Construction Management

CE2900
Module 1

Meenakshi Students
Department of Civil Engineering B. Tech 3rd Semester
[email protected]
Office no – 504, Block B

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 Objective of course
• To introduce you to the challenges in construction projects
• To introduce you to the concepts of construction management
• To introduce you to the different skills required to manage projects
• To learn how we can manage construction projects better

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 Course outline
• General overview and Project Organization
• Introduction to construction project, stakeholders of a construction projects, role of project manager, Interdisciplinary
nature of construction projects, construction contracts

• Construction Economics
• Economic decision-making, time value of money, cash-flow diagrams, taxation, inflation, benefit-cost ratio

• Estimation of project cost

• Preliminary estimate, detailed and definitive estimate, contracts, bidding process, contractor’s estimate

• Construction planning
• Type of project plans, work breakdown structure, network diagram, bar chart, PERT and CPM

• Resource levelling
• Resource levelling, resource allocation, network crashing and cost-time trade-off

• Construction quality and safety management

• Construction quality, quality control, quality assurance, cost of quality, construction productivity, evolution of safety,
cost of accidents, principles of safety, safety and health management system

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 References
• Jha, Kumar Neeraj. Construction project management: theory and practice. Pearson Education India, 2011.

• Chitkara, K. K. Construction Project Management. Tata McGraw-Hill Education, 2014.

• Bennett, F. Lawrence., The management of construction: a project life cycle approach. Routledge, 2003.

• Oberlender, Garold D., Project management for engineering and construction. Vol. 2. New York: McGraw-Hill,
1993.

• Peurifoy, Robert Leroy, Cliff J. Schexnayder and Shapira A.. Construction planning, equipment, and methods.
No. 696 pp. McGraw-Hill, 2010.

• Riggs, James L., David D. Bedworth, and Sabah U. Randhawa., Engineering economics. 4th Ed., McGraw-Hill,
2004.

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 Evaluation
• 2 credit course
• 1-4 segments
• 1 to 5 modules
• 6 module – construction quality and safety
• Topics to be presented by students in groups

• Presentation – 10% marks

• 3 quizzes
• 1st Quiz – Module 1 and 2 – 30 % marks
• 2nd Quiz – Module 3 and 4 – 30 % marks
• 3rd Quiz – Module 5 and 6 – 20 % marks
• Attendance and class participation – 10%

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 Why construction industry is important?
• Construction industry vital for socio-economic development
• Employment to billions of people
• Important and essential for country’s infrastructure and industrial development
• Housing and commercial building, roads, dams, airports, refineries, industries etc.
• Influences growth of other industries
• Direct influence – cement, steel, paint, brick, aggregate industry etc..
• Indirect influence – transport, food, agricultural industry etc.
• Construction cost – 60 to 80 % overall project cost
• Time and cost overruns influence national’s growth
• Construction industry indicator of growth of country
• Dip in its growth impacts on employment and income

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 Indian construction industry
• India will be a powerful engine for global growth
• Construction output > US$1 trillion per annum by 2030
and accumulated US$7.9 trillion during the decade to
2030
• Contributes to more than 6% to GDP
• Second largest industry with > 30 million people
employed
• Growth of different sectors – housing, industrial,
commercial, institutional etc
• Approximately INR 304 lakh crore of investment -
infrastructure sector till 2040 in order to sustain the
country’s development (NITI aayog) Global construction growth 2020-30

Future of Construction, Oxford Economics

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 Why construction management is important?

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 Construction project
• Project - temporary endeavor undertaken to provide a unique product or service
• Product – constructed facility – building, road, factory, dam, etc.
• Service – design, planning, execution, etc.
• Unique
• Different scope – network length, cost, time
• Different ground conditions – within city or outside city
• Different technology – according to conditions, economics-time, etc.
• Different agencies – government, private companies, etc.
• Different people – decision makers, workers, etc.
• Temporary – definite beginning and ending
• Complex and interrelated activities
• Huge consumption of resources
• Limited budget and time
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 Stakeholders/Participants of a construction project
• Owner/client • Investors
• Mange the facility upon completion • Provide funding for projects ex. Banking
• Responsible for funds traditionally institutions
• Specifications of the project • PPP - public-private partnership

• Architect/Designer • Consultant
• Responsible for layout, drawings, etc. • Technical services from clients’ side
• Responsible for detailed drawings etc. • Different services – feasibility study,
geotechnical studies, checking of drawings,
• Tender documents
monitoring of execution, etc…..
• Contractor/Constructor • Users
• Responsible for construction of project • Uses the project on completion
• Subcontractors – specialized works, • Needs are identified during planning phase
mobilizing labours, machinery
Tender document example https://tenders.hpcl.co.in/tenders/tenderprog/tenderfiles/6214/Tender/Technical/Tender%2012.11.12.pdf

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 Stakeholders of a construction project
• Safety auditors • Regulatory agencies
• Monitors safety during site operations • Standardization agencies – testing
• Ensure – safety guidelines followed methods
• government agencies - design, the
• Quality auditors construction, and, the operation, is done
• Monitors quality of work during site as per an existing or an agreed guideline
operations
• Insurer
• Lawyers • To reduce risks of bankruptcy in case of
• Responsible for claim settlements and accidents
disputes • Terms and conditions by insurer might play
• Large companies separate legal cell a significant role

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 Phases of a construction project

Pre-project phase Project phase Post-project phase

Initiation phase Basic design phase Utilization phase

Project concepts Detailed design phase Close-down phase

Feasibility Tendering phase

Conceptual

Project strategy Execution phase

Estimate
Approval Closure phase

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 1. Pre-project phase
• Initiation/idea phase
• Need is identified – to build new, to alter the existing or to add in the existing facilities

• Project concepts
• Different options are studied
• A few project options are selected
• Most important step
• Direct influence on the final cost of project
• Greater uncertainty about future

• Feasibility
• Feasibility studies of different project concepts
• Market, technical, environmental and financial feasibility

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 1. Pre-project phase
• Conceptual
• Primary process diagrams and layouts are prepared - basic idea of quantum of work

• Project strategy
• Design team (in-house or contractor), resources and their availability, number of contractors,
overall scheduling

• Estimate
• Preliminary estimate by divided project into work packages
• Using historical database or resources – cost is estimated (reasonable accuracy)

• Approval
• Financial evaluation, identifying details of funding and their timing

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 Project phase/project implementation or realization phase
Preliminary estimate

Administrative approval and financial sanction

Basic design

Administrative approval and financial sanction

Detailed design

Detailed estimate

Final approval and technical sanction

Tendering phase

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 2. Project phase
• Basic design phase • Detailed design phase
• By engineering organization or an • By in-house team or through
architect contracting
• Basic design calculation, preparing • Depending on the contract type, this
tender drawings, preparing design and phase may also move after tendering
material specification, etc. phase
• Documents for tendering, contracting • Item-rate contract – detailed designs
or for procuring equipment are usually provided to contractor
• Changes, if any, from the initial scope of • Design and built contract and Turnkey
work are recorded contract – tendering starts after basic
• Regular meetings design

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 Project phase
Tendering phase

Tender documents – Technical and financial

Notice inviting tender

Submission of bids

Evaluation of bids

Selection of contractor

Sanction of contract
This process should be transparency in the process – funds are being used appropriately and effectively

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 Project phase
• Notice inviting tender
• Publication/notice issued to the public
through press/online/otherwise expressing
the intention of the corporation to get the
supplies/work done and requesting the
bidder to make offers
• Details of the work either mentioned or
method of obtaining details is mentioned
• Method of circulation may vary – local, state,
national or global

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 Project phase
• Bidding
• The effort of interested organizations to win contracts by responding to tenders.
• Tendering
• Actions performed by the awarding authority to produce, publish and manage tendering
documents
• Tender
• Written offer to execute specified work within a certain time, within a certain budget and
under certain conditions of contract

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 Project phase
• Content of notice inviting tender
• Information about client
• Nature of work
• Estimated cost
• Time of completion
• Type of contract
• Pre-qualification criteria
• General conditions of contract
• Special conditions of contract
• Details of earnest money deposit (EMD), security deposit, and performance guarantee
• Date, timing and place of opening
• Date, timing and place of Pre-bid conference

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 Project phase
• Evaluation of bids
• Technical bid and financial bid
• Technical bid - eligibility/qualification of the bidders
• Rejection of bids without EMD and non-qualified contractors
• Financial bid - tendered rates for individual items are compared with the estimated rates to
spot out those with exceptionally high or low rates
• The impact of such items on the overall costs of work can be assessed and if the variation in
the total cost is marginal, such tenders can be considered for comparison.
• Bidder is identified
• Letter of intent (LOI)
• A formal invitation to one of the bidders showing intend to award the job
• Mobilize resources and commencement of work

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 Pre-qualification

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 Project phase
• Earnest Money Deposit
• 2.5% of the estimated value of the work – to be refunded to all unsuccessful bidders.

• Performance Guarantee
• 5% of the award value of the work submitted immediately on acceptance of tender or within
certain time after acceptance.
• Held till the completion of work and refunded only after getting a certification of successful
completion of work

• Individual Security Deposit

• to be retained @ 10% of each running bill from each running bill to maximum limit of 5% of
the estimated value of the work.
• Released when it is no longer required after obtaining “No Objection Certificate” from the
concerned engineer-in-charge, generally after defect liability period.

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 2. Project phase
• Tendering phase
• Preparation of clear and concise documents
• Preparing
• Specifications, agreement conditions, bill of quantities and contract value
• Issue of tender documents, holding meetings, receiving bids and evaluation of bid
• Contractor selection and approval to place a contract
• Award of contract

bill of quantities consists of a list of materials and services required to perform a project. The
list includes materials, labor, and quantities of each
https://cic.gov.in/sites/default/files/Tenders/Tender%20for%20Building_1.pdf

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 2. Project phase
• Execution phase – mobilization phase
• Detailed programme of construction activities
• Detailed drawings and designs prepared, if not provided as tender document
• Project budget and system for tracking actual project costs
• Organization of worksite – temporary buildings and services, access and delivery locations,
storage area, security
• Initiation of procurement of materials and equipment
• Arrangement of labours
• Mobilization advance

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 2. Project phase
• Execution phase – Operation phase
• Main focus – monitoring and controlling, resource management and documentation and
communication
• Monitoring and controlling –
1. whether project on schedule or not
2. Actual cost performance vs planned budget
3. Quality management
4. Work safety
5. Environmental impact of construction
• Resource management – Materials, equipment, labour
• Documentation and communication
• To keep all the involved stakeholder informed
• Required in case of disputes

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 2. Project phase
• Project closeout and termination phase
• Various testing, the final cleanup, various inspections and remedial work
• Closing of all temporary facilities
• Termination/transfer of staff
• Paperwork – for final payment
• Final comparison of original drawing to as-built drawings
• Transfer of project to owner

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 2. Post-project phase
• Utilization phase • Close-down phase
• Monitoring and maintenance of facility • Dismantle and dispose off
• Owner
• User
• Contractor

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 Phases of a construction project

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 Project life cycle

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 Project life cycle

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 • Tender fee • Earnest money deposit
• Cost charged for documents • Earnest – showing sincere and
evaluation process intense conviction

• Usually collected in the form of • Earnest money deposit – Money

tender documents’ purchase fee deposited to show sincerity and
conviction to execute the
construction project
• Usually a marginal amount
• Refunded to unsuccessful bidders.
• Usually, non-refundable regardless not refunded in case the bidder
the contract is awarded or not. withdraws or amends the offer
after winning the contract

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 Construction contract
• A contract is basically a written commitment between two consenting parties, which, if breached,
remedial protection can be sought under the law by the affected party, since the law recognizes its
performance as the rightful duty – VK Raina

• Construction contract
• An agreement between a client that wants construction done and a general contractor
• Details the contractor's scope of work, including their right to subcontract any of the work
• How and what they will charge for the work, and any applicable plans or work orders.

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 Documents in construction contract
• The construction drawings

Basic plan Elevation Section A-A

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 Construction drawings

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 Documents in construction contract
• The construction drawings - visual descriptions of the project to contractor
• Means to convey quantity of the work
• Two-dimensional diagram – Plan or blueprint/softcopy
• Site drawings, Architectural drawings, structural drawings, HVAC drawings, electrical drawings, etc.

• The specifications
• Written instructions – not possible to show on drawings
• Ex – quality of material, quality of workmanship, IS code to follow, inspection and installation method

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 Construction contract
• The general conditions of contract (GCC)
• General – the document is standard one used by all the contracts entered by the party (owner)
• Details responsibility and obligation of parties to contract
• Provides scope and performance, valuation and payment terms, arbitration and laws, safety
codes, etc.
• The special conditions of contract (SCC)
• Separate document – amendments, additions and deletions to GCC
• List of materials provided by the owner, site visits, mobilization advance, etc.
• The agreement
• Final signed agreement between the parties
• The bill of quantities (BOQ)
• Net quantity to be executed in each item of work

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 Types of construction contracts
• Types discussed here are relevant to large and complex construction projects
• Owner might not have the knowledge of work
• Owner – hire different parties to different work at different stages
• Types of construction contracts
• Separated contracts
• Integrated contract

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 Separated contracts - 1
• Clear division between the design and construction responsibilities
• Design – architects/engineers, construction – constructor
• Tendering only after detailed design and estimate is completed
• Types of separated contracts
1. Lump-sum contract
2. Measurement contracts
3. Cost plus percentage

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 Separated contracts - 1
• Lump-sum contract
• Based on detailed drawing, contractor quote a single lump-sum amount for work
• Lump-sum amount – supply of raw materials, building facility and also accounts for
uncertainties occurring during the work
• Revision in the amount is possible – if the reason is uncontrollable by contractor
• Detailed measurement of the work done is not required with each bill amount
• Bills are paid based on the basis of milestone

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 Separated contracts - 1
• Measurement contracts
• Payment based on the actual work carried out
a) Item rate contract
• Rate is quoted based on the unit quantity of a particular work
• Detailed BOQ is a must
• For any additional work not listed in BOQ – rate determined based on resources involved

b) Percentage rate contract

• Instead of unit rate of each item, percentage figure by which the estimate unit rates are to be
increased or decreased, the same percentage figure being applicable to all the items

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 Separated contracts - 1
• Cost plus percentage
• Client pays the contractor actual cost incurred + a certain percentage of the cost incurred
• a certain percentage of the cost incurred - profit
• Only in emergencies, when work to be started without detailed estimate
• Often, the client makes a part of the material available to the contractor
• This type of contracts is usually used in an emergency

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 Integrated contract - 1
1. Design-Build Contract
• Basic design provided by client and detailed design and construction by contractor
• Conflict between designer and contractor is avoided
• Client has no-house design team and engineering department
• Contractor should have expertise in both design and construction.
• Separate companies specializing in design and construction can always form a joint venture
and bid for such a project, with appropriate financial and legal arrangements.

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 Integrated contract - 1
2. The turnkey contract
• Owner wants to ‘turn the key’ at the completion to take over the facility
• Contractor responsible from surveying to construction and test operations
• Especially useful for highly interdisciplinary projects – civil, mechanical, electrical, mining, etc.
• Main contractor – Engineers India Ltd., Hindustan Construction Company, Larsen & Turbo
• Client – only prepares documents stating the requirement and responsible for finances
• Selection of contractor
• Either by selecting best proposal from bidder
• Or by working with a specific contractor

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 Integrated contract - 2
3. Build, Operate and Transfer (BOT) contract
• Owner specifies only requirement
• Contractor – responsible for finances, designing, building, operating and then transferring to
the client
• Owner doesn’t arrange finances
• Increases participation of private sector in the public sector
• Contractor – research on economical and technical feasibility
• Contractor – research on social and administrative aspects of project
• Mechanism to follow if expected revenue is not met

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 Other type of contracts in construction
• Partnering contract
• the client and the contractor together form a project team based on mutual confidence and
then work together to manage the project to a successful conclusion, yielding a profit for both
parties.

• Joint venture
• several contractors pool in their resources and form a joint venture and bid for the project
together.

• Management contracts
• Owner appoints a construction manager at an early stage to provide planning, management
and coordination.
• The owner also appoints the designer and contractors
• Construction manager is mainly coordination among different contractors, besides ensuring
timely completion of project within the budgeted cost according to the specifications.

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 Exercise – please write down the sequence of phases
Separate contract Design-built contract Turnkey project BOT contract

Tendering phase Tendering phase Tendering phase Tendering phase

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 Project management
• Application of knowledge, skills, tools and
techniques to a broad range of activities to
meet the requirements of the project.
• Planning – setting objectives, identifying
resources and forming strategy
• Executing – allocation of resources, guiding
execution, communication
• Controlling – measuring achievement,
reporting and resolving problems

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 Project management
• Management of
• Scope
• Time
• Cost
• Quality
• Safety
• Human resource
• Communication
• Risk
• Procurement

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 Project manager
• Capabilities
• Initiating, planning, executing, controlling and closing

• Knowledge areas
• Project scope management
• Project time management
• Project cost management
• Project quality management
• Project human resource management
• Project communications management
• Project risk management
• Project procurement management
• Project integration management

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 Who is a better manager?
• https://youtu.be/jv0VKri79c0 - Baahubali Kalakeya War Scene.

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 Construction industry segments

General building construction Engineered construction

Residential construction Highway construction

Commercial construction Heavy construction

Institutional construction

Industrial construction

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 General building construction
• Residential construction • Institutional construction
• Single-family/Multifamily homes • Hospitals, schools and universities
• Flats and apartments • Recreational centres and athletic stadiums
• Designed by architects/owners/builders • Design – architects/engineering firm
• Constructed by contractor/subcontractors • Constructed by contractor/subcontractors

• Commercial construction • Industrial construction

• Retail and wholesale stores • facilities that manufacture and process
products
• Office buildings, shopping centres
• steel mills, electric power-generating
• Design – architects/engineering firm
plants, petroleum refineries
• Constructed by contractor/subcontractors
• Design – engineering firms

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 Engineered construction
• Designs prepared by engineers rather than architects, emphases on functionality
than aesthetics
• The public infrastructure, owned by public-sector entities and funded through
bonds, rates or taxes
• Use of heavy equipment's and machinery and plant in the construction process.
• Highway construction • Heavy construction
• excavation, embankment construction, • Dams, tunnels, pipelines, marine
paving, installation of bridges and drainage structures, water and sewage treatment
structures and associated lighting and plans, railroads, rapid transit systems,
signage airports
• Utility work such as electrical transmission
and distribution systems, water lines, etc.

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 Interdisciplinary nature of construction projects
• Most of the modern day projects have components of civil, electrical, mechanical,
etc.
• Depending on the stage of work – different construction manager may be
appointed - civil, electrical, mechanical, etc.
• Different stage of work – different activities predominate
• Example – metro construction, transmission lines, railways, automobile plant,
automatic parking stations

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 Summary
• Construction industry
• Stages of project
• Different type of contracts
• Construction manager

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