Chapter 1. Introduction – Construction Project Management: Theory and Practice

1

Introduction

General, a construction project, importance of construction and construction industry, Indian construction industry, construction project management and its relevance, participants/stakeholders of a construction project, organization of the book

1.1 GENERAL

Construction, in one form or the other, has been practised since the dawn of civilization. In the Indian context, people were familiar with construction using burnt bricks as far back as 2600 BC. The townships of Mohenjo-daro and Harappa provided its citizens with the comfort and luxury that was unheard of in other parts of the world during those days. The Ashoka Pillars erected around 250 BC, also known as monoliths, were one of the finest examples of craftsmanship. These monoliths of height in the range of 13 m to 15 m were made of a single block of sandstone. The polish to the sandstone was such that the monoliths appeared as if they were made of metals. The top of these monoliths was crowned with figures of the lion, the elephant and the bull. The Grand Anicut situated in southern India is one of the oldest water diversion projects in the world. This is an example of the familiarity of the people of second century BC with dam construction. That the dam is still in use speaks of the quality of construction practised in those days. The strength, symmetry and aesthetics of Qutab Minar in Delhi prove beyond doubt that the Indians of thirteenth century were familiar with the nuances of construction. The Taj Mahal, completed in 1653, is an outstanding example of architecture. Under the British regime, some of the most challenging construction of roads, railways and irrigation projects were undertaken. Some of the important construction works undertaken during this period are—construction of light railway lines in 1845, construction of the first railway bridge over Thane Creek in 1854, construction of the first narrow gauge line in 1862, construction of the Ganges Canal consisting of main canals and distribution channels between 1842 and 1854, construction of a major bridge in Dehri-on-Sone in 1900, and construction of Juhu Aerodrome in Mumbai in 1928.

Chander (1989) reports that during the British period a number of specialized departments such as the Public Works, Survey of India, etc. were established. Construction on large scales for secretariats, residential complexes and other building projects were undertaken in Delhi when the national capital was shifted from Kolkata (earlier Calcutta). After the completion of this massive project, the need was felt to look after these constructed facilities. Central Public Works Department (CPWD) was, thus, established in 1930 principally to take care of these facilities. However, the pressure of the Second World War saw the need of constructing structures for military purposes as well. CPWD was entrusted with this job and an expansion of CPWD to other major cities—namely Mumbai (earlier Bombay), Kolkata and Chennai (earlier Madras)—took place.

Post Independence, a number of notable construction projects have been undertaken, namely construction of the first nuclear reactor in 1956; construction of Hirakud Dam in 1957, Bhakra-Nangal Dam in 1970 and Idukki Dam in 1976; and construction of Mumbai Pune Expressway in 2000, Tehri Dam in 2005 and Bandra Worli Sea Link Bridge in 2009. A number of organizations were created post-Independence to construct and maintain specific constructions. For example, the construction related to defence is undertaken by the Military Engineering Services; Border Roads Organisation (established in 1963) undertakes the expansion and maintenance of road networks in border areas; National Highways Authority of India (established in 1988) undertakes the development, maintenance and management of national highways; and Indian Railways undertakes the construction and maintenance of rail network in India. The works related to irrigation projects and power projects are under the supervision of Central Water Commission and Central Electricity Authority, respectively. They provide advisory services to different state governments, which in turn have separate public works departments for executing construction of different types.

Construction in India is the second largest industry next to agriculture, and it provides employment to about 33 million people. It is an integral part of the country’s infrastructure and industrial development. As per the Tenth Five Year Plan (2002–07) of the Government of India, it constitutes about five to six per cent of gross domestic product (GDP) and is vital for the growth of the overall economy. The performances of construction projects in India have not been very encouraging due to time and cost overruns and disputes in various contracts. With the opening up of the Indian economy to the outside world, India has been facing increased competition with other countries. A large number of infrastructure facilities are being created and development works are undertaken to facilitate a comfortable atmosphere—and here, the construction industry has got a great role to play. It is, therefore, far more important to understand the current problems with the overall performance of the construction projects and find out appropriate remedial measures to keep pace with the required growth.

In this chapter, we define the concept of construction project and discuss different phases involved in a construction project. Further, the different tasks required to be performed in different phases are discussed. The importance of construction projects and a bird’s eye view of the Indian construction industry are presented next. Construction project management and its relevance are discussed thereafter. A brief introduction to the different stakeholders involved in a construction project has also been presented. Towards the end of the chapter, the organization of the book is presented briefly.

1.2 A CONSTRUCTION PROJECT

The Guide to the Project Management Body of Knowledge (PMBOK) published by Project Management Institute (PMI) defines project as a temporary endeavor undertaken to provide a unique product or service. The product in case of a construction project is the constructed facility such as building, assembling of some infrastructure and so on. The constructed facilities are supposed to adhere to some predetermined performance objectives. Examples of service in the context of a construction project would be design, planning, execution, and so on.

Construction projects involve varying manpower and their duration can range from a few weeks to more than five years. Each one of them is ‘unique’ and ‘temporary’ in nature, and so is the management involved. Here, the term ‘unique’ means that every project is different in some way from other projects, and the term ‘temporary’ means that every project has a definite beginning and an end (PMBOK 2000). A summary of unique features of a construction project is given in Box 1.1.

A project involves a series of complex or interrelated activities and tasks that consume resources to achieve some specific objectives. It has to be completed within a set of specifications under a limited budget (Munns and Bjeirmi 1996, Pinto and Slevin 1988a). For many organizations, projects are a means to respond to those requests that cannot be addressed within the organization’s normal operational limits. A project may involve a single unit of one organization or may extend across organizational boundaries, as in case of joint ventures and partnering. A project is regarded as key to accomplish the business strategy of any organization, as it is the means by which strategy is implemented (PMBOK 2000), and a project is, therefore, not an isolated event but a realization of objectives through concerted efforts of different participants in various phases of the project life cycle.

Box 1.1 Unique features of a construction project

Unique Features of a Construction Project
  • One-time activity—it must be performed correctly the first time every time
  • Complexity—it is multidisciplinary because it involves a set of interrelated tasks to be done by specialists
  • High cost and time for execution
  • High risk of failure
  • Difficulty in defining quality standards
  • Uniqueness of people relationship
  • Feedback mechanism
  • Lack of experience of client or owner
  • Untrained workforce

1.2.1 Phases of a Construction Project

Just as the human life cycle has different phases or stages—such as conception phase, birth phase, childhood phase, adolescence phase, and so on—a construction project also passes through different phases in its life cycle. The term ‘phases’, ‘stages’ and ‘steps’ are used interchangeably in project management literature and, accordingly, no distinction has been made in this book as well.

The phases can be defined as the top-level breakdown of an entity, and a construction project is distinctly characterized by a number of phases or stages during its life cycle, though there may be some overlaps between the characteristics of two phases. Considering the definition of construction project as unique, it is really very difficult to identify some common stages across all the construction projects, since depending on the type of project, the type of organization and other parameters, the phases as well as the tasks performed in each of the phases may vary. For example, some of the stages in a technical project such as a petroleum refinery project or a chemical project would be different from that of a building construction project. Researchers and practitioners do not adopt a common nomenclature to distinguish different phases of a project. Thus, there is no single standard nomenclature available to describe the different phases of a construction project. In the following paragraphs, we discuss a generic approach to describe the different project phases under three broad categories—the pre-project phase, the project phase and the post-project phase.

Pre-Project Phase

The three sub-phases under Pre-Project Phase are shown in Figure 1.1 and are discussed below in brief.

Initiation or idea phase    The pre-project phase aims to identify all possible projects based on the examination of needs and the possible options. This stage is also sometimes referred to as initiation phase or idea phase. A possible example would be a municipal authority concerned with the growing parking problems near a prominent city milestone. The municipal authority may explore different options to address the parking problem. The options shall be evaluated against the mission and vision of the municipal authority and the limits to which funding is available with the municipal agency.

Figure 1.1 The three general phases under the pre-project phase

Project concepts    The initiation phase aims to sort out all the mentioned information to identify some project concepts. As many project concepts as possible are identified, and using some selection procedure (such as the benefits for the organization that intends to employ them) in line with the objectives of the organization, several project concepts are selected. The project concept phase of a new construction project is most important, since decisions taken in this phase tend to have a significant impact on the final cost. It is also the phase at which the greatest degree of uncertainty about the future is encountered.

The selected project concepts, then, are used as the inputs for the feasibility phase.

Feasibility    This phase aims to analytically appraise project concepts in the context of the organization, taking into consideration factors such as the needs of the organization, the strategic charter of the organization, and the capabilities and know-how of the organization. With this information, the decision makers should be able to decide whether or not to go ahead with the project concept proposed. The feasibility phase can be broadly characterized into the following:

Conceptual    For the selected project concepts, the preliminary process diagrams and layouts are prepared. Design basis or design briefs are also formulated.

Project strategy    The strategy in terms of selection of an in-house design team or the contractor’s design team is deliberated upon. The resources required and their availability is discussed. Further, the number and type of contractors required for the execution of project is also formulated. Besides all these, the project strategy also contains the overall project schedule, the project scope and the overall project plan.

Estimate    A preliminary estimate is prepared with reasonable accuracy by first breaking down the project into work packages/elements. The estimates may be prepared for each of the work packages using the established historical database and the resources estimated for each of the work packages.

Approval    Approval consists of financial evaluation, identifying details of funding and their timing, capital/revenue, etc., besides evaluation of different options.

The feasibility phase has sub-phases such as market feasibility analysis (to confirm the viability of the project concept from a purely marketing point of view), technical feasibility analysis (to demonstrate whether the project is technically feasible and to estimate the cost of project concept), environmental analysis (to ensure that the project does not go against ecological issues and regulations), and financial feasibility analysis (to establish whether the project once materialized would generate profits for the organization). It is only after the first three sub-phases are found to be positive that a financial feasibility analysis is performed. If the feasibility analysis is positive, one can go ahead, but if it is negative, the project can be abandoned and eliminated from the ‘project concept’ definition.

The feasibility phase is terminated when a decision maker decides to transform the project concept into a project. At this point, in the case of a plant, the capacity is decided, the locations are chosen, the financing is agreed upon, the overall budget and schedule determined, and a preliminary organization is established.

Some of the tasks related to pre-project phase (Bubshait and Al-Musaid 1992) are summarized below:

  1. Assigning a task force to conduct preliminary studies for the proposed project
  2. Studying the users’ requirements
  3. Defining the technical specifications and conditions that determine the quality of the required work
  4. Studying how to secure funds to finance the project
  5. Estimation of the project cost and duration
  6. Approval of the project cost
  7. Studying and determining the technical specifications of the materials
  8. Studying the impact of the project on the safety and health of the community and environment
  9. Establishing criteria for the selection of project location
  10. Advising members of the task force (consultant, engineering, etc.) on the approved funds for the project
  11. Establishment of milestones for the project for review and approval
  12. Describing the responsibilities and authority of project parties
  13. Pre-establishing a system to prepare for ‘change order’ procedures
  14. Establishment of design criteria for structural specifications
  15. Conducting a feasibility study of the proposed project

Project Phase

The project phase is also referred to as project implementation phase, project realization phase, or project materialization phase. It can be broken down into five sub-phases as shown in Figure 1.2. The sub-phases are discussed below in brief.

Figure 1.2 The five general phases under the project phase

Basic design phase    The activities in this phase are carried out by an engineering organization or an architect. During this phase, the documentation for tendering and contracting the physical construction or for procuring equipment is prepared. It involves performing basic design calculation, preparing tender drawings, preparing design and material specification, etc. The changes, if any, from the initial scope of work are recorded. Regular design and specification review meeting is one of the important features of this stage of the project.

Detailed design phase    Detailed design may be carried out in-house or through contracting. In some cases, such as ‘item rate’ contract, it may be required to carry out the detailed design before starting the tendering process. However, in some cases, such as ‘design build’ contract or ‘lump sum’ contract, the tendering process can start immediately after the completion of basic design and specifications.

Tendering phase    Tenders are issued if it is decided to execute the project through contracting. The preparation of clear and precise documents is essential to eliminate any dispute about scope of work at the contract stage. The tender preparation includes preparing the specifications and agreement conditions, preparing bill of quantities and estimating the contract value. It also includes issuing of tender document to the interested applicants, holding meetings, receiving bids and evaluating them. After the bids are evaluated, recommendations are made for the successful contractor and approvals sought to place a contract, and finally the contract is awarded.

Execution or construction phase    Immediately after the contract is awarded, construction phase begins. In cases where the detailed drawings and designs were not available as part of the tender document, the contractor proceeds with the preparation of detailed design and drawings, and follows it up with the construction. In some cases, the preparation of detailed design and construction may proceed simultaneously with milestone-wise deliverables for both design and construction. After the construction work has started, the progress is closely monitored and regular meetings held with the contractor to assess cost and schedule. The variations in cost, quality and schedule are noted and corrective measures are taken to bring them to the desired level.

Closure or completion phase    In this phase, the major equipments are tested and commissioned, and the constructed facility in totality is handed over to the client for use. Client issues approval of work and a completion certificate after all the work has been checked and found to be in order.

Some of the typical tasks performed in the project phase are listed below:

Design-related tasks (Bubshait and Al-Musaid 1992)

  1. Arranging the documents of the construction contract
  2. Qualifying of design professionals
  3. Performing technical and financial analysis of offers from competing contractors
  4. Selecting the design team
  5. Negotiating with the qualified design professionals
  6. Providing the qualified design professionals with the needed information
  7. Monitoring the design progress of the proposed project
  8. Evaluating the design and making the necessary decisions
  9. Updating design documents
  10. Reviewing design documents>
  11. Conducting design peer review
  12. Monitoring design quality
  13. Updating drawings and specifications to reflect the requirements of location or environment
  14. Using technical standards (e.g., Indian standard, American standard, British standard, etc.) to describe materials quality and construction methods

Tendering- and construction-related tasks (Bubshait and Al-Musaid 1992)

  1. Pre-qualifying contractors
  2. Holding a pre-bid conference and providing the necessary information
  3. Negotiating contract price with qualified contractor
  4. Reviewing at frequent intervals documents submitted by the contractor (e.g., work schedules, manpower qualifications, equipment)
  5. Interpreting and clarifying ambiguities in the contract documents
  6. Taking necessary precautions to prevent the loss of project data
  7. Making necessary decisions against contractor claims during project implementation
  8. Monitoring and controlling implementation methods, cost, schedule and contractor productivity
  9. Enforcing quality and safety principles during project implementation
  10. Assigning personnel to supervise, monitor and control the implementation of quality (quality control programme)
  11. Establishing quality assurance programme
  12. Enforcing the quality assurance programme
  13. Conducting regular visits to project site
  14. Establishing acceptance criteria
  15. Receiving record (as-built) contract drawings and specifications

Post-Project Phase

The post-project phase is also known as the turnover phase or the start-up phase. During this phase, the responsibility of the materialized deliverable is transferred from the engineers, the architects and/or the general contractors to the owners. The two general phases under Post-project phase are shown in Figure 1.3 and are discussed below in brief.

Figure 1.3 The two general phases under the post-project phase

Utilization phase    During this phase, the client or the end user makes use of the finished project. The performance of the constructed facility is monitored at regular intervals, and maintenance at regular intervals is performed.

Close-down phase    Once the project has lived its intended life, it is dismantled and disposed of. The entire cycle explained under different phases is repeated.

It is very difficult to have a clear-cut demarcation among the different phases. This is truer in today’s context when there is a tendency to cut down the project duration, thus requiring considerable overlapping in different phases of a project.

Normally, each of the mentioned phases requires different skills and, hence, should be carried out by different people with different skills. Pre-project phase requires creativity, while a project phase requires rigour. Only a few people are involved in pre-project phases over considerably long time periods, while hundreds or thousands of people can be involved in project phases over the shortest possible time periods. The phases play a dominant role in several decision-making areas, as given below:

  • Phases of a construction project decide the relative importance to be assigned to various project performance attributes in its life cycle (Pinto and Slevin 1989).
  • Phases of a construction project govern the importance of various project success criteria (de Wit 1988).
  • Change in the phase of a project calls for different skill requirements of a project manager (Spitz 1982).

The objective of a project participant is to achieve success in all the phases to make the project an overall success, which can be assumed as the cumulative success in different phases.

1.3 IMPORTANCE OF CONSTRUCTION AND CONSTRUCTION INDUSTRY

Construction is an integral part of infrastructure such as houses, offices, townships, schools, hospitals, urban infrastructure (water supply, sanitation), highways, ports, railways, airports, power, irrigation, industrial infrastructure and so on. The importance of construction can be gauged from the simple fact that cost of construction of certain infrastructure projects may be as high as 60 per cent–80 per cent of the project cost.

Construction is recognized as the basic input for socio-economic development. It generates substantial employment. It employs not only engineers, managers and skilled workers, but also unskilled male and female workers from rural and urban areas. Since construction industry is dependent on a number of industries, its growth propels growth in other industries as well. For example, it positively contributes in the development of building materials industry and construction equipment industry. The demands for cement, steel, paints, chemicals, aluminium, glass, etc., from the construction industry provide positive impetus to the growth of these industries. While the forward movement of construction industry is an indicator of growth of the country, its backward movement creates widespread impact on employment and income, and the growth in GDP is also affected. The multiplier factor between growth rate of construction and growth rate of GDP has been in the range of 1.5 to 1.6. Construction products such as buildings, roads and power plants have a long life when compared to the products of other industries. In general, the construction industry of a country depicts the health of the economy of the country, and it is imperative that the industry is properly nurtured for the growth of the overall economy.

1.4 INDIAN CONSTRUCTION INDUSTRY

The construction industry was accorded Industrial Concern Status under the Industrial Development Bank of India (Amendment). Now, the construction industry is the second largest industry, next only to agriculture. Its contribution to the GDP at factor cost in 2006–07 was Rs. 196,555 crore, which is about 6.9 per cent of the country’s GDP. It employed 31.46 million personnel comprising both skilled and unskilled workers, technicians, foremen, clerical staff and engineers.

With increasing thrust on developing infrastructure and attractive concessions appeasing private partnership in infrastructure projects, the Indian construction industry is already booming and is poised to see a bigger growth in near future. Some of the factors in favour of the Indian construction industry are availability of cheap labour, availability of qualified professionals, excellent opportunities at present and a large number of construction companies (nearly 28,000 organized companies and 75 large contracting companies).

Some of the factors that go against the Indian construction industry are low productivity, low ratio of skilled to unskilled workers, high cost of finance and complicated tax structure, and the presence of mostly small contractors who lack financial and technological backup, have low technology base, have negligible investment in R&D, and show little regard for systems.

A host of factors such as acute housing shortage, upturn in industrial sector, restructuring of state electricity boards (SEBs) and expansion of power grid will contribute to the growth of the Indian construction industry. There is a big upturn in commercial production, creating a correspondingly big market for commercial buildings. Factories are being put up at mass scale at some locations that have been declared as ‘industrial area’ by the state governments. The concept of tax holiday has given further boost to establishing factories. There is also a huge market in building residential units for both the private and public sectors. Real estate investment has shot up in recent times due to the tax benefits announced by the government. A lot of housing projects are being undertaken not only in metropolitan cities but in other major cities as well.

In roads sector, the execution of the golden quadrilateral and the north–south and east–west corridor has created a lot of opportunity. Further, work on Pradhan Mantri Gram Sadak Yojana (PMGSY) proposes an investment to the tune of Rs. 60,000 crore. This will connect to the rural area with certain habitat strengths. The operation and maintenance of the huge road network will spawn extensive opportunity to work in this sector.

The public–private partnership initiative through build–operate–transfer (BOT) and build–own–operate–transfer (BOOT) route is proving to be a blessing in disguise for the upgrade of existing airports in the country. Operation and maintenance of these airports are sure to attract bulk investment.

There are 11 major ports and 163 minor ports in the country at present. The average ship turnaround time is six days in India, and this is very high when we compare it to other better-managed ports with high-class infrastructure in the developed world. For example, the average ship turnaround time in Singapore is just six hours. Traffic is expected to increase further, which will throw up a huge potential for investment and construction. This sector is set to grow since development of small ports and inland waterways is a part of the prime minister’s investment policy decision.

The water and effluent treatment sector is also bound to grow in the near future. Already, there is an increase in investments in improvement of civic facilities in rural and urban areas, in order to improve water supply and address sanitation-related issues as envisaged in the Tenth Five Year Plan. There is a plan to link the major rivers of the country, which will bring huge investments into the construction sector. There are many projects in the planning stages to bring water from rivers to cities through pipelines. Further, enforcement of stringent norms for discharge from industries under Environmental and Pollution Act will also spur growth in the effluent treatment sector.

The restructuring of state electricity boards, setting up of new substations and switch yards, implementation of accelerated power development and reforms programme (APDRP), and revamping of transmission lines to reduce transmission and distribution losses from 35 per cent–40 per cent to international norms of 8 per cent–10 per cent are sure to bring momentum to electrical projects. Privatization of transmission and distribution systems will further increase investments.

India suffers from perennial power shortage and there is a huge potential in the field of power, as new additions in power-generation capacity are required. National Hydroelectric Power Corporation (NHPC) and Nuclear Power Corporation of India Limited (NPCIL) have plans for huge capacity building in the hydel power sector and nuclear power sector, respectively. In thermal power, large private investments are in the pipeline and a number of independent power producers (IPPs) are in final stages of financial closure. Also, there are increased investments in captive power plants by large industries in cement, aluminium, sugar, etc.

India has considerable natural gas reserves. There are plans to invest in pipelines to save on transportation costs. Similarly, there are plans to lay pipelines from ports to refineries to carry crude and finished products to different destinations, apart from projects for expansion of refineries and LNG storage facilities. All these are bound to throw up opportunities in the hydrocarbon sector.

In addition to the above-mentioned opportunities, there are promising prospects in bulk materials-handling projects. While development of ports would require investment in port-handling equipment, investment in thermal power sector would call for more coal-handling plants, and increased food production would mean more opportunity for grain-handling plant construction.

Here, it must be noted that the indigenous construction industry is bound to face increasing competition from multinational companies. Already, projects including major portions of Delhi Metro, some high-value hydroelectric jobs such as Uri Project, high-tech projects such as Bangalore Infotech project and Chennai Tidel Park project, and power projects such as Enron have seen a major chunk of construction going into the hands of multinational companies. A number of MNCs such as Skanska, Hyundai, Bechtel, Kumi Gumi, Obayashi and Toyo are now operating in India. The future is going to be quite competitive and the domestic companies who can face the challenges posed by the MNCs will emerge stronger.

1.5 CONSTRUCTION PROJECT MANAGEMENT AND ITS RELEVANCE

1.5.1 Role of Project Management

Project management as defined by PMBOK 2000 is the application of knowledge, skills, tools and techniques to a broad range of activities to meet the requirements of the particular project. Munns and Bjeirmi (1996) define project management as the process of controlling the achievement of the project objectives. Utilizing the existing organizational structure and resources, it seeks to manage the project by applying a collection of tools and techniques, without adversely disturbing the routine operations of the company. The function of project management includes defining the requirement of work, establishing the extent of work, monitoring the progress of the work and adjusting deviations from the plan.

Figure 1.4 The elements of project management

The main elements of project management according to Austen and Neale (1995) are given in Figure 1.4, and the cycle of activities to achieve the project goals is shown in Figure 1.5.

Project management aims to achieve the stated goals of the project leading to completed facility, by virtue of planning, executing and controlling time, funds and human and technical resources. The planning essentially consists of setting objectives, identifying resources and forming strategy. Executing consists of allocation of resources, guiding execution, coordinating efforts and motivating the staff. Controlling consists of measuring achievement goals, reporting, and resolving problems. The planning, executing and controlling are performed on a continuous basis till the goals of the project are realized.

Project management knowledge and practices are best described in terms of their component processes. These processes can be placed into five process groups (initiating, planning, executing, controlling and closing) and nine knowledge areas (project integration management, project scope management, project time management, project cost management, project quality management, project human resource management, project communications management, project risk management and project procurement management).

Figure 1.5 Cycle of activities

Project management is essentially about managing a project from an idea through to completion. Projects today are getting increasingly complicated than they have ever been, embracing multiple disciplines and including increasingly larger sums of money. The basic ingredient of bringing together ideas and successfully executing them remains, even though the new techniques in project management are continuously being deployed.

Project management, as we know it today, first emerged in the early 1950s on large defence projects. It was adopted gradually by smaller organizations, and currently, even the smallest construction organizations are known to operate project management in some form.

1.5.2 Why Construction Project Management?

As we go through the subsequent chapters, we will find that there is probably no other discipline that is more difficult than construction project management. The statement may come as a surprise to readers; after all, the general goal of a construction project seems simple enough—building a project on time, within budget, with the stated quality standards, and in a safe environment. Looks so simple!

Yet, research shows that less than 20 per cent of most construction projects meet the four requirements mentioned above. Not surprisingly, then, the contracting companies or agencies in charge of construction are not held in high esteem. Construction project management is known for continual problems and the companies involved have a continual record of poor performance.

According to Austen and Neal (1995), managing a project is quite different from managing a ‘steady state’ organization. A project has a distinct beginning and an end. On the other hand, the ‘steady state’ organizations run continuously. Some examples of the ‘steady state’ organization are mass-production factories where mostly routine works are carried out.

Construction utilizes a lot of natural resources that are scarce. This calls for even more care in management of construction projects if the resources are not to be wasted.

The last two decades have seen the growth of construction project management in terms of knowledge, management skills and increased performance and quality. Today, there are many excellent contractors who perform well on time, within budget, and by adhering to quality and safety standards. So, how do they do it? This will be the question we shall be exploring throughout the text. It will be our endeavour to see that scientific principles are applied in practice, and not rely solely on experience gained at the project site.

1.6 PARTICIPANTS/STAKEHOLDERS OF A CONSTRUCTION PROJECT

The following section describes the position and role of various people involved in a construction project; we take a viewpoint based on project execution processes as categorized by internationally accepted methods. It should be noted that the roles, rights, responsibilities and principles of action of these people, even when in the same position, sometimes differ highly in each nation and region.

1.6.1 Architect

Traditionally, architects were responsible both in pre-project and project phases, and they were acting on client’s behalf. In pre-project phase, they were responsible for preparation of drawings, preparation of tender document and contractor selection. In project phase, they were responsible for checking the measurement, certification of bills and overall project management functions. Over the years, however, most of their roles have been performed by construction managers. In the case of Public Sector, there may be a separate department (Engineering Department) which is responsible for the tender preparation and contractor selection.

1.6.2 Client (Owner)

The client is often the person or organization that will manage the facilities or structures upon completion of the project. The client is in a position to judge the use of funds to execute the project and they are at his discretion. Examples of clients are national and local governments, public corporations, public enterprises, the army, stock companies, cooperative societies, enterprise groups, legal entities, and individuals.

1.6.3 Constructor

The constructor is sometimes called the construction contractor. The job is an important one: completing the project on schedule according to the contract concluded with the client, and in accordance with design drawings and specifications. Constructors are of a vast variety of forms and sizes. Some are big firms that go about business by taking on large-scale projects involving many subcontractors and specialized contractors. They may actively conduct research and development. Some constructors are firms who develop by specializing in a specific construction technology, by possessing certain construction machinery, or by having skilled workers at their disposal; these would receive subcontracted work. Others are small-scale firms who develop by mobilizing workers at construction sites for labour-intensive construction work.

Constructors are generally profit-making firms, so their aim is to obtain as much contracted money as possible from the client at the earliest possible time and to pay subcontractors as little as possible for what they do at the latest possible time.

1.6.4 Engineer (Consultant)

Generally, the term ‘engineer’ means the consulting engineer who works with the client to conclude the contract. He provides technical services on behalf of the client (as a partner and/or agency). Design alterations and cost and schedule changes are often unavoidable as a construction project proceeds because working conditions may change unexpectedly. When they are necessary, the consultant plays an important role as an unbiased arbiter, acting for client and contractor. The position, role, responsibilities and duties of an engineer differ greatly across countries, as one may well imagine.

The consultant is also referred to as ‘Construction Management Consultant’, ‘Construction Supervision Consultant’, or ‘Project Management Consultant’. The nature of services offered by these consultants varies from project to project. However, in general, they are responsible for undertaking project feasibility study, preparation of cost estimates, geo-technical investigation, reviewing and coordinating engineering drawings, helping client in bidding process, and coordinating in execution phase of the project.

1.6.5 Subcontractor/Supplier/Vendor

In large projects, very often no single contracting company has adequate expertise and/or resources to be able to undertake all the activities on their own. Under such situations, they employ small contractors for certain specialized items of work, for either execution purpose or material procurement purpose, or both. These are referred to as subcontractors or vendors, and are a very important party in any construction project.

1.6.6 Lawyer, Insurer, etc.

It may be a little surprising to find the lawyer as participant in a construction project. While in some countries lawyers play a much more minor role during construction projects, in some countries, lawyers are part and parcel of a construction project and it is normal for a lawyer to be retained. Lawyers specializing in claims settlements and disputes play an important role in domestic projects undertaken in India, as well as in international projects. Some of the construction companies in India do have a separate legal cell comprising lawyers specializing in construction disputes. Insurers also play an important role in construction projects as shall be seen subsequently in latter chapters.

1.7 ORGANIZATION OF THE BOOK

The book is intended to be used by students of construction management as well as practising professionals. Further, among practising professionals, personnel of both the client organization and the contracting organization would find the book useful.

The book is presented in 19 chapters. The first two chapters introduce the readers to the construction project and the construction organization. Thereafter, the book has been organized in a manner similar to the different stages or phases through which a typical construction project passes. In Chapter 3, readers are introduced to the construction economics, which may be useful for selection of projects. The concept of ‘time value of money’ has been explained and different methods of project evaluation have been discussed.

In Chapter 4, the process of preparation of estimates of the proposed project by a client or an owner organization has been discussed. These estimates serve a number of functions as outlined in this chapter. Owner/client organization may choose to get the project executed through a contracting organization and, accordingly, the various aspects of contract management have been presented in Chapter 5.

In Chapter 6, different planning techniques, which may be useful to both the client organization and the contracting organization, have been discussed. After the project plans are made, the ways to convert the plans into schedules are put forth. The project-scheduling and resource-levelling aspects have been covered in Chapter 7.

The estimation of cost and preparation of bid are important functions of any contracting organization. In Chapter 8, the estimation process from the point of view of the contracting organization has been discussed in detail. The bidding strategy and the process to determine the optimal markup have also been covered in this chapter.

Chapter 9 to Chapter 17 mostly cover topics pertinent during the execution stage of the project. In Chapter 9, the aspects of construction equipment management are covered. Here, the important factors in the selection of equipment and the issues in selection of major plant and equipment are discussed, in addition to presenting the advanced concepts in economic analysis.

Construction accounting is different from the accounting practices adopted for other industries. In Chapter 10, the salient features of construction accounting are explained. The emphasis is not on preparation of balance sheet and profit-and-loss account for a construction company, but on the interpretation of figures contained in the financial statements.

Materials constitute a significant portion of the cost of a construction project, and Chapter 11 addresses all the salient aspects of materials management. Chapter 12 covers cost management and value engineering aspects in the context of a construction project.

In a recent survey, a majority of Indian construction professionals have rated quality performance in a construction project as one of the topmost performance parameters in terms of importance. The different facets of construction quality have been covered in Chapter 13. Construction being a risky business, with incidences of a number of failures of construction companies year after year, it is pertinent to cover construction risk management. In Chapter 14, construction project risk management has been covered with special emphasis on insurance. Risk in international construction has also been discussed in this chapter.

Construction safety is of paramount importance in modern construction, more so in the light of the number of legislations being enacted presently. In Chapter 15, the major issues in construction safety management are elaborated.

Projects, if left on their own, are most likely to get completed at extra cost and beyond the stipulated time frame. It is, thus, imperative to monitor them on a regular basis so that suitable corrective measures can be taken appropriately and in good time. In Chapter 16, the monitoring and control systems pertinent to construction projects are explained.

In Chapter 17, construction claims, disputes and project closures have been taken up.

With so much of emphasis being placed on software in the area of construction management, it was felt that it would not be out of place to include a chapter on computer applications in construction management. Accordingly, Chapter 18 features computer applications in scheduling, resource levelling, monitoring and reporting. The illustrations on working of MS Project and Primavera—two of the most popular softwares used in the construction industry—have also been provided in this chapter.

In Chapter 19, a detailed discussion on the factors crucial for the success of a construction project are presented. The chapter contains recommendations for project professionals for better achievement of schedule, cost and quality performance in a construction project.

Most of the chapters have a number of practical examples that readers may find quite useful. Also, in all the chapters, review questions have been provided which may prove to be useful in the learning process.

The text contains a number of appendices that interested readers may refer to.

REFERENCES

 

1. Austen, A.D. and Neale, R.H., 1995, Managing Construction Projects: A guide to process and procedures, International Labour Organization.

2. Bubshait, A.A. and Al-Musaid, A.A., 1992, ‘Owner involvement in construction projects in Saudi Arabia’, Journal of Management in Engineering, 8(2), pp. 176–185.

3. Chander, K., 1989, ‘OR Applications in Strategic Sector Constructions with Capital Budgeting’, Doctoral thesis submitted at Department of Civil Engineering, Indian Institute of Technology, Delhi.

4. Construction Industry Development Council, available online at http://www.cidc.in, retrieved on 15 September 2009 (for data pertaining to construction industry).

5. de Wit, A., 1988, ‘Measurement of project success’, International Journal of Project Management, 6(3), pp. 164–170.

6. http://cpwd.nic.in, viewed on 13 September 2009 (for history of CPWD).

7. http://en.wikipedia.org, viewed on 15 September 2009 (for details of major construction events in India).

8. http://indianarmy.nic.in, viewed on 15 September 2009 (for History of Indian Railways—major events).

9. Munns, A.K. and Bjeirmi, B.F., 1996, ‘The role of project management in achieving project success’, International Journal of Project Management, 14(2), pp. 81–87.

10. Pinto, J.K. and Slevin, D.P., 1989, ‘Critical success factors in R&D projects’, Research Technology Management, 32(1), pp. 31–35.

11. Pinto, J.K. and Slevin, D.P., 1988a, ‘Project success: Definitions and measurement techniques’, Project Management Journal, 19(1), pp. 67–72.

12. Pinto, J.K. and Slevin, D.P., 1988b, ‘Critical success factors across the project life cycle’, Project Management Journal, 19(3), pp. 67–74.

13. PMBOK, 2000, A guide to the project management body of knowledge, Project Management Institute, http://www.pmi.org.

14. Spitz, C.J., 1982, ‘The project leader: A study of task requirements, management skills and personal style’, Doctoral Dissertation, Case Western Reserve University, USA.

REVIEW QUESTIONS
  1. State whether True or False:
    1. Construction projects are gradually becoming multidisciplinary with multiple objectives.
    2. The three phases of a construction project are—pre-project phase, project phase and post-project phase.
    3. Lawyers are not a participant in construction projects.
  2. Define ‘project’ and ‘project management’. What are the different stages in a typical construction project?
  3. Explain the different phases of a project specifying the activities to be carried out in each of the phases.
  4. How do you define a construction project?
  5. Mention some of the features of a construction project which make it unique compared to other project types.
  6. What are the different phases through which a construction project passes?
  7. What typical activities are performed in pre-project phase?
  8. What important tasks/activities are performed in project phase?
  9. What tasks are performed by a client organization in tendering?
  10. Name the two most important activities in post-project phase?
  11. Why is it important to understand the different phases of a construction project?
  12. Why is construction management needed?
  13. Who are the major participants/stakeholders involved in a construction project?
  14. Find out the contribution of construction activities in the GDP of a country.
  15. ‘Construction projects may have different scopes of work, but the core nature of project implementation is very similar.’ Discuss this statement with respect to: (a) phases of projects and (b) stakeholders involved in the project.
  16. ‘Execution of engineering contracts is different from setting up of a manufacturing project in many ways.’ Discuss this statement with respect to (a) phases of projects and (b) stakeholders involved in the project.