Construction Management

CONSTRUCTION MANAGEMENT Table of Content

INTRODUCTION CHAPTER 1: CONSTRUCTION MANAGEMENT OVERVIEW 

What is Construction Management?

 Construction Management System  Construction Management Roles, Responsibilities & Risks  Benefits of Construction Management  Construction Manager  Construction Engineering CHAPTER 2: CONSTRUCTION INDUSTRY  World Construction Industry  Construction Industry Trends  Construction Industry Research  Residential Construction Industry  Commercial Construction Industry CHAPTER 3: CONSTRUCTION PROJECTS MANAGEMENT  Types of Construction Projects  Construction Processes  Construction Careers  Project Risk Management  Project Management Methodologies  Project Management Tools

CHAPTER4: SCHEDULING TECHNIQUES FOR CONSTRUCTION PROJECTS  Bar Charts and Linked Bar Charts  Network Analysis and Critical Path Method  Line of Balance  Q Scheduling CHAPTER 5: CONSTRUCTION ESTIMATING  Purpose of Estimating  Types of Construction Estimates  Steps in Preparation of an Estimate  Building Cost Estimate CHAPTER 6: CONSTRUCTION COST CONTROL  Cost Control and Cost information Systems  Developments in Cost Control Systems CHAPTER 7: CONSTRUCTION CONTRACTS ADMINISTRATION  Construction Contract  Contract Administrator  Construction Accounting CHAPTER 8: CONSTRUCTION PRACTICE  Equipment Costs  Building Material  Safety  Innovation and Trends in Construction

INTRODUCTION There are several different approaches to building a major project. One such approach is that of construction management. There is some confusion as to what construction management is and what is involved. Basically construction management involves some form of professional expertise that is focused in the specialized areas of cost, estimating, systems analysis and supervision. Construction management is headed up by the construction manager (CM). This person is in complete and total control of the entire project from start to finish. The role of the construction manager may differ from project to project and it will depend on which construction company he/she works for. Construction Management is a consulting firm providing project management services. Any private or public investor can call upon the corporation's services to design and implement real estate or industrial projects across Europe. The knowledge and know-how acquired in the long standing practice by Construction Management as part of a leading building and civil engineering (BCE) group ensure its ability to optimize building projects. This applies to quality, cost as well as to terms of delivery, both for new buildings or renovation projects. Construction Management offers services for developing feasibility studies, drawing up building programs, fine-tuning construction documents and coordinating the various parties involved in the project. High-performance management and information tools as well as multidisciplinary teams suited to each market allow Construction Management to respond optimally to customer needs.

CHAPTER 1 CONSTRUCTION MANAGEMENT OVERVIEW

What is Construction Management? Construction Management refers either to the study and practice of the managerial and technological aspects of the construction industry (including construction, construction science, construction management, and construction technology), or to a business model where one party to a construction contract serves as a construction consultant, providing both design and construction advice. The Construction Management Association of America (CMAA) says the 120 most common responsibilities of a Construction Manager fall into the following 7 categories: Project Management Planning, Cost Management, Time Management, Quality Management, Contract Administration, Safety Management, and CM Professional Practice which includes specific activities like defining the responsibilities and management structure of the project management team, organizing and leading by implementing project controls, defining roles and responsibilities and developing communication protocols, and identifying elements of project design and construction likely to give rise to disputes and claims.

Study and Practice Construction management education comes in a variety of formats: formal degree programs (two-year associate degree; four-year baccalaureate degree, masters degree, engineer degree, doctor of philosophy degree, postdoctoral researcher); on-job-training; and continuing education / professional development. For information on degree programs, reference ACCE, the American Council for Construction Education, or ASC, the Associated Schools of Construction. The recognized institute for construction management in Great Britain is The Chartered Institute of Building in Ascot. According to the American Council for Construction Education (the academic accrediting body of construction management educational programs in the U.S.), the academic field of construction management encompasses a wide range of topics. These range from general management skills, to management skills specifically related to construction, to technical knowledge of construction

methods and practices. There are many schools offering Construction Management programs, including some that offer a Masters degree.

Business Model Typically the construction industry includes four parties: an owner, a designer (architect or engineer), the builder (usually called the general contractor), and the government (local laws and regulations). Traditionally, there are two contracts between these parties as they work together to plan, design, and construct the project. The first contract is the owner-designer contract, which involves planning, design, and construction administration. The second contract is the ownercontractor contract, which involves construction. Indirect, third-party relationships exist between the designer and the contractor due to these two contracts. An alternate contract or business model replaces the two traditional contracts with three contracts: owner-designer, owner-construction manager, and owner-builder. The construction management company becomes an additional party engaged in the project to act as an advisor to the owner, to which they are contractually tied. The construction manager's role is to provide construction advice to the designer, on the owner's behalf, design advice to the constructor, again on the owner's behalf, and other advice as necessary.

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Design Build Contracts Recently a different business model has become more popular. Many owners - particularly

government agencies have let out contracts which are known as Design-Build contracts. In this type of contract, the construction team is known as the design-builder. They are responsible for taking a concept developed by the owner, completing the detailed design, and then pending the owner's approval on the design, they can proceed with construction. Virtual Design and Construction technology has enabled much of the ability of contractors to maintain tight construction time frames. There are two main advantages to using a design-build contract. First, the construction team is motivated to work with the design team to develop a design with constructability in mind. In that way it is possible for the team to creatively find ways to reduce construction costs without reducing the function of the final product. The owner can expect a reduced price due to the increased constructability of the design. The other major advantage involves the schedule. Many projects are given out with an extremely tight time frame. By letting out the contract as a design-build contract, the contractor is

established, and early mobilization and construction activities are able to proceed concurrently with the design. Under a traditional contract, construction cannot begin until after the design is finished, the project is bid and awarded, and the team can mobilize. This type of contract can take months off the finish date of a project.

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Agency CM

Construction Cost Management is a fee-based service in which the Construction Manager (C.M) is responsible exclusively to the owner and acts in the owner's interests at every stage of the project. The construction manager offers advice, uncolored by any conflicting interest, on matters such as: 

Optimum use of available funds;

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Control of the scope of the work;

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Project scheduling;

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Optimum use of design and construction firms' skills and talents;

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Avoidance of delays, changes and disputes;

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Enhancing project design and construction quality;

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Optimum flexibility in contracting and procurement.

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Cash flow Management. Comprehensive management of every stage of the project, beginning with the original concept

and project definition, yields the greatest possible benefit to owners from Construction Management. As time progresses beyond the pre-design phase the CM's ability to effect cost savings diminishes. The Agency CM can represent the owner by helping to select the design team as well as the construction team and manage the design preventing scope creep, helping the owner stay within a pre-determined budget by performing Value Engineering, Cost/Benefit Analysis and Best Value Comparisons. The Agency CM can even provide oversight services for a CM At-Risk contract.

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CM At-Risk CM at-Risk is a delivery method which entails a commitment by the construction manager to

deliver the project within a Guaranteed Maximum Price (GMP), in most cases. The construction manager acts as consultant to the owner in the development and design phases, (often referred to as "Preconstruction Services"), but as the equivalent of a general contractor during the construction

phase. When a construction manager is bound to a GMP, the most fundamental character of the relationship is changed. In addition to acting in the owner's interest, the construction manager must manage and control construction costs to not exceed the GMP, which would be a financial hit to the CM Company. CM "At Risk" is a global term referring to a business relationship of Construction contractor, Owner and Architect / Designer. Typically, a CM at Risk arrangement eliminates a "Low Bid" construction project. A GMP agreement is a typical part of the CM and Owner agreement somewhat comparable to a "Low Bid" contract, but with a number of adjustments in responsibilities required by the CM. Aspects of GMP agreements will be elaborated below. The following are some primary aspects of the most potential benefits of a CM at Risk arrangement: Budget management Before design of a project is completed ( 6 months to 1-1/2 years of coordination between Designer and Owner), the CM is involved with estimating cost of constructing a project based on hearing from the designer and Owner (design concept) what is going / desired to be built. Upon some aspect of desired design raising the cost estimate over the budget the Owner wants to maintain, a decision can be made to modify the design concept instead of having to spend a considerable amount of time, effort and money re-designing and/or modifying completed construction documents, OR, the Owner decides to spend more money or obtain higher financial support for the project. To manage the budget before design is done, construction crews are mobilized, CM is spending tens of thousands per week just having onsite management, major items are purchased, etc, etc,...is an extremely more efficient use of everyone's time, effort, Architect / Designer's costs, and the CM's General Conditions costs, AND delivering to the Owner a design within his budget.

Construction Management System It facilitates the maintenance of necessary data as well as generation of reports and queries for planning, design, construction and monitoring of irrigation projects. The system provides accurate and relevant information to support effective decision-making at different levels. It improves the management of high-volume data and minimises information delays at different management levels, and also provides effective ways to share data and information among various management levels and concerned field offices. The application is easily accessible to the user, as and when needed. The construction management system comprises the following modules:

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Configuration

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Land Acquisition

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Rehabilitation and resettlement

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Schedule of rates’

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Procurement

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Construction management and monitoring

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Project management’

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Resource requirement planning

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Accounts

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Stores and inventory management

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Assets

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On-farm development works

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Environment management plan

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Quality control

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Water users' association

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System administration and data transfer

Construction Management Roles, Responsibilities & Risks The following material is provided for informational purposes only. Before taking any action that could have legal or other important consequences, speak with a qualified professional who can provide guidance that considers your own unique circumstances. In search of additional revenue streams, design firms often consider offering construction management services. Providing such services can generate income and increase the value delivered to the project owner. However, construction management can also bring additional liabilities, including those often associated with contractors. For this reason, any design firm considering construction management services must be prepared to identify and manage those risks. The term “construction management” generally relates to services provided by a consultant acting as a representative of the project owner. These services typically involve administering the design and construction contracts and may include responsibility for managing or coordinating the

planning, design and construction phases of the project. Construction management services can be performed by an independent party on a standalone basis, or by an architect or engineer who also provides design services on the project. Work scopes for the construction manager (CM) can be tailored to meet a variety of owner needs, project types and project delivery methods. The scope of services provided, as well as the associated liabilities that result, depend greatly on the construction management role performed by the design firm. The two primary roles are CMAdvisor and CMConstructor.

CMAdvisor In the CMAdvisor role, the design professional serves as a consultant to the project owner. The primary responsibility is administering the construction contract through the design and construction phases of the project. Duties may also include preconstruction services such as cost estimating, scheduling and constructability reviews. The CMadvisor typically has a contractual agreement with the client only, not with the contractor or other parties to the construction. CMAdvisors do not award contracts, direct construction means and methods, or arrange for materials or labor. The CMAdvisor may or may not also be a designer on the project. When the CM only provides advisory services and does not design the project, the role is sometimes called CMAgent.

CMConstructor The CMConstructor role entails responsibilities typically associated with contractors. In addition to the advisory roles described above, the CMConstructor typically: 

Holds all subcontracts for construction

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Is responsible for tasks of contract management and construction

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Assumes the same warranties as the general contractor, taking responsibility for the entire construction project

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Assumes the same risks as a general contractor, including jobsite safety

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May promise the owner a guaranteed maximum price for the project.

Licensing Issues To our knowledge, no state or province licenses construction managers. However, the Construction Management Association of America (CMAA) does provide instruction and training and issues a “Certified Construction Manager” certificate. You could likely provide most, if not all, of the services of a CMAdvisor under your architecture or engineering license or registration. If, however, you're acting as a CMConstructor, you may be required to obtain a contractor’s license, depending on your jurisdiction and duties. Regardless of your role, check with your local contractors’ licensing board, professional licensing board and/or professional association to see whether a license is required.

Insurance Issues Most professional liability (PL) policies will cover any claims arising from the professional services a design professional renders as a CM. However, most PL policies won’t cover construction risk i.e., faulty workmanship. This would include problems with fabrication, erection, installation, assembly and the supplying of products and materials. In addition, there is no coverage available for the economic risk of providing a guaranteed maximum price. PL policies may also specifically exclude claims relating to jobsite safety. Some may even contain a general exclusion for claims arising out of services not “usual and customary” to the practice of architecture or engineering or they may cover only those professional disciplines specified in the policy. Unless these exclusions can be modified or construction management is specifically listed as a covered service, there may not be professional liability coverage in force for such services. Design firms considering providing construction management services should get a complete insurance review. We’ll be happy to help you examine your needs for PL, general liability, workers compensation and other types of coverage.

General Risks to Consider There are several areas of liability to watch for when providing construction management services. The degree to which you assume any of these risks depends on your role as a CM and your responsibilities as stated in your contract and demonstrated by your actions. Consider the following: Design: When CMs conduct design and constructability reviews, they may, along with the architect or engineer of record, be subject to claims involving design errors and omissions. Selection of materials: CMs may have exposure arising from the selection and timely delivery of construction materials and subsystems. Cost estimates: Project owners typically have high expectations that a CM’s construction cost estimates are accurate. If costs exceed a CM’s estimate, there is substantial risk of a claim. Jobsite safety: CMs may assume responsibility for construction means and methods, as well as the contractor’s jobsite safety program and safety plans. OSHA rulings have generally concluded that a CMConstructor’s responsibilities for jobsite safety are akin to those of a general contractor. Scheduling and coordination: Work not performed on schedule or not well coordinated can lead to claims for project delays, increased overhead expenses and added overtime costs. Hazardous site conditions: If not careful, the CMConstructor can assume liability for existing hazardous site conditions. In addition, if toxic materials on the site must be disposed of or transported, the CM can be deemed an “operator” of the site or an “arranger” of the disposal and thus subject to severe (and sometimes criminal) sanctions in the event of an illegal dumping or accident.

Managing CM Risks Once you understand the risks of construction management, you can make an informed decision as to whether or not to offer such services. If you decide to offer construction management services, keep the following in mind:

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Select your projects and clients cautiously. Because the CM will no doubt be brought into any significant claims, it is important to avoid clients with a litigious history or project types that are likely to have problems.

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Choose your CM role with care. Offer only those services you and your staff are qualified to provide.

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Be aware of your jurisdiction’s licensing requirements. Obtain all licenses required by your state or province to provide the services you intend to offer and then operate within the scope of your licenses.

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Negotiate solid contracts. The AIA, AGC (Associated General Contractors), CCA (Canadian Construction Association) and CMAA have all published standard form agreements for CMs that can be tailored by you and your attorney to fit your specific project needs.

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Develop a clearly defined scope of services. With the client, put together a detailed work scope that describes precisely the specific responsibilities of each party to the project, including the owner.

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Charge adequate fees in consideration to the level of risk you must assume.

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Make sure that your words and actions, particularly on the jobsite, are in keeping with your role. If you are the CM Advisor, for instance, your job is to recommend and advise, not to direct or supervise.

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Check your insurance. Talk with us to be sure you have appropriate coverage. We’ll help you ascertain whether your professional liability policy covers the professional services you intend to provide. If you perform as a CM Constructor, we will need to address bonding, workers compensation and general liability issues.

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Limit your exposure to claims involving jobsite safety. Include appropriate “means and methods” disclaimers in your contract. Allocate health and safety risks through indemnities and insurance. Train your field people so their actions don’t undermine these protections. Ask to be

named as an additional insured on the contractor’s liability policies and request certificates as proof that appropriate workers compensation coverage is in place. 

Consider, with advice from legal counsel, establishing a separate corporate entity for your construction management services. This can help limit your liabilities for these riskier services.

Dealing with a Third Party CM If you are a designer on a project for which the owner has hired a third party CM Agent, your chances of facing a claim may increase. Not only do you have another pair of eyes critiquing your design services, there may be a greater chance of error or omission due to confusion regarding duties, responsibilities and authorities. Talk with your attorney about including a contract clause that addresses this risk. We can provide sample language for you to consider.

Benefits of Construction Management There are several benefits to construction management. The major or most important benefit to this form of management is that there is a constant watching of the project. This is good if any problems arise, they can then be quickly taken care of. The CM is also there to keep things in line and to keep the project moving smoothly to ensure that there are no delays in the project. The construction manager is also in charge of creating a time table from which the construction workers will work from. This will ensure that things are going on schedule and from this the CM can determine any things that can be fast-tracked during the completion of the project. Some of the other advantages of construction management include such things as construction costs being identified and predicted during the design phase. This is one of the most important things that a CM will be responsible for. Predicting the cost of a project is important as the owner does not want to allot to little money and in return he/she does not want to spend more than expected. The CM is responsible for creating a budget from which the construction company will work. By planning this detailed budget the CM is therefore avoiding any potential delays in the project. Construction management or the construction manager is responsible for the entire construction of the project. This means that no additional personnel are required on site to manage the project. However, construction management is not without its problems. Due to the fact that there is usually a single person handling the entire project there have been instances when the project is not

completely planned out prior to its start date. This does create some problems as there might be a delay in construction due to the lack of adequate planning. Also depending on the construction company being dealt with the construction management team may not have the complete ability to influence construction schedules. If you are interested in finding out more about construction management then you might consider attending some of the many seminars on the topic. As more and more people become interested in having a construction manager on site, seminars and construction management courses are being created and are being conducted all over the United States and Canada. Today there are even schools and colleges in the United States that are adding construction managements courses to their list of degree programs. People have a better chance of getting a job as a construction manager if they have been trained in the area of construction management. It has also been found that people who have had a background in business and finance are more likely to be hired as part of construction management teams as it believed that people are more inclined to be properly prepared for planning and budgeting. Since planning is a major part of this job, most employers are looking for someone who has had extensive experience in planning and carrying out major projects in which they are in charge of a large group of people and projects within the one big project.

Construction Managers What Is a Construction Manager? A construction manager is the person who handles a construction job from start to finish. This individual will have a primary hand in planning the job as well as overseeing the project along the way. The construction manager will plan, direct and budget a construction project as well as handle any issues which arise during the job. Within the scope of a major construction project, a construction manager or management team is trained to coordinate the different processes and timetables necessary to complete a project. These individuals and teams mediate between owners, designers, contractors, and suppliers. As such, they act as overseers of the entire process, from inception to design to execution.

Significant Points  Construction managers must be available—often 24 hours a day—to deal with delays, bad weather, or emergencies at the jobsite.

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Employers prefer jobseekers who combine construction industry work experience with a bachelor’s degree in construction science, construction management, or civil engineering.

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Although certification is not required, there is a growing movement toward certification of construction managers.

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Excellent job opportunities are expected.

The Role of a Construction Manager A construction manager is essentially a high level manager who focuses on the coordinating the different needs of a project on a large scale. In particular, the construction manager is responsible for maintaining the relationship with all the contractors and subcontractors to ensure the smooth and timely completion of a project. The most important aspect of the position is that of defining the structure of the project management team and assigning responsibilities to each member. Beyond this, the construction manager arranges and maintains project relationships with the trade contractors and designers associated with particular aspects of the project, including setting timetables for the completion of certain sections and resolving conflicts as they arise. Beyond coordinating the internal workings of a project, the manager must develop plans to handle external concerns. These include handling equipment and materials suppliers, developing plans with local emergency and fire departments for on-site safety, and risk management. Construction is an activity which goes on in almost every city and town on a daily basis. Something is constantly being built or renovated wherever we look. A construction manager is the individual who oversees such projects and ensures that they are completed as they should be. The following will highlight information relating to the job role of a construction manager and detail the importance of such a position. General Responsibilities of a Construction Manager The construction manager has some general responsibilities which correspond with the job role. They are the ones who help in the acquisition of land, the planning process, obtain permits, hire workers, keep tabs on the progress of the construction job and ensure that it is being completed in a correct manner. They are the go-to person for most of the parties involved with the entire project. The construction manager is also responsible for handling complaints or problems along the way.

Specific Duties of a Construction Manager A construction manager is responsible for a multitude of tasks. One specific duty which a construction manager must complete is to look over a proposed project to determine what necessary jobs need to be completed prior to beginning the project. The construction manager must review the project in depth so that he/she thoroughly understands what will be needed along the way. Once the project is reviewed by the construction manager, that individual must then aid in the procurement of land for the project site. The construction manager is an important part of this phase as they will know what type of land is necessary, the size which is required and so forth. It is important for the construction manager to be part of this acquisition. Construction managers are also responsible for hiring and supervising workers. The construction workers will be interviewed by the construction manger, hired, disciplined and even fired by that individual should it be deemed necessary. Any problems that arise with regard to the construction workers will be brought to the attention of the construction manager who will deal with it accordingly. Many construction managers are also given the duty of providing a budget for the construction project. The construction manager will detail the costs that will be seen as a result of the project and determine what is in the budget and what may not be. The individual must take various factors into account such as wages and materials, to name just two of the many factors one must consider. A construction manager must also order supplies for completing the construction project. These supplies range anywhere from nails to bulldozers. It is up to the construction manager to shop around for the least expensive yet most reliable materials all the while keeping the project budget in mind. Some construction managers will have to handle the contract end of construction projects. They will have to hire individuals to draft the relevant paperwork and ensure that the documents are signed by the right parties. This includes contracts with the subcontractors, architects and suppliers to name just a few. An important duty of the contract manager is to manage the construction schedule in an effective and efficient manner. This is crucial as any delays in the project may cause a substantial amount of money. Therefore, the construction manager must ensure that everyone involved does their utmost to stay on schedule and should issues arise it is up to the construction manager to resolve them. Construction managers must also inspect and review the construction project on a periodic basis to ensure compliance with safety code and building code regulations. This is vital as well since

any violation could mean a delay in the project if not cancel the project altogether. Therefore, the manager must be sure to inspect as frequently and efficiently as possible. The construction manager is the one who will supervise the project and determine that the job is being done correctly. He must review the entire project on a daily basis to ensure that the work is being done as it should be. If there appears to be any deviation from the planned construction project, it is up to the construction manager to get the project back on the right track. Positive Traits for Construction Managers to Possess A construction manager should possess certain traits. By having the following traits, the individual will find that their job can be better completed. One who fills the job role of construction manager should be a multitasker. Those who are able to handle multiple tasks at the same time will excel in this position. Since the specific duties of a construction manager are wide and varied, it will certainly help if one possesses good multitasking skills. Construction managers should also have excellent problem solving skills. In construction jobs problems will arise from time to time and the individual who will have to solve such problems is most likely the construction manager. Given the fact that this individual will usually have many years of construction experience, problem solving should not be a problem for that person. However, individuals who have natural problem solving skills will find that the job role is much easier to fill in the end. A construction manager should be timely in nature. Construction jobs are projects which almost always need to be completed in a timely manner. If the construction manager is a timeconscious individual, then he/she will be able to confidently lead the construction crew so that they finish in a timely fashion. A construction manager wears many hats. They are a supervisor, planner and sometimes worker to boot. This is an interesting job as it requires a multitude of talents to carry out such a role. One who is a construction manager will succeed in their job if they can adequately lead their workers to complete the job correctly. By possessing traits such as multitasking abilities, timeliness and good problem solving skills, the construction manager will be able to complete their daily job tasks quickly and efficiently.

Construction Engineering Construction engineering concerns the planning and management of the construction of structures such as highways, bridges, airports, railroads, buildings, dams, and reservoirs. Construction of such projects requires knowledge of engineering and management principles and

business procedures, economics, and human behavior. Construction engineers engage in the design of temporary structures, quality assurance and quality control, building and site layout surveys, on site material testing, concrete mix design, cost estimating, planning and scheduling, safety engineering, materials procurement, and cost engineering and budgeting. Construction management is similar to construction engineering from the standpoint of the level of mathematics, science and engineering used to analyze problems and design a construction process. Career The construction industry in the United States provides employment to millions with all types and levels of education. Construction contributes 14% of the United States Gross National Product. Construction engineering provides much of the design aspect used both in the construction office and in the field on project sites. To complete projects construction engineers rely on plans and specifications created by architects, engineers and other constructors. During most of the 20th century structures have been first designed then engineering staff ensure it is built to plans and specifications by testing and overseeing the construction. Previous to the 20th century and more commonly since the start of the 21st century structures are designed and built in combination, allowing for site considerations and construction methods to influence the design process. Work Activities Construction engineers have a wide range of responsibilities. Typically entry level construction engineers analyze reports and estimate project costs both in the office and in the field. Other tasks may include: Analyzing maps, drawings, blueprints, aerial photography and other topographical information. Construction engineers also have to use computer software to design hydraulic systems and structures while following construction codes. Keeping a workplace safe is key to having a successful construction company. It is the construction engineer's job to make sure that everything is conducted correctly. In addition to safety, the construction engineer has to make sure that the site stays clean and sanitary. They have to make sure that there are no impediments in the way of the structure's planned location and must move any that exist. Finally, more seasoned construction engineers will assume the role of project management on a construction site and are involved heavily with the construction schedule and document control as well as budget and cost control. Their role on site is to provide construction information, including repairs, requests for information, change orders and payment applications to the managers and/or the owner's representatives.

Skills Construction engineers should have strong understanding for math and science, but many other skills are required, including critical thinking, listening, learning, problem solving, monitoring and decision making. Construction engineers have to be able to think about all aspects of a problem and listen to other’s ideas so that they can learn everything about a project before it begins. During project construction they must solve the problems that they encounter using math and science. Construction Engineers must maintain project control of labor and equipment for safety, to ensure the project is on schedule and monitor quality control. When a problem occurs it is the construction engineer who will create and enact a solution.

Abilities Construction engineers need different abilities to do their job. They must have the ability to reason, convey instructions to others, comprehend multi variables, anticipate problems, comprehend verbal, written and graphic instructions, organize data sets, speak clearly, visualize in 4D time-space and understand Virtual Design and Construction methods. Educational Requirements A typical construction engineering curriculum is a mixture of engineering mechanics, engineering design, construction management and general science and mathematics. This usually leads to a Bachelor of Science degree. The B.S. degree along with some construction experience is sufficient for most entry level construction engineering jobs. Graduate school may be an option for those who want to go further in depth of the construction and engineering subjects taught at the undergraduate level. In most cases construction engineering graduates look to either civil engineering, engineering management, or business administration as a possible graduate degree. For authority to approve any final designs of public projects (and most any project), a construction engineer must have a professional engineers (P.E.) license. To obtain a P.E. license the Fundamentals of Engineering exam and Principles and Practice in Engineering Exam must be passed and education and experience requirements met.

CHAPTER 2 CONSTRUCTION INDUSTRY

Construction Industry is one of the most booming industries in the whole world. This industry is mainly an urban based one which is concerned with preparation as well as construction of real estate properties. The repairing of any existing building or making certain alterations in the same also comes under Construction Industry. This industry can be categorized into three basic categories namely:

Construction involving heavy and civil engineering. The construction of large projects such as bridge, road, etc comes under this category.

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General construction. The construction works that involve building of real estate ones such as residential or commercial real estate assets, etc.

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Construction projects involving specialty trades.

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Construction works that involve building up of specialized items namely, electric related works, works on woods, etc. It is generally being observed in the all around the globe in the Construction Industry that the

contractor individual or organization involved in the construction process specialize in any one of the above mentioned categories. A contractor who is involved in building real estate do not generally go for specialized trade or heavy engineering works. The same is also true for other kind of contractors. Construction Industry is a booming industry and remains so with the continuation of the development process especially in the developing countries. With the process of development, the migration of people takes place from the rural to urban areas. This phenomenon is most significantly observed in the "Asian Tiger" countries, China and India. Thus, the Construction Industry is also on a rise in such countries.

World Construction Industry World Construction Industry is one of the biggest industries in the whole world. The contribution of this industry towards the global GDP revolves around one-tenth of the total amount. World Construction Industry is also a potential employment generator and provides work to almost seven percent of the total employed person in the whole world. The extent of this industry has become so vast that the energy, in the form of electricity or fuel, consumed by it hovers around two-

fifth of the total energy consumed all over the globe. The resources that are utilized in World Construction Industry is also staggeringly high and itself consumes fifty percent of the total world resources. World Construction Industry is the base of the world economy which is achieved through the construction of real estate properties (both residential and commercial), bridges, tunnels, roads, railway tracks and compartments, airports, etc. World Construction Industry has come up as a basis for judging the performance of the economic condition of a country. This industry is not a homogeneous entity but has heterogeneous characteristics which are detailed in the following: The World Construction Industry that is concerned about constructing real estate properties for both residential and commercial purposes are categorized under the group General Construction. Any type of building construction are categorized under this head. World Construction Industry that is involved in the production of specialized items in the real estate properties are categorized under Specialty trade section. World Construction Industry is also involved in building bridges, roads, etc.

Construction Industry Trends Construction Industry Trends all over the world show a rise in its rate of growth. This industry is composed of many components including construction of heavy and civil engineering (highways, bridges, railway tracks, airports, etc.), real estate (both residential as well as commercial) development, and specialized construction products (such as architectural products, electrical connections, decorative items, etc.). All these segments cannot be expected to show similar trends and in fact are showing differential growth pattern all over the world.

Facts about Construction Industry Trends 

Construction industry contributes a huge chunk to the world GDP amounting to 1/10th of the same.

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This industry has immense potential in generating huge amount of employment. It has been found out that construction industry offers employment to around 7% of the total employed work force around the globe.

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Construction Industry is the largest sector in respect of consumption of energy. It consumes around 2/5th of the total consumed energy through out the world.

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Resource utilization in case of construction industry amounts to half of the total resource used all over the world. The most significant aspect associated with the construction industry trends is increased use

of the latest IT technologies for pacing up the work. Cutting edge technology is being adopted by world's one of the biggest industries for leveraging purposes and is mainly being used in raising the efficiency level of engineering and designing of construction industry. It has been found out that the paper oriented format of operation in the construction industry is not at all a cost effective approach because it eats around sixteen billion US dollars in US real estate sector only. Construction Industry Trends show that the utilization of information technology has helped the industry to save a lot of fund which could be channelized in more fruitful directions. One of the latest technologies used in construction industry is Building Information Model (BIM). This technology helps all the factors of a project to work in a collaborative and concerted manner solely based on the platform of Information Technology. BIM helps the different members of a project to communicate information among themselves which consequently leverages the productivity and at the same time minimizes the error along with cost. Construction Industry Trends can be stratified in accordance with the different segments and countries. We would mainly discuss about two countries for giving an overview of the construction industry trends. 

In USA, heavy engineering construction sector has increased at the rate of 5.2% in the financial year 2005. Residential and commercial residential real estate sector has respectively grown at the rate of 15% and 7.5%. But this upbeat mood lost its shine in the fiscals 2006 and 2007 especially in the residential real estate one. A glut can be evidenced in this segment because of fall in the sales of the homes which is expected to continue till 3rd quarter of 2007.

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India is seeing a boom in the construction sector mainly due to the government initiative in expansion of the developmental facilities. Economic upsurge has also generated enhanced generation of demand in the real estate sector (both residential as well as commercial). Construction Industry in India is rising at a phenomenal rate of 7 to 8% p.a.

Construction Industry Research Industry Research is one of the most important ingredients required by the construction industry for proper analysis and viability of any project. The construction industry can be stratified into 3 broad categories:-

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Construction of heavy and civil engineering including construction of railway tracks, highways, etc.

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Construction of real estate buildings meant for both residential as well as commercial purposes.

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Construction of specialized items like architecture, pipelines, electrical equipments, etc.

Importance of Construction Industry Research Generally, before the inception of any infrastructural project the agency or government department in charge of it requires thorough inspection of the same. The main aspects that need to be visited by the construction industry research include: 

Viability of the project involving both the cost as well as revenue aspects

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Choosing of the place or site where the construction needs to be done. In case of construction of the real estate properties, the most important factor that are visited

by the construction industry research involve: 

Costing structure involved in the construction of the building

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Expected revenue that the apartments are going to fetch for the builder along with the profit margin associated with each of the flats.

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The resale value of the home in the short, medium and long term. Construction industry research in case of real estate sector becomes more important because

of the fact that it involves investment opportunities for individuals. This market of residential real estate is subjected to risk and for that reason the investors are required to go through the Construction Industry Research report for making informed decision. This would help the investors in making profit out of the real estate investments. Construction Industry Research of the US residential real estate market provide negative signals in the present context and expects the on going downtrend to continue till the 3rd quarter of the financial year 2007. This market is expected to be stabilized from the mid-year of 2008. The analysts go through the entire fundamental as well as the technical aspects of the market for reaching a conclusion and accordingly predicting its future movements.

Residential Construction Industry

Residential Construction Industry is especially concerned with the construction of homes required for residential purposes. These houses meant for personal occupancy come in varied forms, namely, single family occupancy type, duplex buildings, residential apartments in the form of flats, etc. Residential Construction Industry involves two types of constructions:

Construction of the newly built houses for residential purposes.

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The already existing residential houses or apartments require repairing, modifications, and improvements for betterment of the same. The growth rate of Residential Construction Industry is highly correlated with the economic

growth of the economy. Economic growth makes people to migrate from the rural to urban areas for the search of a better. This phenomenon is glaring in China. At present, the Government of China is taking certain steps for cooling off the over-heated economy but the Residential Construction Industry is expected to grow at a far accelerated pace from the mid 2008. This prediction is done with much conviction by the analysts on the basis of the continuing strong performance of the economy along with high rate of migration of people from the country sides to the urban localities. This migration is creating increased need for their residence which is again increasing the propensity for Residential Construction Industry. Currently, the construction of the dwelling houses are facing grave problem in United States of America. The main reason behind such a downturn lies in the over production and the consequent glut that has occurred in the residential real estate market. The situation has worsened due the fall in domestic demand for residential housing. The sales of the newly built houses have fallen significantly in United States and this trend is expected till the third quarter of 2007. From the last quarter of 2007, this trend in Residential Construction Industry is going to see a reversal and the market would stabilize around mid part of the financial year 2008. In India Residential Construction Industry is going through a boom and is expected to continue for some time from now. But in the very recent past this industry has observed a partial slow down. The reason behind such a situation can be attributed to the decision of the Indian apex bank (Reserve Bank of India) to raise the interest rate of the housing loans. RBI has done this as a precautionary measure against the over-heating of the economy.

Commercial Construction Industry Commercial Construction Industry is a booming market all over the world. At the time when the residential real estate market is going through a very bad phase, Commercial Construction Industry is constantly performing extraordinarily well.

In United States of America, this industry has observed a massive growth of around 12 % during the 2006 fiscal. Commercial construction industry in USA has grown at an enormous rate between the years 2005 and 2006. During this period, this industry has grown by five times which is itself is a phenomenal performance. Experts have observed a peculiar phenomenon regarding the relation between residential and commercial real estate with that of the growth rate of the overall economy. They have found out that when an economy enters into a booming phase then the sector, which also observed a consequent boom, is the residential real estate market. But as this boom period enters its last phase in the business cycle then the acceleration in the housing market falls and the growth is seen in the Commercial Construction Industry. Thus, the analysts, economists and the experts of the Chicago Mercantile Exchange (CME) have come to a conclusion that during the first phase of the boom period the housing sector flourishes but with the passage of time this enthusiasm fizzes out and during the finishing lap of the boom period, the Commercial construction industry performs extraordinarily. The reason behind the last phase performance of this industry lies in the fact that commercial construction industry has a higher latent period than the housing market, that is, the commercial real estate market acts in a cautious manner to reap the advantage of economic boom. There are especially two main reasons that help the commercial construction industry for phenomenal performance and they are:

Impressive rate of growth of the domestic economy

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Rate of interest associated with the real estate loans need to be low

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Increased need for commercial for the industries like the IT industries

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Increased demand from the retail sector

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Increase in the corporate profit has led them towards expansion of business.

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Demand for warehousing increases with the increase in foreign trade which consequently expands the scope for commercial construction industry. GE Real Estate is one of the largest companies in commercial construction industry in USA,

Europe and Asia.

CHAPTER 3 CONSTRUCTION PROJECTS MANAGEMENT In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of multitasking. Normally the job is managed by the project manager and supervised by the construction manager, design engineer, construction engineer or project architect. For the successful execution of a project, effective planning is essential. Those involved with the design and execution of the infrastructure in question must consider the environmental impact of the job, the successful scheduling, budgeting, site safety, availability of materials, logistics, inconvenience to the public caused by construction delays, preparing tender documents, etc Security in work is very important in any business however construction business doesn’t offer you lots of security but its sure that it will give you lots of money. Any construction entrepreneur will pay highly to its employee and have number of projects to get done but with involvement of “risk” factor. So the management of any construction project requires lots of skill As well as experience. Experience is one of the major factors that are to be considered before recruiting any individual for any particular project. If the project is of high budget than definitely experience people will take over where as if the construction project is not that big than definitely trainee or people with less experience can work over it. Construction project management can be a team of engineers, architect, designers, management trainee etc. Management people who have qualification of Business Administration helps Construction Company in getting clients and thus it helps company in growing business. However in today’s world more than presentation to client what works is contacts and money. But there are some clients who look only after quality of work and if a company think that the construction management team is efficient enough to deliver quality work than it will be client who will walk towards the company. Project Management in construction can differ from projects to projects. Like if a construction is need to be done for a theme park than a team of creative people is needed, if a project is related to the building some mall than the team of project management will have more of civil engineers. But today every company manages projects with some specialization. Like a construction company can specialize only in building bungalow, sky capers, Malls, theatres, parks etc. Construction project management team can also hire people from abroad if the need exist because only particular talented people can do that work. So the people who are hired are nothing

but the resources but while hiring it is to be seen that they will add value to the project in a very efficient way. Construction project management team just needs to see the demand of client and work accordingly but by putting some suggestion and ideas, which will benefit company as well as client. In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of multitasking. Normally the job is managed by the project manager and supervised by the construction manager, design engineer, construction engineer or project architect. For the successful execution of a project, effective planning is essential. Those involved with the design and execution of the infrastructure in question must consider the environmental impact of the job, the successful scheduling, budgeting, site safety, availability of materials, logistics, inconvenience to the public caused by construction delays, preparing tender documents, etc.

Types of Construction Projects In general, there are three types of construction. Each type of construction project requires a unique team to plan, design, construct, and maintain the project.

Building Construction Building construction is the process of adding structure to real property. The vast majority of building construction projects are small renovations, such as addition of a room, or renovation of a bathroom. Often, the owner of the property acts as laborer, paymaster, and design team for the entire project. However, all 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. Building construction is procured privately or publicly utilizing various delivery methodologies, including hard bid, negotiated price, traditional, management contracting, construction managementat-risk, design & build and design-build bridging. Residential 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, 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 tradespeople. As residential (as well as all other types of construction) can generate a lot of waste, careful planning again is needed here. The most popular method of residential construction in the United States is wood framed construction. As efficiency codes have come into effect in recent years, new construction technologies and methods have emerged. University Construction Management departments are on the cutting edge of the newest methods of construction intended to improve efficiency, performance and reduce construction waste. Building construction is the process of adding structure to real property. The vast majority of building construction projects is small renovations, such as addition of a room, or renovation of a bathroom. Often, the owner of the property acts as laborer, paymaster, and design team for the entire project. However, all 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. Building construction is produced privately or publicly utilizing various delivery methodologies including hard-bid, negotiated price, traditional management-at-risk design build and design build bridging.

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 Design Team In the modern industrialized world, construction usually involves the translation of paper or computer based designs into reality. A formal design team may be assembled to plan the physical proceedings, and to integrate those proceedings with the other parts. The design usually consists of

drawings and specifications, usually prepared by a design team including the client architects, interior designers, surveyors, civil engineers, cost engineers (or 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 lowest responsible bidder. The modern trend in design is toward integration of previously separated specialties, especially among large firms. In the past, architects, interior designers, engineers, developers, construction managers, and general contractors were more likely to be entirely separate companies, even in the larger firms. Presently, a firm that is nominally an "architecture" or "construction management" firm may have experts from all related fields as employees, or to have an associated company that provides each necessary skill. Thus, each such firm may offer itself as "one-stop shopping" for a construction project, from beginning to end. This is designated as a "design Build" contract where the contractor is given a performance specification, and must undertake the project from design to construction, while adhering to the performance specifications. Several project structures can assist the owner in this integration, including design-build, partnering, and construction management. In general, each of these project structures allows the owner to integrate the services of architects, interior designers, engineers, and constructors throughout design and construction. In response, many companies are growing beyond traditional offerings of design or construction services alone, and are placing more emphasis on establishing relationships with other necessary participants through the design-build process. The increasing complexity of construction projects creates the need for design professionals trained in all phases of the project's life-cycle and develop an appreciation of the building as an advanced technological system requiring close integration of many sub-systems and their individual components, including sustainability. Building engineering is an emerging discipline that attempts to meet this new challenge. 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 they are a matter of having sufficient funds at a specific time, can arise even when the overall total is enough. Fraud is a problem in many fields, but is notoriously prevalent in the construction field. 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. Mortgage bankers, accountants, and cost engineers are likely participants in creating an overall plan for the financial management of the building construction project. The presence of the mortgage banker is highly likely even in relatively small projects, since the owner's equity in the property is the most obvious source of funding for a building project. Accountants act to study the expected monetary flow over the life of the project, and to monitor the payouts throughout the process. Cost engineers apply expertise to relate the work and materials involved to a proper valuation. 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. Large projects can involve highly complex financial plans. As portions of a project are completed, they may be sold, supplanting one lender or owner for another, while the logistical requirements of having the right trades and materials available for each stage of the building construction project carries forward. In many English speaking countries, but not the United States, projects typically use quantity surveyors. Legal Considerations 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. Some legal requirements come from malum in se considerations, or the desire to prevent things that are indisputably bad - bridge collapses or explosions. Other legal requirements come from malum prohibitum considerations, or things that are a matter of custom or expectation, such as isolating businesses to a business district and residences to a residential district. An attorney may seek changes or exemptions in the law governing the land where the building will be built, either by arguing that a rule is inapplicable (the bridge design won't collapse), or that the custom is no longer needed (acceptance of live-work spaces has grown in the community). A construction project is a complex net of contracts and other legal obligations, each of which must be carefully considered. A contract is the exchange of a set of obligations between two or more parties, but it is not so simple a matter as trying to get the other side to agree to as much as possible

in exchange for as little as possible. The time element in construction means that a delay costs money, and in cases of bottlenecks, the delay can be extremely expensive. Thus, the contracts must be designed to ensure that each side is capable of performing the obligations set out. Contracts that set out clear expectations and clear paths to accomplishing those expectations are far more likely to result in the project flowing smoothly, whereas poorly drafted contracts lead to confusion and collapse. 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. Throughout the process of the project, they work to avoid and resolve conflicts that arise. In each case, the lawyer facilitates an exchange of obligations that matches the reality of the project. 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. The financial structure must accommodate the need for building the design provided, and must pay amounts that are legally owed. The legal structure must integrate the design into the surrounding legal framework, and enforces the financial consequences of the construction process. Procurement Procurement describes the merging of activities undertaken by the client to obtain a building. There are many different methods of construction procurement; however the three most common types of procurement are: 1. Traditional (Design-bid-build) 2. Design and Build 3. Management Contracting Traditional 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 relationship with the main contractor.

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. The owner produces a list of requirements for a project, giving an overall view of the project's goals. Several D&B contractors present different ideas about how to accomplish these goals. The owner 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 a 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. Kent Hansen, director of engineering for the National Asphalt Pavement Association (NAPA), pointed out that state departments of transportation (DOTs) usually use design build contracts as a way of getting projects done when states don't have the resources. In DOTs, design build contracts are usually used for very large projects. Management procurement systems In this arrangement the client plays an active role in the procurement system by entering into separate contracts with the designer (architect or engineer), the construction manager, and individual trade contractors. The client takes on the contractual role, while the construction or project manager provides the active role of managing the separate trade contracts, and ensuring that they all work smoothly and effectively together. Management procurement systems are often used to speed up the procurement processes, allow the client greater flexibility in design variation throughout the contract, the ability to appoint individual work contractors, separate contractual responsibility on each individual throughout the contract, and to provide greater client control.

Construction Careers There are many routes to the different careers within the construction industry which vary by country. However, there are three main tiers of careers based on educational background which are common internationally: 

Unskilled and Semi-Skilled - General site labour with little or no construction qualifications.

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Skilled - On-site managers whom possess extensive knowledge and experience in their craft or profession.

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Technical and Management - Personnel with the greatest educational qualifications, usually graduate degrees, trained to design, manage and instruct the construction process. Skilled occupations in the UK require Further Education qualifications, often in vocational

subject areas. These qualifications are either obtained directly after the completion of compulsory education or through "on the job" apprenticeship training. In the UK, 8500 construction-related apprenticeships were commenced in 2007. Technical and specialised occupations require more training as a greater technical knowledge is required. These professions also hold more legal responsibility. A short list of the main careers with an outline of the educational requirements are given below: 

Architect - Typically holds at least a 4-year degree in architecture. To use the title "architect" the individual must hold chartered status with the Royal Institute of British Architects and be on the Architects Registration Board.

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Civil Engineer - Typically holds a degree in a related subject. The Chartered Engineer qualification is controlled by the Institution of Civil Engineers. A new university graduate must hold a masters degree to become chartered, persons with bachelors degrees may become an Incorporated Engineer.

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Building Services Engineer - Often referred to as an "M&E Engineer" typically holds a degree in mechanical or electrical engineering. Chartered Engineer status is governed by the Chartered Institution of Building Services Engineers.

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Project Manager - Typically holds a 2-year or greater higher education qualification, but are often also qualified in another field such as quantity surveying or civil engineering.

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Quantity Surveyor - Typically holds a masters degree in quantity surveying. Chartered status is gained from the Royal Institute of Chartered Surveyors.

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Structural Engineer - Typically holds a bachelors or masters degree in structural engineering, new university graduates must hold a masters degree to gain chartered status from the Institution of Structural Engineers.

Project Risk Management As the business grows, risk also grows with it but the rate at which risk grows is less as compared to before starting business. Now is project management risk is involved as the size of the project increases. In short smaller the project small is the risk and bigger the project big is the risk. Now how to minimize the risk or eliminate risk is a big question and lot many answers can be find out.

Risk in project management can be of various factors like risk can be of meeting deadlines, making profit, getting sufficient resources and so on. Organization is one who needs to borne the risk but the burden of risk is shared among various departments so that it can easily handle. Like if risk in a project is in relation with money than its account department who will look after it and if its related to production than it will be engineers and so on but everyone needs to work hand in hand in order to lessen the risk. Risk can also be shared if the project of client is carried by two organizations but this thing rarely happens but what can happen is sharing of risk with client itself. In this case the percentage of risk which is to be shared is need to be decided in advance and where the sharing of risk is decided in advance also profit is need to be decided. But all this will happen when the client and the project management company is strong. But some time project is not outsourced to different companies and the organization itself manages the project so in order to minimize risk it is very necessary for the organization to work everything on paper and than start execution and while executing any risk is traced and the problem area should be traced and need to work on it for the smooth flow of work. In every organization risk is there and the percentage of risk involved is fixed if the percentage increases than only action is taken. Sometimes due to aftermath risk becomes very high and project is need to be closed or needs to be started from the scratch and in this case organization suffers lots of losses. So all the unforeseen consequences are also need to be kept in mind before starting project so that immediate solution can be applied however every project is a new experience for an organization so also every risk is new so organizations can just minimize it but can never eliminate completely.

Project Management Methodologies Project Management though is not a scientific term still it has some standards methods that can be used to make project more effective as well as efficient. Project Management methodologies are used depending upon the nature of the project if a project demands a requirement of particular methodologies than only it is to be used but only after making proper selection. There are different methods existing for project management and many methods are also on their way of innovation. A single project can have use of one or more methodology depending upon the need. But before applying any methodology its effect is need to be calculated so that the result can come out as per the expectations. Expectations can be met only after framework or the approach of the project meet with the set guidelines.

Some of the project management methodologies used today are prince 2, log framework, 4pm and so on and every method has its own importance like some methods helps in focusing only on good communication, some on product planning and so on. What is important with the use of methodologies is a proper teamwork and to know guidelines for fixing various tools and techniques. Today software industry has made use of many methodologies easy and quick also so results can be known in advance as to what will be the outcome by using particular method. So it is very important to evaluate and monitor the project simultaneously while using the methods and the people using the method should not only have knowledge about the methodology but also the skill. There are many firms who believe in following particular method because they are used to it but it is also very important to educate them about new methods which will help in bringing advanced methods in the market and will make the work easier.

Project Management Tools Management of any project can be done with various resources, techniques as well as tools. There are various tools, which can be used on the project to get the desired result but only efficient and effective tools are need to be applied to avoid risk and get the results as per the standards set. There are various tools used by the various organizations depending on the requirement and software industries have made things easier with a click of button. But what is important is to get the tools properly assembled and that too in time this will not only eliminate risk but will also help in meeting deadlines. Certain tools in market are available free of cost but one should know where to look for them while some needs to be discovered by doing some basic research. Tools if also easily available cannot be used everywhere what is important is to have knowledge as those where to use it and when so one needs to have skill in using tools and also to know about the resources as to where he or she can get them. Today it has become imperative to use project management tools as they ease the flow of project, makes proper utilization of the resources. Tools helps in knowing which projects are at risk and falling behind the schedule and which are the projects getting over budgeted. Some of the tools are used internally while some are used externally and the tools, which are, used externally helps in withstanding competition. In India there are some crash course and workshops organized for the employee o that they can use tools properly and ones they know how effective tool can be than it will not help only in individual growth but will also help for the growth of the projects as well as company.

CHAPTER 4 SCHEDULING TECHNIQUES FOR CONSTRUCTION PROJECTS The four scheduling techniques widely used in construction projects are: 1. Bar Charts and Linked Bar Charts 2. Network Analysis and Critical Path Method 3. Line of Balance 4. Q Scheduling Each is briefed below with a focus on Q Scheduling being a new technique increasingly being applied in construction management. 1. Bar Charts and Linked Bar Charts Bar Charts are the easiest and most widely used form of scheduling in construction management. Even with other scheduling techniques the eventual schedule is presented the form of a bar chart. A typical Bar chart is a list of activities with the start, duration and finish of each activity shown as a bar plotted to a time scale. The level of detail of the activities depends on the intended use of the schedule. The linked bar chart shows the links between an activity and its preceding activities which have to be complete before this activity can start. The bar charts are also useful for calculating the resources required for the project. To add the resources to each activity and total them vertically is called a resource aggregation. Bar charts and resource aggregation charts are useful for estimating the work content in terms of man-hours and machine hours. 2. Network Analysis and Critical Path Method Practically network analysis offers little more than a linked bar chart, though its protagonists claim, with some justification, that the self contained steps of a network are more applicable to complex operations than the bar chart, and that the greater rigor imposed by the logic diagram produces more realistic models of the proposed work. The steps in producing a network are: Listing of activities a) Producing a network showing the logical relationship between activities. b) Assessing the duration of each activity, producing a schedule, and determining the start and finish times of each activity and the available float

c) Assessing the required resources. There are now two popular forms of network analysis in construction management practice, activity on the arrow and activity on the node, the latter now usually called a precedence diagram. Each of these approaches offers virtually the same facilities and it seems largely a matter of preference which is used. 3. Line of Balance The line of Balance is a planning technique for repetitive work. The principles employed are taken from the planning and control of manufacturing processes greatly modified by E. G. Trimple. The basis of the technique is to find the required resources for each stage or operation so that the following stages are not interfered with and the target output can be achieved. The line of balance technique has been applied in construction work mainly to house building and to a lesser extent to jetty work and in conjunction with networks to road works. 4. Q Scheduling The Q Scheduling is a new technique, though getting rapid popularity among contracting firms. It is the only scheduling technique that reveals a relation between the sequence of doing a job and the cost to be incurred. The Q schedule is similar to the Line of Balance with some modifications made by A. R. A. Z. A in 2004, to allow for a varying volume of repetitive activities at different segments or locations of the construction project, thus the model produced is closer to reality. Q Scheduling software is currently limited to consider up 5 locations; i.e. 120 alternatives so that it can work on normal computers - Pentium II and above. It can be used efficiently for small to medium projects. However, for the time being large projects can use Q Scheduling first by integrating segments together so that a maximum total of five segments is there, then considering each segment as a separate construction project. Thus a twenty five location project can be handled.

CHAPTER 5 CONSTRUCTION ESTIMATING Construction estimating is the bane and boon of every contractor. You have to estimate to get jobs, and you're always wondering if you got it right. Accurate construction estimating is essential to making money consistently. Accuracy begins with careful takeoffs and ends with thorough job cost. Job cost is used to adjust your estimating so you are more accurate on the next estimate. The challenge for most small and medium sized contractors, like you, is bidding consistently job after job. Frequently, you're overwhelmed with the amount of work you have to do, whether it's job related or not. There's just not enough time to get everything done. One of the things that suffers because of it, is your estimates. An estimate is a calculation of the quantities of various items of work, and the expenses likely to be incurred there on. The total of these probable expenses to be incurred on the work is known as estimated cost of the work. The estimated cost of a work is a close approximation of its actual cost. The agreement of the estimated cost with the actual cost will depend on accurate use of estimating methods and correct visualization of the work, as it will be done. Importance of correct estimating is obvious. Under-estimating may result in the client getting an unpleasant shock when tenders are opened and drastically modifying or abandoning the work at that stage. Over-estimating may lose the engineer or estimator his client or his job, or in any case his confidence. Estimating is the most important of the practical aspects of construction management, and the subject deserves the closest attention of one aspiring to a career in the profession. It is a comparatively simple subject to understand; however, as it brings one up against practical work, methods and procedure, knowledge of it cannot be acquired without close application.

Purpose of Estimating To give a reasonably accurate idea of the cost An estimate is necessary to give the owner a reasonably accurate idea of the cost to help him decide whether the work can be undertaken as proposed or needs to be curtailed or abandoned, depending upon the availability of funds and prospective direct and indirect benefits. For government works proper sanction has to be obtained for allocating the required amount. Works are often let out

on a lump sum basis, in which case the Estimator must be in a position to know exactly how much expenditure he is going to incur on them. 

Estimating Materials: From the estimate of a work it is possible to determine what materials and in what quantities will be required for the work so that the arrangements to procure them can be made.

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Estimating Labor: The number and kind of workers of different categories who will have to be employed to complete the work in the specified time can be found out from the estimate.

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Estimating Plant: An estimate will help in determining amount and kind of equipment needed to complete the work.



Estimating Time: The estimate of a work and the past experience enable one to estimate quite closely the length of time required to complete an item of work or the work as a whole. Whereas the importance of knowing the probable cost needs no emphasis, estimating materials, labor, plant and time is immensely useful in planning and execution of any work.

Types of Construction Estimates There are several kinds of estimating techniques; these can be grouped into two main categories: 1. Approximate Estimates: An approximate estimate is an approximate or rough estimate prepared to obtain an approximate cost in a short time. For certain purposes the use of such methods is justified. 2. Detailed Estimate: A detailed estimate of the cost of a project is prepared by determining the quantities and costs of every thing that a contractor is required to provide and do for the satisfactory completion of the work. It is the best and most reliable form of estimate. A detailed estimate may be prepared in the following two ways. a. Unit Quantity Method: In the unit quantity method, the work is divided into as many operations or items as are required. A unit of measurement is decided. The total quantity of work under each item is taken out in the proper unit of measurement. The total cost per unit quantity of each item is analyzed and worked out. Then the total cost for the item is found by multiplying the cost per unit quantity by the number of units. For example, while estimating the cost of a building work, the quantity of brickwork in the building would be measured in cubic meters. The total cost (which includes cost of materials. labor, plant, overheads and profit) per cubic meter of brickwork would be

found and then this unit cost multiplied by the number of cubic meters of brickwork in the building would give the estimated cost of brickwork. This method has the advantage that the unit costs on various jobs can be readily compared and that the total estimate can easily be corrected for variations in quantities. b. Total Quantity Method: In the total quantity method, an item of work is divided into the following five subdivisions: i.

Materials

ii.

Labor

iii.

Plant

iv.

Overheads

v.

Profit.

Qualifications of an Estimator A good estimator should possess the following quantifications: 

A thorough understanding of architectural drawings.



A sound knowledge of building materials, construction methods and customs prevailing in the trade.



A fund of information collected or gained through experience in construction work, relating to materials required, hourly output of workers and plant, overhead expenses and costs of all kinds.



An understanding of a good method of preparing an estimate.



A systematic and orderly mind.



Ability to do careful and accurate calculations.



Ability to collect, classify and evaluate data that would be useful in estimating. Good instruction or careful and thorough study of a standard book will help a beginner to

become a good estimator. He must, however, try to develop all the above mentioned qualities while obtaining practical experience.

Data Required for Preparing an Estimate In order to prepare a detailed estimate the estimator must have with him the following data: 

Plans, sections and other relevant details of the work.



Specifications indicating the exact nature and class of materials to be used.



The rates at which the different items of work are carried out. To enable an estimator to take out the quantities accurately, the drawings must themselves be

clear, true to the fact and scale, complete, and fully dimensioned. The estimator has also to bear in mind certain principles of taking out quantities.

Steps in Preparation of an Estimate There are three clearly defined steps in the preparation of an estimate. 1. Taking out quantities: In the first step of taking out quantities, the measurements are taken off from the drawings and entered on measurement sheet or dimension paper. The measurements to be taken out would depend upon the unit of measurement. For example, in the case of stone masonry in superstructure, length, thickness and height of the walls above plinth level would be taken out from the drawings and entered on the measurement sheet, whereas, in the case of plastering only the lengths and heights of the walls would be entered. Obviously, the unit of measurement in the first case is cubic meter and that in the second case is square meter. 2. Squaring out: The second step consists of working out volumes, areas, etc. and casting up their total in recognized units. 3. Abstracting: In the third step all the items along with the net results obtained in the second step are transferred from measurement sheets to specially ruled sheets having rate column ready for pricing. The second and third steps above are known as working up. All calculations in these stages and every entry transferred should be checked by another person to ensure that no mathematical or copying error occurs.

Standard Method of Measurement of Building Works The different methods of measuring used by various Central and State Government departments and by construction agencies were found to be a serious difficulty to estimators and a standing cause of disputes. For this reason a unification of the various systems at the technical level had been accepted as very desirable and wanting.

Although the standard has no legal sanction and as such need not be adopted unless it is referred to in the contracts. Principles of Deciding Unit of Measurement A beginner may find it difficult to remember the units of measurement of different items. Memorizing of units of measurement would be greatly simplified if he knows the principles kept in view while selecting the units of measurements. Following are the most important principles of selection of unit of measurement: 

The unit of measurement should be simple and convenient to measure, record and understand.



It should be one, which provides for fair payment for the work involved.



In the result it should yield quantities, which are neither too minute nor too large.



The price per unit should not be a very small figure or a very large one, that is, generally costlier items will be measured in smaller units, cheaper ones in larger units.



The unit of measurement may sometimes depend upon the unit for the raw material and/or labor and/or important dimensions. For example, stone masonry is measured in cubic meters because raw materials are measured in cubic meters plastering or pointing is measured in square meters, as the labor is considerable.

Building Cost Estimate Construction costs estimating: Construction costs estimating is the bread and butter of any profitable construction contracting business. Keeping your estimates, and your job costs, organized allows you to focus your attention and energy on getting the job done, instead of wasting time on administrative functions. Yes, good administration is a key piece of a contracting business. This can represent not only time, but frustration if you don't have a good system in place for keeping all of the respective balls in the air at once. This is why a good construction costs estimating software program is essential for the small to medium sized contractor. Keep Money in Your Pocket: Keeping good tabs on budget and financial information for each job with a useful construction costs estimating program will ensure that money is in your pocket, and not left behind at a job site. Too many contractors make the mistake of keeping loose tabs, or no tabs, on labor and material costs, only to find that money was lost on a job due to inaccurate estimating.

Avoid Frustration: Sometimes contractors balk at the idea of using software for construction costs estimating. After all, contractors are in the business of building or remodeling homes, not accounting. But, this shouldn't deter you from making the best of your business and improving your bottom line. Contrary to what you might think, it isn't necessary to spend an arm and a leg on fancy programs that include everything except the kitchen sink. For small businesses, there are really a limited number of functions necessary for keeping jobs and costs in order. Useful Functions of Estimating Software: The best construction costs estimating software for residential contractors serves a variety of useful functions. First, it will provide accurate cost requirements based on project square footage and a variety of other variables. Second, it will record prior job parameters for easy future reference, and the ability to understand your business at a glance. Third, it will integrate with your QuickBooks software so that you can maximize the usefulness of both your estimating software and your accounting software. Standardize Job Estimates: The key to a good estimation software program is the ability to standardize estimates. You'll have finished projects at your fingertips for comparison that will walk you through the entire process from laying a foundation all the way through drywall and exterior paint. A good program will walk you through this entire process with easy to use functions at every step of the way. Cost and Ease of Use: The right construction costs estimating program for a small or mid-sized business is one that is affordable, simple to use with step by step instructions, and provides all the right tools for staying organized and on track. This kind of program will allow you to devote your time to doing the job right, without worrying about material shortages and other headaches that come from bad estimating. This will make a contracting business run more smoothly, and will ensure that valuable time and money isn't left on the table when estimating residential building costs. Building Costs Estimate: Presenting an accurate forecast of the scope, cost and time period of future projects is most vital for the survival of any business. For building cost estimate, the best way is to hire cost estimators. Cost estimators make an accurate estimate of the cost information that the business owners need to bid for a contract or to decide a proposed new product or project’s profitability. They also help you determine as to which endeavours are making the maximum profit. In every industry, there are a number of factors that influence costs such as materials, labour, location, machinery requirements, time required for a project and the computer hardware and software. Based on these factors, the Building cost estimator can properly compile and analyze the data.

In a construction project, the cost estimation process starts with the decision to submit a bid. After the review of various preliminary drawings and other specifications, the cost estimator makes a visit to the website of the proposed project. Details with regard to the site have to be collected by the cost estimators and accordingly a report has to be made which is included in the final project estimate. After the process of purchasing a residential house or an office for the company premises, one of the most essential is to design the interior of the house. Interior and Landscape Design is done by our experts after the plans discussed with the clients. The ideas for the interior design is then worked upon keeping in mind the requirements and suggestions made by our customers. For the garden design part, our design engineers have a wide range of creative ideas pleasing in terms of modern designing. The Building Cost Estimate of the entire project is prepared by the cost estimator including the costs of labour, equipments, materials, overheads, insurance, taxes and all the other factors affected with costs. There are specially trained construction cost estimators who only focus on the costs related to the construction. The main goal of a cost estimator is to estimate the costs involved in the making of products with great accuracy. This cost estimation process starts with the development of a new product or the re-design of an existing product. The estimator then decides whether the parts required for the project has to be purchased or has to be produced in order to incur less cost. Some products require a considerable amount of computer programming during the design phase. The most difficult part is to estimate the cost of software development as this industry is fast growing from time to time. The cost estimating services goes through four phases including preliminary, conceptual, schematic and detailed estimation services. In case of the construction activities, detailed estimation is the ideal way of Estimating construction costs. The most efficient materials required for respective products are determined by our team. It is necessary to calculate the estimate of cost used on the materials. Our cost estimators keep an account of the estimate of the various types of machinery, its size and various other features. Information about the drafting services undertaken by your company in detail is maintained by our estimators to prepare a detailed estimate. The production of various processes carried out is also taken into account. Hence the final cost estimate prepared shall include even the minute expenses on every aspect. An estimate of what is present or known is not the only aspect looked at by our cost engineers. But they look at the cost involved in the details that based on the extensive knowledge of planning, purchasing, installation and construction. As our database is updated from time to time, hence it helps in the accurate and fast calculation of cost estimates.

Computers serve as a solace for the Complex mathematical calculations being an essential part of the cost estimation process. For this, advanced mathematical techniques are used by the cost estimators of Silicon Valley. Though computers are not the only solution but they can clearly relieve our estimators from the time-consuming calculations. Various new cost estimating softwares are available in the market but it is a big question in your minds as to which one to select. Silicon Valley provides the best and most improvised cost estimating softwares that will partially help the cost estimators in their analyzation of projects.

Why Estimating Building Costs is Important Estimating building costs is often one of a contractor's least favorite tasks. For many small and medium sized contractor businesses, estimates are often eyeballed without a whole lot of detailed analysis. After all, the contractor probably doesn't want to take time out of a busy schedule for a bunch of administrative tasks. But what you may not realize is that creating a detailed estimate that more accurately reflects the costs of the job is well worth the extra time. And, it really doesn't take all that much extra time anyway, provided you have the right tools. Cutting into Your Bottom Line:

Let's consider for a moment what happens when you

underestimate the cost of a job (which, of course, you have undoubtedly done at one time or another). In order to save a few minutes of time, or because you just don't have the right tools available, you hand write a quick estimate. The client hires you, and work begins. As the job progresses, you soon realize you are going to spend more time than you allocated in your estimate. By the time you're done, all the extra labor costs are cutting into your bottom line. When compared with the hours of pay lost, taking some extra time for estimating building costs in detail is a far wiser use of time. Construction Estimation Software Can Help: Many contractors are unaware that there are specialized computer programs for estimating building costs. All of the big contractors, of course, use programs with lots of fancy bells and whistles. But, if you're one of the little guys, you don't need all of those features. And you certainly don't need the expensive price tag. What you do need is a software program with features tailored to your needs that won't break the bank. Create Systematic Estimates: The key to estimating building costs accurately is systematization. You need a program that can analyze and evaluate a number of variables, including square footage, materials costs, labor hours, and data from completed jobs. You might think a program like this would

be hard to use, but many programs designed for the small contractor have been specifically designed to be easy to use, with intuitive, user-friendly functions. Even if you're not a computer wizard, you can easily learn to use a program for estimating construction costs. Improve Your Professional Profile: As an added bonus, you'll appear more professional to the customer. After all, your clients expect you to not only be knowledgeable about contracting projects, but to wisely manage project budget and administration tasks as well. Don't Lose Jobs by Overestimating: One risk of offhand estimates that we haven't talked about so far is over-estimating construction costs. It seems counterintuitive; after all, if you overestimate, then you'll have money left over—you're sure to get paid for all of your work. The problem with this is that you simply won't get the clients if you overbid your projects. This is also an unseen cut in your profit margin. Keep Money Off the Table and In Your Pocket: Using a software program like this one available at www.construction-estimating.com will help you improve your bottom line. The program offered at www.construction-estimating.com is certainly not the only program out there, but it is a great value, is user friendly, and will quickly have you on the way to estimating construction costs consistently and accurately to increase the amount of money that stays in your pocket.

CHAPTER 6 CONSTRUCTION COST CONTROL

Cost Control and Cost information Systems Cost Control is an obvious objective in Construction Management and Construction Scheduling. It should be recognized that no amount of paperwork achieves this construction cost control. The actual control is achieved through the ultimate decision of the manager that something should be done differently and the translation of that decision into practice. The paperwork provides guidance on what control actions should be taken and therefore it is rather a cost information system. The elements of a cost control system are: 

Observation



Comparison of observation with some desired standard



Corrective action to take if necessary. A construction cost control system should enable a manager to observe current cost levels,

compare them with a standard plan or norm, and institute corrective action to keep cost within acceptable bounds. Most construction cost control systems have an inordinately long response time. Even the best cost control system would provide information on what was happening last week or last month. Since, in construction projects some activities might finish in a week or a month, then nothing could be done if the performance of such activities was reported to overrun estimates of respective costs.

Developments in Cost Control Systems There are three developments in construction management which show promise of improving cost control system in the construction industry. 1. Short term scheduling and control: This system was developed at Loughborough University in association with a contractor. It aims to merger the planning and supervision and hence to obtain a more or less zero response time.

2. Project Cost model: This a system developed by Dr Martin Barnes for simulating future actions and thus guiding the manager in his choice between them. 3. Quantitative scheduling: One of the unique Construction Software that provides a futuristic construction cost control tool for construction management is the CFF3 for cash flow forecasting. Version three has taken into consideration the possible deviations from estimates of cost as well as cash in patterns and provided a means to return back to the original estimate by damping out these deviations through the remaining period of construction. Updated estimates are provided each time an actual figure is added such that the end cost remain same as was originally estimated. It provides an excellent guide for managers through the construction project to capture the best possible actions in each period activities. Labor rate and efficiency constitute the core of Quantitative Scheduling which is highly recommended if cost minimization in respect of productivity rates is sought. Also Construction Cost is directly related to Material price, Material usage and waste, Fixed and varied overhead expenditure. These are the areas where managers should seek action for future adjustments in order to get back to original estimate or practically as near as possible.

CHAPTER 7 CONSTRUCTION CONTRACTS ADMINISTRATION Construction Contract Definition of a contract The term Contract used in the Construction management can be defined as: "An agreement entered into by two parties under the terms of which one party agrees to perform a specific job for which the other party agrees to pay. Contract documents attached to and/or stated in the agreement form integral parts of the contract". Essentials of Contract validity The parties to the contract must be competent, and legally capable of playing their intended part. The law can not enforce the agreement on someone who has not the legal capacity to enter into an agreement. This could be due to infancy, lunacy, drunkenness, or being restricted from entering into such agreement by a prior in date agreement or scope of authority. The subject matter of the contract must be lawful and definite in respect of requirements and duties of each party. For example a contract violating municipal regulation is not binding and is void in courts. Also uncertainty in respect of what is wanted may result in the contract being not enforceable by law. Proposal and acceptance: There must be a proper proposal by one party and its absolute and unqualified acceptance by the other party. The proposal is not binding without a clear acceptance and is not binding beyond its date of validity. Free consent of parties to the contract: Consent is said to be free when it is not caused by force, or undue influence or fraud or misrepresentation. Breach of Contract Breach of Contract is the failure to perform it. However, not every failure to perform an obligation amounts to a true breach, as there are a number of excuses for non performance. When a contract has been broken without sufficient excuse or justification, the party who suffers by such

breach is entitled to receive from the party in default, a compensation for any loss or damage caused by such breach. Data Required for Preparing an Estimate A Contract may be terminated or brought to an end in either of the following ways: 

Full and satisfactory performance by both parties to their obligations under the contract.



Breach of contract, when the default of one party releases the other party from the contractual obligations.



Mutual agreement of the parties to terminate the contract.



Unforeseen circumstances beyond the control of either party render it impossible to perform his duties or obligations stated in the contract.



Operation of law to terminate a void contract.

Types of contracts commonly used in construction 

Lump sum contract



Item rate or unit price contract



Percentage rate contract



Cost plus percentage rate contract



Cost plus fixed fee contract



Cost plus fluctuating fee contract



Target cost contract ( Read more about this Type of contract )

Contract Administrator The contract administration policies of the Government have been set out in the “Code of Practice for the Building and Construction Industry” and reference should be made to the Code. Contract Administration phase commences after approval has been given by the Department to enter into a building contract. It involves the administration of the Building Contract and covers the obligations, rights and responsibilities of the Contracting parties. The Building Contract comprises: 

Signed Contract (including special conditions);



Specification; and



Working Drawings.

The key parties involved in the construction phase are: 

Principal (i.e. Health Service/Agency);



Contractor (i.e. the Builder); and



Superintendent (i.e. the Contract Administrator). In some larger more complex projects, the Contractor may be a Construction Manager who

tenders out trade packages during the course of the construction works. However, this process generally follows the issues outlined in this guideline. Legal and Financial Obligations Health Services/Agencies and consultants should be aware of their legal and financial obligations and responsibilities, as failure to do so can involve costly compensation and legal expenses. It is essential that the contract administration role be undertaken by a person having the necessary expertise and qualification to do so. Superintendent Responsibilities In the standard form of contract AS 2124 - 1992 the Superintendent has the specific responsibilities involved in contract administration, that is, the day-to-day administration of the contract. The Superintendent is obliged to follow the provisions of the Contract Agreement and Contract Documents, and must interpret and administer the Contract in accordance with the documents and must act with due consideration for their intent. Throughout the General Conditions, certain clauses require the Superintendent to act as agent for the Principal, and in other clauses, the Superintendent is required to act as a certifier. In both instances, in accordance with the provisions of Clause 23 of the contract, the Superintendent is required to act fairly and reasonably, but particularly when acting as a certifier, there will be an expectation from the Builder/Contractor that the Superintendent acts impartially. There are many matters calling for the Superintendent’s special adjudication. Some examples are: 

Assessing and certifying progress payments



Issuing, assessing, referring and authorising contract variations



Determining quality, etc. Of materials and workmanship



Issuing notices and dealing with security of payment provisions



Ascertaining losses or expenses by the building/contractor due to instructions, etc.



Assessing and determining any extensions of time



Determining and formally notifying the date of practical completion



Determining completion and issuing the final certification. On Government projects, the Superintendent has the additional responsibility of taking into

consideration government regulations and policies, particularly in respect of OH&S and Security of Payment (SOP). The Superintendent must act in a manner consistent with those policies to ensure that the Principal/Client is not exposed to the risk of additional payment. Examples of this additional responsibility are: 

OH&S o establish and maintain procedures to ensure safe working conditions prevail



SOP o timely response to a claim o Issue of schedule

Facility Operation during Construction Many of the Department’s Construction projects are undertaken whilst buildings are occupied. It is essential that service delivery standards be maintained for the facility during construction. In addition to careful planning, and appropriate organisational and contractual arrangements, full cooperation between the Principal, Superintendent and Contractor is essential. OH&S and Security of Payment Responsibility The Health Service/Agency is to note that the engagement of a superintendent is not a substitute for discharging their responsibilities in regard to the matters of OH&S and SOP. These areas are to be taken as shared duties and obligations and cannot be delegated to others. Health Services/Agencies must ensure that these items are regularly monitored and reported on and where necessary action taken to address issues as they arise.

Construction Accounting

Construction accounting is a form of project accounting applied to construction projects. Construction accounting is a vitally necessary form of accounting, especially when multiple contracts come into play. The construction field uses many terms not used in other forms of accounting, such as draw and progress billing. Construction accounting may also need to account for vehicles and equipment, which may or may not be owned by the company as a fixed asset. Construction accounting requires invoicing and vendor payment, more or less as to the amount of business done. Construction Costs: Construction accounting involves charging construction costs to the applicable contract. Costs fall into three categories. Direct costs are labor, material, and subcontracting costs. Indirect costs include indirect labor, supervision, tools, equipment costs, supplies, insurance, and support costs. Selling, general and administrative costs are generally excluded from contract costs. Revenue Recognition: Construction accounting requires unique revenue recognition rules for contracts in progress. In most cases, revenue is recognized using the Percentage of Completion Method. Under this method, revenue is recognized using an estimate for the overall anticipated profit for a particular contract multiplied by the estimated percent complete of that contract. This involves the inherent risk of relying upon estimates. Under SOP 81-1, revenue is also allowed to be computed using the Completed Contract Method. Under this method, contract revenues and costs are not recognized until the contract is substantially complete. However, this method is not allowable if the results are significantly different than results using the Percentage of Completion Method. The Completed Contract Method is allowed in circumstances in which reasonable estimates cannot be determined. However, these types of circumstances can be construed as a lack of internal control. Construction Loans and alternative construction finance sources One of the major problems facing any business enterprise is that of obtaining finance. This is a problem not merely of quantity but also of type. The situation is further compounded by legislation. a the dynamism of the economy, but fundamentally by the requirement to minimize costs. The construction industry comprises a wide variety of firms from the single person enterprise to the large multinational public company. The sources of capital available to any firm are quite numerous but public companies have the great variety of sources available for their use and the single person enterprise, the least variety.

Construction Loans It can be classified into short term and long term borrowings: Long term Finance: It is that capital required for five to ten years, either to start a business or to carry out expansion programs. Broadly the capital is used to purchase buildings, plant and equipment. The risks to the lender are high because of the time scale involved, consequently only established firms are generally considered by the lending institutions. Short term Finance: The firm when established often needs short term capital to overcome immediate cash flow problems. Materials have to be purchased, plant hired, labor and subcontractors paid and so on before payment is received from the Employer. The common types of Finance 1. Shares: Shares may be of several types, each with different rights. Ordinary shares which are called equity of the company represent the major ownership and risk bearing element of the entrepreneurship. The shareholder is entitles to the residual profits in the company after all other commitments have been met. Ordinary shares usually entitle the holder to voting rights. Preference shares are also common, entitling the shareholder to a dividend up to a prescribed level prior to any distributions being made to holder of ordinary shares. Cumulative preference shares are less common and carry a right for any unpaid to be carried forward for payment out of the profits of future trading periods. A new issue of shares for sale raise capital for the company 2. Debentures: These are loans made to the company. They differ from conventional loans insofar as they are offered to the market at a fixed interest rate and are repayable at a set time. The loan is either secured by mortgage on the firm's property or simply on the basis of the firm's reputation. Debenture holders rank ahead of almost any other creditors in the case of liquidation of the firm's assets. Like other loans, Debentures represent a cost to the company and as such the interest payment made is deducted from profits before allowance is made for tax income. In addition, the payments rank ahead of any dividend declared to shareholders. 3. Bank Loans: Loans are not easy to obtain. Most institutions are reluctant to lend long term, particularly to construction firms. They often request the borrower to provide a proportion of the

finance from internal resources. Merchant banks tend to demand higher rate of interest than the clearing banks since they are normally dealing with a large loan. 4. Retained earnings: Retained earnings is profit retained within the firm instead of being distributed to the owners. 5. Bank overdrafts: A bank overdraft is a process whereby a customer of a commercial bank is permitted to overdraw on that account up to an agreed limit for a prescribed period. This is rather similar to a bank loan except that interest is payable for the amount overdrawn only for the period it remains overdrawn and the account is usually repayable on demand or upon the termination of the overdraft period. 6. Trade creditors: Delayed payments to creditors and prompt ones from debtors, if handled with care, ease cash flow problems. The construction industry is well suited for this sort of financial arrangement since completed work is paid for by the client in periodical stages. CFF3 Cash Flow Forecasting software is a unique construction management software for estimating the difference between cash in and cash out amounts for construction projects, and hence you can realize the construction loan or external finance required for completion of the project. 7. Short Term Loans: Short term loans are available from individuals, banks, and other financial institutions. They are required for the provision of working capital, carry a prescribed rate of interest upon the entire sum and can not be recalled prior to the due date. Usually short term loan are obtained from commercial banks

Internal sources of capital Provision for corporation tax: Payment of this tax is usually made one year in arrears. The cash therefore remains in the business during that time and acts as a valuable source of short term funds. Depreciation: Depreciation is a bookkeeping and costing exercise by which the initial cost of an asset is written off over its useful life. It can be regarded as a source of capital. If no depreciation was charged on, say equipments, a great amount of profit would be available for distribution to the owners. Thus, reserves created by the process of depreciating fixed assets represent a stake in the firm by the owners, in a similar manner to retained earnings. For purposes of corporation tax, the

method to be used for depreciating any asset is prescribed in the tax regulations and so it may be necessary to produce two accounts, one for internal purposes and the other for taxation purposes

CHAPTER 8 CONSTRUCTION PRACTICE Equipment Cost By managing this information and providing easy access to it, Equipment Cost helps maximize your equipment investment. Cost and revenue information can be entered directly into Equipment Cost. Equipment related cost and revenue information can be entered through Payroll timesheets, and equipment-related cost information can be entered through Accounts Payable invoices. This information is then distributed to Job Cost, General Ledger, and Billing for appropriate processing. Equipment Cost also helps with equipment maintenance and resource allocation. In addition to make, model, and year, Equipment Cost tracks meter readings, license expirations, location, and more. You can even establish miscellaneous entries to track additional information, such as fuel consumed or miles traveled. Using integrated access tools, your equipment information is always immediately available. Interactive inquiries let you view stored information in seconds. And customizable reports let you calculate and print information in any format you need to conduct in-depth equipment analysis. Following is a detailed list of the features Equipment Cost offers to help you make informed equipment decisions that benefit your bottom line: Equipment Tracking 

Identify each piece of equipment with a flexible ID code of up to 10 alphanumeric characters and up to three sections.



Maintain a log of equipment specifications (for example, make, model, year, meter, and odometer readings).



Track rental information (for example, renter, rental date, return date, external rental rates).



Track ownership information (for example, purchase date, purchase price, seller, fair market appraisal).



Track license and permit expiration dates.



Add up to 250 user-defined data fields to track additional equipment information.



Group equipment by type (for example, trucks, lifts, backhoes) for maximum processing efficiency.



Identify a piece of equipment as an attachment to another (for example, the bucket of a backhoe) and track the attachment’s costs and revenue separately.



Track equipment status with user-definable descriptions (for example, in service, out of service).



Track equipment revenue and cost information for profit analysis.



Define miscellaneous entries to track additional details (for example, trips, gallons of fuel used, tons carried, on-road miles, downtime).



Define units for costs, revenue, and miscellaneous entries (for example, hours, gallons, miles, tons, flat amounts).



Accumulate costs, revenue, and miscellaneous entries by week, month, year, or life-to-date.



Choose to either accumulate miscellaneous entries or replace existing values with new values on an ongoing basis.

Revenue and cost tracking 

Define equipment revenue and cost codes with up to 12 alphanumeric characters and four sections.



Record cost and revenue amount totals to-date, next week, month-to-date, next month, yearto-date, next year, and life-to-date (also record revenue units by these accumulations).



Track depreciation with an interface to depreciation management software from Sage Software, Inc.



Group cost codes by any classification (for example, operating costs, ownership costs).



Analyze trends in cost, revenue, and profits with historical equipment tracking.



Track pass-through costs (costs that are billed to the job and not the equipment, but are related to the equipment for reporting purposes).



Set up revenue and cost rate tables to streamline entry.



Define cost and billing rates with up to four decimal places and use formulas to calculate rates.



Use cost and revenue rate tables to automatically assign rates to individual pieces of equipment, equipment types, jobs, employees, etc.

Entry and processing 

Enter equipment revenue on an hourly basis or by your own custom rate (for example, daily, weekly, monthly, break-even, or stand-by rates).



Enter revenue information through Payroll time cards or directly into Equipment Cost.



Enter cost information through Payroll time cards, AP invoices, or directly into Equipment Cost.



Post equipment costs to a job instead of a piece of equipment (for example, when a job site surface ruins tires and the replacement cost needs to be attributed to the job).



Automatically send job-related equipment costs to Billing for cost-based billing contracts (for example, time and materials, cost plus).



Automatically track location, operator, and date of operation based on the last transaction entered.



Customize cost and revenue entry grids.



Verify data entry with customizable entry journals.

Inquiry 

Choose from several pre-designed Equipment Cost inquiries (for example, Profit Analysis, Utilization, Monthly Trends, and Own vs. Rent).



Drill down on summary information to view supporting detail (for example, click on a piece of equipment to see associated revenue and cost transactions).



Apply conditions to display only the information you want to see.

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View and insert electronic notes and file attachments.

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Insert columns of data on-the-fly to quickly access additional information.

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Modify any of the more than 100 inquiries, or create new inquiries using Inquiry Designer.

Reporting 

Choose from several pre-designed Equipment Cost reports to calculate and print information at any time (for example, Profit w/ Attachments, License/Permit Expiration, and Cost Spreadsheet).

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Apply conditions and ranges to print exactly the information you need.

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Modify nearly all of the more than 500 reports, or create new reports using Report Designer.

Additional features 

Automatically generate balancing GL entries if you have separate companies for equipment ownership and construction.

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Import revenue, costs, meter readings, and other entries from third-party software systems (for example, depreciation from Sage Software’s FAS).

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Enter electronic notes to document information throughout Equipment Cost.

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Attach other files throughout Equipment

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Cost (for example, attach a digital image of a piece of equipment).

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Customize the toolbar for push-button access to reports, inquiries, and tasks.

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Change descriptions that appear on the screen to match your company’s standard terminology.

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Set up macros for unattended processing of predefined tasks.

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Define security rights by user or group. Equipment Cost is a part of Sage Timberline Office, fully integrated software created to

streamline work and connect the people you depend on to build your business.

Building Material Building material is any material which is used for a construction purpose. Many naturally occurring substances, such as clay, sand, wood and rocks, even twigs and leaves have been used to construct buildings. Apart from naturally occurring materials, many man-made products are in use, some more and some less synthetic. The manufacture of building materials is an established industry in many countries and the use of these materials is typically segmented into specific specialty trades, such as carpentry, plumbing, roofing and insulation work. This reference deals with habitats and structures including homes. Natural materials Building materials can be generally categorized into two sources, natural and synthetic. Natural building materials are those that are unprocessed or minimally processed by industry, such as lumber or glass. Synthetic materials are made in industrial settings after much human manipulations, such as plastics and petroleum based paints. Both have their uses.

Mud, stone, and fibrous plants are the most basic building materials, aside from tents made of flexible materials such as cloth or skins. People all over the world have used these three materials together to create homes to suit their local weather conditions. In general stone and/or brush are used as basic structural components in these buildings, while mud is used to fill in the space between, acting as a type of concrete and insulation. A basic example is wattle and daub mostly used as permanent housing in tropical countries or as summer structures by ancient northern peoples.

Safety Construction is the most dangerous land based work sector in Europe (the fishing industry being more dangerous). In the European Union, the fatal accident rate is nearly 13 workers per 100,000 as against 5 per 100,000 for the all sector average. In the U.S. there were 1,225 fatal occupational injuries in the construction sector in 2001 with an incidence rate of 13.3 per 100,000 employed workers. For the same year the construction industry experienced 481,400 nonfatal injuries and illnesses at a rate of 7.9 per 100 full-time workers in the industry. Construction has about 6% of U.S. workers, but 20% of the fatalities - the largest number of fatalities reported for any industry sector. The problem is not that the hazards and risks are unknown, it is that they are very difficult to control in a constantly changing work environment. Nature of Hazards Hazards to construction workers The leading safety hazards on site are falls from height, motor vehicle crashes, electrocution, machines, and being struck by falling objects. Some of the main health hazards on site are asbestos, solvents, noise, and manual handling activities.

Hazards to non-workers Many construction sites cannot completely exclude non-workers. Road construction sites must often allow traffic to pass through. This places non-workers at some degree of risk. Road construction sites are blocked-off and traffic is redirected. The sites and vehicles are protected by signs and barricades. However, sometimes even these signs and barricades can be a

hazard to vehicle traffic. For example, improperly designed barricades can cause cars that strike them to roll over or even be thrown into the air. Even a simple safety sign can penetrate the windshield or roof of a car if hit from certain angles. Architects and construction companies are also responding to demands for improved structural safety against violent storms, such as hurricanes and tornadoes, and, increasingly from the threat of terrorism around the world. “Our people work closely with companies that are designing and constructing buildings. We advise on safety features. We participate in public and industry education as a member of the Protecting People First Foundation, which was founded in the wake of the 1995 Murrah Federal Building bombing in Oklahoma City,” said Schroeder. The Protecting People First Foundation campaigns for increased use of life saving, blastresistant windows with protective glazing, following congressional reports that indicated many lives were lost because of flying glass. Federal buildings now require windows to be designed to provide protection against potential threats. Dow Corning provided window safety testing and consulting services at the Pentagon, a collaboration that was featured in a case study presented at a Foundation symposium, titled: "Saved by a Window: A Case Study of the Pentagon's Blast-Resistant Glazing and the Lives saved on 9/11".

Innovation and Trends in Construction World-class architecture has always been a delicate balance of form and function. As cities seek to create distinctive skylines to foster civic pride and attract greater international recognition, architects and contractors need to meet the challenges of new requirements for safety and the environment. “In addition to meeting traditional safety, design and functional specifications, we see major external trends that are changing the way all types of structures are designed and built,” explained Bob Schroeder, Industry Director (Americas) for Dow Corning’s construction business. “These affect everything from high-rise office buildings and convention centers to athletic stadiums and transportation hubs.” Concern about the risk of terrorism has heightened around the world, creating more demand for buildings that protect both the structure and the inhabitants. In many countries, building owners want their facilities to better withstand the effects of violent storms. And from both governments and

the public alike, there are increasing demands for structures that are sustainable and meet environmental considerations. Taken together these trends require greater industry expertise, innovation, and solutions to address a wide range of issues. Green Construction “One very important industry trend has been the growing emphasis on sustainable, or green, construction,” Schroeder continued. “Years ago, structures which were built for World Fairs, were sometimes demolished - often soon after the event finished. It was a tremendous waste of limited resources and just what the principle of sustainable construction is meant to avoid.” “Today, sustainable design has been recognized by the industry and the public as critical factors in achieving high quality architecture and benefiting the building owners - the companies that occupy these structures and the wider community.” Architects therefore work to identify ways to repurpose structures in order to increase their usable life after one-time world events have ended. One example is the Lisbon Expo 98 project, called the Gare do Oriente, the largest urban regeneration project in Europe. Buildings erected for the Expo were re-purposed for long-term use as a transport interchange for rail, bus and metro links. Dow Corning assisted this development by providing expertise and materials to provide aging resistance, protection from hot and salty sea air, adhesion, and elasticity to accommodate structural movements. Sustainability is especially important for sports venues, which are often constructed for single events such as the Olympics or World Cup matches. “We work with architects and developers to plan in advance how venues can be

integrated

into the surrounding community once the games are over,” said Schroeder. “After all, events like the Olympics and the World Cup last only about 20 days, while well-built stadiums can last a lifetime.” The Athletes Village in Sydney is a prime example. Designed to accommodate more than 15,000 athletes, when the Olympic Games were finished the entire complex was turned into a new residential suburb. It was proposed to convert the facilities into a primary school, shopping center, and additional residential facilities in order to more fully integrate the complex into the city’s infrastructure.

“The emphasis placed by the developers was on a long-term, sustainable approach to construction, which has ensured that the Athletes Village will be a legacy that future generations will enjoy far more than a single sporting event or simple tourist attraction,” said Schroeder. “We’ve had considerable experience in this field - Dow Corning’s technical leaders and materials have been involved in most of the summer Olympic Games. Dow Corning also contributed expertise and products for the construction of four stadiums for the FIFA World Cup in Korea and Japan. Products included structural and non-structural sealant applications, and panel cladding that enabled advanced building designs.” Architects also work to bring the outdoors inside with designs that increase natural daylight, giving a sense of spaciousness and a connection with nature. Dow Corning products and expertise make it possible to design structures incorporating large expanses of glass that can create spectacular visual effects. Beyond the aesthetic advantages, the natural lighting provides very real benefits to athletic events themselves – extensive use of glass reduces shadows on the field of play that can distract players and create problems for TV filming and event photography. For fans, it means fewer pillars that block their view. Design Solutions Some developers present unusual challenges that require innovative solutions. “One developer came to us with an unusual problem involving the gymnastics and fencing facility for the 1988 Olympics in Korea,” Schroeder explained. “Energy in Korea is very expensive, so the less electricity required the better. Because Olympic events are televised, the developer needed significant lighting to broadcast the competition on television. Our solution involved developing a silicone-coated fabric roof with light translucency properties that let in natural light while providing acoustical benefits. We provided an outer skin, an inner blanket of insulation and an acoustical liner, which were cable-suspended. All this sandwiched together still allowed approximately 15 percent light penetrations. The cost for the fabric roof with light translucency was in line with the cost of a conventional roof.” Spectacular landmarks

Schroeder noted that there is a fourth trend emerging – the number of cities around the world that want world-class structures and dramatic architectural features to act as city and national landmarks. Sometimes the desire for increased tourism revenue is the driving factor but equally, there are many cities interested in creating symbols to foster local pride. A prime example is the British Airways London Eye. Originally created as a temporary feature to mark the Millennium, this structure proved so popular it has remained in its landmark location alongside the River Thames. The wheel consists of 32 glazed capsules, each of which carries 25 people on a rotating 135-meter diameter wheel. The oval capsules, completely enclosed by curved glass, were designed to withstand a 174 mph wind and glass strong enough to take the weight of 25 people standing on it. Dow Corning contributed both expertise and products that enhanced strength, durability, and provided both fire resistance and explosion-proof properties. Another architectural marvel, the Guggenheim Museum in Bilbao, Spain, offers free-flowing lines and form, standing in stark contrast to the low-lying art deco buildings surrounding it. Silicon-based materials help it withstand structural movement, offer protective qualities, and provide weather-sealing properties.