Title: Construction Fundamentals
1Construction Fundamentals
2Chapter 3 Construction Management Functions
- Purpose of operating a business is to earn a
profit!
3Chapter 3 Construction Management Functions
- To be successful a construction company must
- Estimate the cost of construction projects
accurately - Predict the schedule of the work
- Control the progress and expenditures during
construction - Complete projects safely and on time
4Construction Management Functions
- Responsibility to construct the project
- in accordance with the plans and specifications
- to satisfy the customers cost, quality, and time
expectations - The project team is organized for the purpose of
accomplishing those missions!
5Owner Functions
- Defining the scope of the project
- Planning the project
- Financing the project
- Ensuring the project team understands the
projects goals
6Construction Management Functions
- Company level
- Selecting the right jobs to bid
- Preparing the cost estimate
- Submitting the bid
- Procuring the payment and performance bonds
- Scheduling the work
- Securing project operating capital
7Construction Management Functions
- Construction site level
- Setting the standards for quality and safety
- Planning the sequence of construction
- Controlling progress and expenditures
8Construction Management Functions
- Construction site level
- Communicating effectively with owner and designer
- Coordinating the work of the subcontractors
- Managing submittals, change orders and periodic
pay estimates - Closing out the project
9Project Planning And Design
- Master planning
- Scope definition
- Owner determines exactly what kind of a facility
will be built - Sets the design objectives for the
Architect/Engineer - Planning phase
10Influence on Construction Quality
11Influence on Construction Project Cost
12Impact of Time on the Cost of Project Changes
13The Business of Construction Management
14Planning Phase
- Select the designer
- Define the project goals
- Ensure the availability of sufficient funds to
complete the project - Select and purchase the project site,
- Determine construction procurement system and the
form of construction contract to be used.
15Design Phase
- Primary requirement for any facility is that it
must be safe!! - Building codes
- Owner and A/E schedule design reviews
- schematic drawings
- preliminary drawings
- working drawings
16Bid Phase
- First step is to decide whether or not to bid the
job. Contractors are generally limited in their
ability to bid by two factors - their bonding capacity and
- the policies of management
17Policies of Management
- Factors contractors consider in deciding whether
or not to bid a particular project include - Location of the work
18Factors Contractors Consider
- Identity of the owner
- Availability of key company personnel
- Experience in the type of work solicited
19Factors Contractors Consider
- Whether or not there is financing for the project
- Size of the project.
20Bid Preparation
- Bid preparation is expensive!
- In preparing a bid, contractors must consider the
costs of - Equipment
- Labor
- Materials
- Subcontractors
21Bid Preparation
- Consider the costs of
- Job and company overhead, contingency, and profit
- Should also consider the number of competitor
bidders and the bidding history of those
competitors on similar projects
22Award Phase
- Owner provides
- Builders Risk insurance
- Successful bidder must provide
- Payment and performance bonds
- Workers compensation insurance
- Liability insurance
- List of subcontractors
- Detailed project schedule
23Notice to Proceed
- Contractor cannot begin the work until the
Notice to Proceed is received so - Use the time between bid opening and contract
award for detailed pre-project planning.
24Pre-project planning
- Planning how the work will proceed and in what
sequence - Construction procedures
- Type of equipment to be used
- Job access
- Location of the field office and storage areas
- Final selection of subcontractors and suppliers
25Pre-project planning
- Cash flow analysis should be completed to
determine if the company needs to borrow money - Detailed project schedule is prepared
- Work break down (WBS) and pay schedule are
planned
26Construction Phase
- Size of the contractors on-site project
management organization is a function of the size
and complexity of the project.
27Project Management Team
28Construction Company Team Functions
- Project managers (PM)
- Superintendents
- Schedulers
- Estimators
- Material expediters
29Owners Project Team
- Size of the owners project team will depend on
the size and complexity of the project small
project (A/E) - Large highway project
- Resident engineer
- Inspectors
- Surveyors
- Quality assurance technicians
30Managing Critical Activities
- Contracts are broken down into activities for
purposes of scheduling, estimating, progress
control, and cost control. Large projects can
have several hundred activities, or more! - Trick is to know which activities are critical
31Critical Activities
- Critical activities are those that could impact
the cost of the work by at least one half of one
percent of the bid price - For example, on a 1,000,000 project, any
activity with a potential for cost over-run or
under-run of 5,000 or more is by definition a
critical activity.
32Paretos 80-20 rule
- 20 of the activities are critical and should be
managed carefully - The other 80 will average out
33Project Control
- Cost control
- Cash Flow Analysis
- Schedule Control
- Material Management
34Cost Control
- Possible corrective actions could include
- Adding additional trade workers or crews
- Adding or removing equipment
- Working overtime
- Bringing in additional subcontractors
35Cost Control
- Possible corrective actions could include
- Making the job more efficient
- Eliminating factors that cause subcontractors to
interfere with each other
36Productivity
- Let R Production rate
- Where T is total time, Q is the total quantity
to be installed - The total cost is determined by the equation
- Ct Ch ? T
- Where Ct total cost and Ch cost per hour, or
- Ct Ch ? (Q/R)
37Cash Flow Analysis
Cost
Time
38Front Loaded Cost Curve
Cost
Time
39Cash Flow Schematic Diagram
40Profit (loss) To Date
- Project Manager must calculate profit (loss) to
date on a regular, weekly basis - Cost to date
- Re-estimated cost to complete
- Amount billed
- Contract amount (including change orders)
- Example 3.2
41Schedule Control
- Chapter 4
- Critical path - By definition, activities on the
critical path will delay the entire project if
they are delayed - Physical progress can be compared with the
financial progress to determine if the project
is - on schedule or late
- over budget or under budget
42Materials Management
- Ensure that materials are delivered in a timely
manner to the site in the quantity and quality
required. When materials arrive they are - Counted
- Inspected
- if necessary, Tested
43Materials Management
- Must determine the latest order date accounting
for the - shop drawing
- Preparation
- submission and
- approval time
- lead time required for fabrication
- shipping
44Materials Management
- Too many materials stored on the site can lead to
problem of - space allocation
- weather damage
- theft
45Construction Related Design
- Temporary structures such as
- Scaffolding
- Forms
- Temporary bridges
- Shoring
- Cofferdams
- Rigging
- must be designed by the contractor
46Risk Management
- Risks are inherent in construction
- Industry is moving toward allocating risks to the
party most able to control the specific risk - Managing risks means
- minimizing risks
- insuring against risks
- and sharing risks
47Risk Management
- Construction risks - inability of a subcontractor
to perform - Economic risks - cost escalation
- Political/public risks - disapproval of the
required project permits - Physical risks - subsurface conditions
48Risk Management
- Contractual and legal risks - risks assigned by
contract over which the contractor has no control - Design risks - a project design that is not
constructible
49Risk Management
- Worker injured or killed
- A job accident that injures the public
- A construction vehicle is involved in an accident
off the project
50Risk Management
- Risks are best assumed by the party with the
ability to best control the risk - The best way to manage risks is to avoid them,
but the construction industry is characterized by
risks!
51Risk Management
- Contractors manage risks by purchasing insurance
- Examining the contract language addressing
changed conditions - Contractor safety programs
- Subcontracting is also a form of risk management
require performance and payment bonds
52Value Engineering (VE)
- Function analysis or value analysis
- Main objective to reduce project cost, without
reducing the quality of the structure - VE exists because contractors know better ways to
build projects, and owners are willing to pay for
that knowledge!!
53Assignment
- Due next class
- Chapter 3 Review Questions
- 3.5
- 3.10
- 3.15