A scenario simulation study of decentralization on architecture, engineering and construction companies

Currently there is a propensity that decentralized hierarchy is adopted by organizations. Vast realms of research endeavor have been committed to understand the advantages and setbacks of decentralized organizations, and their results indicate that inadequate decentralization will constrain the creativity of employees while over decentralization may push the company towards chaos. However, little research exists in AEC (architecture, engineering and construction) industry to improve understanding or facilitate prediction of the equilibrium of decentralization. In response to the need, this study focuses on the bidding decision-making in AEC firms to understand how different degrees of decentralization impact on companies’ performance. Agent-based modeling (ABM) approach is applied to test different scenarios in a virtual AEC company. The results indicate that best performance can be achieved only with appropriate balance on centralization and decentralization. Also, when shifting the decision rights from top manager to low level managers or employees, sufficient information and knowledge should be provided to them simultaneously.