Construction Management

Presentation on theme: "Construction Management"— Presentation transcript:

1 Construction Management
CE 401 – CONSTRUCTION MANAGEMENT Construction Management L-1

2 Why care about project management?
CE 401 – CONSTRUCTION MANAGEMENT Why care about project management? 10% of projects successful between 1998 and 2004 90% FAILED. L-1

3 Basic Project Concept CE 401 – CONSTRUCTION MANAGEMENT L-1

4 Professional CM Functions:
Construction Management Functions Coordination Planning & Scheduling Purchasing & Expediting Supervision Cost Control Documentation and Reporting Quality Control/Quality Assurance Estimating Safety and Risk Management Contract Administration Claims Analysis/Avoidance THINK PLAN ORGANIZE EXECUTE

5 The CM works in the Owner’s Benefit
CONSTRUCTION MANAGER Safety Time Cost Quality THINK PLAN ORGANIZE EXECUTE

6 What is construction project management? Ctd.
Organizing, scheduling, mobilizing, and directing equipment, material, and personnel in performance of a construction contract. CPM is the overall planning, coordination, and control of a project from beginning to completion. CPM is aimed at meeting a client's requirement in order to produce a functionally and financially viable project. . CE 401 – CONSTRUCTION MANAGEMENT L-1

7 What is Construction Management ?
Construction Management is a professional service that applies effective management techniques to the planning, design and construction of a project from inception to completion for the purpose of controlling time, cost and quality. THINK PLAN ORGANIZE EXECUTE

8 What is construction project management? Ctd.
The construction industry is composed of five sectors: residential, commercial, heavy civil, industrial, and environmental. A construction manager holds the same responsibilities and completes the same processes in each sector. All that separates a construction manager in one sector from one in another is the knowledge of the construction site. This may include different types of equipment, materials, subcontractors, and possibly locations. CE 401 – CONSTRUCTION MANAGEMENT L-1

9 Construction Project Management
CE 401 – CONSTRUCTION MANAGEMENT L-1

10 Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT dictionary definition of CONSTRUCT, is “To form by assembling parts” = (construction process). Divergent materials Diverse group of people come together to make a project possible. L-1

11 Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT There are people from a variety of backgrounds in a construction company. It is a service industry. So, its success or failure depends on qualities of its end product which is a building. Risk factor is much higher in construction. Reasons: Government funding, demographics, market trends, weather conditions, etc. b) Unpredictable nature of work itself. c) Any extremes can effect productivity level, damage materials. d) Project oriented … meaning: to use mass production is difficult e) Each project has its own learning curve. L-1

12 Turkish Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT Following the textile and agriculture sectors, construction is the third leading sector in Turkey. There are 5,000 registered architectural practices and 10,000 engineering firms in Turkey. Today, Turkish construction and engineering companies are able to design, erect, build and operate almost all kinds of civil and industrial projects Such as: Dams, hydroelectric and thermal power plants, industrial plants, airports and seaports, large scale petroleum and natural gas pipelines, fertilizer plants, petrochemical complexes and refineries, motorways, tunnels, bridges, large housing projects, hotels and all kinds of sophisticated buildings. L-1

13 ATATÜRK DAM

14 Yavuz Sultan Selim Bridge

15 Bridge Adana - Osmaniye Motorway Seyhan Viaduct

16 Sapphire Tower 236 metre ile Türkiye'nin 1., Avupa'nın 9. ve Dünya'nın 148. en yüksek binası

17 Turkish Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT Annual construction spend in 2000 was $10.5 billion excluding building materials. Building materials accounted for an additional $5 billion, which is 10% of Turkey’s industrial output, also 10% of total exports. The sector is estimated to employ more than 1 million people (they are not continuously employed, 80 % of the construction workers are non-insured, and 98 % are non-unionized) and account for 8 to 10% of GNP. GNP in 2000 was around $201 billion. . L-1

18 Turkish Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT The construction sector, has strong backward linkages with over 200 sub-sectors in the economy. The backward linkages of the sector is related with the input to the industry. This makes over 200 subsectors, being strongly dependent and affected by the construction industry. Thus, the sector plays a vital role in the employment in the country. L-1

19 Problems of Construction Industry
CE 401 – CONSTRUCTION MANAGEMENT Highly traditional and fragmented; slow to embrace new technology Restrictive/outdated building codes Labor agreements and craft jurisdictional issues Liability and legal considerations Lack of profit motive or other incentive Government regulation Environmental constraints Global competition L-1

20 Introduction Nature of the Construction Industry
The Construction Project Categories of Projects Why is CM needed? Knowledge required of a CM Construction’s Future

21 Nature of the Construction Industry
+/- 10% of many countries’ GNP Many small businesses Creates a Physical Project Service Industry High Sales/Low Assets Fragmented Custom Orientated Unstable Demand Seasonal Most work is regional Construction Drives economy?

22 Physical Nature of the Product
Labor Intensive generally speaking, Labor cost accounts 30-40% of total construction cost Normally you have mobile construction workers, not “under contract” project based IMPACT - IMPLICATIONS??? COMMUNICATION REQUIREMENTS PROCEDURES AND PRACTICES MOTIVATION, TRAINING RETENTION Unique undertaking Specific / known client Major investment Production in ‘temporary’ plants Exposed elements during production Labor intensive Mobile Assets Numerous & changing hazards Technically complex Multiple components manufactured in other industries 22

23 Construction Sectors Residential Construction Commercial Construction
Industrial Construction Heavy/Highway Construction

24 Residential Construction
Residential housing construction includes single-family houses, multi-family dwellings, and high-rise apartments. During the development and construction of such projects, the developers or sponsors who are familiar with the construction industry usually serve as surrogate owners and take charge, making necessary contractual agreements for design and construction, and arranging the financing and sale of the completed structures. Residential housing designs are usually performed by architects and engineers, and the construction executed by builders who hire subcontractors for the structural, mechanical, electrical and other specialty work.

25 Characteristic of Residential Construction
Typically wood products & light gauge steel Low Overhead; High Competition Low Profit Margins & High Number of Bankruptcies Close working relationship with owners Strongly influenced by interest rate & economy

26 Institutional & Commercial Construction
Institutional and commercial building construction encompasses a great variety of project types and sizes, such as schools and universities, medical clinics and hospitals, recreational facilities and sports stadiums, retail chain stores and large shopping centers, warehouses and light manufacturing plants, and skyscrapers for offices and hotels. The owners of such buildings may or may not be familiar with construction industry practices, but they usually are able to select competent professional consultants and arrange the financing of the constructed facilities themselves. Specialty architects and engineers are often engaged for designing a specific type of building, while the builders or general contractors undertaking such projects may also be specialized in only that type of building.

27 Unique Aspects of Commercial Construction
Technically complicated construction systems Numerous specialty contractors involved Variety of construction materials Require extensive knowledge in construction process, communication & leadership skills

28 Industrial Construction
Specialized industrial construction usually involves very large scale projects with a high degree of technological complexity, such as oil refineries, steel mills, chemical processing plants and coal-fired or nuclear power plants. The owners usually are deeply involved in the development of a project, and prefer to work with designers-builders such that the total time for the completion of the project can be shortened.

29 Industrial Construction
Require highly specialized expertise Substructure construction is the key Heavy Materials: Steels, Concrete Schedule driven Technology is more complex

30 Infrastructure & Heavy Construction
Infrastructure and heavy construction includes projects such as highways, mass transit systems, tunnels, bridges, pipelines, drainage systems and sewage treatment plants. Most of these projects are publicly owned and therefore financed either through bonds or taxes. This category of construction is characterized by a high degree of mechanization, which has gradually replaced some labor intensive operations.

31 Unique Aspects of Highway/Heavy Construction
Mostly financed by public Designed by registered professional engineers Use large qualities of a relatively small materials Heavy duty construction equipment required Higher percentage of self-performance Higher profit margin

32 Why is CM Needed? Increased Project Size
Increased Organizational Complexity Increased Technical Complexity More Complex Interdependencies Increased Government Regulations Speed!!!!

33 The Construction Project
Unique Large Outdoors Each a new team

34 Knowledge Required of a CM
Financial Methods and Materials People and Organizational Skills Laws and Regulations Other?

35 Construction’s Future
Image! Certification Construction not Disruption Changing Demographics Declining Technical Skills Shifting Responsibilities

36 Project Participants How many People does it take to build a Project?

37 Project Participants

38 Project Participants

39 Project Participants

40 Project Participants

41 Project Participants

42 Project Participants

43 Project Participants

44 Owner Establishes Budget Defines Program Selects Designer/Builder Team
Determines Project Delivery Method Two types of Owners: Public Private

45 Public Owners Project is funded with public money
Federal State City Since publicly funded specific guidelines must be followed

46 Private Owners Residential Commercial Office Buildings
Minimal constraints on how the project is organized and managed.

47 Owner Representative Large organizations and institutions often employ full-time facility managers Other owners hire outside consultants Some owners rely on a building committee In all cases the owner representative defines the project scope, budget and timeline

48 Design Professional Architects – Lead Vertical Construction
Engineers – Lead Horizontal Construction Licensed Design Professionals

49 Architects An architect translates and develops an owner’s requirements and graphically presents them so that the constructor can accurately price, schedule and construct the design. Architects are the industry’s image-makers

50 Engineers Lead designers on horizontal/infrastructure projects
Responsible for the design all of the engineered systems in commercial building project: Structure, HVAC and Electrical Complete coordination between the engineered systems is critical

51 Constructors Constructors is the term used to include both Construction Managers and General Contractors. The constructor is responsible for the “means and methods” of construction whether the work is bid or negotiated, at risk or not.

52 Required Constructor Expertise
Building Knowledge Contracts Legal & Regulatory Environment Demographic Trends Personnel Management Company Management Scheduling Conflict Resolution Information Systems Estimating Negotiation Cash Management Customer Relations Industry Advancement

53 Specialty Contractors
Generally known as Subcontractors The Constructor is responsible for the coordination and hire of all Specialty Contractors As projects become more complex the specialties become numerous, requiring a greater number of work packages

54 The Trades The building trades are responsible for the physical construction of the project The increased complexity of projects demands an increased number of highly trained trades people Current demographic trends show fewer young people entering the trades – this is an industry challenge!

55 Union versus Merit Shops
a continuing debate!

56 Material Suppliers Owners, designers, and trade associations need to work together to establish product standards American Concrete Institute American Plywood Association Constructors can play an important role in the evaluation (pricing and scheduling) of different product selections

57 Equipment selection is a typical constructor responsibility and an important one!

58 Other Participants Financial Institutions
Inspectors and Testing Laboratories Public Officials Insurance and Bonding Agencies Construction Attorneys The Public!

59 Good Project Managers Confront Problems Are Organized Are Enthusiastic
Communicate Well Motivate Well Are Flexible Delegate Well Multi-task Have strong Moral Grounding

60 Organizing and Leading the Construction Project

61 Managers vs. Leaders Management Leadership
The field of management science focuses on the scientific study of decision making. Good management systems help good leaders get better. Leadership Flexibility Morale Building Order and Discipline Goals and Accountability Mentoring Communication Construction Project Management, 4/e Frederick Gould, Nancy Joyce Copyright © 2014 by Pearson Education, Inc. All Rights Reserved

62 Managing Projects Define Levels of Specialization and Authority
Establish a structure for Decision Making Create an Organization Structure Define the Project Work Breakdown Structure Establish the Workflow Allocation of Authority and Responsibility

63 The Construction Industry Needs Leaders!
Leading a Construction Project is like going to battle. Construction Projects: Compressed Schedules Complex Organizations Large numbers of people Cost Pressures

64 Generalist Organization
Principal Technical Staff Support Staff

65 Wide Span of Control = Many Subordinates
Boss Subordinate subordinate

66 Narrow Span of Control = Few Subordinates
Boss Subordinate

67 Departmental Organization
Managing Principal Department Head Support Staff Design Construction Documents Administration

68 Gangplanks Establish a “Working Connection” between Departmental Staff

69 Matrix Organization Managing Principal Project Management
Department Head Support Staff Project Manager A Operations Gangplank

70 3 Types of Business Ownership
Sole Proprietorship Partnership Corporation

71 Sole Proprietorship an individual who owns, manages and provides the necessary financial backing.

72 Benefits of Sole Proprietorship
Easy to start-up Simplest business form No tax payment as the business entity Owner retains all the company profit Easy to dissolve

73 Disadvantages of Sole Proprietorship
Limited financial capacity Unlimited liability to business debts and obligations Single perspective on business decisions Vulnerable to business environment

74 Partnerships General Partnership Limited Partnership Joint Venture

75 General Partnership A general partnership is one or more persons who co-own a business by contributing capital, equipment, and/or property Profit is allocated based on the original contributions made by the individual partner.

76 Benefits of General Partnership
Each partner is active in managing the partnership Each partner is personally liable for the business debts and profits Business continuity can be stipulated in the partnership agreement Combined financial resources

77 Disadvantages of General Partnership
Each partner has unlimited liability to the third persons Any partner can bind the partnership into responsibilities without the authority of the other partners Double taxes-annual salary + shared profit Requires strong trust among the partners

78 Limited Partnership A co-owner’s liabilities and profits are limited and are equal to the amount of capital and property invested in the company Liability does not extend to a partner’s personal assets.

79 Benefits of Limited Partnership
Increased opportunity to raise financial capital Limited liability - personal assets protected The partnership is not automatically dissolved by the death of a limited partner

80 Disadvantage of Limited Partnership
Limited partner provides no service to the business No authority in the signing of contracts and acquiring debt

81 A Joint Venture is a relationship between two or more companies who unite to form a single company for a specific undertaking

82 Advantages of Joint Venture
Additional resources – financial and technical Shared project risk Each partner carries individual liability for the venture’s performance and debts

83 Disadvantage of Joint Venture
Each partner shares equally in the profits and the losses of the venture Very limited power to control relations the actions of other partners May be difficult at times to arrive at a consensus on key project decisions

84 Corporation Corporations are legal entities created by binding individuals into one group under a corporate name The corporation is owned by its stockholders, who may reside inside or outside the company The corporation’s business is controlled by a board of directors which is elected by the stockholders

85 Benefits of Corporations
Limited owner liability Extended financial resources Perpetual life of the company

86 Disadvantage of Corporations
Costly to start-up Double taxation of the company’s profit at both the federal and state level Strict government regulations May be Bureaucratic Management may not carry the same incentive for success as other forms of business ownership

87 New trends of Business Ownership
Subchapter “S” corporation Acquisitions and mergers Employee ownership

88 Conclusion Organizing and Leading today’s Construction Project is both a science and an art Projects need a centralized vision and the appropriate level of organizational support and control A companies ownership structure determines the level of resources available and the manner in which decisions will be made Good leadership is key and good leaders are hard to find!

89 Project Phases

90 Chronology Conceptual Planning
Owner makes decisions on designers, site, and project cost and schedule Iterative process – add in and delete items to get desired final product Need to gather as much info as possible Rehab work uncovers many unknowns Permits are started and applications made Estimate +/- 25%, Schedule +/- month

91 Chronology Schematic Design Actual design begins
Looking at method and materials to use Value engineering Begin setting up work packages Id long lead time items Preliminary estimate (+/- 10%) and schedule are completed

92 Chronology Design Development Final design phase
Make system choices based on cost and schedule Prequalification process for bidders Contract documents and determination of work packages – Woodrow Wilson Bridge Fair cost estimate and schedule developed

93 Chronology Construction Mobilization Milestones Substantial completion
Punchlist items Project Close out

94 Project Risk Bid depends on amount of risk contractor is willing to take Risks Project Site – Neighbors, Regulatory environment, Subsurface conditions, Economic climate Project – complexity, planned technologies, degree of finishes, materials, mechanical/electrical systems Process – Project funding, timetable, preconstruction info, project unknowns Owner Org – sophistication, org structure, decision making Contingency takes some of risk out

95 Contract Types Fixed Price (Lump Sum) Unit Price
Do work for a set price Must have an accurate estimate for bid Provides owner and contractor with a number Risk to contractor is great, to owner minimal Unit Price Price is per unit of each item. Price includes all O&P Designer estimates quantities

96 Contract Types Cost Plus Fee GMP
Owner reimburses actual costs plus a fee to cover O&P Good when scope of project is unclear GMP Owner knows max price for financing Clause provides a split of money if contract comes in under budget

97 PROJECT DELIVERY METHODS

98 Project Risk and Liability
The approach (delivery method) utilized to manage a project should be in response to the risks inherent in a planned project. Sources of Risks may be: Project Type Project Site or Location Owner Organization Accelerated Design-Build Schedule

99 Owners are often the greatest source of Project Risk

100 Project Risk – Alaskan Pipeline
Working north of the Artic Circle in darkness and extreme cold with extended supply lines added significant risk to the Owner- Constructor team.

101 Project Risk – Project Type
The one of a kind, Frank Gehry designed, Stata Center at MIT brings risk to the owner – constructor team in the areas of constructability, and cost and schedule control.

102 Project Risk can be managed by the building approach (delivery method) and choice of contract

103 Delivery Method is the term used to describe the manner in which the project team is organized

104 Many Delivery Methods are employed, but most are derived from the following:
Design-Bid- Build Design-Build Construction Management

105 Design – Bid – Build*

106 Design-Bid-Build Advantages Disadvantages Single Fixed Price
Historical Precedence Open competition Active Owner not required Disadvantages Difficult to fast track No constructor input Change Orders needed

107 Design Build

108 Design-Build Advantages Disadvantages Single Contract
Collaboration between designer and Constructor possible Fast tracking possible Disadvantages Firm cost established late No Designer-Constructor balance

109 Modified Design-Build
Bridging Owner hires Architect for prelim design Owner solicits bids from Design-Builders Architect serves as Owner’s Rep

110 Constructor as CM Advantages Disadvantages Early GMP
Fast tracking possible Construction input in design Disadvantages Firm price established late Requires heavy Owner involvement gcfirst.com/uploads/images/CM-at-Risk.gif

111 Pure CM Advantages Disadvantages Saves Owner resources
Provides technical expertise Competitive pricing Disadvantages Firm cost established late Project Cost not Guaranteed

112 Contract Types Single Fixed Price Unit Price Cost plus Fee

113 PROJECT CHRONOLOGY

114 Project Chronology Design Procurement Construction Turnover Operation
Disposal Project Initial Feasibility

115 Project Initiation Owner’s needs, desires Outsider opportunities
Go/No Go Decision?

116 Feasibility Study Initiation Cost Schedule Budget Market Proceed
Design Revise/Cancel

117 Case Study Total Cost $6.12 million $1.24 million
Retail Facility Supermarket Total Cost $6.12 million $1.24 million Economic Life years years Projected Yearly Income $ 1 million $320,000

118 A/E Selection Selecting the correct design team is critical to project success Selection Criteria to include: Previous experience Recommendations Past similar project experience Professional Reputation Notoriety Design Style/Image An interview process which introduces the team and its vision for the project helps the owner make the right choice

119 4 Stages of Project Design
Program- ming Schematic Design Design Development Construction Documents

120 Design Phase I: Programming
A written statement of the requirements of the buildings Owners need to: Establish building population and functions to be housed within the facility Choose the building site Select desirable systems and materials Define budget and timeframe for construction: to include any key milestone turnover dates

121 Design Phase II: Schematic Design
Preliminary Design of the Project Contents of Schematic Design Site & Location of the project, alternative design schemes, Rough floor plans Architects: compare the alternative design options Construction Manager: break-down the construction work, square foot pricing

122 Design Phase III: Design Development
Focus on the design of major building systems. Delivery of Design Development Architectural, structural, mechanical and electrical systems refined floor plan, elevation plans and section plans, outline specifications Responsibilities Architects: selecting all the major systems and components CM: Evaluating the cost and schedule and conduct value engineering

123 Design Phase IV Contract Documents
Complete a set of well-defined working drawings and technical specifications Consideration of this phase Project Scope Project Budget Delivery of this phase Contract Documents

124 Procurement Phase Contractor selection Bidding
Award of contracts/Notice to proceed Kick-off

125 Kick-off Meeting Preconstruction meeting
Topics specific to the project Communications, distribution lists, site security, assigned storage areas, site operations, site officer/trailer location, temporary service, and peculiar parameters, traffic control, parking, safety issue

126 Construction Phase Perform Construction
Scheduling the crews in the proper sequence Choosing the most efficient construction method Monitor schedule, cost, quality and safety

127 Turnover and Startup Systems Testing Training Collect Warranties
As-Builts Certificate of Occupancy

128 Operation and Disposal
The facility is used for its intended purpose until the end of its useful life and then renovated or disassembled and removed

129 CONSTRUCTION SERVICES DURING DESIGN

130 A constructor’s role during design can range from the old “over the fence” approach where the designer works independent of the eventual builder who builds the design that is “tossed” over the fence to him or her to a fully collaborative approach with active consultation between the designer and builder throughout design.

131 As time moves on Influence decreases and costs increase

132 Finding the Right CM Financial Health Workload Past Project Experience
Market Focus Geographic Focus Compatibility with Team Resources Available Reputation Fee

133 Request for Proposal (RFP) Response
Overview Project, Schedule and Costs Review of Sample Contract Overview of Services Offered Identify how Fee will be configured Sample Team Resumes Suggested Safety Plan Range of Company Services Corporate Management Plan

134 Typical Contractor “Services”
“Bid it” and “win it” – the “over the fence approach” Construction Manage the Construction Process Perform the Work Responsibility for the ‘Outcome’ Summary Breakdown Preconstruction Services Design Management A/E Selection, Responsibility (Design-Build) Design Analysis (“Control”) Budget Cost input / Confirmation Time Best “value” Value analysis Best Bang for $ Construction Ability/willingness to go “at-risk” Meet “Preconstruction” commitments Construction Risk Low risk for Owner, could walk if not satisfied Ability to Deliver on the “plan” Owner’s Plan, Project Plan 134 134

135 Typical Format of a RFP Executive summary Project approach
Scope of work Price breakdown Schedule (site logistic) Value engineering QA/QC plan Safety plan Contracts (AIA, AGC)

136 Criteria for a good RFP Unique Detailed vs. vague Pre-bid
Be in a position where you assist the owner with an RFP

137 Keys to Winning a RFP Know your competition
Establish relationship when possible Identify the Owner’s hot points Create a competitive advantage Schedule Constructability Price Presentations

138 “Preconstruction” Services
A/E Selection (and responsibility) Site Analysis / evaluation Code/Zoning Investigation System Analysis Foundations & structure “Skin” MEP, Interior finishes Material/product analysis A/E Selection Often if D-B No In-House Design - Select the “Best” for the Project Looked for Expertise, Team player Site Analysis Implications for Building Cost Cut/Fill, Foundations, etc. Code/Zoning Investigation Again often w/ D-B System Analysis MOST EVERY PROJECT Didn’t make the decision - Presented Analysis / Options Foundations & structure Often concealed - Least $ (System) “Skin” MPE, Interior finishes Material/product analysis Cost Installation cost Function / Life Cycle 138 138

139 “Preconstruction” Services (continued)
Value analysis Life cycle costing / analysis Constructability reviews & analysis Scope definition Design phasing / coordination Pricing (concept, DD’s, GMP) Cost Management Value analysis Life cycle costing Constructability reviews & analysis Scope definition Design phasing / coordination Pricing (concept, DD’s, GMP) Almost every Project STAFFING Early Stages Lead Estimator, Developer, Division Manager Later Stages Involve the “Project Team” 139 139

140 “Preconstruction” Services (continued)
Trade prequalification / solicitation Purchasing / Scope management ‘Total’ project scheduling Document quality review Design support assistance Project delivery planning 140

141 “Preconstruction” Services (continued)
Identification / procurement of ‘long lead’ Sustainability review/assistance Logistics & phasing Fundraising support ….. 141

142 Long-lead Items The building components, systems or structures are required to be manufactured and assembled prior the installation in their final positions. Such as: air handler units, steel structures, prefabricated concrete panels, or curtain wall systems, etc 142

143 Construction Work Packages