Construction Management: lecture notes

Chapter 2: Introduction
Chapter One: Introduction
1.1 Definitions and Concepts
Construction
Construction 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 industry
Construction 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
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Civil Engineering Department, JiT, JU

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Chapter 2: Introduction
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 Segments
The 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.
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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 technical
complexity. 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.
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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, pumping
stations 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.
Project
A 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:
o Within time
o Within cost
o At the desired performance/technology level
o 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

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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 onsite, 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 shortterm 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.
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Civil Engineering Department, JiT, JU

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Chapter 2: Introduction
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 designbuilder. 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
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Civil Engineering Department, JiT, JU

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Chapter 2: Introduction
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

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Professional Practice: Participating in continuing education and
certification in the field of construction management
1.2 The Construction Management Process
Although 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.

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Civil Engineering Department, JiT, JU

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Chapter 2: Introduction
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 management
i.
Project completion with in the allocated budget & time.
ii.
Ensure high quality of performance
iii.
Provide safe and satisfactory working conditions
iv.
Delegation of authority to make decisions at the required
level
v.
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 Skills
1. 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

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Chapter 2: Introduction
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. Organizing
Establishing 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. Staffing
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The 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. Directing
Involves 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. Controlling
Constant 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. Coordinating
This is a process which operates smoothly with the flow of informations
decisions and results in every direction of the framework of an organization.
vii. Communicating
For 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
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Chapter 2: Introduction
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
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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 Risks
1. Low profit margins
2. Slow collection of accounts receivables
3. Insufficient working capital
4. High material prices
5. Shortage of qualified, skilled workers
6. Subcontractor failure
7. Inadequate cost-tracking systems
8. Estimating problems
9. Overexpansion
10.
Onerous contracts
11.
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.

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