CE406-CONSTRUCTION PLANNING AND MANAGEMENT-NED

B.E. CIVIL

01
RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

1. CONSTRUCTION PROJECTS A project is a temporary endeavor consisting of a sequence of connected activities undertaken by limited resources to create a unique product or service that must be completed within specified time, within budget, according to specification, and safely. Temporary Endeavor Temporary means that every project has a definite beginning and a definite end. The end is reached when the projects objectives have been achieved, or when it becomes clear that the project objectives will not or cannot be met and the project is terminated. Temporary does not necessarily mean short in duration (many projects last for years), nor it applies to the product or service created (many projects are undertaken to create lasting results for example, a project to erect a national monument will create a result expected to last for centuries). Sequence of Connected Activities A project comprises of a number of activities that must be completed in some specified order, or sequence. An activity is a defined chunk of work. The sequence of the activities is based on technical requirements. Activities within a project are interconnected. To determine the connectedness, it is helpful to think in terms of inputs and outputs. The output of one activity or set of activities becomes the input to another activity or set of activities. Undertaken by limited resources Projects have resource limits, such as a limited amount of people, materials or equipment that are dedicated to the project. Unique Product or Service Unique means that the product or service is different in some distinguishing way from all similar products or services. A product or service may be unique even if the category it belongs to is large. For example, many thousands of office buildings have been developed but each individual facility is unique different location, different owner, different design, different contractor, and so on. The presence of repetitive elements does not change the fundamental uniqueness of the project. For example, a real estate development project may include hundreds of individual units. Within Specified Time Projects have a specified completion date. This date can be self-imposed by management or externally specified by a client or government agency.
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CE406-CONSTRUCTION PLANNING AND MANAGEMENT-NED

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RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

Within Budget Projects have cash inflow constraints. The source of finance may be public funds, bank loans or private investments. According to Specification The client expects a certain level of functionality and quality from the project. These expectations can be self-imposed, such as the specification of the project completion date, or client-specified, such as use of wall paper for wall finishing in a bungalow, or law imposed, such as environmental considerations. Safely We would like to get the job done without any accidents. Hence the term 'construction project' refers to a high-value, time bound, special construction mission with predetermined performance objectives.

2.

PROJECT SUCCESS PARAMETERS Five constraints operate on every project: Time The client specifies a timeframe or deadline date within which the project must be completed. This may be due to several reasons: the capital turnover (revenue) forecasted to be realized from early facility completion (e.g. shopping mall, school) the need of the client to occupy, use or rent the facility on a particular timeframe (e.g. bungalow). A public client requiring completion of the project by a particular deadline so as to open it to service for public (e.g. road, bridge, hospital). Cost Cost is the expenditure which the client has agreed to commit for creating the desired construction facility. Cost is a major consideration throughout the project management life cycle. It is best thought of as the budget that has been established for the project. This is particularly important for projects that create Time Cost Resources Quality/ Performance Scope Safety

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B.E. CIVIL

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RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

deliverables that are sold either commercially or to an external customer. Cost is a major element in leading the client to a go/ no-go decision. Resources Resources are assets, such as people, equipment, physical facilities, or materials, which have limited availabilities, can be scheduled, or can be leased from an outside party. Resources are central to the scheduling of project activities and the orderly completion of the project in their availability as well as productivity. Productivity, in its broader sense, measures the ratio of planned effort of resources to produce a unit quantity of work divided by the actual effort of resources employed to achieve this unit of work. Quality/ Performance Two types of quality are part of every project. The first is product quality. This refers to the quality of the deliverable from the project. The second type of quality is process quality, which is the quality of the project management process itself. A sound quality management program not only contributes to customer satisfaction, but also helps organizations use their resources more effectively and efficiently by reducing waste and rework. The payoff is a higher probability of successfully completing the project in accordance with customer requirements. Quality to be achieved in accomplishing tasks is normally stated in terms of standard specifications. Scope Scope defines the boundaries of the project. Scope definition should include: what is included in the project as well as what is not included in the project. It is critical that scope be correctly defined and project proceedings follow the same direction as identified through scope. Scope can change. Detecting and weighing that change and deciding how to accommodate it in the project plan are major challenges for the project manager. Safety Safety is usually determined by the number of accidents on a jobsite. Ideally, we would want our jobsites to be free of any accidents. It is important to know that a safe jobsite is also able to provide quality work because if a worker is convinced that company management cares about his safety, he would be more willing and will put in extra efforts to perform more effectively. The above parameters are an interdependent set; a change in one can cause a change in another. For instance, with an increase in the repetition of similar tasks, there is an improvement in resource productivity due to the experience gained, which consequently results in reduced overall costs.
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CE406-CONSTRUCTION PLANNING AND MANAGEMENT-NED

B.E. CIVIL

01
RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

The set of parameters form a system that must remain in balance for the project to succeed. The job of the project manager at any time would be to optimize the parameters. 3. CATEGORIES OF CONSTRUCTION PROJECTS Most designers and contractors tend to focus their efforts within specialty areas, focusing on particular types of projects. Hence the construction industry can be divided into five distinct divisions; these distinct types have evolved because major differences exist in the way the projects are funded, in the technologies involved, and in the manner in which the designers, contractors and owners interact. These five divisions are: Residential Building Construction Non-Residential Building construction (or Commercial Construction) Infrastructure and heavy construction Industrial Construction Special-Purpose Construction

The distribution of total Pakistan construction volume for a representative year is illustrated in Figure 1. Building construction (inclusive of residential and nonresidential building construction) accounts for a majority (81%) of the total Pakistan construction market (see Figure 1).
Public Nonbuilding 12% Public Building 10%

Private Nonbuilding 7%

Private Building 71%

Figure 1: Distribution of Pakistan new construction volume. i. Residential Building Construction Residential Building construction projects include the construction of individual homes as well as condominium and apartment building complexes. These projects tend to be privately funded by individual owners for their own use or by developers for profit. Such projects are typically designed by architects, but in
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RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

some cases a single home may be designed by the individual home owner or builder. This industry tends towards the use of fairly low technologies and requires little investment to enter. For these reasons the industry is characterized by large numbers of small designers and contractors and suppliers. When the economy is strong these small companies do well, but when times are tough many of these companies go out of business. Interest rates and government policy towards housing investment also influence the health of this industry. About 30 to 35 percent of construction spending is on residential construction. ii. Non-Residential Building Construction Examples of non-residential building construction projects would be office buildings, shopping malls, theaters, commercial complexes, educational and recreational facilities, hospitals, hotels, warehouses and marketing facilities. In terms of annual construction expenditures this project category is the largest. Projects such as these are designed by architects with engineering support and are generally built by general contractors. Most of these projects are privately funded, though some projects like schools, courthouses, and city offices are publicly funded. The technical sophistication of building construction projects is greater than residential construction as is the investment necessary to enter. These factors provide for fewer players than in residential construction. This sector typically accounts for 35 to 40 percent of the construction market. iii. Infrastructure and Heavy Engineering Construction Though accounting only for some 15 to 20 percent of the market, infrastructure and heavy engineering construction includes many of the structures for which the industry is best known. Dams and tunnels provide hydroelectric power, flood control, and irrigation; bridges range from footpaths to internationally famous landmarks such as that spanning San Francisco's Golden Gate; other transportation structures include railways, airports, highways, and urban rapid transit systems; ports and harbor structures fall into this category, as do many of those in the deep open sea. Pipelines are included here, as are some of our more utilitarian structures, such as water treatment and distribution systems, sewage and storm water collection, treatment and disposal systems, power lines, and communication networks. These are capital intensive and heavy-equipment oriented works, characterized by fleets of large earthmovers, cranes, and trucks, working with massive quantities of basic materials like earth, steel, concrete and pipe. These projects are designed principally by specialist civil engineers and built by heavy
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RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

construction contractors having engineering backgrounds or support. These projects are usually publicly funded and therefore are sensitive to governmental policy. These projects tend to be long in duration and thereby less sensitive to the ups and downs of the economy, and they involve the heavy use of equipment. iv. Industrial Construction Industrial construction represents only about 5 to 10 percent of the market, but it has some of the largest projects and is dominated by some of the largest engineering and construction firms. These projects include petroleum refineries and petrochemical plants; synthetic fuel plants; fossil-fuel and nuclear power plants; mine developments, smelters, steel mills, and aluminum plants; large heavy-manufacturing plants; and other facilities essential to our utilities and basic industries. These works involve heavy investment and are highly specialized. Both design and construction require the highest levels of engineering expertise, from not only civil, but also chemical, electrical, mechanical, and other disciplines, and typically all phases of the project are handled by the same firm on a negotiated design-construct or "turnkey" contractual arrangement, with considerable overlap between design, procurement, and construction. The design-constructors must be intimately familiar with the technology and operations of the facility from the owner's point of view, and often they hold some of the key patents for advanced process technologies needed therein. Quality and time are extremely important in these projects. Most of these facilities may be publicly funded. In contrast with the basic materials characteristic of heavy engineering construction, the major factors in industrial construction generally consist of large amounts of highly complex mechanical, electrical, process piping, and instrumentation work. This work tends to be much more labor-intensive, though some of the largest hoisting and materials-handling equipment is also required.

v. Special-purpose projects These include environmental works, emergencies, remedial works, installation and commissioning of equipment, and complex key operations. These works are highly specialized. Only a few specialty designers and specialty contractors are qualified for any one type of project. Depending on the nature and scope of work, heavy amounts of investments and technological complexities may be involved as well as complex interaction issues amongst the designers, contractors and clients may develop.

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CE406-CONSTRUCTION PLANNING AND MANAGEMENT-NED

B.E. CIVIL

01
RIZWAN FAROOQUI, PH.D. FALL 2011

HANDOUT#1: CONSTRUCTION PROJECTS

4. MAIN CAUSES OF PROJECT FAILURE It is not uncommon to see a project failing to achieve its goal within the specified cost and time. Hardly few projects get completed in time and within original costs. According to a survey conducted in the 1990s, out of 351 major projects, the observations were as follows: 56% had cost overruns (totaling 20% cost) 49% faced a time overrun from 1 to 157 months The major factors contributing to these overruns are outlined below: Inadequate project formulation analyses, poor investment decisions. Poor planning for implementation Inadequate time plan, inadequate Poor field investigation, inadequate project information, bad cost estimates, lack of experience, inadequate project

resource plan, inadequate equipment supply plan, inter-linking not anticipated, poor organization, poor cash flow planning. Lack of proper contract planning and management contract actions, poor post award contract management. Lack of project management during execution Inefficient and ineffective working, delays, changes in scope of work and location, law. There can be endless reasons for non-fulfillment of project objectives. Failures can be due to unforeseen natural calamities like earthquakes, floods and natural disasters. Failures can also result from deliberate attempts made by manipulators during the feasibility stage by incorporating inaccurate time and cost estimates with a view to secure business or start a project. These in-built intentional inaccuracies can lead to unrealistic objectives and thus create problems during the implementation stage. But, the main causes of such failures can be attributed to the cost estimation failure and management failure. Improper pre-

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