeneous, and
immobile.

C. Demand for the productC. Demand for the product
 Demand is usually driven by ‘other’ goods and services;
not controlled by industry,
 In the majority of cases, clients define requirements
before the industry provides it,
 Time lags between demand and supply is long.
D. The WorkforceD. The Workforce
 The industry is, by its very nature, an overwhelmingly
domestic and labor-intensive industry despite the
advancement in modern technologies.
 Construction is a team output and requires motivated and
skilled workers.

1.4.2 Uniqueness of Construction Industry:1.4.2 Uniqueness of Construction Industry:
 Fragmented industry;
Need Design Bid Build
Client ClientA/E Contractor
Fragmented project participants
Sequential process

 Long production cycle;

 Large uncertainty;
 Transient organization nature;
 Unpredictable work load; and
 Subject to environmental impact.

1.5. Roles of Construction Industry
 Construction Industry is the most important enabler for
social, economic and political development of countries.
 It provides the basis upon which other sectors can grow
by constructing the physical facilities required for the
production and distribution of goods and services.
 Specifically this fact is true for least developing countries
like Ethiopia because projects are:
 Inter-sectoral;
 Source of employment; and
 Demands huge capital budget.

1.6. Construction Project Lifecycle
 The project life cycle of a construction project may be viewed as a
process through which a project is implemented from cradle to
grave.
17
Definition of project
objectives and scope
Conceptual plan or
preliminary design
Plans and specifications
Completion of
construction
Acceptance of facility
Fulfillment
of useful life
AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G.

1.7. Stakeholders of Construction sector
 Stakeholders of Construction sector:
 Construction Industry involves many people, organization, agencies,
ministries, designers, contractors, project managers, equipment
suppliers, material suppliers, testing Laboratories, etc.
ContractorContractor
ArchitectArchitect
EngineerEngineer
SuppliersSuppliers
SubsSubs
VendorsVendors
PublicPublic
OwnerOwner

1.7. Stakeholders of Construction sector
 Contractual stakeholders:
 Employer/Client,
 Consultant/Engineer, and
 Contractor.
 Non-contractual stakeholders:
 Public agencies: Statutory Agencies (EEPCo, AAWSA,
Fire Authority), Public authorities and Municipalities
(land and building permit),
 Suppliers, and
 End users etc.

1.7. Stakeholders of Construction Sector
1.7.1 Employer/client
 Employer/Client is the initiator and owner of the project (it
can be public or private client).
 The client is the most important party who is active from
inception to completion and event to post-occupancy
maintenance.
 Duties of the client encompass the following:
 Availability and cost of land,
 Location & accessibility
 Required Infrastructure
 Legal constraints
 Current & future development
 Soil characteristics of land
 Site preparation (right of way)
 Permits

1.7.2 Consultant
 The main role of the consultant is to interpret the client’s
project requirement into a specific design and possibly the
supervision.
 The consultants’ team shall:
 Ascertain, interpret and formulate the client’s requirement into an
understandable project.
 Design the project to much requirements and constraints (imposed by
statutory obligations, technical feasibility, environmental factors, site
conditions, cost, etc)
 Assess client’s cost limit to decide on materials & the like.
 Prepare contract documents.
 Supervise the project and constantly inform the client on the progress
 Approve payments
 Resolve contractual disputes
 Issue provisional and final acceptance certification

1.7.3 Contractor
 These are groups established mainly as commercial
companies, that contract to construct development projects.
 Responsibility of contractors:
 Carry out a full site investigation prior to submission of tender,
 Submit tender,
 Plan, Program, Control the construction process.
 Notify the consultant about delays, discrepancies,
 Effect all payments to his employees, suppliers, subcontractors,
 Rectify all defects on completion of works, etc
 Provide post occupancy repair and maintenance if required.

1.8. Resources for Construction Industry
 The following resources are vital that make up an integral
components for construction industry:
 Human Resources (Labor or Workmen);
 Financial Resources ( Fund);
 Information Resources;
 Physical Resources ( Materials, Equipment and Other
Assets); and
 Services and Management.

2. Domestic Construction Industry2. Domestic Construction Industry
2.1. Domestic Construction Industry: Historical Aspect
 Previous monarchies had contributed to the development of
construction in Ethiopia.
 Historic chronicles of the 17th
and 18th
centuries showed
that there were a number of small roads, palaces and
river improvement works.
 Among the Emperors Atse Fasil, Atse Tewodros and Atse
Menilik were noted for their major contributions.

 Modern construction however had started during the reign
of Emperor Menilik II (The road from Addis Ababa toAddis Ababa to
AsmaraAsmara).
 Italy during its invasion (1936-19411936-1941) had also contributed
to the development of the construction industry. It had
constructed about 6000km6000km of roads.
 After Italian invasion, the first Ministry called “MinistryMinistry
of Communication and Public Worksof Communication and Public Works’’ was established
during the Imperial regime.

 The construction development can be reviewed into six
distinct periods based on the historical paradigm shifts
in the construction industry in Ethiopia:
i. Pre 1968: Foreign Companies dominated construction
Industry.
ii. 1968-1982: Emergence of Small scale Domestic construction
companies,
iii. 1982-1987: Parastatal companies dominated Construction
Industry,
iv. 1987-1991: Fragmentation between Design services &
Construction works,
v. 1991-2001: Parastatal Domination legally abolished, and re-
emergence of private construction companies,
vi. 2001- to date: Integration and Capacity Building.

2.2. Current Status of Local Construction Industry
 Current status of the construction industry is
distinguished by:
 Lack of clear developmental objectives for the industry;
 Inadequate co-ordination of planning between the industry and
infrastructure programs in the various sectors of the economy;
 Heavy dependence on foreign resources such as materials,
equipment and expertise, which continue to be supplied to a
major extent by foreign consultants and contractors;
 Transport bottlenecks to the distribution of construction
materials and equipment;
 Inadequate relevant local construction regulations and
standards;

 Current status of the construction industry is
distinguished by:
 Control of the construction sector by small-to-medium sized
firms and parastatal construction enterprises operating at low
levels of capacity and with inadequate working capital;
 Inadequate and ineffective organizations representing the
interests of contractors, consultants and engineers;
 Inadequate numbers of suitably qualified and experienced
personnel, at all levels: engineers, technicians, mechanics,
operators and foremen etc.;
 Inadequate consideration given to the use of local resources
(including community participation in labor-based works);
 Little consideration given to the concept or cost of maintenance
as a component of investment costs.

 The general state of the domestic construction industry
in Ethiopia is characterized by the following five major
deficiencies:
 An inadequate capital base;
 Old and limited numbers of equipment;
 Low levels of equipment availability and utilization;
 Deficiencies in technical, managerial, financial and
entrepreneurial skills; and
 Insufficient and ineffective use of labor-based construction
and maintenance technology.

2.3. Challenges of Domestic Construction Industry
 Some of the major challenges faced in the Ethiopian
construction industry are:
 Lack of equipment and material;
 Obstacles posed by government regulations;
 Scarcity of finance;
 Big projects off-limits to domestic firms;
 Inefficient custom and clearance;
 Lack of skilled labor; and
 Construction project delays:- Delays are endemic to
construction projects in Ethiopia.

2.4. Recent Trends and Future Prospects
2.4.1 Road Construction
 The Road Sector Development Plan (RSDP) has been
implemented over a period of thirteen years and in three
separate phases, as follows:
 RSDP I – Period from July 1997 to June 2002 (5 year plan);
 RSDP II – Period July 2002 to June 2007 (5 year plan); and
 RSDP III – Period July 2007 to June 2010 (3 year plan).
Phases of the Program Financial (in Million
ETB)
% Physical ( in km) %
Budget Disb. Plan Acco.
RSDP I (Five Years ) 9812.9 7284.57284.5 74 8908 87098709 98
RSDP II (Five Years) 15985.8 18112.818112.8 113 8486 1200612006 142
RSDP III (Three Years) 34643.9 34957.834957.8 101 20686 1925019250 93
Total RSDP (Thirteen
Years ) 60442.6 60355.160355.1 100 38080 3996539965 105

 RSDP IV is prepared as part of Governments’ overall
Growth and Transformation Plan.
 Implementation of RSDP IV is major strategic pillar of the
Growth and Transformation Plan.
 RSDP IV consists of:
 Rehabilitation of 728Km of trunk roads;
 Upgrading of 5,023Km of trunk and link roads;
 Construction of 4,331Km of new link roads;
 Heavy maintenance of 4,700Km of paved and gravel roads;
and
 Routine maintenance of 84,649Km of road network.

 The program also consists of the following regional and
Wereda road components through Universal Road Access
Program, URAP.
 Construction of 11,212Km of new rural roads through
the RRAs; and
 Construction of 71,523Km of Wereda roads through the
Wereda road offices.
 Cost Estimate:
 The total cost of implementing RSDP IV is estimated to
be ETB 125,276.7 million.

2.4.2 Railway Construction
 Ethiopian Railway Corporation, ERC is presently
managing a 5,000Km proposed National Railway Network
study and the Addis Ababa Light Rail Transit (AALRT)
Project.
A. Addis Ababa Light Rail transit Project (AA LRT):
 The 1st Phase of the LRT project comprises an East-West
line from Ayat to Torhailoch (17.35Km) and a North-
South line from Menelik II Sq. to Kality (16.90 Km).
 The Total Length of Phase I will be 34.25Km.
 Cost: USD 3 milion per Kilometre.

A. Addis Ababa Light Rail transit Project (AA LRT):

B. Federal Railway Projects
 Ethiopia has launched the construction of a 5,000Km
railway complex which aims to link the capital, Addis
Ababa, to various regions of the country.
 According to the GTP 2,000Km of the total will be
constructed in the next five years.
 The first phase of construction will be the construction of
five railway tracks, which will create job opportunities for
over 300,000 citizens nationwide, and will cost the nation
an estimated 6 billion Birr (US$336 million) annually.

Project
Phase
Route Via Distance
(Km)
Phase I Route 1 Addis Ababa (Sebeta)_Mojo_Awash_Dire Dewa_ Djibouti 656
Part of Route 3 Addis Ababa(Sebeta)_Ejaji_Seka_Bedele 366
Part of Route 6 Weldia_Mile_Djibouti_Railway 256
Part of Route 5 Awash_Kombolcha_Mekele 556.2
Phase II Route 4 Ejaji_Nekemt_Asossa_Kurmuk 460
Route 2 Mojo_Shashemene_Konso_Woyito_ Konso_ Moyale 905
Route 7 Wereta_Azezo_Metema 244
Part of Route 5 Mekele_Shire 201.2
Part of Route 6 Fnoteselam_Bahirdar_Wereta_Weldia 461
Route 8 Adama_Indeto_Gasera 248
Extension Extension to Sudan Via Boma (not part of the project) 115

2.4.3 Hydropower Development
 Ethiopia has a vast hydropower potential, which is
estimated to be about 45,000 MW.
 Even though Ethiopia considers itself the Powerhouse of
Africa, so far very little percentage (less than 5%) of the
vast potential has been harnessed.
 In 2009 less than 10% of Ethiopians had access to
electricity and the country was plagued by power outages.

Name Installed
Capacity
Commissi
oning
Basin Contractor Financing Cost
Fincha 134 MW 1973 Fincha (Blue Nile)
Gilgel Gibe I 180 MW 2004 Omo river Salini (bid) World Bank $331m
Tekeze 300 MW 2009 Tekeze (Atbara) Sinohydro
Corporation (bid)
Chinese $365m
Beles 460 MW 2010 Lake Tana (Blue
Nile)
Salini (no bid) Ethiopian
government
Gilgel Gibe II 420 MW 2010 Omo River (no dam,
fed by GG I)
Salini (no bid) Italy and EIB Euro 370m
Gilgel Gibe III 1870 MW 2012-13 Omo river Salini (no bid) Italy Euro 1.55bn
Fincha Amerti
Nesse (FAN)
100 MW 2013 Fincha (Blue nile) China (CGGC) Exim Bank of
China
$276m
Halele
Worabese
440 MW 2014 Omo river Sinohydro
Corporation
FairFund? Euro 470m
Gilgel Gibe IV 2000 MW 2014 Tributary of the Omo
River
Sinohydro
Corporation
Chinese $1.9bn
Chemoga Yeda 278 MW 2013 tributary of the Blue
Nile, near Debre
Markos
Sinohydro
Corporation
Chinese $555m
Genale Dawa
III
256 MW Awarded
in 2009
between Oromo and
Somali state
Chineese (CGGC) Chinese $408m

Possible interconnection with neighboring countries

2.4.4 Wind Power Development
 EEPCo has decided to use wind power for the several
advantages that it posses:
 Being renewable;
 Being reliable and affordable;
 Being complementary to hydropower plants: rainy season
– low wind; dry season – high wind potential; and
 combining wind and hydro adds value to the hydro plant,
i.e. longer operation time, also at the end of dry season
(water saving through wind).

S. No. Name of the project Electric power
generation capacity in
MW
Year of
completion
11 Ashengoda Wind Power ProjectAshengoda Wind Power Project 120120 ((€210 million )€210 million ) 20122012
22 Adama Wind Power ProjectAdama Wind Power Project 51 (51 ($117 million)$117 million) 20112011
3 Adama II Wind Power Project 51 2013
4 Assela Wind Power Project 100 2013
5 Ayisha Wind Power Project 300 2012
66 Debre Birhan Wind Power ProjectDebre Birhan Wind Power Project 400400 20132013
7 Messobo Wind Power Project 42 2012

Four major search areas for wind power

2.4.5 Irrigation Projects
2.4.6 Housing development projects
2.4.7 University Capacity Building Projects, UCBP
2.4.8 Sugar Factory Projects
2.4.9 Fertilizer Factory Projects

3. Fundamentals of Management3. Fundamentals of Management
3.1. Management: Definition
 A means of achieving political, economic, and social
objectives.
 A means of integrating resources (materials, finance,
human resources, information, etc.,) in order to achieve
organizational objectives efficiently and effectively.
 A means of getting things done through people in order
to achieve objectives.
 A process of establishing vision, mission, values,
objectives, goals, and strategies and communicating
these, and guiding and empowering others to accomplish
them.
 A process of planning, organizing, directing and
controlling of organizational activities in order to achieve
objectives.AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 46

3.2. Management Functions
 Management is a set of goal-directed,
interrelated and interdependent activities, aimed
at accomplishing organizational goals in an
efficient and effective manner.
 Generally, management functions encompass:
planning, organizing, leading and controlling.

Management Function inputs and outputs
Management sets direction
ResourcResourc
eses•HumanHuman
•FinancialFinancial
•Raw MaterialsRaw Materials
•TechnologicalTechnological
•InformationInformation
Inputs
PerformancePerformance
•Attain goalsAttain goals
•ProductsProducts
•ServicesServices
•EfficiencyEfficiency
•EffectivenessEffectiveness
Outputs
Planning
Controlling Organizing
Leading

 Planning: devising a systematic approach for attaining
the goals of the organization.
 Organizing: determining how activities and resources are
grouped and the composition of work groups and the way
in which work and activities are to be coordinated.
 Leading: guiding, leading and overseeing of employees
to achieve organizational goals.
 Controlling: establishing performance standards and
comparing results and expectations to make appropriate
changes.

PlanningPlanningPlanningPlanning OrganizingOrganizingOrganizingOrganizing
LeadingLeadingLeadingLeadingControllingControllingControllingControlling
ManagementManagement
FunctionsFunctions
ManagementManagement
FunctionsFunctions

3.2.1 Planning
 Management starts with planning. Without a plan
organizations will never succeed. If they do, it will have
been by luck or chance and is not repeatable. Plan, will
help us in:
 What to accomplish (goals);
 When to accomplish the goals;
 What resources to use;
 Who should accomplish what;
 Where to accomplish; and
 What methods to use.
 Assess all possible scenarios including the best and worst
and what actions to take.

3.2.2 Organizing
 Organizing refers to the process of designing jobs and
departments and determining authority relationships in
organizations.
 Organizing:
 Permits people to work together in order to achieve goals;
 Helps to achieve synergy;
 Avoid duplication of resources;
 Establish authority ; and
 And facilitate communication.

3.2.2 Organizing
 Some issues in organizing include:
 Specialization (division of labor);
 Grouping jobs into departments and structuring
(functional, product, customer, geographic, matrix);
 Determining authority relationships (span of control,
chain of command);
 Delegation of authority; and
 Centralization and decentralization.

3.2.3 Leading
 Influencing, inspiring and empowering employees to
work towards the leaders vision.
 Leading involves:
 Building successful groups and teams in organizations;
 Motivating people;
 Communication; and
 Developing organizational change.

3.2.4 Controlling
 The process of measuring performance, comparing it
with the objectives, and making any necessary
adjustments.
 The purpose of control include:
 Adapting to changes;
 Minimizing consequences of errors;
 Helping the organization cope with complexities; and
 Improving efficiency.

3.2.4 Controlling
A. Control Purpose
 The control function, in turn, has four basic purposes.

3.2.4 Controlling
B. Control Process

3.3. Levels of Management
Manager: Definition
 The people looking beyond
themselves and exercising
formal authority over the
activities and performance of
other people in pursuit of
organizational goals.
 Someone whose primary
responsibility is to carry out the
management process.
 Someone who plans and makes
decisions, organizes, leads, and
controls human, financial,
physical, and information
resources.

A. Top Managers
 The relatively small group of executives who manage the
organization’s overall goals, strategy, and operating
policies.
B. Middle Managers
 Largest group of managers in organizations who are
primarily responsible for implementing the policies and
plans of top managers. They supervise and coordinate the
activities of lower-level managers.
C. First-Line Managers
 Managers who supervise and coordinate the activities of
operating employees.

M
arketing
A
dm
inistration
O
ther
H
um
an
resources
O
perations
Finance
Middle managers
Areas of Management
Levels of Management
First-line managers
Top managers

Lower Level
Middle Level
Top Level
Make decision about the
overall direction and
performance of the
organization
Translate the over all direction
and performance into specific
objectives and plans
Implement directions
and plans through
production and delivery
of services

3.4. Managerial skills
 Conceptual skills: the capacity to think in the abstract
and to see the organization as a complete unit and to
integrate and give direction to its diverse activities so that
objectives are achieved.
 Interpersonal skills: the ability to communicate with,
understand and motivate both individuals and groups.
 Technical skills: skills necessary to accomplish or
understand the specific kind of work being done in an
organization.

3.4. Managerial skills
Management Skills
Interpersonal Skills
Communication , conflict resolution, leading
Conceptual Skills
Intellectual ability to process information and make accurate
decision about the work, group, and the job
Technical Skills
Knowledge and ability to accomplish the specialized activities of the
work group
Top Level Middle Level Lower Level

3.5. Construction Management
 The management of construction is an enterprise that
involves many people with diverse interests, talents and
backgrounds. The owner, design professional and
contractor comprise the primary triad of parties,
 However, others such as subcontractors, material
suppliers, bankers, insurance and bonding companies,
attorneys and public agency officials, are vital elements
of the project team whose interrelated roles must be
coordinated to assure a successful project.

3.5. Construction Management
 The function of project management for construction
include:
 Specification of project objectives and plans including
delineation of scope, budgeting, scheduling, setting
performance requirements, and selecting project participants.
 Maximization of efficient resource utilization through
procurement of labor, materials and equipment according to
the prescribed schedule and plan.
 Implementation of various operations through proper
coordination and control of planning, design, estimating,
contracting and construction in the entire process.
 Development of effective communications and mechanisms
for resolving conflicts among the various participants.

3.6. Organization Management
A. Organization
 A consciously coordinated social unit, composed of two
or more people influencing each other that functions on a
relatively continuous basis to achieve a common goal or
set of goals.
 It is a structured process in which people interact and
influence each other in order to achieve objectives.
B. Components of Origination
 People,
 Influence ,
 Goals or Purpose,
 Structure, and
 Technology.AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 66

3.6. Organization Management
C. Organization Environment
ORGANIZATION
Near or Operating
Environment
Customers
Clients
Competitors
Suppliers
Partners
Macro or Far Environment
Technological
Factors
Social
Factors
Political
Factors
Economic
Factors

3.7. Organizational Structure
 Organizational structures can fall into either
mechanistic or organic forms.
 Mechanistic organizations are rather rigid in that they
comprise distinctly delineated jobs, clearly defined
hierarchical structure and are driven primarily by top-
down command and control. Mechanistic organizations
are tall structures, consisting of hierarchies with several
layers of management levels.
 Organic structures are is relatively flexible. They are
structurally decentralized, empowering employees at all
levels of the organization to take personal responsibility
for the processes and activities in which they are
engaged.

 Organizational design is creating an appropriate
organizational structure that will enable the organization
to accomplish its goals.
 The organization can choose from among functional,
divisional or matrix designs, whichever is appropriate.
 It is the process of arranging, allocating work authority
and resources to achieve organization goals.
 It involves:
 Identifying tasks to be performed;
 Allocating the tasks among members; and
 Integrating efforts to achieve its objectives.

Key Concepts
 Span of Management Control: The number of
subordinates reporting directly to a given manger;
 Chain of Command: The plan that specifies who reports
to whom in an organization, such reporting lines are
prominent features of organization chart;
 Coordination: The integration of the activities of the
separates parts of an organization to accomplish
organizational goals; and
 Downsizing: A version of organizational restructuring
which results in decreasing the size of the organization
and often results in a flatter organizational structure.

3.7. Organization Structure
3.7.1. Functional Organization
 In a functional organization, tasks or jobs of similar
nature are grouped together and structured as a unit.
Each unit is staffed by functional specialists.
 Structuring the organization along the functional lines
facilitates good coordination and makes supervision of
the unit easy for managers as they only need to be
familiar with a narrow set of skills.
General ManagerGeneral Manager
Marketing MgrMarketing Mgr.. Production Mgr.Production Mgr. Finance Mgr. HRM Mgr.HRM Mgr.

3.7.2. Divisional Organization
 Divisional structures are grouped according to workflow
and structures are made up of independent strategic
organizational units.
 The workflow can be broken into product lines,
geographic regions, etc.
GM (Head Quarter)GM (Head Quarter)
(A.A)(A.A)
DGM (Awasa)DGM (Awasa) DGM (Mekelle)DGM (Mekelle) DGM (Bahir DarDGM (Bahir Dar)DGM (Jimma)DGM (Jimma)

3.7.3. Matrix Organization
 In matrix organization, individuals are made responsible
both to their line manager and the project manager
involved.
 The matrix concept facilitates working on concurrent
projects by creating a dual chain of command, the
project (program, systems, or product) manager and the
functional manager.
 Matrix structures utilize functional and divisional chains
of command simultaneously in the same part of the
organization, commonly for one-of-a-kind projects.

3.7.3. Matrix Organization
FinanceFinance
GrpGrp
MarketingMarketing
GrpGrp
MaterialsMaterials
GrpGrp
HRHR
GrpGrp
HRHR
GrpGrp
ProductionProduction
GrpGrp
FinanceFinance
GrpGrp
MaterialsMaterials
GrpGrp
ProductionProduction
GrpGrp
MarketingMarketing
GrpGrpProject AProject A
ManagerManager
Project BProject B
ManagerManager
ProductionProduction FinanceFinance MarketingMarketing
MaterialMaterial
&&
ProcurementProcurement
HumanHuman
ResourceResource
Head QuarterHead Quarter

THANK YOU!

1. introduction cm 2014

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