Construction Management: lecture notes Chapter 2: Introduction

Construction Management: lecture notes Chapter 2: Introduction

Chapter One: Introduction

1.1 Definitions and Concepts

ConstructionConstruction is the process or art of constructing; the act of building; erection; the act of devising and forming; fabrication; composition. It is a commercial activity involved in constructing and erecting buildings, constructing highways, railways, hydropower plants, airfields and other infrastructures. Construction is the execution of the work as required by the contract documents. Construction is a team effort that includes the contractors, subcontractors, testing agencies, architect/engineer (A/E), consultants, owner, and authorities having jurisdiction (AHJs), product representatives, and others, all working toward the common goal of delivering the completed facility ready for its intended use. The participants in the construction stage can generally be divided into four teams: the contractor team, the design team, the owner team, and the supplier team. Depending on the project delivery method, the contractor may be an independent entity, a construction manager as constructor (CMc), or the design-builder. A construction manager as adviser (CMa) is a member of the owner team.

Construction industryConstruction industry is an industry that is organized and involved in the construction, erection and renovation of built environment and infrastructures like buildings, highways, hydropower plants etc.

Construction industry is the largest industry in the world providing employment opportunity for a wide range of population. It is more of a service than a manufacturing industry. Growth in this industry in fact is an indicator of the economic conditions of a country. This is because the construction industry consumes a wide employment circle of labor. While the manufacturing industry exhibit high-quality products, timelines of service delivery, reasonable cost of service, and low failure rates, the construction industry, on the other hand, is generally the opposite. Most projects exhibit cost overruns, time extensions, and conflicts among parties. In general, the construction industry is more challenging than other industries due to: its unique nature; every project is one-of a kind; many conflicting parties are involved; projects are constrained by time, money and quality; and high risk.

At present the construction work in Ethiopia is one of the most widespread activities, involving a range of people from the small builder in villages and towns to large private companies, public undertakings and various state agencies. A broad category of agencies which initiate and execute construction works are given below: The Government and its agencies, such as the Federal and Regional states, Universities, state public works departments, the military engineering services, municipalities etc. Public under takings, such as the Railways, Highways, Hydropower projects by ERC, ERA, EEPCO etc Private companies Individuals.Construction Industry SegmentsThe construction industry can be broken down into two very broad categories, general building construction and engineered construction. Most construction contractors concentrate on one of these categories, or even on a specialty within one of them. A third category of contractor is the specialty trade contractor, who usually works as a subcontractor for a general, or prime, contractor responsible for the construction of the entire project. We can understand something about the nature of the industry by describing the various types of construction work.General building construction

Within this very broad category we find projects that include residential, commercial, institutional and industrial buildings. Residential construction produces buildings for human habitation, including single-family dwellings, condominiums, multifamily townhouses, flats and apartments and high-rise apartment buildings. Depending on the projects complexity, such work is usually designed by architects, owners or builders themselves, with construction performed by contractors who hire specialty subcontractors as needed; some of this work may be built by owners themselves.

Commercial construction erects buildings that are meant for commercial purpose. It includes retail and wholesale stores, markets and shops, shopping centres, office buildings, warehouses and small manufacturing facilities. Institutional construction erects buildings and other infrastructures for institutional and public purpose. Examples of institutional constructions are medical clinics and hospitals, schools and universities, recreational centres and athletic stadiums, governmental buildings and houses of worship and other religious buildings.

Architectural firms usually take the lead in the design of commercial and institutional facilities, with assistance from engineering firms for such specialties as structural and electrical elements. Because this type of work is usually more complex and time consuming than residential construction, owners usually engage general contractors to perform the field construction; subcontractors usually provide specialty services such as plumbing, painting and electrical work.

Often categorised separately from general building construction, industrial construction is a special segment of the industry that develops large-scale projects with a high degree of technicalcomplexity. Such endeavors result in facilities that manufacture and process products; examples include steel mills, electric power-generating plants, petroleum refineries, petrochemical processing plants, ore-handling installations and heavy manufacturing factories that produce such products as vehicles, rolling equipment and various kinds of large machinery. The engineer,rather than the architect, usually assumes the lead responsibility for the designs of these kinds of projects. Often the owner selects a single entity to provide both design and construction services under a designbuild contract and works closely with the design professional to assure that the owners special requirements are met.

Engineered construction

This broad category of construction, sometimes called engineering construction, is characterized by designs prepared by engineers rather than architects, the provision of facilities usually related to the public infrastructure and thus owned by public-sector entities and funded through bonds, rates or taxes and a high degree of mechanization and the use of much heavy equipment and plant in the construction process. These projects usually emphasize functionality rather than aesthetics and involve substantial quantities of such field materials as timber, steel, piping, soil, concrete and asphalt. More so than other types of construction, engineered construction is often designed by an owners in-house staff, such as a provincial highway department or a federal public agency; the Army Corps of Engineers is an example of the latter in the USA. A general contractor is usually engaged to install the work, with subcontractors as needed to contribute specialty services. With these kinds of projects, the exact quantities of some materials can seldom be ascertained in advance; thus these construction contracts are often arranged such that the contractor is paid a pre-agreed-upon unit price (US$ per cubic metre of concrete, for example) for each unit of material actually required.

Two common subcategories of engineered construction are highway construction and heavy construction. Highway construction typically requires excavation, embankment construction, paving, installation of bridges and drainage structures and associated lighting and signage.Heavy construction projects include dams, tunnels, pipelines, marine structures, water and sewage treatment plans, railroads, rapid transit systems, airports and utility work such as electrical transmission and distribution systems, water lines, sanitary and storm drains, pumpingstations and street paving. Utilities, upon completion, are often owned and operated by public or semipublic entities such as electric associations or water authorities.

Construction works/activities are regarded as projects weather they are small or large in size. Thus, in order to undertake construction/project management, one must begin with the definition of a project.

ProjectA project is a temporary endeavor undertaken to create a unique product, service, or result. It can be considered to be any serious of activities and tasks that: Have a specific objective to be completed within certain specifications Have defined start and end times Have funding limits Consume resources i.e. money, people, equipment.Successful project management can then be defined as having achieved the project objectives: Within time Within cost At the desired performance/technology level While utilizing the assigned resources effectively and efficiently.

The Construction Project

Construction works/activities are undertaken as projects weather they are small or large in size. Construction project is defined as a project intended to build infrastructures. Like other projects construction project possess the following characteristics: A defined goal or objective. Specific tasks to be performed. A defined beginning and end. Resources being consumed.The goal of construction project is to build something. What differentiate the construction industry from other industries is that its projects are large, built on-site, and generally unique. Time, money, labor, equipment, and, materials are all examples of the kinds of resources that are consumed by the project.Projects begin with a stated goal established by the owner and accomplished by the project team. As the team begins to design, estimate, and plan out the project, the members learn more about the project than was known when the goal was first established. This often leads to a redefinition of the stated project goals.

Management

Management is an art of arranging various activities and group of people in an organization to achieve a common goal. Project management is the planning, organizing, directing, and controlling of company resources for a relatively short-term objective that has been established to complete specific goals and objectives. Construction Contract Administration

Construction contract administration (CCA) involves the activities necessary to effect and determine the fulfillment of the contract requirements by the parties to the construction contract. CCA generally refers to activities related to administering the contract for construction. CCA is typically performed by the Architects/Engineers(A/E) or other teams as the case may be.Construction contract administration begins when the agreement between the owner and contractor is executed and ends when final payment is accepted by the contractor. The construction stage includes the contractors planning and scheduling activities, mobilization of equipment, material purchasing, fabrication of components, and construction. Primary decision makers during this stage are the A/E, owner, and contractor.

The construction stage of the project follows the design and procurement stages and precedes the facility management stage in the life cycle of a facility. Construction is a team effort that includes the contractors, subcontractors, testing agencies, architect/engineer (A/E), consultants, owner, authorities having jurisdiction (AHJs), product representatives, and others, all working toward the common goal of delivering the completed facility ready for its intended use.The participants in the construction stage can generally be divided into four teams: the contractor team, the design team, the owner team, and the supplier team. Depending on the project delivery method, the contractor may be an independent entity, a construction manager as constructor (CMc), or the design-builder. A construction manager as adviser (CMa) is a member of the owner team.

The basic responsibilities of those involved in the construction processes are stipulated in the contract documents. Depending on the project delivery method, the contract documents may have been based encourage team commitment to the project. The procedures implemented during the construction stage communication, coordination, and cooperation can greatly affect the attitude of project team members as they strive to achieve a successful project, constructed on schedule, within budget, and with no unresolved claims.

Contractor Project Management

Contractor project management refers to activities related to managing the construction process. It is typically performed by the contractor. Contractor project management should not be confused with construction management. Construction management is a delivery method. Contractor project management is managing the construction process, whether by a contractor, a construction manager, a design builder, or other entity responsible for constructing a project.

Construction Management

Construction Management is defined as the science and art of organizing, planning and managing resources to complete a construction project--preferably on time and under budget. It may refer to a contractual arrangement under which a firm supplies construction management services to an owner. However, in its more general use, it refers to the control of constructions basic resources of workers, material, equipment money and time.

The above definition of construction management includes five major steps: project initiation, project planning and design, project execution or construction, project monitoring and project completion. Many construction projects include a number of sub-stages in each major step, including pre-planning, conceptual design, schematic design, design development, construction drawings and construction administration.'Construction management is broad and includes such topics as construction contracts, construction methods and materials, production and cost estimating, progress and cost control, qualify control, and safety.Construction project management requires the lead individual, the project manager, to oversee the construction schedule, the allocation of personnel and equipment and the project's budget. The project manager has the ultimate responsibility over the planning, execution and successful completion of the project. A critical element of construction project management is keeping the project on schedule and within the set budgetary parameters. In order to achieve these goals, the project manager must establish clear project objectives. A project manager is responsible for responding quickly to the changing needs of the client, no matter how they alter the size and scope of the project. This can be a difficult process; making changes to a project can affect its cost, the time needed to complete it, the number of employees needed to successfully complete the project and the quality of work done. Having the ability to adapt to abrupt changes requires forethought, preparation and, in many cases, a good rapport with the client. Construction managers coordinate and oversee all the work on a construction site, serving as a liaison between architects, inspectors, clients, builders and tradespeople.There are seven main categories of work performed by construction managers: Project management planning: Planning a project from start to finish, including work to be done, materials needed and timetable for completion Cost management: Evaluating and managing the costs of a building project from start to finish Quality management: Overseeing the quality of the work completed by contractors and subcontractors participating in the job Contract administration: Overseeing the contract process and working with the owner, builder and other parties to make sure they are satisfied with the terms of the contracts and that they fulfill their contractual duties Safety management: Managing the safety of employees and contractors at the worksite Professional Practice: Participating in continuing education and certification in the field of construction management1.2 The Construction Management ProcessAlthough every building project is different and has its own set of requirements, the process of managing a construction project generally has four main steps. These steps are as follows: Specifying the projects objectives: The first thing that a construction manager must do when taking on a construction project is to specify the projects objectives and plans. This means determining the type of building to be built, the method by which it will be built and the architects, builders and contractors who will be part of the building process. Procuring labor, materials, equipment and other resources: This second step is a major part of the construction managers job making sure the people and things are in place to complete a project in a timely fashion. This means researching available labor, materials and equipment, calling for and evaluating bids and putting in place the necessary resources to get a project done. Coordinating the project: Coordination of the many moving parts of any construction project is the next step. This means setting up a realistic timetable, creating and managing the budget and working closely with the owner, architect, builder, contractors and other parties. It also means revising the plans as necessary, given problems that might arise during the building process. Ongoing communication: Throughout the building process, communication is key and it is one of the construction managers most important jobs. Communicating with the owner about what can be expected at the outset of a project, with the architect about the projects plans, with the builder about the plans, blueprints, supplies and specifics of a project, with tradespeople about the details regarding a building and with inspectors about evaluating and approving each stage of the building project: all of these are important tasks for the construction manager. Construction managers, therefore, must have strong verbal and written skills, and they must also be skilled at dealing with conflicts and solving problems.In general construction managers plan and manage the implementation of construction projects. This includes developing the job plans (how work will be done) from architectural and engineering drawings & requirements; estimating the labor and materials needed for each step, developing cost estimates and bids, scheduling the project work, and managing the actual work to ensure it proceeds on time, within budget, and of high quality. Construction Managers are also always looking to implement new construction techniques to improve the total quality and cost effectiveness of the nation's construction industry for the purpose of providing a competitive advantage.

1.3 Need of construction management

Some of the major factors of construction company failures are lack of capital, poor cost estimating, inadequate cost accounting, and lack of general management ability. All of these factors can be categorized as elements of poor management.Management is necessary because the limited resources have to be utilized with in a given time under conditions of varying degrees of uncertainty to derive the max benefit in terms of construction out put and to avoid failure.

Objectives of construction managementi. Project completion with in the allocated budget & time.ii. Ensure high quality of performanceiii. Provide safe and satisfactory working conditionsiv. Delegation of authority to make decisions at the required levelv. Create an atmosphere to get the best out of every body.vi. Proper coordination and team spirit should be maintained, in the management so that everybody should work very efficiently for achieving the assigned goal.Management Skills1. Conceptual Skillthe ability to see the organization as a whole and the relationship between its parts.2. Human SkillThe ability to work with and through people.3. Technical SkillMastery of specific functions and specialized knowledge

1.4 Construction Management functions

The aims of construction management are to facilitate the execution of work in a planned and efficient manner as per designs and specifications within the prescribed time limit and with the greatest possible economy in construction cost. To achieve these aims the management must have the following functions.

i. Planning and Scheduling

a) Planning: preparation of alternatives for achieving specified objectives. The planner decides how a project will be carried out what material should be used, what men and staff will be employed, what equipment or machines will be utilized to do the work, etc and also other details to achieve the desired goal effectively.The project manager is the key to successful project planning. Project planning must be systematic, flexible enough to handle unique activities, disciplined through reviews and controls.One of the objective of project planning is to completely define all work required possibly through the documented project plan so that it will be readily identifiable to each project participant. This is a necessity in a proper environment because, If the task is well understood prior to being performed, much of the work can be pre-planned. If the task is not understood, then during the actual task execution more knowledge is learned that, in turn, leads to changes in resource allocation, schedules, and priorities. The more uncertain the task, the greater the amount of information that must be processed in order to ensure effective performance.b) Scheduling: Timing of the approved work plan. Schedules are used as guides during the performance of an operation in order to control the pace of activities and to permit completion the operation at the desired or required time.

ii. OrganizingEstablishing a workable organizational structure to divide the work into manageable departments/sections and delegate tasks accordingly. The type of organization depends up on the type and volume of work as well as the method of execution.

iii. StaffingThe appointment of the required number of personnel to fulfill the responsibilities as laid down by the organization structure. A right person on the right job should be selected very carefully so that the project may not be hampered due to the lack of knowledge on the part of the person appointed for a particular job.

iv. DirectingInvolves guiding, supervising, motivating, and leading the employees of the organization. This is achieved by establishing effective communication b/n the employees and the management to make aware of the aims, programmes and performance. The purpose of directing is that each employee should know exactly what he is supposed to do, how and when to do.

v. ControllingConstant review of work plan against performance for correcting measures, if needed.The main aims of controlling To complete each activity with in the time allocated to it. To control the quality of work as per specifications. To avoid any wastage, the use of materials, machines and out put of the labour should be controlled. To keep the cost with in the estimated cost, the expenditure on each item of work should be controlled.

vi. CoordinatingThis is a process which operates smoothly with the flow of informations decisions and results in every direction of the framework of an organization.

vii. CommunicatingFor execution of a project, a proper and effective communication of instructions, orders or any change in plans or designs, is most essential in every direction with in the organization. Effective management will exist only with continuous communication and feed back for control purposes. There will be no control or coordination with out effective communication.

1.5 Ethics in the Construction Industry

In 2004, FMI, the USA largest management-consulting firm for the construction industry, teamed up with Construction Management Association of America, CMAA to survey project owners, architects, engineers, construction managers, and contractors to gauge their concerns about ethics in the industry. The key concerns expressed by the respondents to the survey were fourfold:1. There appeared to be a breakdown in trust and integrity.2. There was a perceived loss of reputation for the industry.3. There was a need to provide a code of ethics and standards.4. There was a need to create a more equitable bidding process.Concerns were voiced by owners, architects, engineers, and contractors; they all seem to point to a need for fairness on the part of each party to the construction process.

Concerns about architects and engineers included the following: Owners stated that architects and engineers do whatever makes the owner happy, often at the expense of the contractor. Architects and engineers need to express fairness when dealing with contractors or making decisions that affect the owner. Design professionals knowingly issue plans and specifications that are deficient.

Concerns about contractors included the following: Bid shopping, a practice where contractors use one subcontractors price to drive down the price of another to achieve the lowest cost, often an unrealistically low price Change-order games, played by a general contractor who knowingly submits a low bid in the hope of gaining more profit by issuing questionable change orders as construction proceeds Payment games, the receipt of payment from one owner, which should be used to pay for labor, materials, and equipment for that project, commingled with funds to pay for other projects Instituting claims that are vague or specious Engaging subcontractors whose past performance has been unreliable

Concerns about owners included the following: Owners who authorize work but argue about paying for it Owners who are very late in their payment of contractor requisitions Owners who pass off responsibility to others when they are the party that should assume responsibility and resolve problems promptly and equitably Owners who lack ethical behavior, such as advertising bogus low bids to drive down the price of bidding contractors Little dialogue between owners and contractors about the expectations of both parties

It appears from this study that there is plenty of blame to go around, indicating the need to maintain and enforce ethical business practices by owner, architect, and contractor alike. So with that in mind, we will now begin the design and construction process.

1.6 Construction-Risky business

Construction has often been likened to an outdoor factory producing a one-off product. Subject to the vagaries of the weather, the uncertainty of price protection for longterm labor and material commitments, and the shortage of skilled laborers from time to time, the risks in the industry are fairly self-evident.This is a business of high risk and relatively low profit margins.Contractor Failure Risks1. Low profit margins2. Slow collection of accounts receivables3. Insufficient working capital4. High material prices5. Shortage of qualified, skilled workers6. Subcontractor failure7. Inadequate cost-tracking systems8. Estimating problems9. Overexpansion10. Onerous contracts11. Unreasonable owners

A bankruptcy law firm listed the number one reason for contractor failure as a significantly underbid project; one large project improperly bid can hit the contractor so hard that he or she can never recover. The healthy builder today may not be so healthy next year. Steps taken by an owner to explore the financial health of a proposed contractor and requiring some financial security by requesting payment and performance bonds will provide less exposure in the event of contractor financial failure.

Lectured by: Jagema.K Civil Engineering Department, JiT, JUPage 12