Project Management for Construction Industry
?Various specialists such as planners, architects, engineering designers, constructors, fabricators, material suppliers, financial analysts and others are part of the construction industry projects. To be sure, each specialty has made important advances in developing new techniques and tools for efficient implementation of construction projects. However, it is through the understanding of the entire process of project management that these specialists can respond more effectively to the owner’s desires for their services, in marketing their specialties, and in improving the productivity and quality of their work.
Owner wants to achieve best value for their investment
Contractors desire to bid low enough to win but high enough to realize profit on investment
Workers hope to achieve better living standards and working conditions
Architect and Engineers are not directly associated with the above groups
Professional achievement more attractive
?The Project Life Cycle
From the perspective of an owner, the project life cycle for a constructed facility may be illustrated schematically in the below Figure. Essentially, a project is conceived to meet market demands or needs in a timely fashion. Various possibilities may be considered in the conceptual planning stage, and the technological and economic feasibility reports (TEFR) of each alternative will be assessed and compared in order to select the best possible project. The financing schemes for the proposed alternatives must also be examined, and the project will be programmed with respect to the timing for its completion and for available cash flows. After the scope of the project is clearly defined, detailed engineering design will provide the blueprint for construction, and the definitive cost estimate will serve as the baseline for cost control. In the procurement and construction stage, the delivery of materials and the erection of the project on site must be carefully planned and controlled. After the construction is completed, there is usually a brief period of start-up or shake-down of the constructed facility when it is first occupied. Finally, the management of the facility is turned over to the owner for full occupancy until the facility lives out its useful life and is designated for demolition or conversion.
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Of course, the stages of development in the above Figure may not be strictly sequential. Some of the stages require iteration, and others may be carried out in parallel or with overlapping time frames, depending on the nature, size and urgency of the project. Furthermore, an owner may have in-house capacities to handle the work in every stage of the entire process, or it may seek professional advice and services for the work in all stages. Understandably, most Clients choose to handle some of the work in-house and to contract outside professional services for other components of the work as needed. By examining the project life cycle from an owner’s perspective we can focus on the proper roles of various activities and participants in all stages regardless of the contractual arrangements for different types of work.
Conceptual Planning and Feasibility Studies
Forecast Future Demand
Location
Availability of Resources
Accessibility to transportation
Political and Institutional Factors
Sociological and Economic Impact on Community
Environmental Impact
Overall Technical and Economic
Feasibility
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Engineering and Design
Architectural concepts
Evaluation of technological process alternatives
Size and capacity of facility
Comparative economic studies
Reviews by regulatory bodies for compliance
Zoning regulations
Building codes
Licensing procedures
Safety standards
Environmental impact
Public Hearing
Funding cycles in Legislative and Executive Bodies
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Procurement and Construction
Process whereby the Designer’s Plans and Specifications are converted into Physical Structures and Facilities
Services
Equipment
Materials
Co-ordination of all resources to complete the project
On Schedule
Within Budget
According to Specified Standard of Quality and Performance
Start-up and Implementation
Testing of Components
Warranty Period
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Operation and Maintenance Utilization
Regular Maintenance of Facilities
?The project life cycle in construction industry process is often very complex; however, it can be decomposed into several stages as indicated by the general outline in the above figure. The solutions at various stages are then integrated to obtain the final outcome. Although each stage requires different expertise, it usually includes both technical and managerial activities in the knowledge domain of the specialist. The owner may choose to decompose the entire process into more or less stages based on the size and nature of the project, and thus obtain the most efficient result in implementation. Very often, the owner retains direct control of work in the planning and programming stages, but increasingly outside planners and financial experts are used as consultants because of the complexities of projects. Since operation and maintenance of a facility will go on long after the completion and acceptance of a project, it is usually treated as a separate problem except in the consideration of the life cycle cost of a facility. All stages from conceptual planning and feasibility studies to the acceptance of a facility for occupancy may be broadly lumped together and referred to as the Design/Construct process, while the procurement and construction alone are traditionally regarded as the province of the construction industry.
Clients must recognize that there is no single best approach in organizing project management throughout a project’s life cycle. All organizational approaches have advantages and disadvantages, depending on the knowledge of the owner in construction management as well as the type, size and location of the project. It is important for the owner to be aware of the approach which is most appropriate and beneficial for a particular project. In making choices, Clients should be concerned with the life cycle costs of constructed facilities rather than simply the initial construction costs. Saving small amounts of money during construction may not be worthwhile if the result is much larger operating costs or not meeting the functional requirements for the new facility satisfactorily. Thus, Clients must be very concerned with the quality of the finished product as well as the cost of construction itself. Since facility operation and maintenance is a part of the project life cycle, the End Users’ expectation to satisfy investment objectives during the project life cycle will require consideration of the cost of operation and maintenance. Therefore, the facility’s operating management should also be considered as early as possible, just as the construction process should be kept in mind at the early stages of planning and programming.
Elements of a Construction Contract
Contract Documents
Architect
Owner
Contractor
Subcontractors
Work by Owner or by Separate Contractors
Time of Completion and Extension of Time
Progress and Final Payments
Substantial Completion
Insurance
Changes in the Work
Uncovering and Correction of Work
Termination of Contract
Major Types of Construction:
In planning for various types of construction, the methods of procuring professional services, awarding construction contracts, and financing the constructed facility can be quite different. For the purpose of discussion, the broad spectrum of constructed facilities may be classified into four major categories, each with its own characteristics.
Residential Housing Construction
Residential housing construction includes single-family houses, multi-family dwellings, and high-rise apartments. During the development and construction of such projects, the developers or sponsors who are familiar with the construction industry usually serve as surrogate Clients and take charge, making necessary contractual agreements for design and construction, and arranging the financing and sale of the completed structures. Residential housing designs are usually performed by architects and engineers, and the construction executed by builders who hire subcontractors for the structural, mechanical, electrical and other specialty work. An exception to this pattern is for single-family houses which may be designed by the builders as well.
The residential housing market is heavily affected by general economic conditions, tax laws, and the monetary and fiscal policies of the government. Often, a slight increase in total demand will cause a substantial investment in construction, since many housing projects can be started at different locations by different individuals and developers at the same time. Because of the relative ease of entry, at least at the lower end of the market, many new builders are attracted to the residential housing construction. Hence, this market is highly competitive, with potentially high risks as well as high rewards.
Institutional and Commercial Building Construction
Institutional and commercial building construction encompasses a great variety of project types and sizes, such as schools and universities, medical clinics and hospitals, recreational facilities and sports stadiums, retail chain stores and large shopping centers, warehouses and light manufacturing plants, and skyscrapers for offices and hotels. The Clients of such buildings may or may not be familiar with construction industry practices, but they usually are able to select competent professional consultants and arrange the financing of the constructed facilities themselves. Specialty architects and engineers are often engaged for designing a specific type of building, while the builders or general contractors undertaking such projects may also be specialized in only that type of building.
Because of the higher costs and greater sophistication of institutional and commercial buildings in comparison with residential housing, this market segment is shared by fewer competitors. Since the construction of some of these buildings is a long process which once started will take some time to proceed until completion, the demand is less sensitive to general economic conditions than that for speculative housing. Consequently, the Clients may confront an oligopoly of general contractors who compete in the same market. In an oligopoly situation, only a limited number of competitors exist, and a firm’s price for services may be based in part on its competitive strategies in the local market.
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Specialized Industrial Construction
Specialized industrial construction usually involves very large scale projects with a high degree of technological complexity, such as oil refineries, steel mills, chemical processing plants and coal-fired or nuclear power plants. The Clients usually are deeply involved in the development of a project, and prefer to work with designers-builders such that the total time for the completion of the project can be shortened. They also want to pick a team of designers and builders with whom the owner has developed good working relations over the years.
Although the initiation of such projects is also affected by the state of the economy, long range demand forecasting is the most important factor since such projects is capital intensive and require considerable amount of planning and construction time. Governmental regulation such as the rulings of the Environmental Protection Agency and the Nuclear Regulatory Commission and other agencies need to be complied.
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Infrastructure and Heavy Construction
Infrastructure and heavy construction includes projects such as highways, mass transit systems, tunnels, bridges, pipelines, drainage systems and sewage treatment plants. Most of these projects are publicly owned and therefore financed either through bonds or taxes. This category of construction is characterized by a high degree of mechanization, which has gradually replaced some labor intensive operations.
The engineers and builders engaged in infrastructure construction are usually highly specialized since each segment of the market requires different types of skills. However, demands for different segments of infrastructure and heavy construction may shift with saturation in some segments. For example, as the available highway construction projects are declining, some heavy construction contractors quickly move their work force and equipment into the field of mining where jobs are available.
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Selection of Professional Services
When an owner decides to seek professional services for the design and construction of a facility, he is confronted with a broad variety of choices. The type of services selected depends to a large degree on the type of construction and the experience of the owner in dealing with various professionals in the previous projects undertaken by the firm. Generally, several common types of professional services may be engaged either separately or in some combination by the End Users.
Financial Planning Consultants
At the early stage of strategic planning for a capital project, an owner often seeks the services of financial planning consultants such as certified public accounting (CPA) firms to evaluate the economic and financial feasibility( EFF) of the constructed facility, particularly with respect to various provisions of central, state and local tax laws which may affect the investment decision. Investment banks may also be consulted on various options for financing the facility in order to analyze their long-term effects on the financial health of the owner organization.
Architectural and Engineering Firms (Designing Consultants)
Traditionally, the owner engages an architectural and engineering (A/E) firm or consortium as technical consultant in developing a preliminary design. After the engineering design and financing arrangements for the project are completed, the owner will enter into a construction contract with a general contractor either through competitive bidding or negotiation. The general contractor will act as a constructor and/or a coordinator of a large number of subcontractors who perform various specialties for the completion of the project. The A/E firm completes the design and may also provide on site quality inspection during construction. Thus, the A/E firm acts as the prime professional on behalf of the owner and supervises the construction to insure satisfactory results. This practice is most common in building construction.
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In the past two decades, this traditional approach has become less popular for a number of reasons, particularly for large scale projects. The A/E firms, which are engaged by the owner as the prime professionals for design and inspection, have become more isolated from the construction process. This has occurred because of pressures to reduce fees to A/E firms, the threat of litigation regarding construction defects, and lack of knowledge of new construction techniques on the part of architect and engineering professionals. Instead of preparing a construction plan along with the design, many A/E firms are no longer responsible for the details of construction nor do they provide periodic field inspection in many cases. As a matter of fact, such firms will place a prominent disclaimer of responsibilities on any shop drawings they may check, and they will often regard their representatives in the field as observers instead of inspectors. Thus, the A/E firm and the general contractor on a project often become antagonists who are looking after their own competing interests. As a result, even the constructability of some engineering designs may become an issue of contention. To carry this protective attitude to the extreme, the specifications prepared by an A/E firm for the general contractor often protects the interest of the A/E firm at the expense of the interests of the owner and the contractor.
In order to reduce the cost of construction, some Clients introduce value engineering, which seeks to reduce the cost of construction by soliciting a second design that might cost less than the original design produced by the A/E firm. In practice, the second design is submitted by the contractor after receiving a construction contract at a stipulated sum, and the saving in cost resulting from the redesign is shared by the contractor and the owner. The contractor is able to absorb the cost of redesign from the profit in construction or to reduce the construction cost as a result of the re-design. If the owner had been willing to pay a higher fee to the A/E firm or to better direct the design process, the A/E firm might have produced an improved design which would cost less in the first place. Regardless of the merit of value engineering, this practice has undermined the role of the A/E firm as the prime professional acting on behalf of the owner to supervise the contractor.
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Design/Construct Firms
A common trend in industrial construction, particularly for large projects, is to engage the services of a design/construct firm. By integrating design and construction management in a single organization, many of the conflicts between designers and constructors might be avoided. In particular, designs will be closely scrutinized for their constructability. However, an owner engaging a design/construct firm must insure that the quality of the constructed facility is not sacrificed by the desire to reduce the time or the cost for completing the project. Also, it is difficult to make use of competitive bidding in this type of design/construct process. As a result, Clients must be relatively sophisticated in negotiating realistic and cost-effective construction contracts.
One of the most obvious advantages of the integrated design/construct process is the use of phased construction for a large project. In this process, the project is divided up into several phases, each of which can be designed and constructed in a staggered manner. After the completion of the design of the first phase, construction can begin without waiting for the completion of the design of the second phase, etc. If proper coordination is exercised. the total project duration can be greatly reduced. Another advantage is to exploit the possibility of using the turnkey approach whereby an owner can delegate all responsibility to the design/construct firm which will deliver to the owner a completed facility that meets the performance specifications at the specified price.
DESIGN TEAM CONSISTS OF:
Architect
Interior Designer
Landscape Architect
Civil Engineer
Environmental Engineer
Electrical Engineer
Mechanical Engineer
Chemical Engineer
Geologist
Environmental Scientist
Economist
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Professional Construction Managers
In recent years, a new breed of construction managers (CM) offers professional services from the inception to the completion of a construction project. These construction managers mostly come from the ranks of A/E firms or general contractors who may or may not retain dual roles in the service of the End Users. In any case, the owner can rely on the service of a single prime professional to manage the entire process of a construction project. However, like the A/E firms of several decades ago, the construction managers are appreciated by some Clients but not by others. Before long, some Clients find that the construction managers too may try to protect their own interest instead of that of the Clients when the stakes are high.
Without mutual respect and trust, an owner cannot expect that construction managers can produce better results than other professionals. Hence, an owner must understand its own responsibility and the risk it wishes to assign to itself and to other participants in the process.
Operation and Maintenance Managers
Although many Clients keep a permanent staff for the operation and maintenance of constructed facilities, others may prefer to contract such tasks to professional managers. Understandably, it is common to find in-house staff for operation and maintenance in specialized industrial plants and infrastructure facilities, and the use of outside managers under contracts for the operation and maintenance of rental properties such as apartments and office buildings. However, there are exceptions to these common practices. For example, maintenance of public roadways can be contracted to private firms. In any case, managers can provide a spectrum of operation and maintenance services for a specified time period in accordance to the terms of contractual agreements. Thus, the Clients can be spared the provision of in-house expertise to operate and maintain the facilities.
Facilities Management
As a logical extension for obtaining the best services throughout the project life cycle of a constructed facility, some Clients and developers are receptive to adding strategic planning at the beginning and facility maintenance as a follow-up to reduce space-related costs in their real estate holdings. Consequently, some architectural/engineering firms and construction management firms with computer-based expertise, together with interior design firms, are offering such front-end and follow-up services in addition to the more traditional services in design and construction.
Facilities management is the discipline of planning, designing, constructing and managing space — in every type of structure from office buildings to process plants. It involves developing corporate facilities policy, long-range forecasts, real estate, space inventories, projects (through design, construction and renovation), building operation and maintenance plans and furniture and equipment inventories.
Construction Contractors:
Builders who supervise the execution of construction projects are traditionally referred to as contractors, or more appropriately called constructors. The general contractor coordinates various tasks for a project while the specialty contractors such as mechanical, electrical, plumbing (MEP) contractors perform the work in their specialties. Material and equipment suppliers often act as installation contractors; they play a significant role in a construction project since the conditions of delivery of materials and equipment affect the quality, cost, and timely completion of the project. It is essential to understand the operation of these contractors in order to deal with them effectively.
General Contractors
The function of a general contractor is to coordinate all tasks in a construction project. Unless the owner performs this function or engages a professional construction manager to do so, a good general contractor who has worked with a team of superintendents, specialty contractors or subcontractors together for a number of projects in the past can be most effective in inspiring loyalty and cooperation. The general contractor is also knowledgeable about the labor force employed in construction.
Specialty Contractors
Specialty contractors include mechanical, electrical, foundation, excavation, and demolition contractors among others. They usually serve as subcontractors to the general contractor of a project.
Material and Equipment Suppliers
Major material suppliers include specialty contractors in structural steel fabrication and erection, sheet metal, ready mixed concrete delivery, reinforcing steel bar detailers, roofing, glazing etc. Major equipment suppliers for industrial construction include manufacturers of generators, boilers and piping and other equipment. Many suppliers handle on-site installation to insure that the requirements and contractual specifications are met. As more and larger structural units are prefabricated off-site, the distribution between specialty contractors and material suppliers becomes even less obvious.
CONSTRUCTION TEAM CONSISTS OF:
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General Contractor
Land Surveyor
Formwork Carpenters
Steel Fabricators
Concreters
Bricklayers
Plant and Equipment Operators
Specialist subcontractors
Suppliers
Financing of Constructed Facilities:
A major construction project requires an enormous amount of capital that is often supplied by lenders who want to be assured that the project will offer a fair return on the investment. The direct costs associated with a major construction project may be broadly classified into two categories:
(1) The construction expenses paid to the general contractor for erecting the facility on site and
(2) the expenses for land acquisition, legal fees, architect/engineer fees, construction management fees, interest on construction loans and the opportunity cost of carrying empty space in the facility until it is fully occupied.
The direct construction costs in the first category represent approximately 60 to 80 percent of the total costs in most construction projects. Since the costs of construction are ultimately borne by the owner, careful financial planning for the facility must be made prior to construction.
Construction Financing
Construction loans to contractors are usually provided by banks or savings and loan associations for construction financing. Upon the completion of the facility, construction loans will be terminated and the post-construction facility financing will be arranged by the owner.
Construction loans provided for different types of construction vary. In the case of residential housing, construction loans and long-term mortgages can be obtained from savings and loans associations or commercial banks. For institutional and commercial buildings, construction loans are usually obtained from commercial banks. Since the value of specialized industrial buildings as collateral for loans is limited, construction loans in this domain are rare, and construction financing can be done from the pool of general corporate funds. For infrastructure construction owned by government, the property cannot be used as security for a private loan, but there are many possible ways to finance the construction, such as general appropriation from taxation or special bonds issued for the project.
Traditionally, banks serve as construction lenders in a three-party agreement among the contractor, the owner and the bank. The stipulated loan will be paid to the contractor on an agreed schedule upon the verification of completion of various portions of the project. Generally, a payment request together with a standard progress report will be submitted each month by the contractor to the owner which in turn submits a draw request to the bank. Provided that the work to date has been performed satisfactorily, the disbursement is made on that basis during the construction period. Under such circumstances, the bank has been primarily concerned with the completion of the facility on time and within the budget. The economic life of the facility after its completion is not a concern because of the transfer of risk to the owner or an institutional lender.
Facility Financing
Many private corporations maintain a pool of general funds resulting from retained earnings and long-term borrowing on the strength of corporate assets, which can be used for facility financing. Similarly, for public agencies, the long-term funding may be obtained from the commitment of general tax revenues from the central, state and/or local governments. Both private corporations and public agencies may issue special bonds for the constructed facilities which may obtain lower interest rates than other forms of borrowing. Short-term borrowing may also be used for bridging the gaps in long-term financing. Some corporate bonds are convertible to stocks under circumstances specified in the bond agreement. For public facilities, the assessment of user fees to repay the bond funds merits consideration for certain types of facilities such as toll roads and sewage treatment plants. The use of mortgages is primarily confined to rental properties such as apartments and office buildings.
For international projects, the currency used for financing agreements becomes important.? If financial agreements are written in terms of local currencies, then fluctuations in the currency exchange rate can significantly affect the cost and ultimately profit of a project.? In some cases, payments might also be made in particular commodities such as petroleum or the output from the facility itself. ? Again, these arrangements result in greater uncertainty in the financing scheme because the price of these commodities may vary. Please refer to the chapter Exchange rates which had focused on this type of aspects.
Contractor Financed Projects
Increasingly, some Clients look to contractors or joint ventures as a resource to design, to build and to finance a constructed facility. For example, a utility company may seek a consortium consisting of a design/construct firm and a financial investment firm to assume total liability during construction and thereby eliminate the risks of cost escalation to ratepayers, stockholders and the management. On the other hand, a local sanitation district may seek such a consortium to provide private ownership for a proposed new sewage treatment plant. In the former case, the owner may take over the completed facility and service the debt on construction through long-term financing arrangements; in the latter case, the private owner may operate the completed facility and recover its investment through user fees. The activities of joint ventures among design, construction and investment firms are sometimes referred to as financial engineering.
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Construction Contracts American Institute of Architects Documents
A101Standard Form of Agreement between Owner
and Contractor – Stipulated Sum
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A111Standard Form of Agreement between Owner
and Contractor – Cost of the Work Plus a Fee
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A201 General Conditions of the Contract for Construction
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B141 Standard form of Agreement between Owner
and Architect
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A132 Performance Bond and Payment Bond
Offshore Platforms – Construction Fangle:
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An oil or gas platform is always under the constant strain of nature, from raging storms to calm weather. The corrosive effect of the constant salt spray eventually takes its toll on even the most heavily protected oil rig. The production facilities piping and valves degrade a lot faster than they would on the mainland and the structural integrity is constantly being monitored for critical weaknesses. In addition a watchful owner of an oil / gas platform may consider it a wise investment to upgrade their platforms effectiveness. This could mean the oil production system, structure or accommodation requires new parts and modifications to be made.
In the 1970s and 1980s oil platforms tended to have offshore construction workers on board as part of the core crew entity. Unfortunately cost cutting measures and health and safety policies have meant almost all rigs only keep a select few construction crew members on board nowadays. However it has meant that when a new upgrade / replacement system of parts is needed the whole platform conducts what is known as a ‘Shutdown.’ Oil / Gas production ceases during this period, although pre-shutdown work may mean work is carried out on a ‘live’ platform. This is usually setting up areas with equipment and transporting new parts to where they’ll be worked on during the shutdown. Whole armies of construction workers are called for during a shutdown and as many as 200 or more workers may be on a rig during this time. As the work is now project-based it can mean a steady flow of work during the peak seasons of late spring, summer to early winter. A typical shutdown on a platform may be as short as a week or as long as a month or more, consisting of several trips to the same oil rig.
Offshore platform construction crews are a pretty mixed bunch although in some parts of the world certain regions tend to specialize in working in the offshore industry. An example of this is in the Bombay High? where a majority tend to be from the north of Maharashtra and Gujarat sates of India.
The offshore construction crews are usually time-served tradesmen (five years or more) and to actually get work in the offshore sector you almost always need to know someone who is ‘on the inside’ so to speak. It can be a case of ‘not what you know but who you know.’ This term is often bandied about the platforms.
Construction folk are generally a rough and ready bunch and can tend to form a ‘guild’ of sorts when they all come together on an oil or gas platform. The platers, riggers, pipefitters and welders often have to work very closely together as jobs that need doing may require a degree of coordination to be successful. A perfect example of this is a large pipe (called a spool in offshore speak) that needs installing. It may well require scaffolders to erect scaffold, riggers to transport and lift it into position, pipefitters to install the spool and then welders to weld it in place. Afterwards an inspector (who may use rope access techniques) will inspect the weld for deficiencies.
It would be unfair to not mention the Deck Crew, although they are not usually contract workers (they tend to core crew) they are construction / support workers in principle. They are the crane operators, slinger / banksmen and helideck crews. These workers are essential to bringing aboard fresh supplies and materials essential to an offshore platforms continuing operation. The cooks and stewards who see to the nourishment and cleanliness on board are also vital to continuing operations on board a platform.
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Lean Construction:
“Lean manufacturing” had a revolutionary effect on many industries, especially automotive assembly companies. Characteristics of this approach include:
Improvement in quality and reduction of waste everywhere. Rather than increasing costs, reducing defects and waste proved to improve quality and reduce costs.
Empowering workers to be responsible for satisfying customer needs. In construction, for example, craftsman should make sure their work satisfied the design intent.
Continuous improvement of processes involving the entire workforce.
Lean construction is intended to spread these practices within the construction industry. Of course, well managed construction projects already have many aspects of lean construction. For example, just-in-time delivery of materials is commonplace to avoid the waste of large inventory stockpiles. Green building projects attempt to re-use or recycle all construction wastes. But the systematic attention to continuous improvement and zero accidents and defects is new.
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Professional Construction Management
Professional construction management refers to a project management team consisting of a professional construction manager and other participants who will carry out the tasks of project planning, design and construction in an integrated manner. Contractual relationships among members of the team are intended to minimize adversarial relationships and contribute to greater response within the management group.
A professional construction manager is a firm specialized in the practice of professional construction management which includes:
Work with owner and the A/E firms from the beginning and make recommendations on design improvements, construction technology, schedules and construction economy.
Propose design and construction alternatives if appropriate, and analyze the effects of the alternatives on the project cost and schedule.
Monitor subsequent development of the project in order that these targets are not exceeded without the knowledge of the owner.
Coordinate procurement of material and equipment and the work of all construction contractors, and monthly payments to contractors, changes, claims and inspection for conforming design requirements.
Perform other project related services as required by End Users.
Professional construction management is usually used when a project is very large or complex.
The organizational features that are characteristics of mega-projects can be summarized as follows:
The overall organizational approach for the project will change as the project advances. The “functional” organization may change to a “matrix” which may change to a “project” organization (not necessarily in this order).
Within the overall organization, there will probably be functional, project, and matrix sub organizations all at the same time. This feature greatly complicates the theory and the practice of management, yet is essential for overall cost effectiveness.
Successful giant, complex organizations usually have a strong matrix-type sub organization at the level where basic cost and schedule control responsibility is assigned. This sub organization is referred to as a “cost center” or as a “project” and is headed by a project manager. The cost center matrix may have participants assigned from many different functional groups. In turn, these functional groups may have technical reporting responsibilities to several different and higher tiers in the organization. The key to a cost effective effort is the development of this project sub organization into a single team under the leadership of a strong project manager.
The extent to which decision-making will be centralized or decentralized is crucial to the organization of the mega-project.
Consequently, it is important to recognize the changing nature of the organizational structure as a project is carried out in various stages.
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Owner-Builder Operation
In this approach an owner must have a steady flow of on-going projects in order to maintain a large work force for in-house operation. However, the owner may choose to subcontract a substantial portion of the project to outside consultants and contractors for both design and construction, even though it retains centralized decision making to integrate all efforts in project implementation.
Turnkey Operation
Some Clients wish to delegate all responsibilities of design and construction to outside consultants in a turnkey project arrangement. A contractor agrees to provide the completed facility on the basis of performance specifications set forth by the owner. The contractor may even assume the responsibility of operating the project if the owner so desires. In order for a turnkey operation to succeed, the owner must be able to provide a set of unambiguous performance specifications to the contractor and must have complete confidence in the capability of the contractor to carry out the mission.
This approach is the direct opposite of the owner-builder approach in which the owner wishes to retain the maximum amount of control for the design-construction process.
The Design and Construction Process
Design and Construction as an Integrated System
In the planning of facilities, it is important to recognize the close relationship between design and construction. These processes can best be viewed as an integrated system. Broadly speaking, design is a process of creating the description of a new facility, usually represented by detailed plans and specifications; construction planning is a process of identifying activities and resources required to make the design a physical reality. Hence, construction is the implementation of a design envisioned by architects and engineers. In both design and construction, numerous operational tasks must be performed with a variety of precedence and other relationships among the different tasks.
Several characteristics are unique to the planning of constructed facilities and should be kept in mind even at the very early stage of the project life cycle. These include the following:
Nearly every facility is custom designed and constructed, and often requires a long time to complete.
Both the design and construction of a facility must satisfy the conditions peculiar to a specific site.
Because each project is site specific, its execution is influenced by natural, social and other locational conditions such as weather, labor supply, local building codes, etc.
Since the service life of a facility is long, the anticipation of future requirements is inherently difficult.
Because of technological complexity and market demands, changes of design plans during construction are not uncommon.
In an integrated system, the planning for both design and construction can proceed almost simultaneously, examining various alternatives which are desirable from both viewpoints and thus eliminating the necessity of extensive revisions under the guise of value engineering. Furthermore, the review of designs with regard to their constructability can be carried out as the project progresses from planning to design. For example, if the sequence of assembly of a structure and the critical loadings on the partially assembled structure during construction are carefully considered as a part of the overall structural design, the impacts of the design on construction false work and on assembly details can be anticipated. However, if the design professionals are expected to assume such responsibilities, they must be rewarded for sharing the risks as well as for undertaking these additional tasks. Similarly, when construction contractors are expected to take over the responsibilities of engineers, such as devising a very elaborate scheme to erect an unconventional structure, they too must be rewarded accordingly. As long as the owner does not assume the responsibility for resolving this risk-reward dilemma, the concept of a truly integrated system for design and construction cannot be realized.
Responsibility for Shop Drawings
The willingness to assume responsibilities does not come easily from any party in the current litigious climate of the construction industry in the United States. On the other hand, if owner, architect, engineer, contractor and other groups that represent parts of the industry do not jointly fix the responsibilities of various tasks to appropriate parties, the standards of practice will eventually be set by court decisions. In an attempt to provide a guide to the entire spectrum of participants in a construction project, the American Society of Civil Engineers issued a Manual of Professional Practice entitled Quality in the Constructed Project in 1990. This manual is intended to help bring a turn around of the fragmentation of activities in the design and construction process.
Shop drawings represent the assembly details for erecting a structure which should reflect the intent and rationale of the original structural design. They are prepared by the construction contractor and reviewed by the design professional. However, since the responsibility for preparing shop drawings was traditionally assigned to construction contractors, design professionals took the view that the review process was advisory and assumed no responsibility for their accuracy. This justification was ruled unacceptable by a court in connection with the walkway failure at the Hyatt Hotel in Kansas City in 1985. In preparing the ASCE Manual of Professional Practice for Quality in the Constructed Project, the responsibilities for preparation of shop drawings proved to be the most difficult to develop. The reason for this situation is not difficult to fathom since the responsibilities for the task are diffused, and all parties must agree to the new responsibilities assigned to each in the recommended risk-reward relations shown in the below Table
Traditionally, the owner is not involved in the preparation and review of shop drawings, and perhaps is even unaware of any potential problems. In the recommended practice, the owner is required to take responsibility for providing adequate time and funding, including approval of scheduling, in order to allow the design professionals and construction contractors to perform satisfactorily.
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Innovation and Technological Feasibility
The planning for a construction project begins with the generation of concepts for a facility which will meet market demands and owner needs. Innovative concepts in design are highly valued not for their own sake but for their contributions to reducing costs and to the improvement of aesthetics, comfort or convenience as embodied in a well-designed facility. However, the constructor as well as the design professionals must have an appreciation and full understanding of the technological complexities often associated with innovative designs in order to provide a safe and sound facility. Since these concepts are often preliminary or tentative, screening studies are carried out to determine the overall technological viability and economic attractiveness without pursuing these concepts in great detail. Because of the ambiguity of the objectives and the uncertainty of external events, screening studies call for uninhibited innovation in creating new concepts and judicious judgment in selecting the appropriate ones for further consideration.
Innovative design concepts must be tested for technological feasibility. Three levels of technology are of special concern: technological requirements for operation or production, design resources and construction technology. The first refers to the new technologies that may be introduced in a facility which is used for a certain type of production such as chemical processing or nuclear power generation. The second refers to the design capabilities that are available to the designers, such as new computational methods or new materials. The third refers to new technologies which can be adopted to construct the facility, such as new equipment or new construction methods.
A new facility may involve complex new technology for operation in hostile environments such as severe climate or restricted accessibility. Large projects with unprecedented demands for resources such as labor supply, material and infrastructure may also call for careful technological feasibility studies. Major elements in a feasibility study on production technology should include, but are not limited to, the following:
Project type as characterized by the technology required, such as synthetic fuels, petrochemicals, nuclear power plants, etc.
Project size in dollars, design engineer’s hours, construction labor hours, etc.
Design, including sources of any special technology which require licensing agreements.
Project location which may pose problems in environmental protection, labor productivity and special risks.
Innovation and Economic Feasibility
Innovation is often regarded as the engine which can introduce construction economies and advance labor productivity. This is obviously true for certain types of innovations in industrial production technologies, design capabilities, and construction equipment and methods. However, there are also limitations due to the economic infeasibility of such innovations, particularly in the segments of construction industry which are more fragmented and permit ease of entry, as in the construction of residential housing.
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Different design styles may be used. The adoption of a particular style often depends on factors such as time pressure or available design tools, as well as the nature of the design problem. Examples of different styles are:
Top-down design. Begin with a behavior description of the facility and work towards descriptions of its components and their interconnections.
Bottom-up design. Begin with a set of components, and see if they can be arranged to meet the behavior description of the facility.
Functional Design
The objective of functional design for a proposed facility is to treat the facility as a complex system of interrelated spaces which are organized systematically according to the functions to be performed in these spaces in order to serve a collection of needs. The arrangement of physical spaces can be viewed as an iterative design process to find a suitable floor plan to facilitate the movement of people and goods associated with the operations intended.
A designer often relies on a heuristic approach, i.e., applying selected rules or strategies serving to stimulate the investigation in search for a solution. The heuristic approach used in arranging spatial layouts for facilities is based generally on the following considerations:
identification of the goals and constraints for specified tasks,
determination of the current state of each task in the iterative design process,
evaluation of the differences between the current state and the goals,
means of directing the efforts of search towards the goals on the basis of past experience.
Hence, the procedure for seeking the goals can be recycled iteratively in order to make tradeoffs and thus improve the solution of spatial layouts.
Consider, for example, an integrated functional design for a proposed hospital. Since the responsibilities for satisfying various needs in a hospital are divided among different groups of personnel within the hospital administrative structure, a hierarchy of functions corresponding to different levels of responsibilities is proposed in the systematic organization of hospital functions. In this model, the functions of a hospital system are decomposed into a hierarchy of several levels:
Hospital–conglomerate of all hospital services resulting from top policy decisions,
Division–broadly related activities assigned to the same general area by administrative decisions,
Department–combination of services delivered by a service or treatment group,
Suite–specific style of common services or treatments performed in the same suite of rooms,
Room–all activities that can be carried out in the same internal environment surrounded by physical barriers,
Zone–several closely related activities that are undertaken by individuals,
Object–a single activity associated with an individual.
In the integrated functional design of hospitals, the connection between physical spaces and functions is most easily made at the lowest level of the hierarchy, and then extended upward to the next higher level. For example, a bed is a physical object immediately related to the activity of a patient. A set of furniture consisting of a bed, a night table and an armchair arranged comfortably in a zone indicates the sphere of private activities for a patient in a room with multiple occupancy. Thus, the spatial representation of a hospital can be organized in stages starting from the lowest level and moving to the top. In each step of the organization process, an element (space or function) under consideration can be related directly to the elements at the levels above it, to those at the levels below it, and to those within the same level.
Top-down design style
In the functional design of a hospital, the designer may begin with a “reference model”, i.e. the spatial layouts of existing hospitals of similar size and service requirements. On the basis of past experience,
Bottom-up design style
A multi-purpose examination suite in a hospital is used as an illustration of bottom-up design style. ?the most basic elements (furniture) are first organized into zones which make up the room. Thus the size of the room is determined by spatial layout required to perform the desired services. Finally, the suite is defined by the rooms which are parts of the multi-purpose examination suite.
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Geotechnical Engineering Investigation
Since construction is site specific, it is very important to investigate the subsurface conditions which often influence the design of a facility as well as its foundation. The uncertainty in the design is particularly acute in geotechnical engineering so that the assignment of risks in this area should be a major concern. Since the degree of uncertainty in a project is perceived differently by different parties involved in a project, the assignment of unquantifiable risks arising from numerous unknowns to the owner, engineer and contractor is inherently difficult. It is no wonder that courts or arbitrators are often asked to distribute equitably a risk to parties who do not perceive the same risks and do not want to assume a disproportionate share of such risks.
Construction Site Environment
While the general information about the construction site is usually available at the planning stage of a project, it is important for the design professionals and construction manager as well as the contractor to visit the site. Each group will be benefited by first-hand knowledge acquired in the field.
For design professionals, an examination of the topography may focus their attention to the layout of a facility on the site for maximum use of space in compliance with various regulatory restrictions. In the case of industrial plants, the production or processing design and operation often dictate the site layout. A poor layout can cause construction problems such as inadequate space for staging, limited access for materials and personnel, and restrictions on the use of certain construction methods. Thus, design and construction inputs are important in the layout of a facility.
The construction manager and the contractor must visit the site to gain some insight in preparing or evaluating the bid package for the project. They can verify access roads and water, electrical and other service utilities in the immediate vicinity, with the view of finding suitable locations for erecting temporary facilities and the field office. They can also observe any interferences of existing facilities with construction and develop a plan for site security during construction.
In examining site conditions, particular attention must be paid to environmental factors such as drainage, groundwater and the possibility of floods. Of particular concern is the possible presence of hazardous waste materials from previous uses. Cleaning up or controlling hazardous wastes can be extremely expensive.
Construction Planning
From the standpoint of construction contractors or the construction divisions of large firms, the planning process for construction projects consists of four stages that take place between the moment in which a planner starts the plan for the construction of a facility to the moment in which the evaluation of the final output of the construction process is finished.
The Pre project planning Even before design and construction processes begin, there is a stage of “pre-project planning” that can be critical for project success. In this process, the project scope is established. Since construction and design professionals are often not involved in this project scope stage, the terminology of describing this as a “pre-project” process has arisen. From the owner’s perspective, defining the project scope is just another phase in the process of acquiring a constructed facility. The definition of a project scope, normally in a Project Charter typically involves developing project alternatives at a conceptual level, analyzing project risks and economic payoff, developing a financial plan, making a decision to proceed (or not), and deciding upon the project organization and control plan. The danger of poor project definition comes from escalating costs (as new items are added) or, in the extreme, project failure. A good definition of scope allows all the parties in the project to understand what is needed and to work towards meeting those needs.
The estimate stage involves the development of a cost and duration estimate for the construction of a facility as part of the proposal of a contractor to an owner. It is the stage in which assumptions of resource commitment to the necessary activities to build the facility are made by a planner. A careful and thorough analysis of different conditions imposed by the construction project design and by site characteristics are taken into consideration to determine the best estimate. The success of a contractor depends upon this estimate, not only to obtain a job but also to construct the facility with the highest profit. The planner has to look for the time-cost combination that will allow the contractor to be successful in his commitment. The result of a high estimate would be to lose the job, and the result of a low estimate could be to win the job, but to lose money in the construction process. When changes are done, they should improve the estimate, taking into account not only present effects, but also future outcomes of succeeding activities. It is very seldom the case in which the output of the construction process exactly echoes the estimate offered to the owner.
In the monitoring and control stage of the construction process, the construction manager has to keep constant track of both activities’ durations and ongoing costs. It is misleading to think that if the construction of the facility is on schedule or ahead of schedule, the cost will also be on the estimate or below the estimate, especially if several changes are made. Constant evaluation is necessary until the construction of the facility is complete. When work is finished in the construction process, and information about it is provided to the planner, the third stage of the planning process can begin.
The evaluation stage is the one in which results of the construction process are matched against the estimate. A planner deals with this uncertainty during the estimate stage. Only when the outcome of the construction process is known is he/she able to evaluate the validity of the estimate. It is in this last stage of the planning process that he or she determines if the assumptions were correct. If they were not or if new constraints emerge, he/she should introduce corresponding adjustments in future planning.
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Impacts of building codes
Building codes originated as a part of the building regulatory process for the safety and general welfare of the public. The source of all authority to enact building codes is based on the police power of the state which may be delegated by the state legislature to local government units. Consequently, about 8,000 localities having their own building codes, either by following a national model code or developing a local code. The lack of uniformity of building codes may be attributed to a variety of reasons:
Neighboring municipalities may adopt different national models as the basis for local regulation.
Periodic revisions of national codes may not be adopted by local authorities before the lapse of several years.
Municipalities may explicitly decline to adopt specific provisions of national model codes or may use their own variants of key provisions.
Local authorities may differ in interpretation of the same language in national model codes.
The lack of uniformity in building codes has serious impact on design and construction as well as the regulatory process for buildings. Among the significant factors are:
Delay in the diffusion of new building innovations which may take a long time to find their ways to be incorporated in building codes.
Discouragement to new production organizations, such as industrialized construction and prefabrication.
Duplication of administrative cost of public agencies and compliance cost incurred by private firms.
Owners Responsibility:
Make Financial Arrangements to fulfill his obligations
Furnish Accurate Contract Specifications and Drawings for the Contractor’s work
Right to Stop Work
Right to Change Work
Right to Terminate Contract if Contractor Defaults
Architect’s Responsibility
Architect is the Owner’s Representative
Architect is the Administrator of the Contract
Visit site at appropriate stages of construction to familiarize himself generally with the progress and quality of the Work and to
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Gautam Koppala,
POME Author
