1.

1 Introduction

Construction and the ability to build things is one of the most ancient of human skills.

In contrast to other manufacturing industries that fabricate large numbers of units, such as automobiles or television sets,
the construction industry is generally focused on the production of a single and unique end product. That is, the product of
the construction industry is a facility that is usually unique in design and method of fabrication.

Once a project has been defined, one of the most critical questions facing the construction manager is ‘‘What construction
technique or method should be selected?’’ The types of methods for placing construction are diverse. New methods are
continuously being perfected and a construction manager must weigh the advantages and disadvantages of a given
method or technique.

Definition of Project

an endeavor that is undertaken to produce the results that are expected from the requesting party
may be design only, construction only, or a combination of design and construction
consists of three components: scope, budget, and schedule

When a project is first assigned to a project manager, it is important that all three of these components be clearly defined.
Throughout this book, the term Scope represents the work to be accomplished, i.e., the quantity and quality of work.
Budget refers to costs, measured in dollars and/or labor-hours of work. Schedule refers to the logical sequencing and
timing of the work to be performed. The quality of a project must meet the owner's satisfaction and is an integral part of
project management as illustrated in Figure 1.1.

Figure 1.1

Figure 1.1 is shown as an equilateral triangle to represent an important principle of project management: a balance is
necessary between the scope, budget, and schedule.

 
For any given project there is a certain amount of work that must be performed and an associated cost and schedule for
producing the work.

Any adjustment in budget and/or schedule requires a corresponding adjustment in scope.

This simple concept of a balance between scope, budget, and schedule is sometimes not fully recognized during early
project development as well as during design and construction.

WHY??? The source of many problems associated with a project is failure to properly de- fine the project scope. Too often
the focus is just on budget or schedule. Not only should the scope, budget, and schedule be well defined, but each must be
linked together since one affects the other, both individually and collectively.

The manager must be clever and innovative in the utilization of resources available. Somewhat like a general in battle,
the manager must develop a plan of action and then direct and control forces (resources) in a coordinated and timely
fashion so that the objective is achieved.

Since the project scope defines the work to be accomplished, it should be the first task in the development of a project,
prior to the development of either the budget or the schedule. Too often, top management specifies a project budget or
schedule and then asks the project team to define a scope to match the budget. This is the reverse order of defining a
project and is not a good project management practice. 'It is the duty of a project manager to ensure that the project scope,
budget, and schedule are linked together.

Management Concepts and Levels of Organization in Construction

At its most fundamental level, construction project management handles the planning, coordination, and execution of a
construction project, whether it’s agricultural, residential, commercial, institutional, industrial, heavy civil, or environmental.
Construction project management typically includes complicated tasks that can shift wildly, depending on the work at hand,
and it requires strong skills in communication, deep knowledge of the building process, and the ability to problem-solve.
Construction project management is a complex field, requiring knowledge in many different areas like finance, mediation,
law, business, and more.

The Role of a Project Manager in Construction Management

Construction project managers shoulder the responsibility of keeping the project moving according to plan. The goal is to
manage the project so that it finishes on schedule and within budget, while still meeting building codes, plans, and specs.

Figure 1.2

Management Concepts
 Figure 1.3

Systematic management is an approach to management that focuses on the management process rather than on the
final outcome. The goals to this approach to management were:

To create specific processes and procedures to be used in job task completion

To ensure that organizational operations were economical
To ensure that staffing was adequate for the needs of the organization
To maintain suitable inventory so that the demands of consumers could be met
To establish organizational controls

This type of management approach was the first to directly link orderly operations, human resource management, and
communication to organizational success.

Figure 1.4

The scientific management approach developed by Taylor is based on the concept of planning of work to achieve
efficiency, standardization, specialization and simplification. Acknowledging that the approach to increased productivity was
through mutual trust between management and workers, Taylor suggested that, to increase this level of trust, the
advantages of productivity improvement should go to workers, physical stress and anxiety should be eliminated as much as
possible, capabilities of workers should be developed through training, and the traditional ‘boss’ concept should be
eliminated.

Taylor developed the following four principles of scientific management for improving productivity:

Science, not rule-of-thumb. Old rules-of-thumb should be supplanted by a scientific approach to each element of a
person’s work.
Scientific selection of the worker. Organizational members should be selected based on some analysis, and then
trained, taught and developed.
Management and labour cooperation rather than conflict. Management should collaborate with all organizational
members so that all work can be done in conformity with the scientific principles developed.
Scientific training of the worker. Workers should be trained by experts, using scientific methods.
 Figure 1.5

Humanistic management is an approach to management theory based on the idea of human needs and human values.
Employees are seen not merely as economic assets valued primarily for their productivity but as people with complex
needs and a desire for meaningful and varied daily tasks.

Humanistic management is a people-oriented management that seeks profits for human ends. It contrasts with other
types of management that are essentially oriented toward profits, with people seen as mere resources to serve this goal.

Figure 1.6

Management Levels of Construction

Organizational considerations lead to a number of hierarchical levels that can be identified in construction. This derives
from the project format. Decision making at levels above the project relate to company management considerations.
Decisions within the project relate to operational considerations (e.g., selection of production methods) as well as the
application of resources to the various construction production processes and work tasks selected to realize the
constructed facility. Specifically, four levels of hierarchy can be identified as follows:

1. Organizational. The organizational level is concerned with the legal and business structure of a firm, the various
functional areas of management, and the interaction between head office and field managers performing these
management functions.
2. Project. Project-level vocabulary is dominated by terms relating to the breakdown of the project for the purpose of time
and cost control (e.g., the project activity and the project cost account). Also, the concept of resources is defined and
related to the activity as either an added descriptive attribute of the activity or for resource scheduling purposes.
3. Operation (and Process). The construction operation and process level is concerned with the technology and details of
how construction is performed. It focuses on work at the field level. Usually a construction operation is so complex that
it encompasses several distinct processes, each having its own technology and work task sequences. However, for
simple situations involving a single process, the terms are synonymous.
4. Task. The task level is concerned with the identification and assignment of elemental portions of work to field units and
work crews.
 Figure 1.7

Structure of Organization

The focus of construction management is the planning and control of resources within the framework of a project.

The study of construction as a discipline can be broadly structured into two general themes:

1. Construction technology
2. Construction management

As the name implies, construction technology relates to the methods or techniques used to place the physical materials
and elements of construction at the job site. In contrast to construction technology, construction management addresses
how the resources available to the manager can be best applied. Typically, when speaking of resources for construction,
we think of the FIRST four M’s of construction: manpower, machines, materials, and money. Management involves the
timely and efficient application of the four M’s to construct a project. The types of methods for placing construction are
diverse. New methods are continuously being perfected and a construction manager must weigh the advantages and
disadvantages of a given method or technique. Hence, the 5th M is the method.
 Figure 1.8

How are you doing, so far? Before we proceed with the next topic, an assessment task is given to each of you to
deepen the understanding of the topic. Remember, this must be done individually and it is expected to each of you
to submit an output promptly. Please click here to answer AT 1.1 Notable Infrastructures in the Philippines.
(https://tip.instructure.com/courses/35605/assignments/1185186) Good luck!

Online References:

https://study.com/academy/lesson/systematic-management-theory-lesson-
quiz.html#:~:text=Systematic%20management%20is%20an%20approach,used%20in%20job%20task%20completio
n (https://study.com/academy/lesson/systematic-management-theory-lesson-
quiz.html#:~:text=Systematic%20management%20is%20an%20approach,used%20in%20job%20task%20completion)

http://www.nzdl.org/gsdlmod?e=d-00000-00---off-0aginfo--00-0----0-10-0---0---0direct-10---4-------0-1l--11-en-50---20-
about---00-0-1-00-0--4----0-0-11-10-0utfZz-8-10&cl=CL2.14&d=HASH0199c4bad8a0a1607e7efd19.4.3.2.2&gt=1
(http://www.nzdl.org/gsdlmod?e=d-00000-00---off-0aginfo--00-0----0-10-0---0---0direct-10---4-------0-1l--11-en-50---20-about---00-0-
1-00-0--4----0-0-11-10-0utfZz-8-10&cl=CL2.14&d=HASH0199c4bad8a0a1607e7efd19.4.3.2.2&gt=1)

https://bizfluent.com/13347106/challenges-of-humanistic-management (https://bizfluent.com/13347106/challenges-of-
humanistic-management)

https://link.springer.com/article/10.1007/s41463-016-0011-
5#:~:text=Humanistic%20management%20is%20a%20people,resources%20to%20serve%20this%20goal.
(https://link.springer.com/article/10.1007/s41463-016-0011-
5#:~:text=Humanistic%20management%20is%20a%20people,resources%20to%20serve%20this%20goal.)
1.2 Project Management Concept

Responsibilities of Parties

Each of the three principal parties in a project has a role to fulfill in the various phases of design development and
construction. A team approach between the owner, designer, and contractor must be created with a cooperative
relationship to complete the project in the most efficient manner. Too often an adverse relationship develops that does not
serve the best interest of anyone.

Quality is the responsibility of all participants in a project, including all levels of management and workers in each of the
principal parties. An attitude of achieving quality must be instilled in everyone and perpetuate throughout the work
environment. The attitude should not be "what can we do to pass quality control or final inspection? Instead, it should be
"what can we do to improve our work and what is the best way we can furnish a project that meets the needs and
satisfaction of the owner?"

Figure 1.9

Owner

Responsible for setting the operational criteria for the completed project
NEED TO identify their level of involvement in the project, e.g., the review process, required reports, and the levels
of approval.
responsible for setting parameters on total cost, payment of costs, major milestones, and the project completion
date

 
Designer

producing design alternatives, computations, drawings, and specifications that meet the needs of the owner
designers usually prepare an estimate of the probable construction cost for the design they have prepared

Contractor

responsible for the performance of all work in accordance with the contract documents that have been prepared by
the designer. This includes furnishing all labor, equipment, material, and know-how necessary to build the project
must prepare an accurate estimate of the project, develop a realistic construction schedule, and establish an
effective project control system for cost, schedule, and quality

Project Teams

Technically speaking, project management may be defined as the art and science of coordinating people, equipment,
materials, money. and schedules to complete a specified project on time and within approved cost.

The project manager is provided with resources such as labor, equipment, and materials and is expected to build a facility
that meets the specifications and is consistent with the drawings provided for the project. Much of the work of a project
manager is organizing and working with people to identify problems and determine solutions to problems. In addition to
being organized and a problem solver, a manager must also work well with people.It is people who have the ability to
create ideas, identify and solve problems, communicate, and get the work done. Because of this, people are the most
important resource of the project manager. Thus, the project manager must develop a good working relationship with
people in order to benefit from the best of their abilities.

Figure 1.10

It is the duty of a project manager to organize a project team of people and coordinate their efforts in a common direction to
bring a project to successful completion. Throughout the project management process there are four questions that must
be addressed: Who? Does what? When? and How much?

Project teams must be assembled to accomplish the work necessary to complete engineering and construction projects.
Team members are vital to the success of the project. The project manager must make sure that his or her team
understands and is focused on the desired out- come of the project. The project manager also acts as a facilitator in project
communications for conflict resolution and team performance. For a successful project, the project manager must build and
lead an effective project team.
 Figure 1.11

When managing multiple small projects, the project manager is usually required to share team members with other project
managers. Generally the project duration is short with minimal contact between the project manager and team members.
Only minimal staffs can be afforded on small projects, thus, few individuals assigned must take responsibility for multiple
functions. Although managing multiple small projects may not have the formality of man- aging a single large project, the
principles of working with people in the spirit of cooperation and teamwork still applies

Figure 1.12

Working with wide projects involved managing several teams. Although each of these teams have their own objectives, the
diverse expertise that each possesses must converge into an overlapping environment. Although each team performs a
different function, each team must develop an attitude of shared ownership in the project. Regardless of the size and
number of teams, there must be a single head project manager to make final decisions and keep focus on the project.

Key Concepts of Project Management 

Although each project is unique, there are key concepts that a project manager can use to coordinate and guide a project
to completion.

1. Ensure that one person, and only one person, is responsible for the project scope, budget, and schedule
2. Don't begin work without a signed contract, regardless of the pressure to start
3. Confirm that there is an approved scope, budget, and schedule for the project
4. Lock in the project scope at the beginning and ensure there is no scope growth without approval
 5. Make certain that scope is understood by all parties, including the owner
6. Determine who developed the budget and schedule, and when they were prepared
7. Verify that the budget and schedule are linked to the scope
8. Organize the project around the work to be performed, rather than trying to keep people busy
9. Ensure there is an explicit operational work plan to guide the entire project
10. Establish a work breakdown structure that divides the project into definable and measurable units of work
11. Establish a project organizational chart that shows authority and responsibilities for all team members
12. Build the project staff into an effective team that works together as a unit
13. Emphasize that quality is a must, because if it doesn't work it is worthless, regardless of cost or how fast it is
completed
14. Budget all tasks; any work worth doing should have compensation
15. Develop a project schedule that provides logical sequencing of the work required to complete the job
16. Establish a control system that will anticipate and report deviations on a timely basis so corrective actions can be
taken
17. Get problems out in the open with all persons involved so they can be resolved
18. Document all work, because what may seem irrelevant at one point in time may later be very significant
19. Prepare a formal agreement with appropriate parties whenever there is a charge in the project
20. Keep the client informed; they pay for everything and will use the project upon completion

What's up, guys? Bring out your creativity and accomplish this task relative to our current topic. Click
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.
1.3 Contracts and Specifications

What is Contract Management?

Figure 1.13

Contract Management could be defined as a multi-stage process that goes on through the entire duration of the contract
and ensures that the parties meet their contractual obligations in order to deliver the specific objectives provided in the
contract.

From a legal point of view, contract is A mutual agreement between two or more parties that something shall be done, an
agreement enforceable at law.

According to Fédération Internationale Des Ingénieurs – Conseils (from French, the International Federation of Consulting
Engineers) or FIDIC, A contract means the General Conditions, the Supplementary Conditions, the Specifications, the
Drawings, the Bill of Quantities, the Tender, the Letter of Acceptance and the Contract Agreement.

Figure 1.14

When any construction or real estate project is concerned, contracts are an important part of the process. A construction
contract provides important protections for the parties to the contract and for both contractors and homeowners or the
owners of the project or building if the project is a commercial construction project.
The most important aspects of a construction contract – and from where most of disputes arise are:

The definition of the scope, i.e. what exactly has to be done, and what happens if the changes are required or
desired along the way;
When the works have to be concluded and what happens if they are concluded on time;
When payments are due and what happens if they are not paid on time;
Technical specifications and quality and performance requirements and what happens if the agreed standards are
not met

Types of Construction Contract

Figure 1.15

Construction contract types are usually defined by the way, the disbursement is going to be made and details other specific
terms, like duration, quality, specifications, and several other items. These major contract types can have many variations
and can be customized to meet the specific needs of the product or the project.

Lump Sum or Fixed Price Contract Type

This type of contract involves a total fixed priced for all construction-related activities. Lump sum contracts can include
incentives or benefits for early termination, or can also have penalties, called liquidated damages, for a late termination.
Lump Sum contracts are preferred when a clear scope and a defined schedule has been reviewed and agreed upon.

This contract shall be used when the risk needs to be transferred to the builder and the owner wants to avoid change
orders for unspecified work. However, a contractor must also include some percentage cost associated with carrying that
risk. These costs will be hidden in the fixed price. On a lump sum contract, it is harder to get credit back for work not
completed, so consider that when analyzing your options. 

Cost Plus Contracts

This type of contract involves payment of the actual costs, purchases or other expenses generated directly from the
construction activity. Cost Plus contracts must contain specific information about a certain pre-negotiated amount (some
percentage of the material and labor cost) covering contractor's overhead and profit. Costs must be detailed and should be
classified as direct or indirect costs. There are multiple variations of Cost Plus contracts and the most common are:

Cost Plus Fixed Percentage

 Cost Plus Fixed Fee
Cost Plus with Guaranteed Maximum Price Contract
Cost Plus with Guaranteed Maximum Price and Bonus Contract

Cost plus contracts are used when the scope has not been clearly defined and it is the owner responsibility to establish
some limits on how much the contractor will be billing. When some of the aforementioned options are used, those
incentives will serve to protect the owner's interest and avoid being charged for unnecessary changes. Be aware that cost-
plus contracts are difficult or harder to track and more supervision will be needed, normally do not put a lot of risk in the
contractor.

Time and Material Contracts (When Scope is Not Clear)

Time and material contracts are usually preferred if the project scope is not clear, or has not been defined. The owner and
the contractor must establish an agreed hourly or daily rate, including additional expenses that could arise in the
construction process.

The costs must be classified as direct, indirect, markup, and overhead and should be included in the contract. Sometimes
the owner might want to establish a cap or specific project duration to the contractor that must be met, in order to have the
owner’s risk minimized. These contracts are useful for small scopes or when you can make a realistic guess on how long it
will take to complete the scope.

Unit Pricing Contracts

Unit pricing contracts is probably another type of contract commonly used by builders and in federal agencies. Unit prices
can also be set during the bidding process as the owner requests specific quantities and pricing for a pre-determined
amount of unitized items.

By providing unit prices, the owner can easily verify that he's being charged with un-inflated prices for goods or services
being acquired. Unit price can easily be adjusted up and/or down during scope changes, making it easier for the owner and
the builder to reach into agreements during change orders

Conditions and Specifications of Contracts

Contract conditions, usually included in the book of specifications (or in the accompanying architectural drawings) of a
contract, that set the minimum performance requirements for the contractor. These conditions also include the rights and
responsibilities of the parties involved

Contract conditions set out the principal legal relationship between the parties to a construction project, determining the
allocation of risk and consequently, price.

Specifications is the part of the Contract that consists of written requirements for materials, equipment, systems, standards,
and workmanship as applied to the Work, and certain administrative requirements and procedural matters applicable to the
Work.

This topic will be more appreciated with a little exercise. How about some puzzle to tease our brain cells?
Click here to start TLA 1.3 Contracts Puzzle
(https://tip.instructure.com/courses/35605/assignments/1185193) .
 

Online References:

https://www.lawbite.co.uk/resources/blog/contracts-construction-industry/
(https://www.lawbite.co.uk/resources/blog/contracts-construction-industry/)

https://www.thebalancesmb.com/common-types-of-construction-contracts-844483
(https://www.thebalancesmb.com/common-types-of-construction-contracts-844483)

http://www.businessdictionary.com/definition/general-conditions.htmL
(http://www.businessdictionary.com/definition/general-conditions.htmL)

 
2.1 Introduction

Construction project management requires a broad variety of skills, along with the ability to interface with a diverse range of
agencies and people in order to lead the project from concept to build. It’s important that construction project managers
follow the principles of project management during every phase of the project.

Conceiving and Initiating the Project

You can’t start a project unless you know you’ll be able to finish it. First comes the due diligence to determine if the project
is even feasible. How do you figure this out? You want to go through a feasibility study or what is often called a business
case, in which you look at the goals, cost and timeline to see if you have resources to reach a successful project end within
those constraints. You also want to define the reasoning behind the project and make sure it’s sound. If so, then you create
your project charter to help initiate the project. You’ll also identify potential issues and risks in this phase.

Define and Plan the Project

You have approval, now how are you going to achieve success? Outline the tasks within the timeline, noting project
milestones, and the resources needed to do those tasks within the budget allotted. Be transparent in your plan, so
everyone is on the same page and understands what needs to be done over the life cycle of the project. That includes
detailing the cost, scope, duration, quality and communications used in the project. This is also when you’ll be able to
conceptualize the best team for the project and begin the process of assembling them.

Launch the Project

Now you’re executing the project, taking the plan and implementing it, along with all the changes and issues that can arise
during such a process. Whatever deliverables you promised must come through in the timeframe you noted. Now you must
deal with stakeholders and customers and teams. The latter have tasks must be completed, which means workload
management and resource allocation. You’ll be setting up meetings and reporting frequently throughout this stage. This is
where your project management tool will really be tested, but more on that later.

Track Project Performance

You can’t know the progress of your project if you don’t have a way to monitor it. You’ll be doing this during the previous
stages of the project, but it’s important enough to demand its own separate stage in your management. You’ll want to have
a way to note the progress, which is why you need to set up key performance indicators for cost, time and quality. If you
can stay on top of these figures, it’s less likely you’ll manage a failing project. Therefore, stay flexible and communicative
throughout so you can adapt quickly to change when it occurs, and it always occurs.
Management is often summarized into four basic functions: planning, organizing, directing, and controlling. Although these
basic management functions have been developed and used by managers of businesses, they apply equally to the
management of a project.

Before we go on further with the discussion of Module 2, I will be assigning you to your respective
groups, in preparation to our succeeding activities. Click this link of TLA 2.1 Group Assignment
(https://tip.instructure.com/courses/35605/discussion_topics/707016) to know what group number you
belong. 

 
2.2 Project Initiation

Planning is the formulation of a course of action to guide a project to completion. It starts at the beginning of a project, with
the scope of work, and continues throughout the life of a project. The establishment of milestones and consideration of
possible constraints are major parts of planning. Successful project planning is best

accomplished by the participation of all parties involved in a project. There must be an explicit operational plan to guide the
entire project throughout its life.

Since the construction sector is so diverse, it is helpful to look at the major types of projects typical of construction to
understand the structure of the industry. Construction projects can be broadly classified as (a) building construction, (b)
infrastructure construction, and (c) industrial construction, depending on whether they are associated with housing, public
works, or manufacturing processes.

Figure 2.1

Contracting Arrangements

There are different procurement systems and several ways of classifying them. On the basis of how the interaction
between design and construction, how funding and operations are managed, mode of reimbursement of the contractor,
level of information available or required before a construction contract , and the magnitude of risk taken by participating
parties. To deliver a quality construction project on time and on budget, you must successfully coordinate the efforts of the
Owner, Architect and General Contractor in an accepted and appropriate contract form. There are three basic project
delivery methods: Design/Bid/Build, Construction Management, and Design/Build. Each method has its own advantages
and disadvantages, and some methods are better suited for certain kinds of projects than others.

Figure 2.2

Design, Bid, Build

This method usually starts with the Owner selecting and entering into a contract with an Architect or other design
professional. The Architect fully develops the design and creates “bid documents” that are then made available to general
contractors for competitive bids. The bid process can either be an open bid or by invitation. Once a suitable Contractor is
selected, the Owner and Contractor execute a separate contract to build. The Contractor, in turn, engages subcontractors
and suppliers to perform the work.

The Design/Bid/Build approach is best when the Owner wishes to be actively involved in the design process, requires a
fixed cost before commencement of construction, and has sufficient time to permit the design to be fully completed before
construction bids are obtained. This method is often used for very large, complex projects. Since the design is fully
developed, an “apples to apples” comparison of multiple bids can be made.

The primary disadvantage of the Design/Bid/Build process is the Architect’s limited ability to establish an accurate cost
estimate; consequently, the Owner may not know the cost of his project until the bids are received. If the bids are higher
than the budget, costly redesign is often required. Other disadvantages include:

Owner is responsible for the completeness and accuracy of the Architect drawings
Contractor has no input regarding more cost-efficient materials or construction methods
Adversarial relationships can occur between the Architect and the Contractor
Contractor is forced to use the least cost approach to be low bidder

Design/Build

In the Design/Build method, the Owner contracts with a single entity to provide both the design and construction of the
building. The intent of the Design/Build form of construction is to foster teamwork between the Architect and the Contractor
early in the project and facilitate early budgeting, programming, and financing. It also promotes review of the design as it
proceeds for constructibility and cost of construction. Well-suited for fast-track construction, design/build projects are often
more cost-effective and less susceptible to delays in the work than traditional projects.

Perhaps the greatest advantage for the Owner is that the Owner only has to look to one party for the design and the
construction. If a problem arises, the Design/Builder is responsible, whether it is a design or construction issue. Because
the Architect and the Contractor are on the same team, many Owners observe a reduction in disputes, and insurance
companies have noted a reduction in claims with Design/Build projects.

The two primary disadvantages to the Design/Build method are:

The Owner does not receive the benefit of the system of “checks and balances” that exist when it contracts
separately with an Architect and a Contractor
It is difficult for the Owner to verify that the best price has been achieved for the work

Figure 2.3

Construction Management

One variation of the Design/Bid/Build method is to secure the services of a Construction Manager. A Construction Manager
At-Risk may be used instead of bidding the project to General Contractors. An Agency Construction Manager acts as an
advisor to the client. It is important to understand the “risk shift” inherent in these two Construction Management methods.

The most common form of Construction Management is CM At-Risk, where an independent professional reduces the risk
to the Owner because a Construction Manager At-Risk (CMAR) holds the subcontract agreements. Often, the Construction
Manager is also the Contractor. Other advantages include:

Owner is provided advice on budget, schedule, and constructability during design phase
CMAR can provide value-engineering advice to save client time and money
CMAR is responsible for schedule and budget
CMAR typically provides a Guaranteed Maximum Price (GMP)
Owner knows the Contractor’s profit on the project and any change orders
Construction can begin without the design being fully completed

Disadvantages:

This method requires a high level of communication between the Owner and the CMAR
Requires cooperation of the Architect to work out details of design before or during construction
Construction costs may run over if design mistakes are not detected early
Involves negotiation of two separate contracts and requires careful contract language establishing responsibilities of
each party
The delivery method referred to as Construction Manager – Agency or CM (Agency) is a fee-based service in which the CM
(Agency) acts as the Owner’s representative during each stage of the project. The CM (Agency) is the Owner’s trusted
construction expert who advises the Owner and acts as a “go to” person for all aspects of the project including design,
constructibility, value-engineering, scheduling, negotiations with Architect and Contractors, and qualification of design
professionals, Contractors and subcontractors. It is important to note that the CM (Agency) is an advisor, but is not
accountable for schedule and budget and that the Owner enters into the trade contracts, not the CM (Agency). Depending
on how the contract is structured, the CM (Agency) may be compensated for some general condition items. This
agreement places the majority of the risk during construction on the shoulders of the Owner.

Figure 2.4

The mission of construction is constrained in terms of the available time and amount of available money. The challenge
faced by the construction manager is to apply the resources of workers, machines, and materials within the limited funding
(money) and time available. This is the essence of construction.

The job of a construction manager is to efficiently and economically apply the required resources to realize a constructed
facility of acceptable quality within the time frame and budgeted cost specified. Among the many watch words within the
construction industry is the expression ‘‘on time and within budget.’’ More recently, the concept of quality as a requirement
has become an increasingly important aspect of the construction process. So this old adage can he expanded to say ‘‘a
quality facility on time and within budget.’’

Since the construction sector is so diverse, it is helpful to look at the major types of projects typical of construction to
understand the structure of the industry. Construction projects can be broadly classified as (a) building construction, (b)
engineered construction, and (c) industrial construction, depending on whether they are associated with housing, public
works, or manufacturing processes.

Contract Development

People often associate engineering with the invention and construction of infrastructure such as industrial plants, roads and
bridges, but there is more than meets the eye when it comes to this profession. Of the many fields of study, Detailed
Engineering Design is perhaps one that needs more exploration.

Detailed engineering is the phase in project implementation that applies all technical disciplines needed (i.e. mechanical,
civil, electrical, piping, automation, telecommunications, instrumentation, etc.) to establish the set of deliverables.

Legally, “No bidding and award of contract for Infrastructure Projects shall be made unless the detailed engineering
investigations, survey and designs, for the project have been sufficiently carried out and duly approved in accordance with
the design standards and specifications prescribed by the Head of Procuring Entity concerned…”

Detailed engineering is a very important process in any project that requires the application of knowledge into action. It is
significant and invaluable in any project. Properly developing every part of the design ensures that the end-user can enjoy
the safety and satisfaction that a well-designed engineering project can produce.
 

Successful projects are usually the result of careful planning and the talent and collaboration of a project’s
team members. Projects can’t move forward without each of its key team members. Before we fully divulge
ourselves with more concepts included in this Module, here is a group activity which you can use as an
opportunity to connect, communicate and make an output as a team. Click the link
(https://tip.instructure.com/courses/35605/assignments/1185188) to start AT 2.1 Company Profile.
(https://tip.instructure.com/courses/35605/assignments/1185188)

Online References:

 https://presentgroup.com.au/what-is-detailed-engineering-design/ (https://presentgroup.com.au/what-is-detailed-
engineering-design/)

http://vancongc.com/news/construction-delivery-methods-explained/ (http://vancongc.com/news/construction-
delivery-methods-explained/)
2.3 Estimating and Value Engineering

During development of a project the client normally looks for construction cost estimates. It is advisable to provide a
probable cost of construction at completion of the schematic design, design development, and construction document
phases. A design contingency is usually carried in cost estimates. It can be reduced as the documents are further
developed. At completion of the construction documents, the architect prepares, or has a consultant prepare, a final and
most accurate estimate of construction cost, which can be used for comparison with the bids submitted to perform the
work.

Value engineering may be performed by consultants and construction managers during the development of the
construction documents. Value engineering should address operating and maintenance costs as well as first costs, to
provide true life-cycle cost estimates for comparative analysis.

Value engineering is a systematic method to improve the “value” of a product or service that the project produces. It is an
integral component of project quality.

What is Estimating?

Estimation (or estimating) is the process of finding an estimate, or approximation, which is a value that is usable for some
purpose even if input data may be incomplete, uncertain, or unstable.

In construction, it is an approximation of cost of a project to the contractor.

A process of calculating costs of a construction project based on a design proposal and using comparisons with
similar projects to establish budgets prior to final pricing.

Purposes Of Estimates

Estimates are used for a number of different purposes in construction:

Determining the feasibility of a project

Calculating an approximate price of a project
Providing value analysis
Calculating & establishing bid prices
Determining project budgets in cost control

Types Of Estimates

Detailed Estimates
Square-Foot Estimates
Parametric Estimates
 Project Comparison Estimates

Detailed Estimates

Determination of the quantities and costs of everything that is required to complete the project.
This includes materials, labor, equipment, insurance, bonds and overhead, as well as an estimate of the profit.
To perform this type of estimate, the contractor must have a complete set of contract documents.

Square Foot/Approximate Estimates

Prepared by multiplying square footage of a building by a cost per square foot and then adjusting the price to
compensate for differences in the building heights, length of the building perimeter, and other building components.

Parametric Estimates

Parametric estimates use equations that express the statistical relationship between building parameters and the
cost of the building.
The building parameters used in the equation may include the gross square footage, number of floors, length of
perimeter, percentage of building that is common space and so forth.

Project Comparison Estimates

Prepared by comparing the cost of a proposed project to a completed project.

When preparing an estimate using this method, the estimator starts with the costs of a comparable project and then
makes adjustments for differences in the project.

Role Of An Estimator

To be an estimator, an individual needs to go a step further. He or she must:

Be able, from looking at the drawing, to visualize the project through its various phases of construction.
Have enough construction experience to possess a good knowledge of job conditions, including methods of
handling materials on the job, the most economical methods of construction and labor productivity.
Have sufficient knowledge of labor operations and productivity to convert them into costs of a project.
Be able to keep a database of information on costs of all kinds.
Be computer literate and know how to manipulate and build various databases.
Be able to meet bid deadlines and still remain calm.
Have good writing and presentation skills.

Simplified Estimating Process

 Figure 2.5

Measuring Quantities and Items of Works in Buildings

The Quantity Take-Off

Refers to the scaling or transferring of critical dimensions of construction components from drawings to paper or
software that are quantified as units of measurement.
This also includes a description of works that are influenced by the appropriate measurement guide.

Organization Of Quantity Take-Off

The order of the take-off will generally follow the sequence of work activities of the project and, conveniently for the
estimator, the contract drawings are usually presented in this sequence.
 

Methods of Measurement

Principles of Measurement – International (POMI)

Philippine Standard Method of Measurement (PSMM)
Standard Method of Measurement of Building Works: 7th edition (SMM7)

Measuring Items of Works in Building Projects

Excavating and Filing

Site clearance/preparation

- It is the removal of natural obstruction across the site such as grass, bushes, shrubs and trees.

Rules of Measurement: Site preparation is measured in terms of area, m2.

Excavations

- It is the removal of earth from its natural position.

Rules of Measurement: All excavation is measured net with no allowance for increasing in bulk after excavation or for
the extra space required for working space or to accommodate earthwork support.

 
 Disposal

- It is defined as the action or process of throwing away or getting rid of something.

Rules of Measurement: Disposal is based on all excavated material off site and measured in terms of volume, m3

Fillings

- It is defined as a quantity of material that fills or is used to fill something.

Rules of Measurement: Filling is obtained from excavated material which includes topsoil and any other material
arising from the excavations that have been specified to remain on site and measured in terms of volume, m3.

In Situ Concrete Works

In situ concrete

- It is concrete deposited in the place where it is required to harden as part of the structure.

Rules of Measurement: Concrete volume is measured net. Deductions are not made for the reinforcement, steel
sections and voids smaller than 0.05 m3 (except voids in troughed and coffered slabs)

Formwork

- It is a temporary construction to contain wet concrete in the required shape while it is cast and setting.

- This can be made of steel, wood, aluminum and/or prefabricated forms.

Rules of Measurement: It is measured to the faces of all cast in place concrete which requires to be supported while
the concrete sets. No deductions shall be made for voids smaller than 5.00 m2.

Reinforcement

A. Types of Steel Bar

 Mild steel bars are plain in surface and are round sections of diameter from 6 to 50mm.
High yield steel bars are rods of steels provided with lugs, ribs or deformation on the surface of the bar,
these bars minimize slippage in concrete and increases the bond between the two materials.

Rules of Measurement:

1. Measure separately for different types of steel bar.

2. Measure separately for different size/diameter.
3. Forming hooks, tying wire, spacers, cutting/splicing and bending are deemed included.
4. Chairs and connectors are deemed included unless not at discretion of contractor.

B. Concrete Cover Provision

Concrete cover is the distance from the outer face of an element to the outer girth of reinforcement and
is provided to ensure that there is adequate protection to steel reinforcements that are not exposed from
the concrete and thus prevent rusting.

Fig. 2.9

C. Anchorage & Lap Splice Length

Lap length is the length of bar overlap when bars are tied together for extending the reinforcement
length.
Anchorage length is the additional length of steel required to be inserted from one structural member
into another structural member at the junction.

Fig. 2.10
 D. Hooks

These are very significant especially when measuring links or reinforcement that is bent up or bent
around another bar. These are usually given as multiples of bar diameter or given as specific lengths in
tabulated form.

Rules of Measurement:

1. Make sure to read the specifications or general notes and checked all notes on plans you will be using
and all other relevant documents.
2. Study carefully the drawings and details given. Make sure that you understand clearly the details
given.
3. Check if there is enough information given to be able to measure lengths. Be sure to check
specifications and general notes.
4. Tick off or loop through bar marks measured to check if all reinforcement for the particular element
has already been taken or measured.
5. If there are any uncertainties in the details, make a query on this.
6. Check for any assumptions made to be put in measurement notes.
7. Unit weight of rebar per meter is calculated by the surface area of steel multiply by the density of
steel. Thus, kg/m = (π D2/4) x 7850 kg/m3 or simply kg/m = D x D x 6165 kg/m3

E. Measurement of Beam Reinforcement 

Typically, reinforcement to ordinary beams will comprise of top bar reinforcement, bottom bar
reinforcement, links or stirrups and side bars.
End conditions for beams are usually given with anchorage length, either given lengths in tabulated form
or given as multiples of bar diameter.
Pay particular attention where anchorage length is measured from, which is usually from the inner face of
support or from the centerline of support.

F. Computation for Lengths & Number of Stirrups

Computation for length of outer stirrups / links:

            S = 2 x (w + d) – 8 x cc + hook

            where:

            s = stirrup / link

            w = width of beam

            d = depth of beam

            cc = concrete cover

            hook = specified length or as multiples of stirrup diameter

Computation for the number of outer stirrups / links:

            N = (L – 2 x cover from face of support) / spacing + 1

            where:

            N = number of stirrups / links

            L = clear length

  
G. Measurement of Slab Reinforcement 

There are two general types of slabs with regards to its load carrying capacity:

One-way slab – slab supported by beam / wall support (parallel to the long span) and whose
reinforcement runs in one direction only, i.e. from support to support.

                                    S/L < 0.50 : S = SHORT SPAN, L = LONG SPAN

Two-way slab – slabs which are supported on four sides and are reinforced in two directions. Reinforcement
is placed in such a way to transmit loads to the four supporting beams.

                                     S/L > 0.50 : S = SHORT SPAN, L = LONG SPAN

Rules of Measurement:

1. Always check if distribution bars have been provided, especially for top bars. Unless top bars are
continuous from support to support, there will always be distribution bars to main top bars.
2. Pay careful attention that spacing for bars are not interchanged between the two directions.
3. Pay attention for slabs that have drops in them. Extra details may be provided or adjustments are to
be made.
  

H. Measurement of Column Reinforcement 

Basically, column reinforcement is made up of vertical bars and links.

Computation for vertical bars:

When measuring vertical bars, always check the end conditions of the bars and check for location of laps /
anchorage lengths. Floor to floor height must be verified from the framing plans, especially at termination
points.

Computation for links in column:

Length of links – can be computed in similar way as the links / stirrups in beam

Number of links - There are two (2) conditions to consider when computing for number of links:

1. when links are to be provided at clear height only

2. when links are provided at entire floor height including at intersections with other members

Fig. 2.13. Typical Column Detail

I. Measurement of Wall Reinforcement

Reinforcement to walls comprised primarily of horizontal bars and vertical bars. For thicker walls, links or
binders may be provided.
Measurement of reinforcement will still be generally the same as the column.
Adjustment to wall reinforcement due to openings in walls:

- Always check from elevation or from framing plans for locations of wall openings like openings for
doors, windows, etc. and make sure that all necessary adjustments are made.
 - When measuring walls with openings, treat walls as if there is no openings in it, and later make the
adjustments.

- Adjustment to opening in walls can be dealt with similarly to adjustment for slabs with voids or
openings.

J. Measurement of Stair Reinforcement

Reinforcement to stair comprised primarily of the main bars, secondary bars, nosing and chairs (as
required).
Measurement of reinforcement to stair stringer and stair landing is similar to the one way slab.
Computation for the length of nosing bar and chair bar:

Nb = w – 2 x cc

Cb = t + r – 2 x cc + 2 x AL

        where

        Nb = nosing bar

        w = width of stair

        cc = concrete cover

        AL = anchorage length

        Cb = chair bar

        t = stair tread

        r = stair riser

Computation for the number of nosing bar and chair bar:

Nosing bar = as per number steps

#Cb = [round((w – 2 x cc) / spacing) + 1] x number of steps

 
 Finishing And Miscellaneous Works
Finishes

- Work shall be measured flat without addition for laps or seams. Internal and external work shall each be so
described.

Rules of Measurement:

1. Finishing shall be measured by area, classified as follows:

Floors, which shall include landings
Walls, which shall include returns, reveals of openings or recesses and attached and unattached columns
Ceilings, which shall include attached and unattached beams and soffits of staircases.
Staircases, which shall include treads, risers and edges of landings but exclude soffits.
2. Skirtings, coverings to kerbs, or the like shall be measured by length
3. Suspended ceilings shall be measured by area, classified as follows:

- Ceilings stating the drop

- Sides and soffits of beams or upstands

Doors and Frames

- Doors and door frames shall be enumerated stating their size and type of material.

Windows

- To measure this work, individual windows shall be enumerated and fully described together with the rough
opening sizes for the units.

Miscellaneous Metals

- The miscellaneous metals trade has a wide scope that in very general terms can be defined as metal items
that are neither part of the structural steel work nor part of any other trade section. Some of the common items
contained in this section and their measuring methods are as follows:
1. Measure miscellaneous angles and channels in linear feet or meters, stating the size and location of the
items.
2. Measure in square feet or square meters and fully describe grates, grilles, grillwork and louvers that are not
part of the mechanical system. Measure frames for this works in linear feet or meters, stating size and type of
section.
3. Measure in linear feet or meters and fully describe metal handrails, railings and balusters.
4. Enumerate and fully describe ladder rungs.
5. Enumerate and fully describe metal corner guards.

Specialties

The specialties trade is another wide-ranging trade section of the specifications that includes items of work as
the following:

- Bulletin boards

- Signs

- Folding partitions

- Storage shelving

- Mail boxes

- Toilet partition

- Bathroom accessories

Enumerate and fully describe the following items:

- Shower curtain rods

- Soap dispenser units

- Grab bars and towel bars

- Mirrors

- Napkin dispensers

- Toilet roll holders

- Towel dispensers

- Waste receptacles
 - Medicine cabinets

- Coat hooks

Finish Hardware

Finish hardware includes the following items that shall be enumerated and fully described:

- Hinges

- Flush bolts

- Bumper plates

- Deadlocks

- Doorstops

- Lock sets

- Latch sets

- Kick plates

- Panic hardware

- Push plates

- Pull bars

- Door closers

Masonry Works
Includes construction with clay bricks, concrete ricks and blocks, clay tiles, and natural and artificial stone.
Hollow Block Sizes

400 X 200 X 200 mm (8” thick)

400 x 150 x 200 mm (6” thick)

400 x 100 x 200 mm (4” thick)

Rules of Measurement:

1. Masonry work is measured “net in place” and the necessary allowances for waste and breakage are
considered later in the estimating process when this work is priced.
2. The units of measurement for masonry are generally the number of masonry pieces such as concrete blocks.
3. Calculating the number of masonry units involves a two-stage process:
The area of masonry is measured
A standard factor is applied to determine the number of masonry units required for area measured.
4. Measurement for mortar in cubic meters is deemed included.

Structural Metal Work

Unless otherwise stated, structural metalwork shall be measured by weight, classified as follows:

Grillages (wiremesh)
Beams
Portal frames (steel columns & rafters)
Roof trusses
Support steelwork
  

Thermal and Moisture Protection

Rules of Measurement:

1. Work shall be measured flat without addition for laps or seams.

2. Coverings & linings:
Unless otherwise stated, roofing, tanking, waterproof coverings, linings or the like shall be measured by area,
classified as follows:
Flat coverings
Sloping coverings
Vertical coverings
3. Insulation:
Insulation shall be measured by area; alternatively, it may be described with items of composite roofing.

Pricing Direct and Indirect Items

Direct Items

Materials
Labor And Equipment
Labor Hours And Productivity
Subcontractor’s Work

Material Rates

The materials used in a construction project fall into two broad categories:

Materials that form part of the finished structure such as concrete

Materials that are consumed in the construction operations such as fuel oil

Most unit prices used to price materials are based on quotations from the suppliers of these materials, seldom are the unit
prices used in the estimate obtained directly from the suppliers. Even where suppliers do quote prices for the same unit of
measurement as the estimate, like concrete, the suppliers’ prices need to be adjusted to account for wastage of materials.
 When pricing any materials, there are a number of questions that should be answered before the prices are used in an
estimate:

Do the materials offered by the supplier comply with the specifications?

Do the prices quoted include delivery of the materials to the site?
Can the contractor rely on the supplier’s prices to remain firm until the owner awards the contract?
Does the supplier’s price include state or city sales taxes?

Labor And Equipment Rate

There are two basic methods of pricing labor and equipment:

First method: the estimator uses productivity rates to convert the take-off quantities into labor-hours and equipment
hours, and then applies wage rates and equipment rates to the total hours to obtain the estimated labor and equipment
prices for the project.
Second method: the estimator makes use of unit prices that are applied to listed take-off quantities to calculate the
total labor or equipment price for the work involved.

 Whichever method of pricing is used, it is clear that there is a high risk factor in pricing labor and equipment because each
involves two components that are subject to variations that can be difficult to predict. The two factors are as follows:

The hourly wage rate of labor or hourly cost of equipment

The productivity of the labor or equipment

Labor Hours And Productivity

Estimating labor requires determining the number of labor hours to do a specific task and then applying a wage rate. A
labor hour is defined as one worker working for one hour. Determining the labor hours requires knowing the quantity of
work to be placed and the productivity rate for the specific crew that will perform the work. The productivity rate is often
expressed as a number of labor hours per unit of work, although it may also be expressed as the quantity of work
performed by a crew during a standard eight-hour day.

The productivity rates can come from a number of sources, but the most reliable source is historical data. General formula
is expressed as:

Productivity Rate = Labor Hours ¸ Quantity

            Labor Hours = Quantity x Productivity Rate  

The productivity rate that is used, if derived from historical data, is for the average or standard conditions for the projects
used in calculating the historical production rate. On many occasions, the project that is being bid deviates from these
standard conditions. Therefore, the number of labor hours needs to be modified to take into consideration how the project
that is being bid deviates from the standard condition. This is done by using a productivity factor.

             Adjusted Labor Hours = Labor Hours x Productivity Factor                                           

When the conditions slow the progress of the work, a productivity factor greater than one is used, thus increasing the
number of labor hours to complete a unit of work.
When the conditions increase the speed at which the work progresses, a productivity factor less than one is used, thus
decreasing the number of labor hours to complete a unit of work.

Following are some variables that need to be considered when determining the productivity factor:

Availability and productivity of workers

When there is plenty of work available and workers are scarce, less trained craft persons are accepted. These less-
trained persons will require more time or labor hours to complete the required task, and a productivity factor greater
than one is used.
Conversely, when construction projects are scarce, workers may become motivated, and the contractor can be
selective and hire only the most qualified workers. This will result in producing more work per labor hour, and a
 productivity factor less than one is used.
Climatic conditions

   -  cold, hot, winds, rain, snow and combinations of these all affect the amount of work that can be produced in an hour.
Typically, any weather extremes will slow down the work pace and may require additional precautions that add labor hours
to the project. 

Working conditions

   -  the job site working conditions can have a great effect on the rate of work. A project being built in the city with little
working space, limited storage space and difficult delivery situations typically has less work accomplished per labor hour
just due to the difficulty of managing the resources.               

To price labor, first the estimator must estimate the labor hours required to do the work. These labor hours can then be
multiplied by the hourly wage rate to develop the labor costs.

                        Labor cost = Adjusted Labor Hours x Hourly Wage Rate
 

Pricing Indirect Items

Indirect Items

Overhead And Supervision

SSS / ECC / MC / VL / SL
Bond Premium
Contingencies And Miscellaneous
Contractor’s Tax

Overhead And Supervision

– to be computed on the estimated manpower requirement as prescribed in the contract conditions

Bond Premium 

(i.e., the given Bid Amount is PHP 5,000,000.00)

Bid bond (based on surety bond)

Bid bond = 10% x PHP 5,000,000.00 = PHP 500,000.00
Contractor’s All Risk
Bid amount x 3% = amount of premium
Php 5,000,000.00 x 0.003 = PHP 15,000.00
Performance bond (20% of Bid Amount)
20% x PHP 5,000,000.00 = PHP 1,000,000.00