Organizational structure in temporary project organizations: impacts on project performance in the construction industry

Abstract

The construction industry is inherently project-based and operates through complex, multi-organizational arrangements that are formed for the duration of individual projects. These arrangements, referred to as Temporary Project Organizations (TPOs), bring together diverse stakeholders, including clients, consultants, contractors, suppliers, and project managers, under contractual relationships to deliver a unique project outcome within defined time, cost, and quality constraints. Despite their central role in construction delivery, the organizational structures of these temporary entities and their influence on project performance remain underexplored in existing literature. This thesis addresses this gap by examining how organizational structure dimensions within temporary project organizations relate to project performance in the construction industry. Organizational structure has long been a subject of study within organizational theory, with research highlighting dimensions such as centralization, formalization, specialization, complexity, and integration as key determinants of how organizations function. More recently, network density, rooted in Social Network Analysis (SNA), has emerged as a complementary dimension that captures relational patterns and communication intensity among organizational actors. While these dimensions have been studied in permanent and project-based organizations, their application to temporary, inter-organizational project settings remains limited. Construction projects, characterized by temporality, heterogeneity, contractual fragmentation, and high uncertainty, present a unique context in which traditional organizational assumptions may not fully apply. The primary objective of this research is to investigate the relationship between organizational structure dimensions of temporary project organizations and project performance in the construction industry. Specifically, the study seeks to identify which structural characteristics are prevalent in construction TPOs and to examine how variations in these dimensions correlate with project success outcomes. Project performance is conceptualized as a multidimensional construct encompassing cost performance, schedule performance, quality, functionality, and stakeholder satisfaction. By linking organizational design choices to these performance criteria, the study aims to contribute both theoretically and practically to construction project management research. To achieve these objectives, a comprehensive literature review was conducted, examining over 200 academic sources spanning organizational theory, project-based organizations, construction management, and social network analysis. This review established the theoretical foundation for the selected organizational dimensions and informed the development of a conceptual framework linking structure to performance. Based on this framework, six hypotheses were formulated to address the effects of centralization, formalization, specialization, complexity, integration, and network density on project performance, including both linear and nonlinear (inverted U-shaped) relationships. The research adopted a quantitative methodology using a structured online questionnaire. The questionnaire targeted construction industry professionals with direct experience in temporary project organizations, including individuals from clients, consultants, contractors, suppliers, and other stakeholders. Respondents were asked to base their answers on a single construction project with which they were highly familiar as active participants. The questionnaire consisted of three sections, respondent demographics, project and organizational characteristics, and Likert-scale items measuring organizational structure dimensions and project performance outcomes. A total of 53 valid responses were collected and analyzed. Descriptive analysis revealed that respondents represented a broad range of roles, professions, experience levels, project values, delivery systems, and organizational sizes, providing a diverse empirical basis for the study. Most respondents were client representatives, working in Canada, and had more than 10 years of experience. The projects examined varied from small-scale developments to large projects exceeding 100 million CAD in value. Traditional delivery systems such as Design-Bid-Build (DBB) remained dominant, though alternative and integrated approaches were also represented. Statistical analyses were conducted to examine correlations between organizational structure dimensions and project performance measures. The findings indicate that organizational structure is not a neutral backdrop to project execution but a significant factor influencing how effectively temporary project organizations function. Specific dimensions demonstrated stronger associations with performance outcomes, while others showed more nuanced relationships that depended on the contextual conditions. Descriptive statistics indicated mean scores above the neutral midpoint for most organizational structure dimensions, with formalization, specialization, integration, and network density receiving the highest ratings. Project success dimensions also demonstrated relatively high mean values, particularly for client satisfaction, functionality, and overall satisfaction of the temporary project organization. Reliability analysis confirmed high or acceptable internal consistency for formalization, specialization, integration, network density, and all project success indices, while centralization and complexity exhibited lower reliability and were therefore interpreted as exploratory. Correlation analysis identified several statistically significant relationships between organizational structure dimensions and project performance. Formalization demonstrated strong and consistent positive correlations with all project success criteria. Specialization was also positively associated with all success measures, with a robust relationship observed for satisfaction-based criteria. Integration showed strong positive correlations with all, indicating that coordination and alignment mechanisms are closely associated with favorable project outcomes. Network density was positively correlated with project performance, particularly client satisfaction, TPO satisfaction, and functionality. These results suggest that frequent and effective communication among project participants is associated with improved perceptions of project success. Centralization exhibited moderate positive correlation with success, though the relationship was not statistically significant. Due to low reliability scores, centralization findings were treated cautiously and interpreted as indicative rather than conclusive. In contrast, organizational complexity did not demonstrate a statistically significant relationship with overall project success or most individual success criteria. The results suggest that variations in complexity, as measured in this study, were neither clearly beneficial nor detrimental to project performance outcomes within the sampled projects. In conclusion, this thesis demonstrates that organizational structure matters in construction temporary project organizations and that its dimensions are meaningfully related to project performance. By bridging organizational theory and construction project management through empirical investigation, the study advances knowledge in both fields. It provides a foundation for future research exploring causal mechanisms, longitudinal effects, and comparative analyses across project types, stakeholder experience in the industry, and their perceptions.