There is no doubt that the construction industry has been turned upside down during this economic debacle. Bodies have flown out the door in droves. The employee cuts were sometimes made in a coherent manner and at other times the cuts were emotional, reactive decisions to rapidly declining revenues and profits.


As the smoke clears, some owners and management are sifting through the remains of their organizational structures and are starting to believe that they might be able to salvage a business out of the people that remain.

“Knowing the production output of employees allows construction companies to clearly calculate the number of people they need to reach overall company goals.”

Figuring Out the Organizational Structure to Create

How should construction firms build their organizational foundations? What should their organizational structures now look like as preparations are made to look ahead? The most critical guideline is that all organizational structures should follow strategic revenue targets in conjunction with services and supporting tasks provided. But there are other significant factors that influence the design of organizational structures.

Terry Kramer
Terry Kramer

1. How Large? Decide strategic revenue targets first by choosing an option. This is most important criteria for organizational development.

a. Plan lower revenue levels

b. Repeat the prior year revenue goal

c. Plan to grow revenues by a stated percentage

2. What Services? Select customer services and detailed support services that your company will offer. The depth of service provided to customers determines organizational workloads and fuel accurate organizational designs.

a. Pre-construction services early in the project schematic design and design development stages

b. Preliminary budgets after construction documents are completed

c. Only collect subcontract bids with limited take-off and limited estimating of work by division

3. Who is Involved? Which employees will be included in supporting customer tasks? How employees are expected to spend their time will dictate personnel needs.

a. Some companies limit their estimators to dealing with customers

b. Some companies like to have the business development and estimating personnel team together to meet with customers

c. Other companies involve PM’s and superintendents with customer meetings along with BD and estimating personnel

4. How Much Communication? Construction firms must choose the methods of communication along with the receivers of communication to determine the size of their organizational structure. If employees spend a lot of time in communication-type activities, more personnel are needed.

a. Some companies are highly confidential and keep information within a tight-knit group

b. Other companies will allow participation down to mid-level management

c. Some go overboard and like to involve all employees in all meetings and share all information distributed

5. What Should Production Levels Be? Knowing the production output of employees allows construction companies to clearly calculate the number of people they need to reach overall company goals.

a. Some companies allow their employees to work without any production goals. These types of companies are easily influenced verbally as to performance expectations

b. Other companies set end goals in mind and as long as they observe effort by employees, owners are satisfied. These types of companies often borrow from competitors when it comes time for staffing guidelines

c. The most sophisticated companies set short and long-range goals with specific, detailed production goals. Reaching the production goals implicitly leads to reaching overall company goals. These companies typically have the right amount of people in the right places

6. Who Will Cover Your Business Functions? Companies should not omit important business functions and then expect to be successful.

a. Some companies have no BD, IT, or HR personnel and hardly anything is done in these areas

b. Other companies take pieces of individual position roles and allocate them among personnel in a variety of departments

c. The good companies commit to a full slate of personnel to ensure that all business functions are covered