SU 214 Assignment 0506163

MSc.
Construction Project Management

Session 2009/10
Course Code: SU214
Course Name: Project Management 1
Coursework – Part One
Task
Research the concept of Management by Objectives {MBO}, compare and contrast

this concept to the management of the early stages of a construction project.
Critically evaluate the concept as a suitable means of managing a construction

project with regard to perceived advantages and disadvantages.
BY
Research the concept of Management by Objectives {MBO}, compare and contrast this concept to the management of the
early stages of a construction project. Critically evaluate the concept as a suitable means of managing a construction
Yomi-Ajayi Adeyemi {0506163}
1.0 Introduction
1.1 The concept of Management by Objectives {MBO}
1.2 Concept and definition of Management by Objectives {MBO}
1.3 The Management by Objectives {MBO} process
1.4 Application of SMART principles
1.5 The Management by Objectives {MBO} connotations:
1.6 Advantages and Disadvantages of MBO

i. Advantages of MBO
ii. Disadvantages of MBO {why planning fail}
1.7 Importance of effective communication
1.8 Summary for MBO
2.0 Management defined

i. Mintzberg
ii. Peter F Drucker
2.1 Theory of management

i. The classical school
ii. Henri Fayol
2.2 The human relation school

i. McGregor’s theory X and Y
ii. Theory X mentality
Course Name: Project Management 1 Course Code: SU 214
Course: MSc. Construction Project Management Student Number: 0506163
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iii. Theory Y perspective on labor and management
2.3 The approach system school
2.4 Comparing and contrasting the concept of MBO to functional

management of the early stages of a construction project
i. The Management by Objectives {MBO} Vs Traditional

Management in relationship to construction project management
ii. The Management by Objectives {MBO} Vs SMART principle

relationship to construction project management
3 Body of study
3.1 Significant of these schools of thoughts to the construction industry
3.2 Relationship between the concepts of Functional Management and MBO

principles
3.3 The use of this concepts of Functional Management and MBO in the
construction/project industries
3.4 Advantages and disadvantages to the construction industries
3.5 Impact on the industry
3.6 Conclusion, summary and recommendation
4 Reference
5 Remark
Fig#1: Planning loop system {Dixon, 1991}

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Table# 1: Sample Template of Management Commitment Plan

Management by Commitment {MBC}
1.0 Introduction:
1.1 The concept of Management by Objectives {MBO}
1.2 Concept and definition of Management by Objectives {MBO}
The principle of Management by Objectives {MBO} was introduced in to the

larger organized management circle by Peter F Drucker in the early 1950’s.
This principle was introduced as a system process in other to combine the
thought of individual managers with in a structured organization to co-
ordinate and synchronize with the corporate philosophy of management at
top management level.
This principle was introduced to streamline and focus on the aims, objectives
and goals of the company as an entity and to extract any misconceptions in
communication flow that might occur with the organization.
The concept of MBO by Peter F Drucker critically analyzed the stages that
major efforts used as special tool, instrument used by managers in business
organisations, its composed of the following significant factors which are
namely, misdirection, specialization of work/tasks of managers in an
hierarchical form in structured management organization and finally to
monitor any divergent views, work, concept resulting from insulation of
different management levels which are not the views of the organization
Evaluate results
Measure results amends
plans if required
Implement Plan

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Fig#1: Planning loop system {Dixon, 1991}
John Humble, also advocated for the integration for the need for top
ranking staff {top management/executives i.e. managers and directors to be
able to contribute positively and directly to the success of the organization’s
aims, objectives and goals.
John Humble stipulate Dixon {1991} statement MBO technique can be used
as a tool of infusing the need of a manger to able to contribute positively
and assist the organization to achieve it sets goals and objectives in decision
making for short term and long term planning respectively.
Also note that coordination is planned by the junior manager and approved
and supervised by superior line manager and a way of control, monitoring
and assessment of the manger
1.3 The Management by Objectives {MBO} process:
This process is usually associated with the managers/top management

executive’s job functions which are critically examined to establish the
strong areas where quality results are expected and necessary.
A list of responsibilities/functions which are to be executed are developed
{responsibility matrix}
The developed responsibility matrix is clearly stipulated to cover about few

functions that the individual manager is to carryout, this jointly scrutinized,
drawn up and approved by the superior line manager.
Examples of these tasks are as follows:

1. Performance {qualitative and quantitative} VS Time
2. Control for verification and VS Time {milestone achievements}
Example monitoring and tracking of projects
3. The performance of the task is monitored and evaluated over a specific
time frame
1.4 Application of SMART principles:

The SMART principle is also used to monitor performance and its decision
making tool for an organization.
The principle has to be Specific, Measurable, Achievable, Realistic and Time
bound regardless the size of the task or project
Specific= the task/project has to be definite and not vague
Measurable= the task/project must be quantifiable
Achievable= the task/project is viable
Realistic= the task/project can be done/doable
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Time= the task/project has time frame
1.5 The Management by Objectives {MBO} connotations:
MBO carries different meanings to people and it’s associated with the
following connotations.
1. Management for results {MFR}

2. Management by results {MBR}
3. Management by goals {MBG}
4. Management by commitment {MBC}
MBO is used to stimulate employee’s motivation by setting individual goals

and objectives for an individual with in an organization and evaluated in the
same process; note an individual notified in advance that he would be
evaluated.
In this view the individual employee feel’s and believes he his part of the
organizational family and he his motivated and energized and he/she
contributes everything to the corporate goals and objectives
i.e. {Quarterly Personal Business Commitment}
1.6 Advantages and Disadvantages of MBO

i. Advantages of MBO:
1. Its helps in planning for results that is all task are result oriented
2. It helps in classification of organizational roles and structures
3. Improves commitments on an holistic organizational basis to the
aims and objectives of the organization goals
4. Helps in effective planning and effective controls measures
5. Helps in setting out individual objectives
6. Improves moral between subordinate and their superior
employees, from regular face-to-face communications
7. Used as tool in strategic management and planning
ii. Disadvantages of MBO :{ why planning fail}

1. Short term plans are set and the danger of over stressing the
short term plan at the expense of the long term plan
2. Limited amount of time is spent by top management in teaching
and coaching the employees the philosophy of MBO
3. Adequate guidelines are not spelt out properly for managers in
setting out the objectives
4. Lack of commitments
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5. Appraisals are overemphasized

6. Objectives are forced on subordinates
7. Poor implementation methods
8. Resistance to change
1.7 Importance of effective communication:
Communication is important and it’s an integral factor to be considered if we
are to have an effective plan. The goals, aims, objectives and strategies and
policies have to be properly communicated and understood.
These are to be put in place to avoid any misconception or hallucination of

the corporate plan which can cause a “planning gap”
1.8 Summary for MBO:

MBO is used as a decision making/technique as earlier stated and they can
be classified as follows.
i. Corporate level,
ii. Strategic level,
iii. Management level
iv. Operational level respectively; each of these levels covers a
specific time frame and different degree of requirements and
uncertainties.
This principle is used to achieve both long and short term coordinated goals
in a coordinated approach and it’s backed by top management in the
construction industry

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Sample Template of Management Commitment Plan

Management by Commitment {MBC}
Quarterly Personal Business Commitment

{For Non-Marketers}
Employee Name: Yomi-Ajayi, Adeyemi. O ID: 77435 Appraisal Period: Quarter2 of 2007
Department: Project Management Office /Turnkey Dept Job Title: Project Controller
Weight
Content Appraisal Elements/Work Plan Achievements/Results Scores
{%}
Site survey/investigation using GPS & Maps for Lagos and 30
Ibadan {60sites}
Report of all sites situation and Escalate all necessary
Key Job issues to the PM Sites:{ Lagos & Ibadan} 30
Accountabilities
(Weight 75-90%) Check that the proposed sites/locations {30Sites}
meets the required specification I.e. proposed cell site
square area ,topology, drainage of the proposed area
and aerial investigation {High Tension Cables} =HT 20
Interfacing/liaise with Landlords, subcontractors &
Huawei
5
Critical handling and solving all problems on site
Exceptional {problem solving}
Work
(Weight 0-10%) 5
Co-ordinate & compile all necessary documents for site
acquisition as planned {Time Management}
Carrying every member of the team along
{Team building, bonding & team sprit development} 3
Teamwork
(Weight 10- Interact with team members on how to resolve pending
3
15%) & nagging issues, collectively and individually.
Brain storming/knowledge sharing with the team 4
Total / 100
Communication Record
Planning communication:
Appraisal grade:
□A-Outstanding □B-Good □C-Satisfactory □D-Need improvements
Appraisal feedback communication: x z

Line manager Comments:
Line manager Comments:
Signature: Date：
Signature: Date：
Employee Comments:
Employee Comments:
Signature: Date：
Signature: Date：14/May/2007
NOTES:

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 The “Appraisal Elements/ Work Plan” and “Targets” columns is to be filled in by employees at
the beginning of each quarter and confirmed with their line managers;
 The “Achievements/Results” columns is to be filled in by employees at the end of each quarter
and will be used as the basis for appraisal
 The “Scores” columns are to be filled in by line managers during the appraisal at the end of
each quarter
 The 100-point system is applied for the performance appraisal
2.0 Management traditional/functional defined:

The principle of management was earlier introduced to by Henri Fayol in
the earlier days and it’s defined as the act of Forecasting, Planning
Organizing, Commanding, Coordinating and Controlling {Fayol 1968}
i. Peter F Drucker, in his book the practice of management {1968,

1989} stipulated management as “the systemic organization or economic
resources”. The essence of management is manage and optimize all
resources available for both the individual employees and corporate body as
a whole and the manager should smooth the progress of process
ii. Mintzberg, also contributed by saying that a mangers must adapt to

the responsibilities and tasks they carryout daily; and they are as follows
Serial No Task Function of Managers
1. Entrepreneur Planner and a risk taker
2. Resource allocater Organizer and Coordinator
3. Leader Motivate and Coordinator
4. Liaison/disseminator Coordinator and Communicator
5. Monitor Controller
6. Negotiator Motivate and Communicator
7. Disturbance-handler Motivate and Coordinator
2.1 Theory of management:

The theories of management are classified in to three {3} groups school of
thought namely:
1. The classical school
2. The human relation school
3. The approach system school
1 The classical school:

The theories of the classical school of management thought tries to
form a general principle of management which could be used in
business environments in production.
The main writers of the school of thought are F.W. Taylor, Henri Fayol,
Frank and Lillian Gilbreth and Henry Gantt.
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i. Henri Fayol {1841-1925}, a French industrialist was interested

in the activities of management through in any organization and introduced
the concept of “universality of management principles”: these principles
should be used across board in regardless what kind of organization it is.
Function of management by Fayol:

The five principles are as follows
1. Planning
2. Organizing
3. Commanding
4. Coordinating
Serial No Task Function of Managers

1. Planning Select objectives, strategies, policies and
procedures for achieving results
2. Organizing Tasks are to be structure which need to be
performed to achieve the desired goals and
objectives
Grouping of these tasks for individuals,
delegating authority for coordination and for
information, communication
4. Commanding Instructing subordinates
5. Coordinating Motivate, harmonize the activist of the group
with in an organization to achieve corporate
goals
6. Controlling Measuring and correcting the performance of
worker against planned aims and objectives
2 The human relation school:

This school of thought approached mainly the human relation or behavioral
management aspect of the structures of the organization rather than the
workers.
This began in the 11920’ and 1930’s; the foundation was set by Elton Mayo
{1880-1949}, Mary parker Follett {1868-1933} and McGregor to name a
few.

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2.1 McGregor’s theory X and Y:

These theories can be applied to management/labor and they have been
classified bellow
i. Theory X mentality:
McGregor stipulated that majority of worker/people want to work, but are
told of what to do, and didn’t want to have to evaluate what needed to be
done, but want boss to tell them
Theory X and the management of characteristics

Labor want to be told what to do
Management needs to supervise
Labor is not necessary motivated to work
Labor does not want to work
ii. Theory Y perspective on labor and management:

It’s an environment where management typically lets labor know what needs to
be done and when, directions are giving towards it.
Theory Y and the management of characteristics

Labor can work with an end goal in mind
Management can minimize supervision
Labor is motivated to do what is necessary for work
Labor want to work and enjoy it
3. The approach system school:

The system school theory were developed in the early 1950’s and 1960’s
these studies tried to predict and explain the behavior of the organization by
studying the whole organization. The study encompasses the structure,
environment, technology
Comparing and contrasting this concept to the management of the

early stages of a construction project
3.1 The Management by Objectives {MBO} Vs Traditional

Management
The concepts of MBO and that of traditional management are closely related in
the sense that they are both used in one form or in a combination forms in the
construction project management.

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The following factors listed below are the reasons WHY, HOW, WHO, WHEN
and WHERE it would be needed or used
They are basically used for the following
1.
Mentoring and Coaching
2.
Budgeting and Financial purposes
3.
For professional purposes
4.
For quality purposes
5.
Marketing and Niche creation
6.
Portfolio management planning
7.
Strategic planning
8. Portfolio management planning
9. Resource/Manpower planning
10. Planning purposes
11. For effective control and motoring of large projects
12. For task and accountability purposes
13. For leadership purposes
14. Monitoring and Controlling of projects by splitting it to smaller packages
15. For a holistic coordination of projects
16. For motivation of staffs/personnel
3.2 The Management by Objectives {MBO} Vs SMART principle
Performance, control ands accountability is based upon the principle of SMART

and also controlled and measured using the SMART
The SMART principle is also used to monitor performance and its decision
making tool for an organizations.
The principle has to be Specific, Measurable, Achievable, Realistic and Time

bound regardless the size of the task or project
Specific= the task/project has to be definite and not vague
Measurable= the task/project must be quantifiable
Achievable= the task/project is viable
Realistic= the task/project can be done/doable
Time= the task/project has time frame
As earlier stipulated above in my Advantages and Disadvantages of MBO, these

factors listed above further analyzed in a tabular format can be used
comfortable in the construction of projects in the built environment in the
following ways.

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In other to motivate personnel and increase corporate performance as a means

of strategic performance
The use of these concepts of Functional Management and MBO in the

construction/project industries long and short term plans
i. Strategic management
ii. Portfolio Management
iii. Niche Marketing
iv. Monitoring variance/tracking of the projects
v. Monitoring tasks/responsibilities and accountability
vi. Reengineering and reposition of the organization
Serial Advantages of MBO Suitability for construction of projects in

No the built environment
Advantages
1. Its helps in planning for Performance oriented and accountability
results that is all task are based are time bound
result oriented
2. It helps in classification of Individual performance are tailored towards
organizational roles and corporate goal, which are specific and
structures strategic for the survival of the organization
3. Improves commitments on an Commitment and motivation of a personnel

holistic organizational basis to is highly promote due to the fact that the
the aims and objectives of the individual would have a psychological zeal do
organization goals perform better at the highest level of his/her
ability
Accountability and responsibility of tasks at
work is promoted and emphasized
5. Helps in effective planning and The project can be easy monitored and
effective controls measures controlled using the responsibility matrix
chart for effective control
6. Improves moral between Improves line communication between
subordinate and their superior superior officer and subordinates
employees, from regular face- Tasks are clear cutout/ specific review for
to-face communications performance appraisal
8. Used as tool in strategic Can be used in engineering and re-
management and planning engineering company on solid footing {short
and medium term planning}
Can be used for Portfolio management in
different aspect of the built
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environment/construction industry
Serial Disadvantages of MBO Suitability for construction of projects in

No {why planning fail} the built environment
Disadvantages
1. Short term plans are set and The long term plan of the organization is not
the danger of over stressing properly taken cared o
the short term plan at the
expense of the long term plan
2. Limited amount of time is The philosophy are not properly disseminated
spent by top management in to all parties involved down the line
teaching and coaching the
employees the philosophy of
MBO
3. Lack of commitments Motivation is very low
4. Appraisals are overemphasized Focusing more on personal task/goals not
corporate goals tasks
5. Objectives are forced on Interaction between subordinate and superior
subordinates line manager is not present
6. Poor implementation methods Halo misconception goals
7. Resistance to change People don’t want to change the ways they
are use doing thing
8. Adequate guidelines are not misconception goals and objectives
spelt out properly for
managers in setting out the
objectives
3.3 The use of any of these principles MBO, SMART and functional
management in the construction/project industries for planning long and short
term reposition of the company as stated below
1. Strategic management
2. Portfolio Management
3. Niche Marketing
4. Monitoring variance/tracking of the projects
5. Monitoring tasks/responsibilities and accountability
6. Reengineering and reposition of the organization
3.4 Conclusion, summary and recommendation:

The three principles of management MBO, functional management and SMART
are good to be deployed in to the construction industries but a little bit of
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combination {Hybrid} can be developed because there is no perfect

environment in business and to this end I conclude that the three principles can
be used independently or in a combination to derive performance, and to
reposition the industry and company respectively
Reference:
1. Dixon Rob
Management of task
Third Edition
2. Dixon Rob
Management theory and practice
Reprinted 1992
3. Armstrong Michael
A hand book of management techniques
Third Edition
4. Louis E Boone and David l Kuntz

Management
Third Edition
5. Drucker Peter F
Practice of management
Reprinted 1989
6. Johnson Tony
PMP Exam success series
7. PMI
Project Management Book of Knowledge {PMBOK}
Forth Edition 2009

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Remarks:

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SU 214 Assignment 0506163

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MSc.

Construction Project Management

Course Code: SU214

Course Name: Project Management 1

Coursework – Part One

Research the concept of Management by Objectives {MBO}, compare and contrast

Critically evaluate the concept as a suitable means of managing a construction

Yomi-Ajayi Adeyemi {0506163}

1.1 The concept of Management by Objectives {MBO}

1.2 Concept and definition of Management by Objectives {MBO}

1.3 The Management by Objectives {MBO} process

1.4 Application of SMART principles

1.5 The Management by Objectives {MBO} connotations:

1.6 Advantages and Disadvantages of MBO

1.7 Importance of effective communication

1.8 Summary for MBO

2.0 Management defined

2.1 Theory of management

2.2 The human relation school

iii. Theory Y perspective on labor and management

2.3 The approach system school

2.4 Comparing and contrasting the concept of MBO to functional

i. The Management by Objectives {MBO} Vs Traditional

ii. The Management by Objectives {MBO} Vs SMART principle

3.1 Significant of these schools of thoughts to the construction industry

3.2 Relationship between the concepts of Functional Management and MBO

3.4 Advantages and disadvantages to the construction industries

3.5 Impact on the industry

3.6 Conclusion, summary and recommendation

Fig#1: Planning loop system {Dixon, 1991}

Course Name: Project Management 1 Course Code: SU 214

Table# 1: Sample Template of Management Commitment Plan

1.1 The concept of Management by Objectives {MBO}

1.2 Concept and definition of Management by Objectives {MBO}

The principle of Management by Objectives {MBO} was introduced in to the

Course Name: Project Management 1 Course Code: SU 214

Fig#1: Planning loop system {Dixon, 1991}

1.3 The Management by Objectives {MBO} process:

This process is usually associated with the managers/top management

The developed responsibility matrix is clearly stipulated to cover about few

Examples of these tasks are as follows:

1.4 Application of SMART principles:

Time= the task/project has time frame

1.5 The Management by Objectives {MBO} connotations:

1. Management for results {MFR}

MBO is used to stimulate employee’s motivation by setting individual goals

1.6 Advantages and Disadvantages of MBO

ii. Disadvantages of MBO :{ why planning fail}

5. Appraisals are overemphasized

These are to be put in place to avoid any misconception or hallucination of

1.8 Summary for MBO:

Course Name: Project Management 1 Course Code: SU 214

Sample Template of Management Commitment Plan

Quarterly Personal Business Commitment

Brain storming/knowledge sharing with the team 4

Appraisal feedback communication: x z

Course Name: Project Management 1 Course Code: SU 214

2.0 Management traditional/functional defined:

i. Peter F Drucker, in his book the practice of management {1968,

ii. Mintzberg, also contributed by saying that a mangers must adapt to

2.1 Theory of management:

1 The classical school:

i. Henri Fayol {1841-1925}, a French industrialist was interested