organisation structure to support concurrent engineering in construction

Organisational structures to support concurrent engineering in construction Chimay J. Anumba Department of Civil and Building Engineering, Loughborough University, Loughborough, UK Catherine Baugh Formerly Department of Civil and Building Engineering, Loughborough University, Loughborough, UK Malik M.A. Khalfan Department of Civil and Building Engineering, Loughborough University, Loughborough, UK Keywords

Simultaneous engineering, Construction industry, Organizational structure

Abstract

The construction industry is plagued by fragmentation of the functions carried out by the various disciplines involved in a project, particularly between the design and construction teams. Concurrent engineering (CE) is seen as a possible means of overcoming this problem. However, for the use of CE to produce the desired benefits, various issues have to be addressed, one of which is the use of appropriate organisational structures. To this effect, this paper explores organisational structures for the implementation of CE in the construction industry. It does so by first reviewing the main principles of, and issues concerning, CE and organisational structures, and by examining the structures which have been proposed for CE by researchers and those which have been used by manufacturing companies in their implementation of CE. By taking into account the peculiarities of the construction industry, this information is used, in conjunction with the results of case studies of companies within the industry, to suggest suitable types of corporate and project level organisational structures to support CE.

Introduction Definition

Concurrent engineering (CE) is a concept which incorporates several other concepts and methodologies. It was developed in response to the need of manufacturing companies to reduce the time taken to develop and introduce new products in order to remain competitive. CE, sometimes called simultaneous engineering, or parallel engineering, has been defined in several ways by different authors. The most popular one is that by Winner et al. (1988), who state that concurrent engineering:

. . . is a systematic approach to the integrated, concurrent design of products and their related processes, including manufacture and support. This approach is intended to cause the developers, from the outset, to consider all elements of the product life cycle from conception through disposal, including quality, cost, schedule, and user requirements.

Different aspects of CE

There are eight basic elements of CE, which are divided into two aspects and compiled by Khalfan and Anumba (2000) as follows:

Managerial and human aspect .

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The use of cross-functional, multidisciplinary teams to integrate the design of products and their related processes. The adoption of a process-based organisational philosophy. Committed leadership and support for this philosophy. Empowered teams to execute the philosophy.

Technological aspect .

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The use of computer aided design, manufacturing and simulation methods (i.e. CAD/CAM/CAE/CAPP) to support

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design integration through shared product and process models and databases. The use of various methods to optimise a product's design and its manufacturing and support process (e.g. DFM, DFA, QFD). The use of information sharing, communication and co-ordination systems. The development and/or adoption of common protocol, standards, and terms within the supply chain.

Main features

Concurrent engineering (CE) is designed to facilitate the simultaneous consideration of all project-related issues and processes from the conception stage. Two of the main features of CE are the use of systematic or parallel processes (instead of traditional sequential ones), and the use of multi-disciplinary teams comprising all parties involved in the project, including the client and suppliers (Evbuomwan and Anumba, 1998). Some of the benefits of this integrated environment are: . getting the job right the first time around; . client satisfaction; . reduced product development time and costs, without compromising quality; and . eliminating waste, and costly and time-consuming downstream changes.

Concurrent engineering framework

For CE to be successfully implemented, it must suit the specific project, company and industry in which it is to be employed. In order to ensure that this is achieved, a suitable, logically structured framework must be put in place. The foundation for the framework proposed by Brookes and Backhouse (1997) is that the objective of CE is to improve the product introduction process, and it considers all aspects of the process. This framework (see Figure 1) comprises the goals and objectives of the concept and project, the strategy to be used for carrying

Chimay J. Anumba, Catherine Baugh and Malik M.A. Khalfan Organisational structures to support concurrent engineering in construction

Figure 1 The concurrent engineering framework

Industrial Management & Data Systems 102/5 [2002] 260±270

out CE (such as integrated processes and multi-disciplinary teams) and the supporting tools and techniques to be used. Most of the supporting tools and technologies are computer-based and can be classified as those which relate to business processes and deal with teamworking, leadership and organisational issues, and those which deal with the design and production (or construction) processes (Kamara et al., 2000). Some of the tools, which relate to design and production, are: . engineering database (EDB) and engineering data management (EDM) tools ± which are a fast and accurate way of accessing information; . requirements capture, generation and analysis tools, such as quality function deployment (QFD); . mathematical analysis and calculation tools (e.g. MATHCAD); and . design optimisation tools. Some of those, which relate to business processes, are: . the establishment of requirements and specifications (e.g. QFD); . the development of viable layouts (e.g. CAD); and . multimedia conferencing. There are several barriers to the successful implementation of CE. These can be

classified as organisational and technical barriers. The technical barriers centre around a lack of knowledge of how to implement CE and the appropriate tools and technologies required. This can lead to the use of unsuitable or unnecessary tools, and insufficient expertise to maximise their potential. Organisational barriers include the lack of top management support, organisational structures which foster protective functional managers and which do not support integration, reward systems which are based on individual goals, and lack of client and supplier involvement (Parsaei and Sullivan, 1993). A properly devised framework, which considers all necessary technical and organisational issues to support the concurrent engineering framework, will help to overcome these barriers. This paper focuses specifically on the appropriateness of current organisational structures to support the adoption of CE in construction. It first reviews the rationale for the adoption of CE in construction, and then explores existing organisational structures and how well they meet CE requirements. Using case studies from within and outside construction, guidelines are provided on the best structures for the adoption of CE in the construction industry.

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Chimay J. Anumba, Catherine Baugh and Malik M.A. Khalfan Organisational structures to support concurrent engineering in construction Industrial Management & Data Systems 102/5 [2002] 260±270

The move towards CE in construction The business drivers that led to the adoption of CE in the manufacturing industry are also prevalent in the construction industry and suggest that CE can be applied to good effect in construction (Kamara et al., 1997). In the context of the construction industry, Evbuomwan and Anumba (1998) define concurrent engineering as an: . . . attempt to optimise the design of the project and its construction process to achieve reduced lead times, and improved quality and cost by the integration of design, fabrication, construction and erection activities and by maximising concurrency and collaboration in working practices.

This is in sharp contrast with the traditional approach to construction project delivery.

The traditional approach

In the construction industry, based on the client brief, the architect produces an architectural design, which is given to the structural engineer, who on completing the structural design passes the project to the quantity surveyor to produce the costing and bill of quantities. This goes on until the project is then passed on to the contractor who takes responsibility for the construction of the facility. This scenario, which is similar to the `òver the wall'' approach (Evbuomwan and Anumba, 1998; Prasad, 1997) is shown in Figure 2. The key disadvantages inherent in this approach include: . The fragmentation of the different participants in the construction project, leading to misconceptions and misunderstandings. . The fragmentation of design and construction data, leading to design clashes, omissions and errors.

Figure 2 The over the wall approach

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The occurrence of late and costly design changes and unnecessary liability claims, occurring as a result of the above. The lack of true life-cycle analysis of the project, leading to an inability to maintain a competitive edge in a changing marketplace. Lack of communication of design rationale and intent, leading to design confusion and wasted effort.

To address these issues, there is an urgent need for a shift in paradigm within the construction industry. This should involve the adoption of new business strategies based on CE, with the aim of integrating the functional disciplines (see Figure 3) at the early stages of the construction project (Evbuomwan and Anumba, 1998).

The application of CE to construction

The adoption of CE in construction can be achieved during the design process by considering all aspects of the project's downstream phases concurrently. Incorporating requirements from the construction, operation and maintenance phases at an early stage of a project would undoubtedly lead to an overall improvement in project performance. The essential constituents of ``concurrent construction'' are as follows (Love and Gunasekaran, 1997): . The identification of associated downstream aspects of design and construction processes. . The reduction or elimination of non-value-adding activities. . The development and empowerment of multi-disciplinary teams. The development and empowerment of multidisciplinary teams requires the use of appropriate organisational structures at both corporate and project levels. This is the main focus of this paper and is addressed in subsequent sections, starting with a brief review of organisational structure.


Figure 3 An integrated project team


Organisational structures Introduction

The structure of an organisation relates to the way in which its various parts are arranged. It is:

the sum of the total ways in which it divides its labour into distinct tasks and co-ordinates them (Mintzberg, 1979).

An organisational structure can also be defined as:

a formal system of task and management reporting relationships that co-ordinates and motivates organisational members so that they work together to achieve organisational design goals (Jones et al., 1998).

Characteristics, which define types of organisational structures, are: . the grouping of roles, tasks and functions; . the method of decision making ± whether decisions are made by a few senior managers (centralisation) or by a large number of employees (decentralisation); . the method of communication ± whether communication is done in a top-down or lateral manner; . the number of management levels ± firms with several management levels are referred to as tall (as opposed to flat); . the span of control ± referred to as narrow or wide, based on the number of people under each manager's jurisdiction; and . the chain of command ± the lines of authority in the company; firms with rigid chains of command are said to be bureaucratic and centralised.

Traditional organisational structures

The traditional organisational structures were tall, bureaucratic in nature, pyramidal, and centralised, with several management levels, distinct chains of command, rigid lines of authority, and narrow spans of control (Schermerhorn, 1993). The main types of traditional structures are functional and divisional. The functional structure is composed of all the departments required by the company to produce its goods or services (Jones et al., 1998). It involves the formal grouping of people with similar skills and knowledge, who use similar tools, technology and techniques, who perform closely related activities, and who are expected to work together to perform a critical function. Typical functional departments include marketing, finance and accounts, personnel and production or construction as shown in Figure 4. Divisional structures are those which contain separate, self-contained business units, each of which contains the various functions and departments that work together to produce a specific product for a specific customer (Jones et al., 1998). In contrast to the functional structure, this system groups together people who have different skills and tasks. Each division, therefore, is a collection of various functions and departments. This type of structure aims to create smaller, more manageable units in the organisation. These structures are usually designed according to the type of product or service (product structure), the

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Figure 4 An example of a functional structure


type of customer (market structure), or the area in which the product is being produced (geographic structure). A combination of both the functional and divisional structures is known as a hybrid structure (Jones et al., 1998). It attempts to address the different operating needs of a company and to make it better able to respond to different challenges and environmental changes. This type of structure is, therefore, suitable for large companies with many divisions, which perform a wide range of operations and which seek to gain optimum benefits from global operations. It provides a high level of flexibility in an organisation.

Modern organisational structures

In the 1960s, the contingency theory was developed. This theory was a part of emerging management theories, and it emphasises that there is no single best way to organise and that the most suitable type of structure depends on the type of work carried out by the organisation and the environmental demands and conditions faced by and imposed on it (Scott, 1992; Senior, 1997). The theory suggested that there are several contingency factors, such as the organisational environment, strategy and objectives, size, human resources and technology employed, which must be taken

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into account when designing an organisational structure. The contingency theory led to the realisation that traditional structures were suitable for only some situations. This resulted in the development of modern, more flexible structures which are flat and decentralised, and which were characterised by lateral communication and wide spans of control. These modern structures are intended to promote teamwork and collaboration and often consist of a team structure imposed on a functional structure. The most common type is the matrix structure, which has the dual benefits of high levels of technical expertise created by the functional structure, and flexibility and teamwork, which enable the achievement of both group and organisational goals (Jones et al., 1998). The essence of the matrix is that a set of departments or divisions is horizontally superimposed on a traditional hierarchical structure (see Figure 5). Large companies, which operate in rapidly changing environments, and which are focusing on growth and development tend to use this structure. It is also suitable for any company which carries out many projects concurrently, all of which need technical expertise and special managerial attention.


Figure 5 An example of a matrix structure


Contingency factors affecting organisational structures

The contingency factors, which affect organisational structures, are (Buchanan and Huczynski, 1991; Scott, 1992): . the organisational environment; . the organisational strategy and objectives; . technology; . organisational size; and . human resources.

Organisational environment

The organisational environment is an environment in which an organisation operates and it affects its structure. Therefore, it must be designed so that the organisation would be able to meet efficiently commercial, technological, and social demands and changes, and remain competitive.

Organisational strategy and objectives

For an organisation to fulfil its purpose, its structure and strategy must go hand-in-hand. The structure complements the strategy and is one of the necessary tools for successfully implementing it.

Technology

Different types of companies and industries require different levels of supporting technology, with technology being the combination of skills, knowledge, tools, machines, computers and equipment that are used in the design, production and distribution of goods and services (Jones et al., 1998).

Organisational size

The growth of organisations results in the addition of more departments and levels, often making a functional structure too tall and complex. For this reason, large companies often need to shift from a functional to a divisional structure. Larger organisations also tend to become more decentralised as it is difficult for top managers to control the everyday operations of numerous departments.

Human resources

Human resources are arguably the most valuable asset of any company. It is, therefore, extremely important for managers to recognise the type of workforce they have and to design a suitable organisational structure, otherwise, employees may become disgruntled, resulting in a high staff turnover which can be detrimental to the organisation.

Organisational structures for concurrent engineering Introduction

The essence of concurrent engineering is integration and teamwork (Prasad, 1997). This suggests that structures which promote teamwork are the most suitable for CE. The CE framework highlights the important relationship between CE and organisational structures (Evbuomwan et al., 1994; Zhang and Zhang, 1995). In order to facilitate a CE environment within an organisation, contingency factors, which were discussed

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earlier, should be overcome and this could be done by modifying the organisational structure. Therefore, in recent years, traditional, hierarchical, and functional structures have started to give way to flatter, cross-functional ones. This section will review the organisation of the team; present the case studies, which were carried out in the manufacturing industry; and propose the organisational structure for CE.

Organisation of the team

The organisation of the team is a critical factor in successfully implementing CE. Teams, generally, should be small (eight to 12 members), in order to ensure proper communication and integration (Nicholas, 1994). Members should come from a broad spectrum of disciplines so that all aspects of the project can be adequately dealt with (Evans et al., 1994). Full-time, co-located teams in which members are totally committed to the project and have no allegiance to their functional departments help to overcome many of the potential team problems (Prasad, 1995).

Case studies of manufacturing organisations

In case studies of nine UK manufacturing companies, carried out to investigate the factors influencing the implementation of CE in the manufacturing industry, it was found that part-time, dispersed teams were just as widely used as full-time, co-located ones (Brookes and Backhouse, 1997). All the companies used small teams and most of them had the three main disciplines (design, commercial and manufacturing) in their teams. The success of the team structures, based on the rate of new product introduction, was greatest in teams which had all these three disciplines, and did not seem to be affected by the choice of either part-time or full-time teams. The fact that some teams only had one or two of the main disciplines suggests that organisations are still not fully aware of the extent to which integration is required and the necessity of appropriate structures. The need to tailor the type of CE organisational structure to suit various companies and projects, instead of simply instituting pure team structures, has also been realised within the manufacturing industry. Some companies have used multifunctional team structures within their traditional departmental structures in order to achieve optimum results (Tucker and Leonard, 1994).

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Proposed structure

The case studies recommend that the companies with hierarchical structures should consider making a change to flatter ones (Dong, 1995). Layered or bubble structures, which are an even more flexible version of matrix and team structures, and in which each element in a layer is connected to every other element in the layers immediately above and below it, are recommended for CE as they provide greater flexibility and improved communication (see Figure 6). Structures which incorporate integrated product and process development (IPPD) teams, dedicated to the project, are also suitable for CE (Dong, 1995). It is also recommended that the structures proposed for CE need to be complemented by supporting tools and technologies such as object-oriented-windowbased (OOWB) information framework ± an information framework, accessible to all team members, which is based on the activities carried out in the organisation and which aids, inter alia, in communication, decision making, conceptual and detailed design, and functionality assessment (Dong, 1995).

Organisational structures for CE in the construction industry Summary of case studies

Case studies of three companies in the construction industry were conducted in an attempt to identify and analyse the types of organisational structures (and related issues) currently in use. The companies (one consulting and two contracting firms) varied in size and in the types of activities they carried out. For confidentiality, the companies are referred to as companies A, B, and C. All three companies were in strong financial positions. Information was gathered from the directors of the companies by way of semistructured interviews. The questionnaire used for the interviews did not discuss concurrent engineering deliberately, seeing that it is not yet common in the industry, but were designed in such a way as to derive information related to the issues of concurrent engineering and organisational structures. Company A is a medium-sized consulting firm and has a divisional (product/service and geographic) corporate structure. Company A has found that its structure works well for it. It realises that there is a problem of fragmentation and poor communication among the various disciplines in the industry, but feels that the construction industry needs more of a culture change than organisational restructuring to solve this problem.


Figure 6 A layered or bubble structure


Company B is a small contracting firm with a functional, hierarchical structure. The structure has two management levels as shown in Figure 7, and information is disseminated vertically. Company B feels that the traditional, hierarchical, functional structure suits the nature of the construction industry and has not seen any way in which organisational restructuring can increase its own efficiency or that of the construction industry as a whole.

Company C is a regional division of a large, well-established construction firm. The organisational structure of the company is tall, hierarchical, and centralised (see Figure 8). The overall company structure is divisional (geographic and product). The company is not of the view that making organisational changes can solve the problems which it and the construction industry experience.

Figure 7 The organisational structure of Company B

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Figure 8 The traditional project structure of Company C


Conclusions from the case studies

The survey showed that the industry still uses traditional, hierarchical structures, with larger firms tending to adopt divisional corporate level structures. The industry is cognisant of the fact that it is plagued by fragmentation, particularly at the project level, but it does not see that organisational restructuring is a way of overcoming this problem. The poor awareness on the part of external project team members of the internal project structure and the practice of having senior managers, instead of staff directly involved with the project, collaborate with external parties are organisational issues which contribute to fragmentation and which will hinder the development of a CE environment. There is general usage of information and communication technologies (ICT) and engineering software in the construction industry. ICT is, however, mainly limited to e-mail and computer links between offices for the transmission of drawings and other information. There is no widespread use of tools designed specifically to support the organisational structure and decision making processes. The traditional structures used by the construction industry are in stark contrast to the modern, flexible and team-oriented ones which are generally recommended for CE. The structures used by the manufacturing industry should not, however, be blindly implemented in construction. The contingency factors affecting organisational structures, which are described earlier, should also be taken into account.

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Organisational structures for CE in construction

The highly unstable, demanding and unpredictable construction environment suggests that it requires flexible structures. Team structures at the project level are absolutely essential. Part-time, dispersed teams consisting of all the key players, including the client and suppliers, are recommended instead of full-time co-located teams. The latter may not be practical for the industry as, at various phases of the project, the input required from some members will be minimal. Given the confrontational nature of the industry, because of competitive tendering, labour division and subcontracts, the team leader should be a neutral party and one who naturally interfaces with all or most of the disciplines (Deasley and Lettice, 1997). Appropriate tools should be used to support such structures. Multimedia conferencing would be particularly beneficial if team members are remotely located, especially considering that communication often concerns intricate and specific detail and needs to be done quickly and accurately. It is interesting to note that all of the companies interviewed were very strong financially. This would not be the case if their structures were completely ineffective. This suggests that there is a place in the industry for traditional structures. These may be particularly useful at the corporate level, especially for large firms, as an efficient way of organising and managing their activities. Functional structures may also be necessary to maintain a high level of specialisation, which is often necessary for problem solving in the industry. These


traditional structures, should, however, be made less rigid, so as to support a teamworking environment at the project level.

Summary and conclusions This paper has discussed concurrent engineering and its application to the construction industry. Organisational structures were then discussed in general, followed by organisational structures for CE in other industry sectors and within the construction industry in particular. It could be concluded that concurrent engineering, which is now widely used in the manufacturing industry, can help to overcome the problem of fragmentation in the construction industry. However, for this to be done, the industry needs to have suitable organisational structures in place. Given the nature, environment and idiosyncrasies of construction, it is recommended that integrated team structures be implemented mainly at the project level. These should be supported by the appropriate communication and decision-making tools and technologies where geographically distributed project teams are involved. It is also recommended that, at the corporate level, the more traditional functional and divisional structures are maintained, but these should be made less rigid so that they can promote a teamwork environment, which will support team working at the project level. In general, therefore, matrix structures comprising functional structures at the corporate level and a cross-cutting, multi-functional team structure at the project level seem to be the most suitable for concurrent engineering in the construction industry, because it has the dual benefits of a high level of technical expertise created by the functional structure, and flexibility and teamwork, which enable the achievement of both group and organisational goals.

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organisation structure to support concurrent engineering in construction

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