CVS 465: CONSTRUCTION MANAGEMENT I

Mr. L.O. Muku

1
STRUCTURE OF CONSTRUCTION INDUSTRY IN KENYA

Content
Introduction
Clients
Consultants
Contractors
National Construction Authority
o Requirements for Registration
Qualifications
Classes of Contractors
Types of constructions and procurement models

2
 Introduction
The Kenyan construction industry involves work done on buildings
and infrastructures and processes involved are key and ought to be
understood.

Consists of two categories of players:

3
 Clients
The client may be a government parastatal, County
Government, an individual, a private company such as a
bank, an industrial organization or an institution such as
school or hospital, a capital investor or a speculator.
Pension funds and insurance companies are also involved in
the construction industry as clients.
The government of Kenya, however, has been for a long
time the major client for the construction industry
constituting about 60% of the total value, which currently
stands at 4% of the GDP.
The client normally initiates the project and provides
the design team with a project brief based on his needs
and budgetary constraints and then the design team
undertakes to propose solutions to the client’s needs. 4
 Consultants
Consultants are professionals in the construction industry
who are qualified at degree level and who are mandated to
conceptualize and design building projects which would be
executed by their counterparts, the contractors.
They include the following primary and tertiary
professionals:
Primary Professionals
oProject Managers
oArchitects
oEngineers ( Civil, Structural, Mechanical, Electrical
etc) 5
 Consultants…
Project Managers
The concept of independent project managers is fairly new
in Kenya and is the process of taking root.
Previously one of the design consultants used to act also as
a project manager and would provide the necessary liaison
between the client and the design team.
The disadvantages of such a set-up are many. Such a
person may lack objectivity as a project administrator and
favour his team leading to unnecessary conflicts between
the various consultants and the contractor in a project and
affect the implementation of the project.
Brainstorm on some of the other disadvantages

6
 Consultants…
Architects
The architect designs the form of the building providing
space to meet the client’s needs and also incorporating
aesthetics based on cultural and regional trends and
environmental aspects.
Engineers ( Civil, Structural, Mechanical, Electrical etc)
In most building projects the engineer works in
collaboration with an architect providing essential services
such as structural, civil, mechanical and electrical
engineering designs.

7
 Consultants..
Tertiary Professionals
o Landscape Architects
o Quantity Surveyors
o Land Surveyors
o Building surveyors –training on property or construction
o Town Planners
o Country planners
o Environmentalists
o Social Scientists
8
Consultants..
Building surveyor
Required training related to property or construction
Role
Advising clients about building/property issues including
technical, financial, legal, environmental, building
regulation and restoration matters.
Undertaking property and land surveys and valuations.
Monitoring the deterioration of a property and taking
steps to abate it.
Preparing plans, contracts, budgets and other
documentation. 9
Consultants..
Building surveyor
Role
Writing technical reports.
Planning and overseeing building work.
Managing projects and/or multi-disciplinary teams.
Identifying building defects and offering advice about
remedial work.
Monitoring progress and ensuring work is completed in
time.

10
Contractors
Contractors are practitioners who are authorized are to
execute projects conceptualized and designed by
consultants and under their supervision.
They are typically categorized as local or international,
The locals being further categorized as national or
regional.
They include the following categories of practitioners:-

11
 Contractors..

1. Engineering Contractors
Civil Engineering contractors
Telecommunications contractors
Building Engineering contractors
Combination of the two types of engineering
contractors

12
 Contractors…
2. Specialist Contractors
Telecommunications contractors
Building Engineering contractors
Electrical contractors
Sewerage contractors

13
Example of Project Organization: Design and
Construction of Hazina Housing Estate

14
National Construction Authority (NCA)
National Construction Authority (N.C.A) under the
Ministry of Lands, Housing and Urban Development
N.C.A was constituted under the Act No. 41, 2011.
NCA is mandated to streamline, overhaul and regulate the
construction industry in Kenya and establish, a code of
conduct in the industry
NCA provides the legal and regulatory requirements for
registration as a contractor

15
NCA Mandate
Promote and stimulate the development, improvement and
expansion of the construction industry;
Advise and make recommendations to the Minister on matters
affecting or connected with the construction industry;
Undertake or commission research into any matter relating to
the construction industry;
Prescribe the qualifications or other attributes required fo
registration as a contractor under this Act;
Assist in the exportation of services connected to the
construction industry;
Provide consultancy and advisory services with respect to the
construction industry;
16
NCA Mandate…
Promote quality assurance in the construction industry;
Encourage the standardization and improvement of
construction techniques and materials;
Initiate and maintain a construction industry information
system;
Provide, promote, review and co-ordinate training
programmes organized by public and private accredited
training centers for skilled construction workers and
construction site supervisors;
Accredit and register contractors and regulate their
professional undertakings; and
Accredit and certify skilled construction workers and
construction site supervisors. 17
National Construction Authority (NCA)…
Requirements for registration
1. Qualification
To be eligible for registration as a contractor:
A firm must hold a certificate of incorporation from the
registrar of companies
At least one of the directors must have minimum
technical qualification, skills and experience in a
construction related field and all the directors must
submit their CVs to NCA
Applicant must show tax compliance by providing a
valid PIN, VAT and Income Tax Compliant Certificate
Must produce evidence of an existing bank account
bearing the name of the construction company
18
 Requirements for registration…
1. Qualification…
Foreign contractors are issued with a clearance certificate
that remains valid only for a specific period
They are required to lodge an affidavit with NCA that
they shall not carry out any construction project in Kenya
once they complete the project for which they have been
cleared
Foreign firms must also submit a commitment to transfer
technical skills not available locally to locals as NCA may
determine from time to time
Upon successful application the contractor is issued with
a “Certificate of Registration”
19
 National Construction Authority (NCA)...
Requirements for registration
2. Classification of Contractors
According to NCA rules and regulations, a contractor may
be registered for more than one class of construction
works, but may hold only one category of registration in
relation to a particular class of construction works at any
one given time

20
National Construction Authority (NCA)…
Requirements for registration
2. Classes of Contractors
NCA1 – Unlimited contract value (Contractors- Building,
Specialist contractors, Roads and other Civil works)
NCA2 – Up to 500,000,000 (Building Contractors); up to
250,000,000 (Specialist contractors); up to 750,000,000
(Roads and other Civil works)
NCA3 – Up to 300,000,000 (Building Contractors); up to
150,000,000 (Specialist contractors); up to 500,000,000
(Roads and other Civil works)

21
National Construction Authority (NCA)..
Requirements for registration
Classes of Contractors
NCA4 – Up to 200,000,000 (Building Contractors); up to
100,000,000 (Specialist contractors); up to 300,000,000 (Roads and
other Civil works)
NCA5 – Up to 100,000,000 (Building Contractors); up to
50,000,000 (Specialist contractors); up to 200,000,000 (Roads and
other Civil works)
NCA6 – Up to 50,000,000 (Building Contractors); up to 20,000,000
(Specialist contractors); up to 100,000,000 (Roads and other Civil
works)

22
National Construction Authority (NCA)…
Requirements for registration
Classes of Contractors
NCA7 – Up to 20,000,000 (Building Contractors); up to
10,000,000 (Specialist contractors); up to 50,000,000
(Roads and other Civil works)
Local contractors pay registration fees Ksh. 10,000- 50,000
depending on their category
Annual practice license renewal costs Ksh. 5,000- 10,000.

23
National Construction Authority (NCA)..
Requirements for registration
Foreign contractors pay registration fees Ksh. 100,000 and
are restricted to the categories of tenders they win
Foreign contractors required to submit to sub contract “ not
less than 30% of the contract value” to local contractors
To protect local contractors from being driven out of
business by global firms, foreign contractors will not be
cleared to carry work below NCA1 category

24
 Assignment

1. Briefly describe some of the weaknesses of NCA in

25
 Types of Construction Projects
In general, there are three types of construction:
• Building construction
• Heavy / civil construction
• Industrial construction
Each type of construction project requires a unique team to plan,
design, construct, and maintain the project.
1. Building construction
Building construction is the process of adding structure to real
property. Building construction projects include some elements in
common - design, financial, and legal considerations.
Many projects of varying sizes reach undesirable end results, such as
structural collapse, cost overruns, and/or litigation reason, those with
experience in the field make detailed plans and maintain careful
oversight during the project to ensure a positive outcome.
They can be procured privately or publicly utilizing various delivery
methodologies, including hard bid, negotiated price, traditional,
management contracting, construction management-at-risk and/or 26
 Types of Construction Projects…
Construction practices, technologies, and resources must conform to
local building authority regulations and codes of practice.
Materials readily available in the area generally dictate the
construction materials used (e.g. brick versus stone, steel versus
timber).
Cost of construction on a per square metre (or per square foot) basis
for houses can vary dramatically based on site conditions, local
regulations, economies of scale (custom designed homes are always
more expensive to build) and the availability of skilled trades people.
As residential (as well as all other types of construction) can generate
a lot of waste, careful planning again is needed here.
2. Heavy / civil construction
Civil engineering deals with the design, construction and maintenance
of the physical and naturally built environment, including works such
as bridges, roads, canals, dams and buildings. These encompasses
Heavy construction.
27
Types of Construction Projects/Construction
Processes..
3. Industrial construction
Industrial construction, though a relatively small part of the entire
construction industry, is a very important component.
Owners of these projects are usually large, for-profit, industrial
corporations. These corporations can be found in such industries as
medicine, petroleum, chemical, power generation, manufacturing, etc.
Processes in these industries require highly specialized expertise in
planning, design, and construction.
As in building and heavy/highway construction, this type of
construction requires a team of individuals to ensure a successful
project.
Construction Processes
1. Design and Construction Team
In the modern industrialized world, construction usually involves the
translation of designs into reality. A formal design team may be
assembled to plan the physical proceedings, and to integrate those
proceedings with the other parts. 28
 Construction Processes
The design usually consists of drawings and specifications, usually
prepared by a design team including surveyors, civil engineers,
quantity surveyors), mechanical engineers, electrical engineers,
structural engineers and fire protection engineers. The design team is
most commonly employed by (i.e. in contract with) the property
owner. Under this system, once the design is completed by the design
team, a number of construction companies or construction
management companies may then be asked to make a bid for the
work, either based directly on the design, or on the basis of drawings
and a bill of quantities provided by a quantity surveyor.
Following evaluation of bids, the owner will typically award a
contract to the most cost efficient bidder.
2. Financial Advisors
Many construction projects suffer from preventable financial
problems. Underbids ask for too little money to complete the project.
Cash flow problems exist when the- present amount of funding cannot
cover the current costs for labour and materials, and because of having
29
 Construction Processes..
2. Financial Advisors
Financial planning for the project is intended to ensure that a solid
plan, with adequate safeguards and contingency plans, is in place
before the project is started, and is required to ensure that the plan is
properly executed over the life of the project.
Bankers, financial controllers and cost engineers are likely
participants in creating an overall plan for the financial management
of the construction project.
Cost overruns with government projects have occurred when the
contractor was able to identify change orders or changes in the project
resulting in large increases in cost, which are not subject to
competition by other firm as they have already been eliminated from
consideration after the initial bid.

30
 Construction Processes..
3. Legal Consideration
A construction project must fit into the legal framework governing the
property. These include governmental regulations on the use of
property, and obligations that are created in the process of
construction.
The project must adhere to zoning and building code requirements.
Constructing a project that fails to adhere to codes will not benefit the
owner.
Legal advisors in the beginning of a construction project seek to
identify ambiguities and other potential sources of trouble in the
contract structure, and to present options for preventing problems.
4. Interaction of Expertise
Design, finance, and legal aspects overlap and interrelate.
The design must be not only structurally sound and appropriate for the
use and location, but must also be financially possible to build, and
legal to use.
31
 Project procurement models
Procurement is the acquisition of appropriate goods and/or services at
the best possible total cost of ownership to meet the needs of the client
in terms of quality, quantity and time.
Models of construction procurement that are commonly applied are:
o Traditional (Design-bid-build)
o Design and Build
o Management Contracting
1. Traditional (Design-bid-build)
This is the most common method of construction procurement and is
well established and recognized.
In this arrangement, the architect or engineer acts as the project
coordinator.
His or her role is to design the works, prepare the specifications and
produce construction drawings, administer the contract, tender the
works, and manage the works from inception to completion.
There are direct contractual links between the architect's client and the
main contractor. Any subcontractor will have a direct contractual 32
 Project procurement models..
This model uses 3 main mechanisms for determining a contract price:
o Lump sum contracts, where the contract sum is largely determined
before full construction starts;
o Measurement contracts, where the contract sum is not finalized until
after completion by a re-measurement of the works on a previously
agreed basis; and
o Cost reimbursement contracts, where the contract sum is determined
on the actual cost of labour and materials, with an amount added to
cover overheads and profit.
2. Design and Build
This approach has become more common in recent years and includes
an entire completed package, including fixtures, fittings and
equipment where necessary, to produce a completed fully functional
building.
In some cases, the Design and Build (D & B) package can also
include finding the site, arranging funding and applying for all
necessary statutory consents. 33
 Project procurement models..
Several D&B contractors present different ideas about how to
accomplish these goals.
The owner/client selects the ideas he likes best and hires the
appropriate contractor. Often, it is not just one contractor, but a
consortium of several contractors working together.
Once a contractor (or consortium/consortia) has been hired, they begin
building the first phase of the project. As they build phase 1, they
design phase 2. This is in contrast to a design-bid-build contract,
where the project is completely designed by the owner, then bid on,
then completed.
As design and construction may proceed in parallel, this could result
in a shorter overall project timeframe.
The client will have reasonable certainty over construction costs
because the contract sum is known at the outset.

34
 Project procurement models…
3. Management Contracting
In this model, overall design is the responsibility of the client’s
consultants, while the contractor is responsible for managing the
performance of the works through separate trade contracts.

The client appoints the consultants and prepares the project drawings,
specifications and cost plan, and retains overall design control through
its professional team.

As detailed design can proceed in parallel with construction work, the

However, there is no certainty over costs at the outset and works