Evaluation of organizational structures formation of the construction industry enterprises of EKR

Table of contents: The Kazakh-American Free University Academic Journal №12 - 2020

Nepshina Victoria, Kazakh-American Free University, Kazakhstan
Urazova Natalya, Kazakh-American Free University, Kazakhstan

Today, the construction industry in Kazakhstan is undergoing a crisis that began back in 2008. Despite a sufficient number of construction projects, most of them are state-owned, aimed at the construction of housing complexes by state order. However, this fact is not critical for overcoming the crisis. Not to mention private companies that are undergoing not only financial, but also managerial crisis. The way out of these problems lies in a comprehensive solution to the issue of forming such a management system that would rely on the experience of developed countries, and also would not exclude the possibility of taking into account national experience in organizing the work of a construction company.

The current state of the industry is as follows: the construction industry requires the reform of production and economic activity, because indicators of loss-making or crisis state of companies in this sphere tend to increase.

In January - March 2017, construction organizations in Ust-Kamenogorsk completed work worth 390.3 million tenge, or 42.7% of the total workload of large and medium-sized organizations in the region. This amounts to 165.5% compared to January - March 2019 (in a comparable estimate).

Change in the volume of contract work performed by construction organizations for the period from 2015 to 2019: the volume of contract work in comparable prices in 2019 amounted to 9542.0 million tenge, which is 111.0% of the volume in 2018. In 2018, there was a decrease in the volume of work compared to 2017 by 5.3%.

Considering the volume of contract work performed by construction organizations with various forms of ownership, it can be noted that in the period from 2003 to 2019, the largest volume of work was performed by organizations with state, mixed and private ownership. State organizations completed - 4.9%, municipal - 1.7%, private - 86.2%, mixed and public - 1.9% and 4.8%, respectively, and foreign - 0,3% of the total volume of work performed in 2019. From this it follows that the private form of ownership remains the priority form, the share of work performed by them in the total volume of work increased from 77.1% in 2018 to 86.2% in 2019.

In January-March 2017, 49.5 km long-distance cable lines and 124 telephone exchanges in rural areas were introduced.

The structure of work has changed in recent years. There is a reorientation of the activities of construction enterprises from industrial construction to non-production. Thus, the share of construction and installation works performed at social facilities increased from 65% in 2018 to 82 percent in 2019, and at industrial facilities, respectively, decreased from 35 to 18 percent.

The renewal coefficient of fixed assets (the share of fixed assets introduced for the year in their availability at the end of the year), determined in comparable prices, was 13% in 2018 compared to 11% in 2017, and the liquidation ratio (the share of fixed assets liquidated for the year in their availability at the beginning of the year), respectively, was 16% and 6%. Depreciation of fixed assets in construction by the end of 2018 was 48% versus 49% at the end of 2017 (Table 1).

Table 1. Level of depreciation, renewal and liquidation, shelf life of fixed assets in construction

From the above data it is seen that, compared with 2018, there is an increase in construction activity. However, the financial situation of construction companies remains tense.

For January - February 2017, the balanced financial result of construction companies in current prices amounted to 10.3 million tenge of profit against 21.5 million tenge for January - February 2019, or 51.8% less. 26 construction organizations (61.9% of the total by type of activity) received 21.2 million tenge of total loss.

The accounts receivable of construction companies as of March 1, 2017 decreased by 0.6% compared to the data as of February 1 of the current year (by 5.2 million tenge) and amounted to 820.8 million tenge, of which 29.1%, or 238.5 million tenge accounts for overdue.

Accounts payable as of March 1, 2017 amounted to 1074.1 million tenge. (48.8 million tenge, 4.3% less than on February 1 of the current year), including 284.5 million tenge, or 26.5% - overdue. In general, for construction, accounts payable exceed accounts receivable by 253.3 million tenge, or 30.9%.

The main indicators limiting the effective productivity of construction organizations, according to the Department of Statistics of the East Kazakhstan region, are still high taxes (this factor is indicated by 59% of managers, insolvency of customers (58%), high cost of materials, structures and products (46 %). There are also factors such as a shortage and deterioration of construction machinery and mechanisms (14%), a lack of skilled workers (21%) and competition (29%) [1].

According to forecast estimates, in 2020, in the opinion of 64% of managers, a decrease in production is not expected, in 73% - a change in the number of employees is not expected.

More and more firms are closed due to lack of profitability. This situation is alarming regarding the growth of the economy and development of the country. In addition, it is important to be aware of the extent to which this problem affects the social component of the issue: with the decline of the industry, there is a natural decrease in the number of jobs, and hence a decrease in employment, and a decrease in the flow of funds to the budget and, in general, a decrease in the overall development indicators of the country.

The actual and most effective tool for solving problems in the construction sector is rightfully considered restructuring. Today, in Kazakhstan, large enterprises are seen as bulky structures, stuffed with a huge amount of obsolete unused inventory and production assets. With the help of them, products are produced that do not meet modern market requirements both in terms of manufacturing time, and in labor costs and quality. As for small enterprises, here the possibility of development is exhausted by the lack of financial resources, production capacities, qualified personnel and tax burden. Thus, domestic construction companies are faced with the issues of finding working capital, the ability to manage finances in the long term and tactically, creating marketing services, developing new production assets and materials, developing new products and services [2].

In order to analyze the main aspects and patterns of the formation of organizational structures of construction enterprises, we chose a universal method - questioning, which allows to comprehensively consider the subject under study and clarify the opinions of respondents. In addition, for completeness, the questionnaire survey was supplemented by interviewing, which significantly increases the reliability of experts' assessments of the situation.

In order to justify the proposed measures for the optimal and rational formation of the organizational structure of East Kazakhstan construction enterprises during the study, a survey of 200 managers of various construction enterprises was conducted: first managers - directors, deputy directors, line managers - heads of departments, sections, as well as foremen, specialists, foremen. The composition of the survey participants is presented in table 2.

Table 2. Distribution of respondent organizations by type

The questionnaire survey was attended by employees of construction organizations with the following distribution: 11% - TOP management of organizations, 10% - engineers, 29% - line managers, 5% - foremen, 12.5% - foremen, 17.5% - specialists and 15 % - other executives (Figure 1).

Figure 1. The proportion of respondents by position

The results showed that 71% of managers have higher education, although 48.8% of them graduated from a non-economic university (Figure 2); 28.8% of respondents graduated from college, 20% of them - not an economic profile. In addition, 6.3% of respondents said that in addition to secondary specialized education they have incomplete higher education; and 3.8% - over one higher. There are not many managers with a scientific degree - only 6.3%, but this is understandable, since at the moment they need more effort and dedication in the workplace to confirm the status of a good leader, and there is not always enough time to develop professional specialization.

Figure 2. Executive Training

This sad situation is also supported by the fact that managers confirm a lack of knowledge precisely with the further development of vocational training. They have a lack of computer knowledge. This is due to scientific and technological progress, which was reflected in the widespread computerization of jobs, and managers who mainly occupy the age group from 46 to 50 years (21%) did not have a wide scale of computer training, even in universities. Lack of knowledge of accounting is constantly being amended by all kinds of modifications, requiring additional training in this direction. The lack of knowledge of foreign languages, and most often English, manifests itself when an enterprise, organization or company reaches an international level.

Leaders can improve their professional skills directly in the organization, for which a network of courses and schools has been created. In order to improve the qualifications of this category of personnel, enterprises have established production and technical courses, various special-purpose courses, training courses for second and related professions, schools for the study of advanced working methods, and schools for masters [3].

However, the majority of managers believe that their managerial position is fully consistent with their specialty and does not require additional knowledge, as 67.5% of respondents answered.

The vast majority of respondents indicate the importance of work for them. In it, they value, first of all, the interest and content of the work corresponding to special training - 37.5% of the respondents; sufficient wages - 28.8%. Sufficient independence is provided by the work of 22.5% of respondents, as well as the opportunity for professional growth - 21% of managers.

In accordance with this, 41.3% of managers believe that their work is evaluated fairly in relation to their labor contribution, 22.5% - in relation to peers in office, 17.5% - to peers in competence, 13.7% - to other categories of employees, and 5% - to peers in the category of personnel.

An interesting fact that emerged during the study: it was noted that managers who have more than 10 years of experience are less likely to take risks than those who have less than the specified experience. In addition, age and education matter in this question. Thus, managers with higher education and older age are less likely to make impulsive and risky decisions. However, education provides an opportunity and contributes to a deeper analysis and study of decisions, thereby helping to reduce risk. However, the decisions of such leaders are more original and independent.

When assessing the organizational structure created at the enterprise, 37.5% of respondents explained that their structure cannot be called ideal, since it has little efficiency in the globally existing market conditions. As part of this, respondents suggest the need to reform the organizational structure as possible, real and justified by the requirements of the current time (55% of respondents).

23.8% of managers note the presence of extra links in the management structure as one of the constraining factors of the effectiveness of existing organizational management structures. And what is important, 53.8% of respondents agreed on the need to reduce the number of administrative workers.

According to the assessment obtained during the survey, it should be noted that in 60 cases during the functioning of enterprises, changes in the organizational structure were carried out in the direction of complication (as 58.8% of respondents noted). 37% of respondents noted that these changes did not lead to an increase in the result of the enterprise�s work and were not effective enough, as they were carried out on their own, and external management consultants were not involved. The main actions that have been taken include: dividing the enterprise into small LLPs; enlargement of units by creating vacancies; breakdown into smaller divisions, but less dependent on each other, as a result of which document flow increased, etc.

There were only a few cases of a simplification of hierarchical subordination, an optimal reduction in staff, in particular, a management apparatus by 10%, a reduction in management links in the manager-production chain supervisor chain.

The inconsistency of the organizational structure with the current economic conditions and its lack of mobility to changing conditions requires its constant improvement.

This is evidenced by the fact that enterprises in the construction industry do not have units that have industrial independence and are fully responsible for the results of their activities (80% of respondents). But if there are any, then 15% of respondents consider their activity not effective. Modern construction enterprises are not sufficiently adapted to changing conditions, due to the absence in the structure of units that operate on a temporary basis and are responsible for solving a specific problem (82.5% of respondents note this fact). Although 42.5% of managers believe that there are opportunities for the development of such units, it is very difficult to practically realize them.

At all enterprises, the heads of which participated in the survey, there are units due to new business conditions, such as the marketing department, economic analysis service, estimated contractual services, etc. 76.3% of managers include the presence of superfluous links in the management structure as the main problems of the ineffective functioning of the organizational structure, 51.3% of managers - the irrational number of administrative staff, due to the lack of staff with the necessary qualifications (51.3% of respondents) and the lack of specialists of the necessary profile (60 % of respondents) with a sufficient level of knowledge.

The organizational structure that exists today at construction enterprises has many links that complicate the operational work and speed of decisions, which naturally slows down the entire production process.

A quality structure must meet the requirements of manageability, flexibility, functionality and constantly include opportunities for improvement. The quality of controllability can be expressed through such an indicator as the norm of controllability, which, according to researchers [5, 6], is based on the number of people and the ratio of the number of managers and subordinates (the norm is no more than 10-12). That is, the number of people subordinate to one leader - no more than a dozen, when it comes to functional departments - the figure varies from 7 to 10 people, technical and design departments are focused on 10-20 people, and the number of workers in one team should not exceed 15 person. The optimum value is recognized by 6-8 people working personnel per head.

If the magnitude of the manageability norm is greater than the permissible values, then this indicates a bloated managerial apparatus, duplication of functions and excessive control, which also negatively affects the work of the unit. Determination the specific number of managers per employee in each organization should certainly be based on a clear analysis of mutually affecting factors, taking into account the specifics of the industry and the specifics of a particular project.

While comparing the organizational structure and the size of the enterprise, it should be considered the following:

- there is a direct relationship between the size of the enterprise and the degree of formality of the organizational structure;

- the degree of centralization of the structure decreases as the size of the enterprise;

- there is a maximum need to use automated forms of work, accounting, analysis, movement and decisions in large enterprises [7].

Thus, the combination of factors, namely: mobility, flexibility of the organizational structure, volume of products sold, customer demand for it, good working conditions, the number of administrative and managerial personnel (AMP), efficient and maximum possible use of production capacities, a group of factors of competitive advantage and many others ultimately determine the possibility of an enterprise making a profit.

Orientation to profit is an objective regularity and the ultimate goal of the functioning of any enterprise. The necessary level of profit allows you to solve a whole range of tasks that determine the stability and efficiency of the enterprise. This indicator is the main source of the current and strategic development of the enterprise, an indicator of its creditworthiness. Stable and steady profit growth indicates the high competitiveness of the enterprise, as well as business efficiency, which is inextricably linked with management efficiency.

As a result of the calculations of the indicators of the management system in terms of importance, the following conclusions can be drawn.

The profitability of the product is in the first place among the indicators characterizing the efficiency of the enterprise management system.

Thus, it is necessary to create such a structure that would correspond to an indicator reflecting the profitability of the enterprise. The company's ability to generate profit reflects its success in achieving economic growth in accordance with the chosen strategy. Maintaining the necessary level of profitability is an objective regularity of the normal functioning of the enterprise.


1. Statistical reference book: Construction industry / [Electronic resource] / Official website of the Committee on Statistics of the Republic of Kazakhstan http://stat. gov.kz/

2. Evseev A. Strategies for enterprise restructuring in a crisis situation // Problems of management theory and practice. - 2008.- 3.-p. 109-113

3. Lytkina Yu.A., Levina S.Sh. Restructuring of construction enterprises: the formation and development of organizational management structures. - Monograph. - Penza, PGUAS, 2008 .-- 236 p.

4. Mazur I.I., Shapiro V.D. and others. Restructuring of enterprises and companies. Reference manual. - M.: Higher School, 2000 - 587 p.

5. Masyutin S. A. Change in the organizational structure of the enterprise: feasibility and opportunities // IVF. - 2018. - No. 2

6. Alekseev N. Designing organizations of the "era without patterns" // Management in Russia and abroad. - 2000. - No. 4. - p. 41-51

7. Nikologorsky D.Yu. Change of ownership and structure of industrial enterprises // Issues of Economics. - 2017. - No. 9. - p. 23-35

Table of contents: The Kazakh-American Free University Academic Journal №12 - 2020

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