Construction Industry Services PDF

Lecture 1: OVERVIEW OF THE CONSTRUCTION Residential INDUSTRY Types o Single family houses CONSTRUCTION INDUSTRY SERVICES o Multi family dwelli...

Lecture 1: OVERVIEW OF THE CONSTRUCTION Residential INDUSTRY Types o Single family houses CONSTRUCTION INDUSTRY SERVICES o Multi family dwellings - Construction infrastructure projects are one o High-rise apartments & of the most important factors in supporting condominiums the socio-economic development in the - 30-35 % of the industry Low capital and country. It could generate downstream technology requirements economic activities and completely enhance - Largely private Often speculative Developers productivity and competitiveness in the = surrogate owners Designed by architects, Construction industry. builders/developers Overview of the Construction Industry Building Construction - 6% of GDP (Gross Domestic Product) Institutional and Commercial Construction - Employs over 2,000,000 workers o Schools and universities - Annual Volume exceeds Php 238 billion o Medical clinics and hospitals - Vital to the Nation’s economic health o Recreational facilities and sports and quality of life stadiums o Retail stores and shopping centers CONSTRUCTION PROJECT ENVIRONMENT o Warehouses and light manufacturing - Construction is the act, process, or manner o Office buildings (single story to sky of building, constructing, or forming scrappers) something which requires the application of o Hotels, convention centers, and special engineering and/or architectural theaters knowledge and skills and involving the use of o Churches and Synagogues specialized building trades or crafts. o Prisons o Courthouses and other government Project Goal buildings - The primary goal of the construction - 35-40 % of construction market Larger and project management team is to complete more complex than residential the projects as specified according to - Various owners (mostly private) Designed by plans, on schedule, within the budget architects and engineers and achieve the best quality level required by the contract Heavy Highway Construction - In order to achieve this goal a construction - Horizontal Construction management system will serve as a guide: - 20-25% of the construction industry - Mostly public financing or large consortium Heavy Construction o Highway & Bridges o Railroads & Urban Transit System o Tunnels o Dams o Airports o Canals o Ports and Harbors o Pipelines and Sewer Systems o Water treatment & distribution systems o Power & communication networks 4 - Categories of construction - Mass quantities of basic materials: earth, 1. Residential Construction rock, steel, timber, and concrete 2. (Institutional & Commercial) Building - Contractors need knowledge of engineering Construction and geology 3. Infrastructure and Heavy Highway - Engineers and builders are often specialized Construction - Greatest impact on land and water 4. Industrial Construction  - High degree of mechanization Lecture 2: PARTICIPANTS IN THE - Contracts awarded through competitive CONSTRUCTION PROJECTS bidding PARTICIPANTS IN THE CONSTRUCTION Industrial Construction PROJECT - Very large scale projects 1. Owner / Client - High degree of technological complexity - Private or public - Designed and built by the largest firms with - Conceives the construction project the highest level of technical sophistication - Increasing level of sophistication - Represent 5-10% of the market Classification of Clients Sector: o Petroleum refineries 1. Public owners consist of national and o Steel mills & aluminum plants local government agencies or units o Chemical processing plants tasked to implement construction o Fossil fuel & nuclear power plants projects intended either for public use o Other heavy manufacturing facilities (roads, bridges, ports, dams, parks, and - Complex mechanical systems, process similar works) or for public piping, service(government buildings and other and instrumentation facilities or structures for the - Civil, but also mechanical, chemical, and development of the national wealth). electrical engineering disciplines involved 2. Private owners, on the other hand, are - Mostly private ownership (in western non- governmental entities requiring countries) services for residential, commercial, - Negotiated contracts are typical “Turnkey” and/or industrial construction. contract arrangements are common - Design-constructor must be intimately 2. Designer familiar with the technology and operations of - Architects the facility o Size of firms ranging form single practitioner to large integrated firms Construction Project Stages o Mostly building and residential Planning and Definition construction - Identify the need for a new facility. Establish - Engineers project definition. Architectural or o Civil, mechanical, structural, engineering work may be required. electrical, chemical, environmental, Design geotechechnical, and multidiscipline - Architectural and engineering design of the entire project. 3. General Contractor Procurement and Construction - General contractor also called “Prime” - Materials and Equipment contractor - Manpower - Specialty contractors working as - Supervision and Management subcontractors - Organization ranges from small, one-person company to large, integrated A/E/C firms - Part of a design-build team 4. Construction Manager - Two principle divisions of CM o CM for Fee (management services only) o CM At Risk ▪ Operates similarly to a GC with no labor or capital equipment - Can encompass the management of the design process as well as construction - CM services including inspection and overall project or program management 5. Suppliers 10. Industry Associations - Manufactures, distributors, research, - Organizations of construction contractors promotions - Organizations of the design and management - Materials and equipment sales professions - Equipment Rental - Construction material and equipment suppliers and product research 6. Fabricators - Construction labor organizations - Structural steel, pre-castors, wood products - Coordination and arbitration - Inspection, specifications, and costs 7. Labor/Trade Unions - Functions and services o Industry information and 8. Government communication - Infrastructure Agencies - are those whose o Development and maintenance of primary function is to provide (either by standards contract or by direct administration) the o Industry coordination necessary public works or facilities within o Collective bargaining their areas of responsibility. o Statistics (market & industry) o Meetings and conventions The bulk of public construction projects are implemented by three major infrastructure Project Delivery Organization agencies: - Construction by owners’ forces 1. Department of Public Works and Highways - Owner-managed construction (DPWH), - Construction by general contractor 2. Department of Transportation and - Design-build team Communication (DOTC), and - CM Contract 3. Department of Energy (DOE). Construction employing owner forces Under these three agencies are several offices - Usually, small in-house construction or and government corporations also classified as renovations infrastructure agencies. These include the: - Industrial projects or institutional (such as National Power Corporation (NPC) hospitals or schools National Irrigation Administration (NIA) National Electrification Administration (NEA) Owner-managed construction Philippine Ports Authority (PPA) - Residential/commercial building developers Local Water and Utilities Administration - Industrial or institutional (LWUA) Bureau of Air Transportation (BAT), Construction by General Contractor Philippine National Railways (PNR), - Also referred to as “Prime Contractor” Light Railways Transit Authority (LRTA). - Most common method of delivery National Housing Authority (NHA). - Contractor bears substantial risks and financial responsibility Most of these agencies have decentralized - Facility designed by in-house organizational structures which allow for architect/engineer or by design consultants infrastructure planning and delivery at the - Often requires specialty subcontractors regional and district levels. Specialty contractors might include those 9. Utility Companies specializing in one of the following: - Electric, communications, water, gas,sanitary - Excavation sewer - Steel erection - Private petroleum pipelines - Concrete - Owner or service provider o Cast-in-place - Integral part of the process o Prestressed/Precast - Existing facilities in conflict with new - Masonry construction - Timber/wood framing - Interruption of service can be very costly - Piping/plumbing - Clearing and grubbing  - Blasting/demolition Lecture 3: CONSTRUCTION PROJECT - Electrical MANAGEMENT FRAMEWORK - Painting - HVAC Construction Project Management System - Environmental remediation - It is a centralized system of planning, organizing, leading and controlling the Design-Build (Turnkey) construction field work to meet the goals of - Single firm or team responsible for design and on time schedule, cost and quality construction minimizes coordination problems - More efficient designs with the interjection of constructibility and innovation - Often employs fast-track construction - Benefits include reduced overall delivery time and “one-stop shopping” for the owner - Disadvantages include complexity of evaluating proposals CM Contract -- Fee (management services only) also referred to as “Agency” - Specialized construction skills through all project stages including preconstruction - Provides close coordination between design - The challenge of project manager is to have and construction coordination among the owner, designer and - Eliminates impact of conflicts of interest contractor. - Independent and objective evaluation of costs, schedules, and performance - Potential saving in time and cost - Disadvantages include no risks associated with costs increase CM Contract – “At-Risk” - CM assumes financial risks similar to a GC - CM manages all phases of the work without performing any actual work tasks - CM’s only resources are management personnel - Contractors/subcontractors have a direct contract with CM - Contract form is often a negotiated guaranteed maximum price arrangement PROJECT LIFE CYCLE - Disadvantages includes lack of impartiality - Construction project starts with idea, requirement to fulfill demands, will to provide basic amenities to the citizen by the state. Project ends with the infrastructure of facilities, recreational amenities, industrial plants in operation as reality. Every construction project is unique in its character and varies with respect to time and degree of emphasis with respect to the phases during its life cycle but these projects certainly pass through these phases.  CONCEPTUAL PHASE Pre-Feasibility Study Phase - Research and Development - Location Analysis - Preliminary Plans - Perspective - Floor Plans - Preliminary Project cost - Sales projection DEFINITION PHASE Feasibility Study Phase - Market Analysis - Technical Analysis - Financing - Economics, cost benefit ratio - Socio-Environmental anaysis - Management Example: Suppose a state highway is crossing the railway line. The idea is to construct a fly over. This is situated in a small district level town. Here the project is the construction of the flyover. In this phase, the following points are examined: a. Based upon the level of traffic, the basic model of the fly over is prepared, with respect to width, length of the approach road, etc. Depending upon the contractual relations and way b. The cost of construction is roughly estimated, of project management, design and construction can and source of money discussed. overlap to the various degrees c. Is it necessary to have a fly over now? This point is studied with regard to the level of traffic on the road as well as on the railway line. If the traffic load is low, the project may be discarded based on cost-benefit analysis. d. How to relocate any power line coming in the construction area. e. Preliminary soil investigation Design In this stage, project takes the definite shape. All the Conceptual and Feasibility Studies technical issues related to the project are carried out. In this stage, ideas generated by individuals / a Engineers/Architects come out with the best group of people are studied. Following important alternatives available. points are carried out to establish the viability of the - Design phase of project is carried out in two project. phases: - Conceptual development of the model and its o Preliminary design - This stage studies involves primarily the studies of - Technical and economic feasibility studies various design alternative, their - Environmental impact assessment economic comparative studies and - Social Impact assessment architectural aspect. Also, in this - Land and geological survey-location of the stage, detailed field investigation project such as soil testing, geological, - Enumeration of major problems in translating hydrological data collection, market the project to reality survey, etc are carried out. - Sales projection Depending on the nature of the  project, various data is collected. It is - How to distribute the labor and equipment, in difficult to say the end of feasibility order to accomplish the work in the given study and the start of preliminary time (Labor, equipment, allocation, resource design. These steps are also a part of allocation) feasibility study. - How to prepare the bill for the money invested o Detailed Design - In this stage, the in the construction to get the payment from project is broken down into its the client (Construction Finance) components and each of the - How to conform the construction is according elements are analyzed and to drawing the specifications (Quality of designated, such that the engineer conformance) renders the explicit drawings and - How to implement the safety measure taken specifications which is used for during construction (Construction safety) construction. This phase is - How to organize the different personals or the traditionally involved with designers. company involved in the construction and define relations among them (Constructional Contracting and Procurement Organization management, construction sub In this stage, the bill of quantities is prepared, final contracting, construction Supervision and cost estimate is worked out. Most of the agreements method of reporting) are signed and relationships between different - How to check whether the project is according parties involved is defined following points are to construction schedule and quality generally addressed during this time. The project (Construction supervision) has to be executed according to the drawing and - What to do if things are not moving according specification. to plan (Disputes and arbitration, Labor laws, - Tender notices are advertised Penalty) - Qualification of contractor / suppliers is - How to avoid redundancy in the system (Value studied. engineering) - Contract is awarded to execute the work - For many of the projects, such as industrial Commissioning of a project projects, industrial material and equipment to Aim of this phase is to check that the project has be installed is purchased been carried out according to the contract document. - Outcome of this stage: Contract document, Also, during this stage changes in the design during which is a legal document describing the the construction is properly documented for the terms and conditions to execute the project. purpose of technical performance and financial implications. Construction This is the most important phase of a construction Following activities are carried out during this stage project, where the major portion of the money is - Check if each component is functioning invested. A lot of issues of project management are according to design and specification involved during this phase. The project is realized in - Check if the entire system is functioning the real world. The main work involved during accordingly as desired construction is to answer the following questions: - To remove the defect if any during construction - How to do the particular construction work (Construction Methods) - Dream has come to reality - How to organize labor and equipment to accomplish the construction (Labor and This is one of the main stages, in the bigger project equipment Management) such as power plant, industrial project, dam, etc, The - How to manage materials for constructions commissioning in large project is carried out in (Material Management) several stages and then the complete system is - How to breakdown the overall work into small tested. Testing of components are generally carried identifiable work called activity and put them out during construction phase. Operational and in sequence (Construction Planning) maintenance instruction manuals are also prepared - How to calculate the time and resources during this phase. required to complete the activity and obtain the criticality of the activity (Construction Scheduling) Utilization and maintenance Lecture 4: CONSTRUCTION PROJECT SCOPE - Basic infrastructure facilities created should be MANAGEMENT utilized to its fullest capacity - Regular repair of the part getting damaged has to be accomplished - This stage has become a very important stage in dealing with project when we talk about the life cycle cost of the project. What is Project Scope Management? - Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Managing the project scope is primarily concerned with defining and controlling what is and is not included in the project. Projects Vary in Size and Scope - NASA shuttle launch - Building a boat - Building a hospital - Building renovation and & space modification - Planning a party or wedding - Organizing the Olympic games - Developing a new software program - Getting a university degree - Company mergers Project Scope Management Processes Scope Need Requirements - The process of defining and documenting clients needs to meet the project objectives. Scope Definition – The process of developing a detailed description of the project and product and subdividing the major project deliverables into smaller, more manageable components. Scope Work Breakdown Structure (WBS) – The process of subdividing project deliverables and project work into smaller and manageable components. Scope Verification – The process of formalizing acceptance of the project scope. Scope Control– The process of controlling changes to project scope. Scope Need Requirements Phase Option Search Procedure in the Need Requirement - The second step is to gather all the ideas that Interviews can fulfill these needs and deliver the - An interview is a formal or informal approach required functionality. This is where survey of to discover information from stakeholders by historical records, current academic talking to them directly. research, experimental research being done Focus groups Discusion (FGD) can help to take full benefit of the existing - Focus group bring together prequalified knowledge of construction and related stakeholders and subject matter experts to activities. learn about their expectations and attitudes Analysis of Options about the project. - After all the ideas are presented. They should Group creativity technique be compared with the needs and decisions - Brainstroming taken as to which of the ideas is better suited - The Delphi Technique for the needs. - Idea/Mind mapping - In this step use of computer graphics and Group Decision making simulation techniques can help to better - An assessment process of multiple analyze the options. alternatives with expected outcome in the Collecting Information form of future action resolutions - The fourth step is to see how the selected option will be carried out and what are its Scope Definition Phase requirements. Procedure in the Definition Phase - This step includes method study and industry Basic Research environment scan. - For better definition, analysis and selection of - The historical data bases combined with needs, of the owner. geographical information systems, the Preparation of scope statement equipment capability and labor use data can - Forms the basis for initial scope development be used to generate time sequenced and helps the attention on the problem of simulations to get a better insight to the scope management requirements of the options. Preparation of a initial scope document - Provides guidelines, forms an outline for a Scope Statement better definition of scope and helps to detect - The scope statement should include broad mistakes early on and helps a good technical description of what is to be covered in the scope document works. Technical Scope Document - The format and its presentation should be such - Forms the basis for the detailed designs and that is should be a clear communication engineering of the project between the various players of the extent and nature of the project. Formation of Scope Development Team Statement of Work - The basic function of the scope development - A brief description of overall scope. team is to do some preliminary research and - It should specify the type of facility its units and gather information for the project to be subunits and the intended functionality they undertaken. are expected to deliver. - The team is formed to do research and Organization of Work prepare the scope documents - An outline of how the items specified in the Need Definition statement of work are to be carried out. - The first step is to define the needs for which - It should also state whether the project is to the project is to be built. Base on these needs conventionally built or fast track. the functional requirements of the project should be determined. SCOPE OF WORK - In this step the input of the owner and the end - “Providing all cost and expenses for the labor, users is very important. materials, equipment, tools and supplies - Need definition is the foundation of the project necessary and other incidental expenses for the successful completion of the construction works in accordance with the plan hereto attached.”  Requirements of Work LECTURE 5: Bids, Proposal and Contracts - Requirements of work scan over the basic feasibility of the project units and subunits. - The requirements should be properly and clearly specified in the scope statement. - The requirement include the overview of the basic financial, physical and regulatory constraints. Overall Objectives - An outline of how the items specified in the statement of work are to be carried out. - It should also state whether the project is to conventionally built or fast track. Critical objective - Critical objectives are the minimum desired functionality expected from the project. The fulfillment and approval of these determines whether the project will move ahead or be Procurement Process abandoned. Definition Control Philosophy - It is the process required to supply equipment, - The type of organization control systems and material, service and other resources the policy should be specified needed to carry out a project that satisfy Performance Specifications customer - The performance specifications of the equipment to used is to be specified Verification Needs Repair and maintenance standard Verifying need for the Construction Project - Apart from the functionality the equality which This process will need to establish and prioritize the the project is to deliver should also be objectives to be met by the project and the financial specified by specifying the repairs and and physical program parameters. maintenance standards. Contingency Policy Assessing the Options - The scope statement should include a All options must be assessed and evaluated at an contingency policy. This policy should be early stage in project development: comprehensive policy in the start including in - Renting it the policy for allowances and management - Leasing reserves. - Extending existing facilities Basic Architectural Plans - Buying - Perspective and floor plans After confirming the need and assessing all options, a more detailed case for the project should WORK BREAKDOWN STRUCTURE PHASE be developed. This will involve considering return on capital investment, the likely benefits to operational efficiency or income flow. Even at this early stage, initial concept designs can be developed to enable the client and those who will use the new facility to look at how initial designs will respond to business needs. Developing Procurement Strategy Traditional - This is probably the most commonly used method of procurement and it is suitable for: o all clients, including inexperienced clients o complex projects and projects where functionality is a prime objective o time predictability  o cost certainty. - Not suitable for: o The client appoints a team of o an uncertain or developing client brief consultants to prepare a design, plus o complex buildings tender documents. Management Contracting o The client appoints the building - The client appoints designers and a contractor contractor to construct the works to (management contractor) separately and the design, by the contract pays the contractor a fee for managing the completion date and for the agreed construction works. price. - This is suitable for: o Usually much of the work is sub- o fast track projects contracted to specialist firms but the o complex buildings contractor remains liable. o a developing brief o The consultants administer the - However, it is less suitable for: contract on behalf of the client and o inexperienced clients advise on aspects associated with o cost certainty before starting design, progress and stage construction payments which must be paid by the o clients wanting to pass risk to the client. contractor o Not suitable for fast track projects Implementing Strategy - Selecting a project team. - Team members should be selected on the quality of their reputation, their track record for similar projects, their capacity to do the work and the size of their fees. - The client must feel comfortable with the way the professionals appointed will handled the desired strategy. - The client could look to sources of independent advice to assist in the selection process, particularly when it come to evaluating tender packages. Project Delivery - When the project team has been selected the project can progress through developing initial design work to preparing drawings and documents to illustrate the project, achieving planning consent, defining standards to be met and allocating responsibilities. - During this period the client (or project sponsor Design and Build or project manager) should: - This method of procurement involves the o ensure land purchase is completed contractor being responsible for design as on time, if necessary well as construction, it can be suitable for: o ensure the design process is o all clients, including inexperienced consistent with the strategic brief clients and those requiring distance o ensure an internal decision-making from the project. system is in place to avoid design o cost certainty delays o faster track o keep the wider client organization - The main contractor takes responsibility for informed both design and construction and will use o set up an appropriate funding either in-house designers or employ framework to ensure payments can consultants to carry out the design. be made - Most of the construction work will be carried out by specialist or sub-contractors. The construction phase will progress under the Unit price management of the project manager or the project - A “unit-price contract” is one on which payment team. for the work is to be based on the computed quantities of work performed on specific work Post Project Review items and materials furnished and used by - A post-completion assessment by the contractor on the project, each such stakeholders involved at the outset will quantities being multiplied by the contractor’s enable both the client and the project team to bid price of the unit. learn from the experience and assess 2. COST-PLUS whether the project objectives have been - “Cost Plus” is another type of contract. The fully achieved. prime contractor is generally involved prior to - This is particularly useful if future projects are completion of the contract documents, when planned or where stakeholders have not the scope of work is not clearly defined. The been directly involved with the project during contractor is reimbursed for his actual its development. expenditures and is paid a fee for - Buildings does not stop at the completion of supervision. The fee paid to him may be the construction work but that there is a based on a percentage of the cost of the continuing and difficult to predict cost of work or a fixed amount predetermined as ownership over the life of the building. compensation for his services. 3. PROJECT MANAGEMENT CONTRACT Construction Contracts - The third type of contract is the Project - Contracts are generally awarded by owners Management Contract. It provides a method separately for design and construction for project development where the owner - Types of Contracts hires the Project Manager who in turn o Stipulated sum/unit price employs the services of architects, o Cost Plus engineers, and other consultants. In this o Management method, the initiation of policy, programming, budgeting, design, and construction are controlled by a team of professionals under the direction of a project manager. Bids, Proposals and Contracts “The lifeblood of the engineering and construction industries.” Contractor-Selection Process - Refers to a system for selecting the contractor and negotiating the contract. 1. STIPULATED SUM / UNIT PRICE - Stipulated sum and stipulated unit price are grouped together because of the similarity of their cost control requirements as described separately from the contractor’s and owner’s view point. - A Contractor in a stipulated sum agrees to construct project for a fixed amount no matter what difficulty or expenses he encounters. The remuneration may be made in a series of partial payments after acceptance of the contractor’s work Qualification of Bidders 3. Places to indicated fees for additional work Pre-qualification documents: 4. Unit Prices - Information about the firm 5. Location to deliver the bid o Owners 6. Method of awarding contracts o Organization chart 7. Expected dates of award and start of project o Company background Bid Form o General office location - The bid form is the document on which the - Business licenses bidder submits the price. The form is usually o Business permits prepared by the designer, with blanks left to o SEC/DTI registration documents be filled out by the bidder. This makes the o BIR registration bids more easily comparable. o Contractors license - Items may include some or all of the following: o SSS/Pagibig registration 1. Name of contractor - Technical capabilities 2. Price both in numbers and in words o Years of experience 3. Price breakdown for major trades, which o List of projects completed can guide progress payments o List of technical personnel 4. Amount of bonds o List of equipment 5. Fees for additional work o Experience in related projects 6. Unit prices if quantities are unclear - Financial capabilities 7. Key subcontractors o Financial Statements 8. Legal status: (Single proprieor. ▪ Balance sheet and Income Corporation or partnership) statements 9. Signature of authorized representative of o List of accredited suppliers with credit the firm, title and date lines o Bank references with credit lines Contractual Information - The contract issued with the construction Bidding Information documents goes to the firm that will perform - The bid documents are sent out with the the work. This includes: drawings and specifications to the qualified o Agreement bidders. o General Conditions - This section of the documents contains: o Special Conditions o Invitation to Bid o Sample of Bonds o Instruction to Bidders o Insurance requirements o Bid Forms Agreement Invitation to Bid - Identification of the parties The invitation to bid is a request for pricing. The - Description of the project and the work owner usually prepares it with the assistance of the - Date of start designer or construction manager. - Date of substantial completion - It contains: - Liquidated damages 1. The type of project. - The contract sum 2. The size of project - Progress payments 3. Location of the project - Interest rate 4. Bid due date - Retainage 5. Start and completion dates General Conditions 6. Bonds - The purpose of the general conditions is to 7. Document location establish the legal responsibilities, 8. Legal requirements obligations, authority, and rights of all parties Instruction to the Bidders involved in the project. - The instruction to bidders are usually bound in Special Conditions the specification. Although they may repeat - The special conditions are sometimes called some of the information in the invitation to bid supplementary conditions or special or on the bid form, the instruction are mostly provisions of the contract. concerned with the following: - They are intended to supplement the general 1. Bid due date conditions and are project-specific. 2. Instruction about filling our the form  - Special conditions include additional owner Contractors’ All Risks (CAR) requirements such as provisions for - This is essentially property insurance for the prevailing wages and additional insurance building while it is under the control of the requirements contractor. It covers losses resulting from Bonds fire, smoke, water, explosions, vandalism, - If the contractor fails to perform in accordance and theft. with the contract, a bond will protect the owner. Technical Information - There are four types of bonds commonly - The technical information is resented in two required in construction: formats: drawings and specifications. o Bid bonds - These two different formats (one graphic and o Performance bonds one narrative) do not exist independently but o Payment bond as a unit. o Guarantee bond Bid Bonds - These are furnished with the bids and basically guarantee that the contractor will enter into a contract with the owner for the price of the bid. Performance bonds - These guarantee that the contractor will perform the contract with the terms of the agreement. If the contractor goes bankrupt or otherwise cannot complete the work, the bonding company becomes liable for it. Payment Bonds - Also called labor and material bonds, these assure the contractor will pay all bills, thus leaving the owner unharmed by claims and liens. Guarantee bonds - These guarantee that the contractor will guarantee the quality of work completed within a period of one year prior to release of Technical Specifications retention money to the contractor. - The technical specifications are written Insurances descriptions of the quality of the project. - To be purchased by the contractor as required - They detail the materials, equipment, and by the contract to protect the contractor workmanship to be incorporated into the against risks during the construction period. project - Types of insurances: - Types of Specifications: o Workers’ compensation o Design specifications o Comprehensive liability o Performance specifications o Contractor’s All Risk (CAR) o Proprietary specifications Workers’ compensation o Open specifications - This insurance covers disability and medical Design Specifications treatments for injuries resulting from - These are also known as descriptive accidents that occur during the construction specifications. employment - They are detailed descriptions of materials, Comprehensive liability workmanship, installation, and erection - This provides protection from third-party procedures. claims. It covers injury to non-workers at the - The contractor’s obligation is to follow the site, damage caused by construction instructions as laid out in the specifications vehicles, damage caused by sub- contractors.  Performance Specifications Why Do Communications Fail? - These lay out the expected results of the work There is a myriad of reasons why communications and leave the methods to the contractor. fail in all parts of our life. A few of the more common - Performance may be expressed in terms of: reasons business communications fail are the o Operational capacity following: o Functional qualities - Not having a clear goal in mind o Appearance - Staying in a negative mode o Finish - Concentrating on your own thoughts to the o Color, texture, structural tolerance exclusion of the other person's ideas - Not establishing rapport - Assuming that others have the same information on the subject that you have - Being impatient not hearing the other party out - Mistaking interpretations for facts - Failure to analyze and to handle resistance - Being ashamed to admit you don't understand - Overabundance of ego Communication - Transfer of information and understanding from one person to another. - Social process in which two or more parties exchange information and share meaning. “Communication is what the receiver understands, not what the sender says.” Importance of Communication - Communication promotes motivation. - Communication is a source of information LECTURE 5: COMMUNICATIONS - Communication also plays a crucial role in altering individual’s attitudes. “Effective communication must be focused on the - Communication also helps in socializing. receiver.” - Robert D. Ramsey - Communication also assists in controlling process. Project Communication - Successful construction project execution is virtually impossible unless you have an effective communication system. - Good communication skills are basic to becoming a successful construction manager. - Good communications between the parties involved, a steady flow of information, and adequate documentation of the activities developed during the construction project are key factors for analyzing the tasks carried out and for avoiding later conflicts, considering that the goal of the company is the integration of processes at the project and business level.  1. Project correspondence 2. Audiovisual presentations 3. Project reporting 4. Meetings 5. Training 6. Listening Interpersonal Communication Verbal communication - the use of verbal communication is very convenient and quick and it provides the opportunity for a rapid feedback. - A major disadvantage of this communication is the distortion of the message when it passes to several people. Verbal communication is the appropriate method if the sender: Wants to appear informal Wants to invite suggestions and ideas Is explaining something complex and might need clarification Needs to be very diplomatic and feels he will be more effective face-to-face Has important news to impact Has something confidential to say and putting it in writing is risky Verbal communication is not appropriate when the sender: Wants to maintain formality or distance from the other person BARRIERS TO COMMUNICATION Wants a permanent record of what has been Personal Barriers said - Emotions Need receiver’s comments to be in writing for - Listening legal reason - Psychological Distance Wants to avoid further discussion of the Physical Barriers subject - Noise - Geographical distance Written communication Semantic Barriers - includes memos, notice-boards, and letters to - Language staff, emails, faxes, internal newspaper, and - Symbols instant messaging. Specific Barriers to Communication The advantages of written communication are Filtering the following: Selective Perception It is formal and authoritative Information Overload It provides a permanent record of what have Emotions been said Communication Apprehension It provides a document useful for legal Lack of Credibility purposes Difference between people A number of people will receive exactly the Attitude same information Improper Timing It is useful in communicating something complicated Project Communications It is sometimes quicker Typically, project communications fall into the Words can be chosen carefully following key categories: Written communication is not appropriate when: The receiver needs to ask question or seek clarification More discussion is needed before facts are established A friendly and informal atmosphere is needed The message is very urgent The message is confidential The information may be using upsetting to the receiver Nonverbal communication - communication that takes place through facial expressions, body movements, eye contact, Communicational Networks in the Organization and other physical gesture Formal Small Groups Networks Kinds of Communication - Chain network of formal small groups mainly DOWNWARD COMMUNICATION follows the formal chain of command refers to message flows from higher levels to – Circle network has the leader as the central lower levels of authority. person for conducting all communications UPWARD COMMUNICATION within the group. refers to messages from persons in lower level – Wheel network is characterised by openness positions to persons in higher positions. that enables the joint communication of all HORIZONTAL COMMUNICATION members of the group. refers to messages sent to individuals or groups form another of the same organizational level or position. DIAGONAL COMMUNICATION Communication that takes place between a manager and employees of other workgroups is called diagonal communication. EXTERNAL COMMUNICATION Communication that takes place between a company and external groups such as - Informal small group networks suppliers, vendors, banks, financial institutes o Informal communication in the organization is etc. known as grapevine is secondary and very complicated communication network that is External Communication based on personal contact, and opposed to the system of formal communication it does not follow a particular line settled in advance. Organizational grapevine and rumors The grapevine is an informal communication system. Factors that encourage grapevine activity are as follows: work that allow conversation a job that provides information desired by others personality of communicator excitement and insecurity involvement of friends and associates recent information procedure that brings people into contact  The major problem with the grapevine – and COMMUNICATIONS ON SITE one that gives the grapevine its poor The approach to communications on a site is reputation – is Rumor. dependent on many factors: the nature of the Rumor is grapevine information that project, the size of the contract, the organization iscommunicated without secure standards of chart adopted by the project manager and the evidence being present contractor, the command chain within them, and so on (Mincks and Johnston, 2010). Guidelines for control of rumor Most of the communication on site actually Remove its cause in order to prevent it takes place through discussions, telephone Apply efforts primarily to serious rumors conversations and spoken messages, but they Refute rumors with facts often need to be formalized in writing. Deal with rumors as soon as possible This applies to requests, reports, proposals, Emphasize the face-to-face supply of facts, approvals, rejections, technical notes and such confirmed in writing if necessary like. Provide facts from reliable sources Refrain from repeating rumor while refuting it Encourage assistance of informal and union leaders if they are cooperative Listen to all rumors in order to understand what they may mean Communication Systems CMs need to keep abreast of the latest communications hardware. Impact of electronic communication EMAIL – The ability to release information to many different people at once, without calling a meeting or requiring printing of the materials, turned into a money- and time-saving device. Daily logs – Negatively, more people spend more time on o The daily logs detail all significant actions email than on other projects. orimportant activities (formal or informal) that TEXT MESSAGING take place during the execution of the – Rather than seeing or talking to a person face- construction works. to-face, you can talk to a person over the phone – has its own language, an abbreviated form of speech that has found its way into classrooms and businesses INSTANT MESSAGING – allowed people to reach other people without having to use the phone. – The downside is that employees are less likely to engage in social activities away from their computers. SOCIAL MEDIA – Rather than talking to their friends in person, they can post a comment about their life. – Cyber bullying is one of the problems with social media. – The amount of information you put out on the Internet over social media, intended or not, affect you in the real world.  Reports o The reports can be regular or delivered on a one-off basis. Regular reports are usually issued on a monthly basis, although they may also be issued bimonthly, trimonthly or even weekly. A report is prepared which summarizes all the work done during the relevant period (Mincks and Johnston, 2010). Construction diary o The construction diary (or orders book) registers orders, communications and instructions from the project manager to the construction site manager, in addition to Photographs and videos on site specifying all problems and incidents that o On-site photographs are taken in digital could arise during the construction works format, which means that hundreds of photos can be taken daily. As indicated, the most The diary should contain three specific key topics: relevant ones can be sent to the parties problems detected, either a defect or omission involved as an attachment to the daily log in the project, bad execution of the using email or intranet. construction works or other exceptional circumstances Information and documentation flow in proposed solutions and recommended construction changes–the decisions made are written o Having formed the project team and down determined the responsibilities of each of the orders transmitted which may affect an members, a table or matrix of responsibilities isolated case or be general, giving rise to can be prepared which clearly assigns changes in the technical specifications or the functions to each of the team members. Then, drawings. an important step is to develop a document procedure which allows the filing of information Meetings (paperwork or digital) from different o Communication during the construction phase documents, including emails. is generally conducted through meetings: o internal (construction team) or external (between the parties involved, including subcontractors). The usual purpose of these meetings is the coordination of the construction works, providing a forum in which common topics of interest can be discussed between all the agent involved LECTURE 7 : ORGANIZING AND LEADING THE ❑Line Organization CONSTRUCTION PROJECT – Simplest form of organization and is most common among small companies “The best organizational structure suitable to a new – The authority is embedded in the hierarchical business organization really depends on the structure short- and long-term vision of the entrepreneur and – It clearly identifies authority, responsibility and one that suits its immediate goals.” accountability at each level. -Dr. N. A. Orcullo Jr. Introduction – Before projects can be effectively led, they need to be effectively organized. – Although leadership and management are certainly interrelated, the field of management science focuses on the scientific study of decision making. – Organizing can be defined as the function of creating in advance of execution the basic conditions that are required for successful ❑Line and Staff Organization achievement of objectives.Introduction – most common in our business economy and – The general goal of any organizational especially among large enterprises. structure is to establish the proper relationship among: General Staff: This group has a general background o The work to be done that is usually similar to executives and serves as o The people doing the work assistants to top management. They are not o The workplace(s) specialists and generally have no authority or responsibility of their own. They may be known as Organizational Design special assistants, assistant managers or in a – The result of the allocation of authority and college setting as deputy chairpersons. responsibility is the establishment of an organizational chart. Specialized Staff: Unlike the general staff who Elements for Proper Organizational Structure generally assist only one line executive, then Work Specialization: To what degree are projects specialized staff provides expert staff advice and subdivided into separate jobs? service to all employees on a company wide basis. Departmentalization: On what basis jobs will be grouped? – Its main disadvantages are the confusion and Chain of Command: To whom will individuals and conflict that arises between line and staff, the groups report? high cost that is associated with hiring Span of Control: Up to how many individuals can a specialists and the tendency of staff manager efficiently direct? personnel to build their own image and worth Centralization vs Decentralization: Who will be the sole maker of decisions? Formalization: To what degree will there be rules and regulations to direct employees and managers? Basic forms of Organizational Chart: – Line Organization – Line and Staffing Organization – Functional Organization – Divisional Organization – Project Organization – Matrix ❑Functional Organization primary concern. The general – Also commonly called a bureaucratic policies are decided upon by the top organizational structure, the functional management within the philosophical structure divides the company based on guidelines of the organization. specialty. ❖Departmentalization by Customers. – This is your traditional business with a sales o This type of departmentalization is department, marketing department, used by those organizations that deal customer service department, etc. differently with different types of – The advantage of a functional structure is that customers. Thus, the customers are individuals are dedicated to a single function. the key to the way the activities are These clearly defined roles and expectations grouped. Many banks have priority limit confusion. services for customers who deposit a – The downside is that it’s challenging to given amount of money with the bank facilitate strong communication between for a given period of time. Similarly, different departments. business customers get better attention in the banks than other individuals. ❖Departmentalization by Area. o If an organization serves different geographical areas, the division may be based upon geographical basis. Such divisions are specially useful for large scale enterprises that are geographically spread out such as banking, insurance, chain department stores or a product that is nationally distributed. ❖Departmentalization by Time. ❑Divisional Organization o Hospitals and other public utility – The divisional or departmental organization companies such as telephone involves grouping of people or activities with company that work around the clock similar characteristics into a single are generally departmentalized on department or unit. the basis of time shifts. For example, – Also known as self-contained structures, these the telephone company may have a departments operate as if these were small day shift, on evening shift and a night organizations under a large organizational shift, and for each shift a different umbrella, meeting divisional goals as department may exist, even though prescribed by organizational policies and they are all alike in terms of plans. objectives. – The decisions are generally decentralized so that the departments guide their own activities. This facilitates communication, coordination and control, thus contributing to the organizational success. – Also, because the units are independent and semi-autonomous, it provides satisfaction to the managers that in turn improves efficiency and effectiveness. ❖Departmentalization by Product. o In this case, the units are formed according to the type of product and it is more useful in multi-line corporations where product expansion and diversification, and manufacturing and marketing characteristics of the product are of ❑Project Organization - These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. - For example, the goal of an organization may be to develop a new project. For this project, the specialists from different functional departments will be drawn to work together. - These structures are very useful when: 1. The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. An example would be the project of building a new airport. 2. The project is separate and unique and not a LEGAL FORMS OF ORGANIZATION part of the daily work routine of the SOLE PROPRIETORSHIP organization. - Proprietorships are single-person ownerships. 3. There must be different types of activities that This person owns, operates, and makes all require skills and specialization and these major decisions for the company. There may must be coordinated to achieve the desired be many employees, but the only responsible goal. person is the one proprietor. This is by far the 4. The project must be temporary in nature and simplest form of ownership. It can be started not extend into other related projects with no formal documents and ended with no formal documents. It is whatever the person wants it to be. Advantages of Sole Proprietorship - Ease of starting and ending the business - Being your own boss - Pride of ownership - Retention of profit - No special taxes Disadvantages of Sole Proprietorship - Unlimited liability - Limited financial resources - Difficulty in management - Overwhelming time commitment - Few fringe benefits Organizing a Sole Proprietorship - Register the business name with the DTI ❑Matrix Organization - Pay the municipal licenses to the local - A combination and interaction of project and government functional structures and is suggested to - Apply for VAT or non- VAT number overcome the problems associated with - Register with the BIR the books of account project and functional structures individually. (simplified bookkeeping records or journals - The key features of a matrix structure are that and ledger) and the business forms to be the functional and project lines of authority used (sales invoices, cash sales invoices, are super-imposed with each other and are official receipts, etc) shared by both functional and project managers. PARTNERSHIP - An association of two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves.  o Leaders establish and maintain Procedure in Organizing A Partnership organizational systems - Register the business name with the DTI Ten core leadership capabilities - Have the partnership agreement (articles of - Setting direction and focusing energy co-partnership) notarized. - Setting a good example - Obtain a tax account number for the - Communicating effectively partnership from the BIR. - Aligning people in emotional terms - Have the partnership agreement (articles of - Developing people and bringing out the best in (co-partnership) notarized and then them registered with the SEC. - Developing self awareness - Obtain the municipal licenses from the local - Encouraging appropriate change government. - Delivering results in appropriate timescales - Obtain the value added tax account number - Staying calm in times of crisis (VAT) or non-VAT, as the case may be. - Creating structure out of chaos. - Register books of accounts (journals and general ledger) and business forms to be used (sales invoice, official receipts, cash sales invoice, etc) with the BIR. CORPORATION - A corporation is an artificial being created by operation of law having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Advantages of Corporation - More money for investment - Limited liability - Size - Perpetual life - Ease of ownership change - Ease of drawing talented employees - Separation of ownership from management Disadvantages of Corporation - Initial cost - Paperwork - Two tax returns - Size - Difficulty of termination - Double taxation - Possible conflict with board of directors LEADERSHIP IN CONSTRUCTION PROJECT LEADERSHIP - Leadership is at the core of the construction managerial profession. Because most projects are in a constant state of flux and tend to move from one crisis to another, project success is dependent on the leadership of the construction manager. - Specifically leaders do the following: o Leaders create synergy o Leaders create vision o Leaders give structure o Leaders set the example o Leaders grow other leaders  Factors Which Determine Project Team Performance (A) Work & Team Structure - Team participates in project definition and work plans evolve dynamically - Team structure and responsibilities evolve and change as needed - Broad information sharing - Team leadership evolves on the basis of expertise, trust and respect - Minimal dependence on bureaucracy, procedures and politics (B) Communication & Control - Effective cross-functional channels and linkages - Ability to seek out and process information - Effective group decision-making and consensus - Clear sense of purpose and direction - Self-Control, accountability and ownership - Control is stimulated by visibility, recognition, accomplishments, autonomy (C) Team Leadership - Minimal hierarchy in member status and Project Teams and Teamwork position - Teambuilding – The process of taking a - Internal team leadership based on situational collection of individuals with different expertise, trust and need backgrounds, needs, competencies, skills - Clear management goals, direction and and experience and transforming them into support an integrated and effective work unit - Inspires and encourages - Today’s project environments are often (D) Attitudes & Values characterised by enormous complexity, dynamism, multinationalism, technological - Members are committed to established sophisticatedness, cost-intensiveness and objectives and plans risk and uncertainty. Project teams, in which - Shared goals, values and project ownership considerations of flexibility, - High involvement, energy, work interest, need multidisciplinarity, innovativeness and a high for achievement and pride, self-motivated level of individual commitment andmotivation - Capacity for conflict resolution and resource- are accorded high value, are an appropriate sharing way to deal with such environments. - Team building and self-development - Risk-sharing,mutual trust and support - Innovative behaviour - Flexibility and willingness to change - High morale and team spirit - High commitment to established project goals - Continuous improvement of work process, efficiency and quality - Ability to stretch beyond agreed-on principles  - Staff and organize the project team - Define the project organization, interfaces and reporting relations - Build a high-performance image - Define work process and team structure - Build enthusiasm and excitement - Ensure senior management support - Define effective communication channels and methods - Build commitment - Conduct team-building sessions - Ensure project leadership - Create proper rewards systems - Manage conflict and problems Project Team Performance – The Drivers - Ensure personal drive and involvement - Clear project plans and objectives - Good interpersonal relations and shared values - Good project leadership and credibility - Professional growth potential - Professionally interesting and stimulating work - Project visibility and high priority - Proper technical direction and team leadership - Qualified, competent team personnel - Recognition of sense of accomplishment - Management involvement and support Project Team Performance – The Barriers - Communication problems - Conflict among team members or between team and support organization