Contents – Construction Project Management: Theory and Practice

Contents

List of Figures

List of Tables

List of Boxes

Foreword

Preface

About the Author

Chapter 1 Introduction

1.1 General

1.2 A Construction Project

1.2.1 Phases of a Construction Project

1.3 Importance of Construction and Construction Industry

1.4 Indian Construction Industry

1.5 Construction Project Management and Its Relevance

1.5.1 Role of Project Management

1.5.2 Why Construction Project Management?

1.6 Participants/Stakeholders of a Construction Project

1.6.1 Architect

1.6.2 Client (Owner)

1.6.3 Constructor

1.6.4 Engineer (Consultant)

1.6.5 Subcontractor/Supplier/Vendor

1.6.6 Lawyer, Insurer, etc.

1.7 Organization of the Book

References

Review Questions

Chapter 2 Project Organization

2.1 Introduction

2.2 Construction Company

2.3 Forms of Business Organization

2.3.1 Sole Proprietorship

2.3.2 Partnership

2.3.3 Corporation

2.3.4 Limited Liability Company (LLC)

2.3.5 Private Limited Company

2.3.6 Public Limited Company

2.3.7 Government Enterprises

2.3.8 Joint Ventures

2.4 Structure of Construction Organization

2.4.1 Centralized Functional

2.4.2 Decentralized Multidivisional

2.5 Organizing for Project Management

2.5.1 Classical (Functional)

2.5.2 Pure Project or Product Management

2.5.3 Matrix Organizations

2.6 Management Levels

2.6.1 Director Level

2.6.2 President Level

2.6.3 Construction Management Level

2.6.4 Project Management Level

2.6.5 Functional Management Level

2.7 Traits of A Project Manager

2.7.1 Strategies for Enhancing the Performance of a Project Manager

2.8 Important Traits of a Project Coordinator

2.8.1 Team Building Skill

2.8.2 Contract Implementation Skill

2.8.3 Project Organization Skill

2.9 Ethical Conduct for Engineers

2.10 Factors Behind the Success of a Construction Organization

References

Review Questions

Chapter 3 Construction Economics

3.1 Introduction

3.2 Economic Decision-Making

3.2.1 Out-of-pocket Commitment

3.2.2 Payback Period

3.2.3 Average Annual Rate of Return

3.3 Time Value of Money

3.4 Cash-Flow Diagrams

3.4.1 Project Cash-flow and Company Cash-flow Diagrams

3.4.2 Using Cash-flow Diagrams

3.5 Using Interest Tables

3.6 Evaluating Alternatives by Equivalence

3.6.1 Present Worth Comparison

3.6.2 Future Worth Comparison

3.6.3 Annual Cost and Worth Comparison

3.6.4 Rate of Return Method

3.7 Effect of Taxation on Comparison of Alternatives

3.8 Effect of Inflation on Cash-Flow

3.9 Evaluation of Public Projects: Discussion on Benefit–Cost Ratio

3.9.1 Benefit/Cost Criteria

References

Solved Examples

Review Questions

Chapter 4 Client’s Estimation of Project Cost

4.1 Introduction

4.2 Approximate Methods of Estimation

4.2.1 Preliminary Estimate for Buildings

4.2.2 Preliminary Estimate for Industrial Structures

4.3 Types of Estimates

4.3.1 Rough Order of Magnitude Estimates

4.3.2 Client’s Indicative Cost Estimate

4.3.3 Client’s Preliminary Cost Estimate

4.3.4 Client’s Detailed Estimate

4.3.5 Client’s Definitive Estimate

4.3.6 Revised Estimate

4.3.7 Supplementary Estimates

4.3.8 Project Closure Cost

4.4 Methods of Structuring Project Costs

4.5 Illustrative Cases in Preparation of Estimate

4.5.1 Case 1: Multi-Level Car Parking Facility

4.5.2 Case 2: Preliminary Estimate for Construction of Sewage Treatment Plant

References

Solved Examples

Review Questions

Chapter 5 Construction Contract

5.1 Construction Contract

5.2 Contract Document

5.2.1 The Contract Drawings

5.2.2 The Specifications

5.2.3 The General Conditions of Contract (GCC)

5.2.4 The Special Conditions of Contract (SCC)

5.2.5 The Bill of Quantities (BOQ)

5.3 Classification of Engineering Contracts

5.3.1 Separated Contract

5.3.2 Management Contract

5.3.3 Integrated Contract

5.3.4 Discretionary Contract

5.4 Bidding Process

5.4.1 Pre-qualification Process

5.4.2 Notice Inviting Tender

5.4.3 Submission of Bids

5.4.4 Analysis of Submitted Tenders

5.4.5 Basis for Evaluation and Acceptance

5.4.6 Letter of Intent

5.4.7 Work Order

5.4.8 Agreement

5.5 Cpwd Contract Conditions

5.6 Fidic form of Contract Agreement

5.6.1 Need and Principles of FIDIC Contracts

5.6.2 Salient Features of FIDIC Form of Contract

5.7 Subcontracting

5.7.1 Classification of Subcontractors

5.7.2 Selection of Subcontractors

5.7.3 Work Order

5.7.4 Terms and Conditions

5.7.5 Subcontractor Management—Some Guidelines

References

Review Questions

Chapter 6 Construction Planning

6.1 Introduction

6.2 Types of Project Plans

6.2.1 Time Plan

6.2.2 Manpower Plan

6.2.3 Material Plan

6.2.4 Construction Equipment Plan

6.2.5 Finance Plan

6.3 Work-Breakdown Structure

6.3.1 Methodology of WBS

6.4 Planning techniques—Terminologies Used

6.4.1 Event and Activity

6.4.2 Dummy Activity

6.4.3 Network

6.4.4 Precedence

6.4.5 Network Logic

6.4.6 Duration of an Activity

6.4.7 Forward and Backward Pass

6.4.8 Float or Slack Time

6.4.9 Path and Critical Path

6.5 Bar Charts

6.6 Preparation of Network Diagram

6.7 Programme Evaluation and Review Technique (PERT)

6.8 Critical Path Method (CPM)

6.9 Ladder Network

6.10 Precedence Network

6.11 The Line-of-Balance (LOB)

6.12 Network Techniques Advantages

References

Solved Example

Review Questions

Chapter 7 Project Scheduling and Resource Levelling

7.1 Introduction

7.2 Resource Levelling

7.3 Resource Allocation

7.4 Importance of Project Scheduling

7.5 Other Schedules Derived from Project Schedules

7.5.1 Preparing Invoice Schedule

7.5.2 Schedule of Milestone Events

7.5.3 Schedule of Plant and Equipment

7.5.4 Schedule of Project Staff

7.5.5 Schedule of Labour Requirement

7.5.6 Schedule of Materials Requirement

7.5.7 Schedule of Specialized Agencies

7.5.8 Schedule of Direct Costs

7.5.9 Schedule of Overheads

7.5.10 Schedule of Cash Inflow

7.5.11 Schedule of Cash Outflow

7.6 Network Crashing and Cost-Time Trade-Off

References

Review Questions

Chapter 8 Contractor’s Estimation of Cost and Bidding Strategy

8.1 Contractor’s Estimation and Bidding Process

8.1.1 Get Involved in Pre-Qualification Process

8.1.2 Study the Tender Document, Drawings and Prepare Tender Summary

8.1.3 Decisions to Take

8.1.4 Arrange for Site Visit and Investigation

8.1.5 Consultation, Queries and Meetings, and Other Associated Works

8.1.6 Prepare Construction Schedule and Other Related Schedules

8.1.7 Collect Information

8.1.8 Determining Bid Price

8.1.9 Analysis of Rates

8.1.10 Fix Mark-Up

8.1.11 Computing Bid Price

8.1.12 Submit Bid

8.1.13 Post-submission Activities

8.2 Bidding Models

8.2.1 Game Theory Models

8.2.2 Statistical Bidding Strategy Models

8.2.3 Cash Flow-Based Models

8.3 Determination of Optimum Mark-Up Level

8.4 Bidding and Estimation Practices in Indian Construction Industry

8.4.1 Prevailing Estimation Practices

8.4.2 Use of Statistical/Mathematical Tools in Estimation

8.4.3 Breakup of Mark-Up

8.4.4 Labour Cost Estimation

8.4.5 Plant and Equipment Cost Estimation

8.4.6 Dealing with Uncertainties

8.4.7 Average Range of Mark-Up

8.4.8 Mark-Up Distribution

8.4.9 Mark-Up Range

8.4.10 Summary and Conclusion from the Study

References

Solved Examples

Review Questions

Chapter 9 Construction Equipment Management

9.1 Introduction

9.2 Classification of Construction Equipments

9.3 Factors Behind the Selection of Construction Equipments

9.3.1 Economic Considerations

9.3.2 Company-Specific

9.3.3 Site-Specific

9.3.4 Equipment-Specific

9.3.5 Client- and Project-Specific

9.3.6 Manufacturer-Specific

9.3.7 Labour Consideration

9.4 Earthwork Equipments

9.5 Concreting Equipments

9.6 Hoisting Equipments

9.6.1 Hoists

9.6.2 Cranes

9.7 Plant and Equipment Acquisition

9.8 Depreciation

9.9 Depreciation and Taxation

9.10 Methods of Calculating Depreciation

9.10.1 Straight-Line Method

9.10.2 Sum of Years Digit Method

9.10.3 Declining Balance Method

9.10.4 Sinking Fund Method

9.10.5 Accelerated Depreciation

9.11 Example of Depreciation Calculations for Equipment at a Site

9.12 The Effect of Depreciation and Tax on Selection of Alternatives

9.13 Evaluating Replacement Alternatives

9.14 Advanced Concepts in Economic Analysis

9.14.1 Sensitivity Analysis

9.14.2 Breakeven Analysis

Solved Examples

References

Review Questions

Chapter 10 Construction Accounts Management

10.1 General

10.2 Principles of Accounting

10.3 Accounting Process

10.4 Construction Contract Revenue Recognition

10.4.1 Cash Method of Revenue Recognition

10.4.2 Straight Accrual Method of Revenue Recognition

10.4.3 Completed Contract Method of Revenue Recognition

10.4.4 Percentage of Completion Method of Revenue Recognition

10.5 Construction Contract Status Report

10.6 Limitations of Accounting

10.7 Balance Sheet

10.7.1 Liabilities

10.7.2 Assets

10.8 Profit and Loss Account

10.9 Working Capital

10.9.1 Need for Working Capital

10.9.2 Operating Cycle

10.9.3 Components of Working Capital

10.9.4 Determination of Working Capital

10.9.5 Financing Sources of Working Capital

10.10 Ratio Analysis

10.10.1 Liquidity Ratios

10.10.2 Capital Structure Ratios

10.10.3 Profitability Ratios

10.10.4 Activity Ratios

10.10.5 Supplementary Ratios

10.11 Funds Flow Statement

10.11.1 Changes in Working Capital or Funds

10.11.2 Determining Funds Generated/Used by Business Operations

10.11.3 Application of Funds Flow Statement

References

Review Questions

Chapter 11 Construction Material Management

11.1 Introduction

11.2 Material Procurement Process in Construction Organization

11.3 Materials Management Functions

11.3.1 Materials Planning

11.3.2 Procurement

11.3.3 Custody (Receiving, Warehousing and Issuing)

11.3.4 Materials Accounting

11.3.5 Transportation

11.3.6 Inventory Monitoring and Control

11.3.7 Materials Codification

11.3.8 Computerization

11.3.9 Source Development (Vendor Development)

11.3.10 Disposal

11.4 Inventory Management

11.4.1 Inventory-Related Cost

11.4.2 Functions of Inventory

11.4.3 Inventory Policies

11.4.4 Selective Inventory Control

11.4.5 Inventory Models

Solved Examples

References

Review Questions

Chapter 12 Project Cost and Value Management

12.1 Project Cost Management

12.1.1 Resources Planning Schedules

12.1.2 Cost Planning

12.1.3 Cost Budgeting

12.1.4 Cost Control

12.2 Collection of Cost-Related Information

12.2.1 Labour Cost

12.2.2 Material Cost

12.2.3 Plant and Equipment Cost

12.2.4 Subcontractor Cost

12.2.5 Overhead Cost

12.3 Cost Codes

12.4 Cost Statement

12.5 Value Management in Construction

12.6 Steps in the Application of Value Engineering

12.7 Description of the Case

12.8 Value-Engineering Application in the Case Project

12.8.1 Foundation Design

12.8.2 Flooring System

12.8.3 Precast vs In-Situ Construction

12.8.4 Discussion of Results

References

Review Questions

Chapter 13 Construction Quality Management

13.1 Introduction

13.2 Construction Quality

13.2.1 Definition of Quality

13.2.2 Evolution of Quality

13.3 Inspection, Quality Control and Quality Assurance in Projects

13.3.1 Inspection

13.3.2 Quality Control (QC)

13.3.3 Quality Assurance (QA)

13.4 Total Quality Management

13.5 Quality Gurus and Their Teachings

13.5.1 Deming

13.5.2 Juran

13.5.3 Philip Crosby

13.6 Cost of Quality

13.7 Iso Standards

13.7.1 Benefits of ISO 9000

13.7.2 Principles of Quality Management Systems

13.7.3 ISO 9001–2000 Family of Standards

13.8 Conquas—Construction Quality Assessment System

13.9 Audit

13.10 Construction Productivity

13.10.1 Typical Causes of Low Labour Productivity

References

Review Questions

Chapter 14 Risk and Insurance in Construction

14.1 Introduction

14.2 Risk

14.3 Risk Identification Process

14.3.1 Preliminary Checklist

14.3.2 Risk Events Consequences Scenario

14.3.3 Risk Mapping

14.3.4 Risk Classification

14.3.5 Risk Category Summary Sheet

14.4 Risk Analysis and Evaluation Process

14.4.1 Data Collection

14.4.2 Modelling Uncertainty

14.4.3 Evaluation of Potential Impact of Risk

14.5 Response Management Process (Risk Treatment Strategies)

14.5.1 Risk Avoidance

14.5.2 Loss Reduction and Risk Prevention

14.5.3 Risk Retention and Assumption

14.5.4 Risk Transfer (Non-Insurance or Contractual Transfer)

14.5.5 Insurance

14.6 Insurance in Construction Industry

14.6.1 Fundamental Principles of Insurance

14.6.2 Insurance Policies for a Typical Construction Organization

14.6.3 Project Insurance

14.6.4 Marine-Cum-Erection Insurance

14.6.5 Contractor’s All-Risk Insurance (CAR Insurance)

14.6.6 Marine/Transit Insurance

14.6.7 Fire Policy

14.6.8 Plant and Machinery Insurance

14.6.9 Liquidity Damages Insurance

14.6.10 Professional Indemnity Policy

14.7 Common Examples of Business and Project Risk

14.8 Risks Faced by Indian Construction Companies Assessing International Projects

14.8.1 Risks in International Construction

References

Review Questions

Chapter 15 Construction Safety Management

15.1 Introduction

15.2 Evolution of Safety

15.3 Accident Causation Theories

15.4 Foundation of a Major Injury

15.4.1 Unsafe Conditions

15.4.2 Unsafe Acts

15.5 Health and Safety Act and Regulations

15.5.1 Building and Other Construction Workers (Regulation of Employment and Condition of Services) Act 1996

15.5.2 Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Central Rules, 1998

15.6 Cost of Accidents

15.7 Roles of Safety Personnel

15.8 Causes of Accidents

15.9 Principles of Safety

15.10 Safety and Health Management System

15.10.1 Safety Policy and Organization

15.10.2 Safety Budget

15.10.3 Safety Organization

15.10.4 Education and Training

15.10.5 Safety Plan

15.10.6 Safety Manual

15.10.7 Safety Committee

15.10.8 Incentive Programmes

15.10.9 Accident Reporting, Investigation and Record Keeping

15.10.10 Incident Investigation and Analysis

15.10.11 Accident Statistics and Indices

15.10.12 Safety Inspection

15.10.13 Safety Audit

15.10.14 Workers’ Health and First-Aid Facilities

15.11 Research Results in Safety Management

References

Review Questions

Chapter 16 Project Monitoring and Control System

16.1 Introduction

16.2 Updating

16.2.1 Updating Using Bar Chart

16.2.2 Updating Using PERT/CPM

16.2.3 Updating Using Precedence Network

16.3 Project Control

16.4 Schedule/Time/Progress Control

16.4.1 Monthly Progress Report

16.4.2 Measuring Progress at Site

16.4.3 Typical Reports to Aid the Progress Review

16.5 Cost Control

16.5.1 Profit/Loss at the Completion of Contract

16.5.2 Stage-Wise Completion of Cost

16.5.3 Standard Costing

16.5.4 S-Curve

16.5.5 Unit Costing

16.6 Control of Schedule, Cost and Technical Performance—Earned Value Method

16.6.1 Terminologies of Earned Value Method

16.7 Illustrations of Cost Control System

16.8 Management Information System

References

Review Questions

Chapter 17 Construction Claims, Disputes, and Project Closure

17.1 Claim

17.1.1 Sources of Claims

17.1.2 Claim Management

17.1.3 Some Guidelines to Prepare the Claims

17.2 Dispute

17.2.1 Causes of Disputes

17.2.2 Dispute Avoidance vs Dispute Resolution

17.2.3 Mechanisms of Dispute Resolution

17.2.4 Causes Leading to Arbitration

17.2.5 Advantages of ADR Over Legal Proceedings in a Court

17.2.6 Some Dos and Don’ts to Avoid Dispute

17.3 Correspondence

17.4 Project Closure

17.4.1 Construction Closure

17.4.2 Financial Closure

17.4.3 Contract Closure

17.4.4 Project Manager’s Closure

17.4.5 Lessons Learned from the Project

References

Review Questions

Chapter 18 Computer Applications in Scheduling, Resource Levelling, Monitoring, and Reporting

18.1 Introduction

18.2 Popular Project Management Software

18.2.1 Primavera

18.2.2 Milestone Professional

18.2.3 ‘Candy’—Construction Project Modelling and Project Control

18.2.4 AMS Realtime Projects

18.2.5 Project KickStart

18.2.6 MS Project

18.3 Functions of Project Management Software

18.3.1 Scheduling Function

18.3.2 Resource Management Function

18.3.3 Tracking or Monitoring Function

18.3.4 Reporting Function

18.3.5 Additional Functions

18.4 Illustration of MS Project

18.4.1 Definitions of Some Terminologies

18.4.2 Working with MS Project

18.5 Illustration of Primavera

18.5.1 Adding a New Project

18.5.2 Preparing Schedule

18.5.3 Resource Levelling

18.5.4 Tracking the Project

18.5.5 Reporting

18.5.6 Some Additional Features

References

Review Questions

Chapter 19 Factors Behind the Success of a Construction Project

19.1 General

19.2 Project Performance Measurement

19.3 Criteria for Project Performance Evaluation

19.4 Project Performance Attributes

19.4.1 Success Attributes/Factors

19.4.2 Failure Attributes

19.5 Effect of Other Elements on Project Performance

19.6 The Theory of 3CS and the Iron Triangle

References

Review Questions

Answers to the Objective Questions

Appendices