The best construction contracting organizational structure reflects a flat hierarchy. It is logical for a successful construction contracting firm. The contracting industry is an “owner – operator” one where the CEO / President needs to know more, not less. Many levels ensure the owner knows less and whatever he is told is filters by the level who report it. Currently, delegating less is a new trend in every construction business. There are more two level firms and less three level ones in the industry as the risk is at an all-time high. It is a trend that allows for the owner to know more things, quicker and therefore faster to act.
The two levels are 1) Leader-Managers and 2) Functional Experts.
Leader – Managers are those executives who have a 50 year responsibility for the firm. They are tied to the firm for life. Whether through ownership, employment contract or by family, their future is the company’s future. In construction, some must lead but, all must do. Regardless of our title, each of us has to perform some measureable work. Leading in the construction industry is not a full time job since the business is fairly straight forward and predictable. We don’t have a rapidly changing market unlike technology, finance or manufacturing.
Functional Experts are everyone else. We all do but, there is a level of people who are Functional Experts. They estimate, install work, project manager, account and the like. They know the most about the area they focus. Again, everyone does functional and measureable work in a construction firm however; there are those who have full time specific tasks called Functional Experts.
We don’t see where the CEO has more than 12 reports to him. This is good. 12 is a typical upper limit and having less than that number allows for greater focus.
There should be no special extra-curricular positions. Each person has to have a focus directly tied to project success. Successful projects lead to successful construction firms. As is the nature of construction, this is a one-way street.
Since a majority of the cost is at the project level, it is appropriate to have one person manage the global field operations. Two people are never a good answer. Some people may argue as they manage their career but, it is not useful in construction. Some outsiders to construction have used it to some success, but not in the construction business.
All companies should be concerned about its bench strength (talent) in case the owner leaves the company for a period of time. Some businesses are predicated on the CEO’s onsite and in-office presence and this is a risk factor.