CSTCM701 Construction Project Management

CIVIL ENGINEERING DEPARTMENT
CONSTRUCTION TECHNOLOGY PROGRAM

ACADEMIC YEAR: 2023-2024
YEAR 3 (LEVEL 7)
SEMESTER : I
MODULE: CSTCM701 CONSTRUCTION PROJECT MANAGEMENT
LEARNING UNI- 1: CARRY OUT PROJECT PLANNING
Construction Project Management (CPM):

It is the overall planning, coordination, and control of a
project from beginning to completion. CPM is aimed at
meeting a client's requirement in order to produce a
functionally and financially viable project.
❖ A project whether in construction or not, has the
following characteristics:
• A defined goal or objective.
• Specific tasks to be performed.
• A defined beginning and end.
• Resources being consumed.
THE PROJECT SCOPE AND GOALS
Project Goal Setting

You can’t hit a target if you don’t know what it looks like.
Similarly, you can’t possibly reach your project’s goal if you
don’t know what it is. When you understand how your project
fits in with the broader company direction, it’s time to really
pin down your goal.
Writing a goal statement
A goal statement outlines why you’re doing this project and what
you hope to accomplish at the end.
CON’T…
For now focus on the why and the desired result. These goals
indicate very different projects, each with its own set of
deliverables, tasks, resources, schedule, and costs. Writing a
goal statement helps you focus on such a project from the
outset.
Project scope
When you understand your goal, you can begin to define the
specific parameters of the project. This is often referred to as
a project’s scope. It is necessary to know that a scope is not a
goal.
Scope statements define both what a project will involve and
what it will not involve.
CON,T…
You typically get into specifics about the project budget, timeframe,
and deliverables in a scope statement. You shouldn’t include every
single detail, but you should have enough information that a project
team can understand the most important parameters of the
project.
If you take the next logical step in pinning down your project at the
outset, at this point you would create what’s called a project
charter. This would include specifying a project name, getting
authorization in writing to begin the project as of a certain date and
to draw on a specified budget, creating a list of responsibilities, and
having those with an interest in the project(called stakeholders)sign
off giving you authority to run the project. You can use your goal
and scope statements to help you obtain the various pieces of your
project charter.
Breaking Your Project into Phases
How does all this goal and scope analysis relate

to Project? When you start a new project
schedule, one of the first things you will do is
to enter individual tasks.
Before you create your first task, you should
probably begin to think beyond the scope of
your project to more detailed project
parameters. These parameters help you
determine what tasks to include in your
project.
CON’T…
For example, you might consider:
• Deliverables: These are tangible products, services, or results
that you’ll produce during your project.
• Key Dates: In addition to the project end date, do you have to
meet other key dates along the way.
• Completion Criteria: How will you know when you’re done
• Expectations: Knowing what you expect from your team,
management, and yourself can help you identify some tasks.
• Potential Risks: Identifying potential problem areas can help
you build in some checks and balances to help avoid or
minimize them.
THE PROJECT LIFE-CYCLE
The project life cycle may be viewed as a

process through which a project is
implemented from beginning to end. This
process is often very complex; however,
it can be decomposed into several stages
as indicated by the general outline in
Figure1.1.
CON’T…
Project phases
1. Preconstruction phase
The preconstruction phase of a project can be broken into
conceptual planning, schematic design, design
development, and contract documents.
2. Procurement phase(Bidding and award phase):
The project formally transits from design into
construction.
This stage begins with a public advertisement for all
interested bidders or an invitation for specific
bidders.
CON’T….
3.Construction phase
• The actual physical construction of the project stage.
• This stage takes the project from procurement through the
final completion.
• It is the time where the bulk of the owner’s funds will be
spent.
4. Closeout phase
• Transition from design and construction to the actual use of the
constructed facility.
• In this stage, the management team must provide documentation,
shop drawings, as-built drawings, and operation manuals to the
owner organization.
MAJOR TYPES OF CONSTRUCTION PROJECTS
constructed facilities may be classified into four

major categories, each with its own
characteristics:
1. Residential Housing Construction
Residential housing construction includes houses and high-rise
apartments
2. Institutional and Commercial Building Construction
3. Specialized Industrial Construction
Specialized industrial construction usually involves very large scale
projects with a high degree of technological complexity, such as oil
refineries, steel mills, chemical processing plants and coal-fired or
nuclear power plants.
CON’T…
4. Infrastructure and Heavy Construction
Infrastructure and heavy construction includes projects

such as highways, tunnels, bridges, pipelines,
drainage systems and sewage treatment plants. Most
of these projects are publicly owned and therefore
financed either through bonds or taxes.
CONSTRUCTION PROJECTS PARTICIPANTS
1. The Owner (The Client)
2. The Design Professionals (Architect, Engineer,
Engineering-Construction Firm)
3. The construction Professionals
4. The Project Manager
5. Construction site Manager
Cont’…
The Project Manager
The project manager is the individual charged with the
overall coordination of the entire construction
program for the owner. These include planning,
design, procurement, and construction.
Among his/ her duties:
✓ Clear definitions of the goals of the project.
✓ Investigate alternative solutions for the problems.
✓ Develop a detailed plan to make the selected
program reality.
✓ Implement the plan and control the project.
Cont’….
The Construction (Site) Manager has the following
responsibilities within a project:
-Construction execution planning,
– Development of the construction portion of the
project schedules
– Development of field staffing plans, temporary
facilities plans, and indirect cost budgets
– Directing technical execution (e.g., construction
methods, subcontract administration) in accordance
with the established construction quality standards,
– Reporting to the construction Manager regarding
overall performance of the site activities, costs, and
schedule.
THEPROJECT SCOPE AND GOALS
Writing a project goal statement
A goal statement outlines why you’re doing this project and what
you hope to accomplish at the end. You don’t get down to
specific deliverables and parameters in a goal statement.
GUIDELINES OF SETTING A PROJECT GOAL
✓ Align with Organizational Objectives
✓ Specific and Clear
✓ Consider Stakeholder Expectations
✓ Break Down Complex Goals
✓ Communicate Clearly
✓ Use the SMART Criteria
✓ Consider Risks and Constraints
✓ Periodic Review and Adjustment
✓ Involve the Project Team
PROJECT SCOPE
• It defines the boundaries, objectives, deliverables, and
constraints of a project. It outlines what the project will
achieve and what it will not.
• A well-defined project scope is crucial for managing
expectations, avoiding scope creep, and ensuring that
the project stays on track.
Writing a scope statement
• Scope statements define both what a project will
involve and what it will not involve.
• You typically get into specifics about the project
budget, timeframe, and deliverables in a scope
statement. You shouldn’t include every single detail,
but you should have enough information that a project
team can understand the most important parameters
of the project.
Cont’….
Key elements typically included in a project scope:
➢ Project Objectives:
➢ Deliverables (Identify the tangible outputs or products like documents,
software, hardware, reports, or any other items that result from the
project's activities.
➢ Constraints (Highlight any limitations or restrictions that may impact the
project, such as budget constraints, time constraints)
➢ Assumptions (Factors that are considered to be true but may influence
the project if they change)
➢ Acceptance Criteria (This helps set expectations)
➢ Exclusions (Specify what is not included in the project)
➢ Dependencies (Identify any dependencies between the project and
external factors, such as other projects, resources, or events)
➢ Scope Change Management (Establish a process for handling changes to
the project scope)
➢ Timeline (Provide a high-level timeline or schedule for the project)
PARAMETERS TO CONSIDER IN DETERMINING PROJECT TASKS
• Deliverables
• Key Dates
• Completion Criteria
• Expectations
• Potential Risks
PROJECT PLANNING
It defines the project activities and end products that will be

performed and describes how the activities will be
accomplished.
The project planning activities and goals include defining:
• The specific work to be performed and goals that define and
bind the project.
• Estimates to be documented for planning, tracking, and
controlling the project
• Commitments that are planned, documented, and agreed to
by affected groups, Project alternatives, assumptions, and
constraints.
Cont’….
Generally, planning answers three main
questions:
• What is to be done?
• How to do it?
• Who does it?
Cont’…
In construction, for example, plans may exist at several
levels: corporate strategic plans, pre-tender plans,
pre-contract plans, short-term construction plans,
and long-term construction plans.
• These plans are different from each other; however,
all these plans involve four main steps:
1) Performing break down of work items involved in
the project into activities.
2) Identifying the proper sequence by which the
activities should be executed.
3) Activities representation.
4) Estimating the resources, time, and cost of
individual activities.
Figure: Planning inputs and outputs
PROJECT PLANNING STEPS
i. Define the scope of work, method statement, and

sequence of work.
ii. Generate the work breakdown structure (WBS) to
produce a complete list of activities.
iii. Develop the organization breakdown structure (OBS)
and link it with work breakdown structure to identify
responsibilities.
iv. Determine the relationship between activities.
v. Estimate activities time duration, cost expenditure, and
resource requirement.
vi. Develop the project network.
Work Breakdown Structure
The larger the project, the greater the number

of activities and higher the level of detail
managers has to handle.
The WBS is a convenient method for
decomposing the project complexity in a
rational manner into work packages and
elementary activities.
Cont’…
Three common types of WBS:
• The Project WBS is an operational tool usually prepared by
contractors to monitor and control the work.
• A standard WBS is a breakdown structure of activities
carried out in the past for a similar project: the past project
WBS that can be used as a template for the new one.
• A contract WBS is agreed between owner and contractor.
This is a decomposition of the scope of work in to the main
elements that will be used for progress measurement,
control and payment of the contract price. It may include
less detail than a Project WBS.
Cont’….
Example of standard WBS for a warehouse construction project

Organizational Breakdown Structure(OBS)
The Organization Breakdown Structure is a practical method to

decompose the pool of human resources needed to execute
all of the tasks into different competence areas and then into
project roles, independently of the number of individuals that
will be assigned the specified role.
The OBS is prepared with the idea that each task in the WBS.
In other words, roles are allocated to detailed tasks with a
specified number of resources and related estimated
workload required to perform the task
Cont’…
Example of OBS
Coding systems
One objective in many construction planning efforts is

to define the plan within the constraints of a
universal coding system for identifying activities.
The use of a common nomenclature or identification
system is basically motivated by the desire for better
integration of organizational efforts and improved
information flow. In particular, coding systems are
adopted to provide a numbering system to replace
verbal descriptions of items.
Cont’…
Common coding systems also aid in the retrieval
of historical records of cost, productivity and
duration on particular activities In North
America, the most widely used standard
coding system for constructed facilities is the
MASTER FORMAT system developed by the
Construction Specifications Institute (CSI) of
the United States and Construction
Specifications of Canada.
Cont’…
MASTER FORMAT involves a hierarchical coding
system with multiple levels plus keyword text
descriptions of each item. In the numerical
coding system, the first two digits represent
one of the sixteen divisions for work; a
seventeenth division is used to code
conditions of the contract for a constructor.
In the latest version of the MASTERFORMAT, a
third digit is added to indicate a subdivision
within each division. Each division is further
specified by a three digit extension indicating
another level of subdivisions. In many cases,
these subdivisions are further divided with an
additional three digits to identify more
specific work items or materials.
Cont’…
For example, the code16-950-960, "Electrical
Equipment Testing" are defined as within
Division 16 (Electrical) and Sub-Division 950
(Testing). The key words" Electrical Equipment
Testing" is a standard description of the
activity.
Cont’….
EX: Divisions in MASTERFORMAT for Site Work

Project Activities
An activity is defined as any function or decision in the

project that: consumes time, resources, and cost.
Activities are classified to three types:
1. Production activities: activities that involve the use
of resources such as labor, equipment, material, or
subcontractor. This type of activities can be easily
identified by reading the project’s drawings and
specifications. Examples are: excavation, formwork,
reinforcement, concreting, etc. each production
activity can have a certain quantity of work, resource
needs, costs, and duration.
CONT’….
2. Procurement activities: Activities that specify the time for

procuring materials or equipment that are needed for a
production activity. Examples are: brick procurement, boiler
manufacturing and delivery, etc.
3. Management activities: Activities that are related to
management decisions such as approvals, vacations, etc. An
activity can be as small as steel fixing of first floor columns or
as large as construct first floor columns.
Activities Relationships
In order to identify the relationships among

activities, the planning team needs to answer
the following questions for each activity in the
project:
- Which activities must be finished before the
current one can start?
-What activity (ies) may be constructed
concurrently with the current one?
-What activity (ies) must follow the current one?
CONT’….
A circle of activity precedence will result in an
impossible plan.
Suppose that a site preparation and concrete slab foundation
construction project consists of nine different activities:
A. Site clearing (of brush and minor debris),
B. Removal of trees,
C. General excavation,
D. Grading general area,
E. Excavation for utility trenches,
F. Placing formwork and reinforcement for concrete,
G. Installing sewer lines,
H. Installing other utilities,
I. Pouring concrete.
Activities A (site clearing) and B (tree removal) does not have
preceding activities since they depend on none of the other
activities. We assume that activities C (general excavation)
and D (general grading) a re-preceded by activity A (site
clearing).
CONT’…
Activity Description Predecessors
A Site clearing -
B Removal of trees -
C General excavation A
D Grading general area A
E Excavation for utility trenches B,C
F Placing form work and reinforcement B,C
for concrete
G Installing sewer lines D,E
H Installing other utilities D,E
I Pouring concrete F,G
Ex: Precedence relations
Overlap or lag
Overlap between activities (negative lag) is defined as
how much a particular activity must be completed
before a succeeding activity may start.
The absence of overlap means that the first activity
must finish before the second may start.
A negative overlap (+lag) means a delay is required
between the two activities
Types of activities relationships
Finish to Start (FS)

The successor activity can begin only when the current activity completes.
Example: Column activity should be finished to start the slab activity
above
Finish to Finish (FF).
The finish of the successor activity depends on the finish of the current
activity. Example: The Project handing over can not be finished until
testing is finished
Start to Start (SS).
The start of the successor activity depends on the start of the current activity.
Example: We could link the start of the plaster to the start of masonry works
with lag of 15 days.
Start to Finish (SF).
The successor activity can not finish until the current activity starts.
• Example: If you want to determine backward the date of the latest shop
drawings completion for an activity. Then we can link the start date of the
foundation with the finish date of the shop drawings of foundation.
Cont’…
Types of relationships
You might not use all four relationships within a project, but
you should at least know that they exist and consider them.
Drawing Project Network
A network is a graphical representation of the

project activities and their relationships. A
project network is a set of arrows and nodes.
Before drawing the network, it is necessary to
ensure that the project has a unified starting
and ending point.
In project network Each activity except the first
and the last has both preceding and
succeeding activities
Cont’…
There are two ways that are commonly used to draw a
network diagram for a project:
1. Activity on Arrow (AOA) representation.
In this method, the arrows represent activities while the
nodes represent the start and the end of an activity
(usually named as events)
The length of the arrow connecting the nodes has no
significance and may be straight, curved, or bent.
When one activity depends upon another, both appear on
the diagram as two arrows having a common node.
Cont’…
Basic patterns of AOA diagrams

Cont’…
The following are some rules that need to be followed
when constructing an AOA network diagram:
a) Each activity must have a unique i–j numbers,

where I (the number at the tail of the arrow) is
smaller than j (the number at the head of the
arrow).
b) It is recommended to have a gap between numbers
(i.e.,5,10,15,etc.). This will allow for
accommodation of missed activities.
c) Avoid back arrows.
Cont’…
In some situations, when more than one arrow

leave the same node and arrive at another node,
dummy activities must be used. The dummy
activity is an activity with zero duration,
consumes no resources, drawn as dashed lines,
and used to adjust the network diagram.
A dummy activity is also used when one activity
depends up on two preceding activities and
another activity depends only upon one of these
two preceding activities
Cont’…
A.
B.
Networks diagram with dummy

activities on AOA representation
Cont’…
Activity on node network (AON)

This method is also called the precedence
diagram method. In this method, the nodes
represent activities and the arrows represent
logical relationships among the activities.
If the arrow starts from the end side of an
activity (activity A) and ends at the start side
of another activity (activity B), then A is a
predecessor of B
Cont’
Use of dummy activity

Comparison between AOA and AON
While both networks can be used to represent a project

network, there are some differences between them:
There is no need for the use of dummy activities in
AON representation.
➢ AON are more easily to draw and to read.
➢ In AOA, an activity can only start when all its
predecessors have finished.
➢ AON allows for overlap/ lag representation.
➢ AON allows for the representation of the four types
of relationships while AOA allows only for the finish
to start relationship.
Cont’…
Data for Example
Activity Predecessors
A -
B -
C A,B
D C
E C
F D
G D,E
Cont’…
X and Y are dummy activities

Cont’…
To understand the drawing of the AON, some ordering
in sequence step for the activities may be necessary.
AON representation includes project start and finish
nodes. Dummy activities are not required.
Cont’…
In this example, as there are two activities

(activities A and B) has no predecessor,
then a start activity is added to have one
unified start activity (Start) for the
project. Also, a finish activity (Finish) is
added as there are two activities without
successors (activities F and G).
ESTIMATION OF ACTIVITY DURATION AND DIRECT COST
Having defined the work activities, each activity has

associated time duration. These durations are used
in preparing a schedule. For example,
Durations and predecessors for a four-activity project
Activity Predecessor Duration(Days)
Excavate trench 1.0
Place formwork Excavate trench 0.5
Place reinforcing Place formwork 0.5
Pour concrete Place reinforcing 1.0
The entire set of activities would require at least 3 days

Cont’…
All scheduling procedures rely upon estimates of the

durations of the various project activities as well as
the definitions of the predecessor relationships
among activities
Typically, the quantity of work is determined from

engineering drawings of a specific project. The
number of crews working is decided by the planner.
Cont’…
Knowing activity duration and resources employed, it is

simple to estimate the activity direct cost. Then, the
three elements of an activity: duration, cost, and
resources form what is called construction method.
Some activities can be performed using different
construction methods. Where, its method will have
its own resources, cost and duration.
EXERCISE: If the daily production rate for a crew that works in an
activity is 175 units/day and the total crew cost per day is 1800 F.
The material needed for daily work is 4.5 units at 100F/unit.
a. Calculate the time and cost it takes the crew to finish 1400 units
b. Calculate the total unit cost. Consider an eight-hour work day.
Solution
Duration (units of time) = Quantity/ Production per unit of time x
number of crews
= 1400/175x1 = 8 days
Cost (labor cost) = Duration (units of time) x crew cost per unit of time
= 8days x1800F/day=14400F
Total direct cost = 14400F+ 4.5units of material x 100F/day x 8 days
= 18000F
Unit cost=total cost/quantity =18000F/ 1400= 12.86F/unit
PROJECTS SCHEDULING
The project schedule is the tool that communicates

what work needs to be performed, which resources
of the organization will perform the work and the
timeframes in which that work needs to be
performed.
Cont’…
The project scheduling is used for:
✓ Knowing the activities timing and the project completion
time.
✓ Having resources available on site in the correct time.
✓ Making correction actions if schedule shows that the plan
will result in late completion.
✓ Assessing the value of penalties on project late completion.
✓ Determining the project cash flow.
✓ Evaluating the effect of change orders on the project
completion time
✓ Determining the value of project delay and the responsible
parties
Breakdown project activities-duration
Types of activity duration:

Four types of activity duration include:
• 1) Fixed Duration & Units,
• 2) Fixed Duration & Units/Time,
• 3) Fixed Units,
• 4) Fixed Units/Time
Cont’…
1- Fixed Duration & Units: This types of activity duration
is used when the duration and the amount of the
resources are known and supposed to remain fixed in
the schedule.
• It is use this duration type for time- and budget-
constrained projects prior to making schedule updates.
The two possibilities include the following:
▪ Option 1: Duration does not change when resources
are added or removed, or if the user changes
Units/Time.
▪ Option 2: A change to the Duration will change the
Units/Time; however, Units remains unchanged.
Cont’…
2. Fixed Duration & Units/Time: In this type of activity, activity
durations remains unchanged in the schedule; however, the
remaining units change.
It is the right choice, if an activity is supposed to be completed
within a certain fixed time frame irrespective of the number
or amount of resources being assigned to the activity.
It is often used if the user uses task dependent activities (not
resource dependent activities).
The two possibilities include the following:
▪ Option 1: Duration does not change when resources are
added or removed, or when Units/Time changes.
▪ Option 2: A change to the Duration will change the Units;
however, Units/Time remains unchanged.
Cont’…
3- Fixed Units: Users need to use this type of

activity duration if the amount of work
needed to complete an activity (e.g., 8,000
bricks to be laid) is fixed. If this type of activity
duration is used, decreasing units per time
causes the activity duration to increase.
It is best to use this activity duration type where
the duration is “resource dependent” (and not
“task dependent”).
Cont’…
4- Fixed Units/Time: Users need to use this type

of activity duration if the activity has fixed
productivity output per time period
(regardless of activity duration).
This activity duration type is most often used if
the user uses resource-dependent activities.
PROJECT MILESTONES
Project milestones are checkpoints in your plan

that mark important events, dates, decisions,
and deliverables so it’s easy for your team and
stakeholders to map forward progress on the
project.
Cont’…
Figure: A comparison of key differences

between project milestones and tasks
Cont’…
Three common ways you can use milestones to
benefit your projects:
1. Monitor deadlines for deliverables more easily(No plan
is ever complete without a list of deadlines! )
2. Spotlight important dates (Are there days from now until
the end of your project that could impact your project in
some way? perhaps there’s a board meeting you’re
expected to attend.)
3. Identify potential project bottlenecks (Many projects
rely on the work produced by external teams or partners
to make forward progress).
ESTIMATING ACTIVITY RESOURCES
Activity resource estimating is a process in

which the project team carefully compiles a
thorough listing of the resources that will be
needed in completing a project.
The six inputs required are: The activity list, the
activity attributes, the organizational process
assets, the enterprise environmental factors,
and project management plan, and the
resource availability.
Techniques to Determine Required Resources
It is to estimate the resources required for each

task, proceed through this checklist, ignoring the
ones that do not apply to your project.
1. Bottom up Estimating
This is the foundation of estimating, and should be
the starting point of any estimating activity. Each
individual task is estimated starting from the
bottom level. The resources required for each
task in the activity list are considered one at a
time and rolled up into a final resource and cost
estimate.
Cont’…
2. Expert Judgment
The first thing that professional estimators will tell you is
that there is no substitute for a technical
expert. Technical experts are very busy people who are
tied down on many different projects, but they are also
very helpful in the planning phase.
3. Alternatives
Resources usually come with many alternatives and you
should not underestimate the different options at your
disposal to carry out the work. Here are a few
examples: Choose between Rent vs. Buy.
Cont’…
Tools and Techniques for Activity Duration Estimating:
1. Expert judgment: Durations are often difficult to estimate
because of the number of factors that can influence them
(e.g., resource levels, resource productivity). Expert
judgment guided by historical information should be used
whenever possible.
2. Analogous estimating. It is most reliable when (a) the
previous activities are similar in fact and not just in
appearance, and (b) the individuals preparing the estimates
have the needed expertise.
It is frequently used to estimate project duration when there is a
limited amount of detailed information about the project
(e.g., in the early phases).
Cont’…
3. Quantitatively based durations. The

quantities to be performed for each specific
work category (i.e., number of drawing, tons
of steel, etc.) defined by the
engineering/design effort, when multiplied by
the productivity unit rate (i.e., hours per
drawing, tons per hour, etc.), can be used to
estimate activity durations.
Cont’…
4. Reserve time (contingency).
Project teams may choose to incorporate an

additional time frame, called time reserve,
contingency, or buffer, that can be added to the
activity duration or elsewhere in the schedule as
recognition of schedule risk. This reserve time
can be a percentage of the estimated duration,
or a fixed number of work periods.
Outputs from Activity Duration Estimating
1. Activity duration estimates.

Activity duration estimates should always include
some indication of the range of possible results. For
example:
▪ Two weeks ± 2 days to indicate that the activity will
take at least 8 days and no more than 12 (assuming a
five-day workweek).
▪ 15 percent probability of exceeding 3 weeks to indicate
a high probability—85 percent—that the activity will
take 3 weeks or less.
2. Basis of estimates. Assumptions made in developing
the estimates must be documented.
PROJECT TIMELINE SETTING
A project timeline shows the work needed to

complete your project in a visual way. It shows
when each task will be completed so you can
keep track of progress. In other words, a timeline
provides the big picture of deliverables.
N.B: People commonly use the words "schedule"
and "timeline" as though they're two different
things. But, in essence, they achieve the same
result. A schedule just focuses on dates, as
opposed to a timeline's list of tasks.
Cont’…
3 common types of project timelines:
1. Gantt chart
This type of bar chart was used to help military planners
organize their logistics operations during World War I,
when it It's named after American engineer William S.
Gantt, who invented the chart a few years prior.
• In his original design, Gantt created a horizontal line
representing the duration of a project. Then he added
vertical lines at regular intervals along the length of the
line. Each interval represents a single day.
Cont…
2. PERT chart
A project evaluation review technique (PERT)
chart is similar to a Gantt chart but focuses
more on estimating than scheduling. Instead
of using tasks color-coded to a project, it uses
a diagram with rectangles and circles as nodes
to represent key milestones. These nodes are
connected by arrows indicating dependencies
between them.
Cont…
Example of a traditional PERT chart. PERT charts

today have become more interactive and flexible.
Cont…
3. Calendar/chronological timeline
A calendar timeline shows each event
happening in chronological order. It looks
similar to a traditional calendar, except it
displays the entire life cycle of your project,
making it easier to visualize project
roadmaps.
Why do I need a project timeline?
Keeping your projects and team members

organized and productive is challenging
without a way to visualize tasks and deadlines.
Benefit from using a project timeline:
✓Meet deadlines
✓Keep everyone on the same page
✓Prevent scope creep
✓Plan resources effectively
Steps to create a project timeline
✓ Analyze the project brief or project charter

✓ Make a work breakdown structure
✓ Set mini-milestones
✓ Map project and task dependencies
✓ Estimate a timing for each task
✓ Determine available resources
✓ Analyze and plan for the future
Template of project timeline
A project timeline template is a tool that displays

the project schedule, including individual
tasks, key milestones, and due dates. Use the
template to plan your project, and to keep
team members and other stakeholders up to
date on progress.
ELEMENTS OF PROJECT TIMELINE
• Project Name: Enter the name of the project.

• Project Manager: List the name of the project
manager ultimately responsible for managing
project day-to-day tasks and ensuring successful
project delivery.
• Start Date: Set the project start date.
• End Date: Set the project end date.
• Phase Title: Enter a name for each phase or stage
of your project timeline.
• Task Name: List each individual task.
Cont…
• Assigned To: List the team member
responsible for completing each individual
project task.
• Duration: Review the task duration to ensure
that the task owner has sufficient time to
complete it.
• Status: Provide the status for each individual
task (e.g., not started, in progress, on hold,
complete, etc.).
Cont…
Some additional components:
• Milestones: List the project’s key milestones.
• A list of tasks that need to be completed.
• Dependencies.
• Duration of tasks.
Common project timeline tools:
1. Gantt PRO
This online Gantt chart maker is one of the best
timeline project management software as it
allows planning and scheduling tasks, setting
dependencies and milestones, managing
resources, and professionally collaborating with
stakeholders.
The tool is known for its friendly design and
convenient learning curve. You can export and
import your Gantt chart timeline from software
like Excel and MS Project.
Cont’…
Key features:
✓Project planning and tracking.
✓Collaboration.
✓Real-time notifications.
✓Time tracking.
✓Export/import.
✓History of changes.
✓Drag and drop functionality.
Cont’…
3. Wrike
It is a tool that does not need a special
introduction. This project timeline app is
widely used for work and task
management.
Cont’…
Key features:
✓Project planning.
✓Personal dashboards.
✓Resource management.
✓Prioritizing.
✓Real-time reporting.
✓Subtasks.
✓Secure data storage.
Cont…
5. Monday
Monday is a good helper in planning and
scheduling issues. It ensures that all team
members are on the right track. It is simple to
use, which makes it suitable for beginning
users.
Cont’…
Key features:
✓ PM timelines.
✓ Deadline views.
✓ Team assigning.
✓ Group messaging.
✓ Third-party integrations.
✓ Document management.
✓ Alerts/notifications.
✓ File sharing.
PROJECT SCHEDULING METHODS
1. Critical path method
The CPM contains three essential elements, which are:
a. The tasks required to complete the project
b. Which tasks depend on the completion of
others
c. A time estimate for each activity
2. Program evaluation and review technique (PERT)
The program evaluation and review technique (PERT) is
similar to CPM in that they both create a task flow
and an estimated timeline. Rather than a single
possible timeline estimate like in CPM, PERT uses a
weighted average duration.
Cont…
3. Fast-tracking
Fast-tracking is a technique that involves finding tasks
you can perform simultaneously or with some
overlap. This allows you to start some tasks earlier
and reduce the time spent overall on the project.
This method is useful in many situations, like when:
✓ Your team is behind on a project and needs to
catch up
✓ Your team needs to finish a project sooner than
expected
✓ An external factor causes a delay in your project
Cont’…
4. Crashing
It is a technique that involves adding more
resources to help you and your team finish a
project faster. One common crashing method
includes assigning more team members to a
project, which reduces the amount of work
required for each person.
You can also have employees work longer hours and
invest in overtime to help you meet a deadline
quickly.
Cont’…
5. Gantt chart
It is a managerial tool that displays a project schedule graphically by
showing the key elements of a project. These elements include
the project tasks with their start dates and finish dates,
milestones, task dependencies and resources.
There are several defining elements in this chart, such as:
✓ It looks like a bar chart.
✓ The vertical axis of the chart contains a list of the project tasks.
✓ The horizontal axis contains a graphical representation of the
duration of each task.
✓ The bars in the horizontal axis are proportional to the duration of
each task.
✓ The chart shows the links between the different elements of a
project.
Cont’…
6. Resource leveling
This is a project scheduling technique that
allows you to optimize resources to help you
use them more effectively. This allows you to
create a task distribution plan that enables
your teams to balance busy periods with
periods of inactivity, which can lead to a more
consistent process.
Cont’…
7. Calendar
Using a calendar can be a simple way to help you
and your teams visualize important tasks and
their deadlines. Calendars make scheduling easy
to understand and can make project schedules
readily accessible to teams and stakeholders.
You might consider using project calendar
templates or color-coding methods to identify
tasks associated with particular aspects of the
project.
Seven steps to create a project schedule:
✓Define your project goals. Write down
key milestones or deliverables that will make
this project successful in the end.
✓Identify all stakeholders. Make a list of every
person that needs to interact with the project
team, even if their role is a simple sign-off.
✓Determine your final deadline. Decide when
you need to be completely finished with the
project.
Cont’…
✓List each step or task. Take those milestones
and deliverables you defined in the first step
and break them down into smaller tasks and
subtasks to be sure all bases are covered.
✓Assign a team member responsible for each
task. Decide who will take on each task and
subtask, and be transparent with deadlines.
✓Organize your project schedule in one tool,
and share it with your team.
LU2: MANAGE CONSTRUCTION SITE RESOURCES
Tips to Identify project resources:
Tip 1: Know what work is required

Make sure that you have a clear brief before the project
starts. You and the client should have a common
understanding of what is included in the project.
Tip 2: Plan in advance
It’s better to plan your resource needs in advance. There
is too much risk involved with waiting until you need a
particular resource and then trying to book them.
Cont’…
Tip 3: Confirm resource availability
Perhaps someone is available to your project 50%
of the time. Check how much you can expect
from resources – especially those who are only
contributing to the project in a part-time capacity
– before you book their time into your schedule.
Tip 4: Check their skills
Do the people you want on the project still have up-
to-date skills in the appropriate areas? Check
your organization’s skills catalogue and make
sure.
Cont’…
Tip 5: Remember to book equipment
We tend to focus on resources as being the
human kind, but here are other types of
resource that are important for projects.
NETWORK SCHEDULING REVIEW
The Critical Path Method:
The most widely used scheduling technique is
the critical path method (CPM) for scheduling.
This method calculates the minimum

completion time for a project along with the
possible start and finish times for the project
activities.
Cont’…
The critical path itself represents the set or
sequence of activities which will take the
longest time to complete.
The duration of the critical path is the sum of
the activities' durations along the path. Thus,
the critical path can be defined as the longest
possible path through the "network" of
project activities.
Cont’…
Benefits of critical path method
It helps you identify,
1. Critical paths
Critical paths are the series of dependent tasks
with the longest duration that must be
completed in a specific sequential order. The
duration of the critical path is the shortest
possible time that one can complete the
project.
Cont’…
2. Noncritical paths
Noncritical paths are comprised of one or more tasks that are
not dependent on the string of jobs in the critical path. These
can be completed at varying times in the course of the
project, run parallel to the critical path and can be achieved
simultaneously alongside critical paths.
3. Float
It is the amount of time you can delay a task without impacting
the delivery time for the overall project. Float on a noncritical
activity path is dependent on the amount of extra time
provided by the critical path. Tasks on the critical path have no
float because they are dependently connected.
Cont’…
Four main steps of CPM:

1. A forward path to determine activities
early-start times;
2. A backward path to determine activities
late-finish times;
3. Float calculations;
4. Identifying critical activities.
Calculations for the Critical Path Method
The inputs to network scheduling of any

project are simply the AOA or the AON
networks with the individual activity
duration defined.
The network scheduling process for AOA
and AON networks, however, is different.
Cont’…
To demonstrate these two techniques (AOA&AON),
consider a simple 5-activity project, with activity
A at the start, followed by three parallel activities
B, C, and D; which are then succeeded by activity
E.
The AOA or the AON networks are used. It is noted
that the example at hand involves only simple
finish-to-start relationships among activities.
Drawn network diagrams
Activity-On-Arrow Networks Calculations
The objective of arrow network analysis is to compute

for each event in the network its early and late
timings.
✓ Early event time (ET): is the earliest time at
which an event can occur, considering the
duration of preceding activities.
✓ Late event time (LT): is the latest time at
which an event can occur if the project is to
be completed on schedule.
Cont’…
Forward Path
The forward path determines the early-start
times of activities. The forward path proceeds
from the most left node in the network and
moves to the right, putting the calculations
inside the shaded boxes to the left.
Cont’…
Certainly, all successor activities can start only

after the latest predecessor is finished.
Therefore, for the forward path to determine
the early-start (ES) time of an activity, we have
to look at the head arrows coming into the
start node of the activity.
We then have to set the activity ES time as the
latest finish time of all predecessors.
Cont’…
A node in an AOA network

Cont’…
Accordingly, the ES time of all successor activities to node 3
(activities B, C, and D) is time 3. This value is therefore, put in the
shaded box on top of node 3, as shown in Figure.
Forward path calculations in AOA networks
Notice that only the largest EF value of predecessor

activities is used to calculate the ES of successor activities
and all other values not used.
Cont’…
In this example, the forward path calculations are as follows:
Start at node 1, the first node of the project, and
assign it an early-start time of zero. Here, all
activity times use an end-of-day notation.
Therefore, the ES of activity A is zero means that
activity starts at end of day zero, or the beginning
of day 1 in the project.
Then, move to node 3. This node receives one head
arrow, and as such, it has one predecessor,
activity A. Since the predecessor started on time
zero and has 3 days duration, then, it ends early
at time 3 (Early-Finish (EF) = Early-Start (ES) + d).
Cont’…
Backward Path
The backward path determines the late-finish
(LF) times of activities by proceeding
backward from the end node to the starting
node of the AOA network. We put the LF
values in the right side boxes adjacent to the
nodes.
Cont’…
Backward path calculations in AOA networks
•Start from the last node of the network (node 11) and we
transfer the early-finish value from the left box to be the late-
finish (LF) value at the right side box.
• Then, move backward to node 9 which has only one tail
arrow of activity E. With the LF time of E being time 14, its LS
time becomes LS = LF - d = 14 – 5 = time 9. At node 9,
therefore, time 9 becomes the LF time of the predecessor
activities of this node.
Cont’…
Moving to node 3, we evaluate the LS time of its
3 successor activities B, C, and D as 6, 5, and 3,
respectively. The LF time at node 3, therefore,
becomes the smallest value 3. With other LS
values not used.
Now, proceed to the first node in the network
(node 1). The LS time of A, therefore, is
LS = LF – d = 3 – 3 = 0, a necessary check to
ensure the correctness of the calculation.
Methods to Calculate the Forward and
Backward Passes in a Network Diagram
The two ways to calculate your early starts and
finishes and your late starts and finishes are
sometimes called the Zero Method and the
One Method.
These titles refer to the early start number you
use in the calculations—either a one or a
zero.
Cont’…
Zero Method assumption: All starts and ends
are at the end of a time period.
One Method assumption: All starts are at the
beginning of a time period, and all finishes are
at the end of a time period. This calculation is
by far the easiest to understand and convert
to real-world situations. It is also the method
that is least frequently taught.
One Method
Six is the EF for the activity.

So the ES = 1. standard formula at hand can use
EF = ES + D– 1 for the forward pass.
Figure: Forward and backward passes network diagram
Zero Method
Now let’s look at the Zero Method. Remember the

starts and finishes both represent the end of a
time period. In this case, they represent the end
of a week. Based on the same network diagram,
the earliest the activity can begin is at the end of
week zero. Therefore, Early Start (ES) = 0. To find
the Early Finish (EF), just add the duration to the
ES(formula: EF= ES + D).
• By using this method, you are less prone to make
mathematical errors.
Cont…
Figure: Forward and backward passes network

diagram for zero method
Cont…
• Float Calculations
Once forward path and backward path calculations are
complete, Total-Float (TF) calculations can determine
the flexibility of an activity to be delayed.
Notice in Table, that some activities such as activity A has

ES time = LS time, and its EF time = LF time, indicating
no slack time for the activity. Other activities such as B
can start early at time 3 and late at time 6, indicating a
3-day of total float. Float calculations can be illustrated
as shown in Figure above for any activity.
Cont…
Table : CPM results

Exercise 1
For the project data in Table 4.3, answer the following questions:
a) Draw an AOA network of the project

b) Perform forward path and backward path calculations
c) What is the effect of delaying activity D by 3days?
Activity Duration Immediate predecessor
A 2 -
B 6 A
C 3 A
D 1 B
E 6 B
F 3 C,D
G 2 E,F
LEARNING UNIT 3 – CARRY OUT CONTRACT MANAGEMENT
Learning Outcome 3.1: Describe contract concepts
At the early stage of a project and once a project manager is selected, the main issue that faces the
owner is to decide on the contract strategy that best suits the project objectives.
Contract strategy means selecting organizational and contractual policies required for the execution of
a specific project. The development of the contract strategy comprises a complete assessment of the
choices available for the management of design and construction to maximize the likelihood of
achieving project objectives. The scope of such contracts is very wide, from a simple purchase of
standard article to multi-million pound projects. The size and complexity of the contract matter vary
accordingly.
A proper contract strategy for a project involves five key decisions:
 Setting the project objectives and constraints

 Selecting a proper project delivery method
 Selecting a proper contract form/type
 Contract administration practices
3.1.1 Definitions
a) A contract: "an agreement made between two or more parties which is enforceable by law to
provide something in return for something else from a second party". Contracts can be very
simple or they may be very long and complicated legal documents. When a contract is properly
set-up it is legally binding upon. The two parties are expected to perform the various obligations
they have undertaken, as expressed in a mutually agreed set of contract documents. A contract
therefore, is necessary to protect both client and contractor. According to its simple definition, a
contract is an agreement enforceable at law, but not all agreements are contracts. Some elements
must be present before an agreement becomes a contract. These elements are:
b) Competent Parties: For an agreement to be a contract there must be two or more
competent parties. In order to be considered competent, apart must have a certain legal
standing.
2
Compiled by TUYISENGE Alphonse/CE IPRC Musanze
c) Proper Subject Matter: For the subject matter of a contract to be proper, the first requirement
is that it must be clearly defined as to the rights and obligations of each party. Second, the
purpose of the contract must not violate the law.
d) Consideration: There must be a lawful and valuable consideration given by both parties. A
consideration of ten called “Something for something."A consideration must, also, be possible.
e) Agreement: For valid contract, there must be a mutual agreement. An agreement is considered
to have been reached when an offer made by one party is accepted by the second party. Both
parties must wish and intend their bargain to be enforceable bylaw.
f) Proper Form: The terms of a contract must be written so that both parties are very sure of
what their rights and responsibilities are.
g) Consent of the Parties: The agreement must be free from: Misrepresentation,

Duress Undue influence, etc. The main steps to be taken before placing
contract are presented in figure 3.1.
3.1.2 Selection of contract type
The selection of contract type to be used for a construction project is made by the owner, acting
upon the advice of his Engineer and his legal advisor. The selection must meet the owner
Objectives and takes into account the constraints that might relate to the project.
Consultants and contractors should be fully informed by the project objectives and
constraints. The scope and the nature of the project will primarily affect the selection of type
of contract.
3
Figure 3.1: steps of contracting process
3.1.3 Project objectives
The client will have a number of overall objectives. These objectives may be of primary and/or
secondary importance. Primary objectives include functional performance, time objectives, and cost
objectives.
a. Project Scope (performance): The project scope defines the extent or the area that the
contract covers. Any additions or omissions during the life of the project will increase or
decrease the quantity of work involved. Likewise, any changes in design must be
discussedcarefullytoestablishwhetherornottheyarelikelytoaffectthescopeoftheproject.
b. Time: The scope and time are closely interrelated. Decisions must often be made on the effect
of increasing or decreasing scope on time. If the completion date of a project is critical,
thenincreasingscopewillcallforanacceleratedprogram.Theextracostassociatedwiththisacceleration
mustbequantified.
4
c. Price: The cost of a project is closely related to scope and time. The effect of the contract on
price, and the various incentives and penalties that can help to keep price steady must be
discussed and clearly defined.
On the other hand, secondary objectives could arise on a construction project and would exert a
major influence over contract strategy decisions Examples of secondary objectives are:
 Allocation and payment for risk.

 Training of the client's staff.
 Transfer of technology.
 Involvement of contract or in design.
 Involvement of client in contract management.
 Choice of labor-incentive construction.
 Use of local material and resources.
 Protection of the environment.
3.1.4 Project constraints
Allconstructionprojectshaveconstraintsthatinfluencetheachievementoftheprojectobjectives.These
constraints should therefore, be considered when choosing an appropriate contract strategy.
There are a variety of constraints and these are examples:

 Availability of funds.
 Availability of contractual incentives.
 Method of tendering.
 Project location.
 Target dates of the project.
 Possibility of design changes.
 Availability of resources.
 Seasonal working.
 Number of contractors willing or able to tender.
 Inflation.
5
Factors influencing contract choice
Three main factors influence the choice of a given contract including: the incentive, risk sharing and
the flexibility.
3.1.5 Project delivery methods
The project delivery method translates what project parties are involved in the project and how they
interact with each other and called also project organizational structure. The choice of an
organizational structure should be related to project objectives and constraints. It can be facilitated
considering the following factors:
 Size and nature of the work packages within the project.
 Selection of the design team for min-house resources external consultants or contractors.
 Process of supervision of construction.
 Restrictions upon using combination of organizational structures within the project.
 Expertise which the client wishes to commit to the project.
When plans are completed and the owner is interested in securing the low price, the use of
competitive bids is suggested. The competitive bidding results in the type of contract that many are
familiar with.
A negotiated contract should be used when construction should start before plans are completed or
when the many unknown factors of the project make an accurate estimate impossible. When many
changes are expected and when inspection and supervision cannot be done efficiently, the negotiated
type of contract should be used.
The various project delivery methods are summarized as follows:
3.1.5.1 Traditional approach

This is the most common approach in civil engineering projects in which the design has to be
completed before construction can start. Design and construction are usually performed by two
different parties who interact directly and separately with the owner.
The pros and cons of this approach are summarized as follow:

Advantages:
- Price competition
6
- Total cost is known before construction starts
- Well documented approach used in most government projects.
Disadvantages
- Longtime
- Design does not benefit from construction expertise
- Conflict between owner, contractor and A/E
Therefore, this method is fine in many cases where the project is clearly definable, design is
completed, time need not be shortened, and changes are unlikely to occur during construction.
3.1.5.2 Direct labor
In this approach, owner organization performs both the design and construction using its in-
house labor force.
- Used by large authorities

- The owner performs both the design and the construction
- May use consultants for some specialized designs
- Most suitable for small projects

- Can be used when expertise are available
- Low risk projects
- In adequate scope definition
3.1.5.3 Design-build
In this approach, a single organization is responsible for performing both design and construction and,
in some cases, providing certain know-how for the project. The pros and cons of this approach are
summarized as follow:
Advantages:
One contract that may include know-how
- Minimum owner involvement
- Used for fast-track projects in order to reduce time
- Co-ordination between design and construction and easier in implementing the changes
Disadvantages:
- Cost may not be known until end of the construction
- High risk to contractor and more cost to owner
- Design-build company may reduce quality to save cost
7
The use of this approach, therefore, should be considered when contractors offer specialized
design/construction/know-how expertise or when design is strongly influenced by the method of
construction.
3.1.5.4 Turnkey
This approach is similar to the design-build approach but with the organization being responsible for
performing both design, construction, know-how (if any), and project financing. Owner payment is
then made at the completion (when the contractor turns over the―key). An example is franchise
projects in which a new branch of a restaurant chain needs to maintain the same design, construction
quality, and food service quality.
3.1.5. 5 Build-operate-transfer (BOT)
In this approach, a business entity is responsible for performing the design, construction, long-term
financing, and temporary operation of the project. At the end of the operation period, which can be
many years, operation of the project is transferred to the owner.
Thisapproachhasbeenextensivelyusedinrecentyearsandisexpectedtocontinue.Anexampleof its use is in

express routes and turnpikes. A consortium of companies shares the cost (design, construction,
financing, operation, and maintenance) and the profits gained from user fees, for a stipulated number
of years. Afterwards, the project returns to the government to become publicly owned. This approach
has also been used extensively in large infrastructure projects financed by the World Bank in parts of
the world that cannot afford the high investment cost of such projects.
3.1.5. 6 Professional construction management (PCM)
In this approach, the owner appoints a PCM organization (also known as Construction Management
organization) to manage and coordinate the design and construction phases of a project using a
Teamwork approach. The design may be provided by specialist design firms and in some cases by the
PCM organization. With high level of coordination between the participants, innovative approaches of
overlapping design and construction (i.e., fast tracking) can be adopted. The PCM organization aims
at holding a friendly position similar to that of the consultants in the traditional approach.
The services offered by the PCM organization overlap those traditionally performed by the architect,
the engineer, and the contractor. This may include: management and programming of design; cost
forecasting and financial arrangements; preparation of tender documents; tender analysis and selection
of contractors; selection of methods of construction; recommendations on construction economics;
planning and scheduling construction works; materials procurement and delivery expedition;
8
provision for site security, clean up, and temporary utilities; supervision of control of construction
contractors; construction quality assurance; cost control; costing of variations and assessment of
claims; and certification of interim and final payments to contractors. The use of PCM approach,
therefore, should be considered when there is a need for time saving, flexibility for design changes is
required, and owner has insufficient management resources.
3.1.6 Types of contracts
There are many types of contracts that may be used in the construction industry. Construction contracts are
classified according to different aspects. They may be classified according to the method of payment to the
contractor.
When payment is based on prices which submitted by the contractor in his tender, they are called
cost-based contracts. Examples are cost-reimbursable and target cost contracts. Contracts may be
classified in the point of view of the risk involved. The range of risk runs from a fixed price contract
to a totally non-risk cost-reimbursable contract at the other end.
Figure 3.2: Types of contracts
9
3.1.6.1 Lump-sum contract
A single tendered price is given for the completion of specified work to the satisfaction of the client
by a certain date. Payment may be staged at intervals on the completion. The contract has a very
limited flexibility for design changes. The tendered price may include high level of financing and high
risk contingency. Where considerable risk has been places with the contractor, this contract may lead
to cost cutting, trivia claims, or bankruptcy.
Contract final price is known at tender. A lump-sum contract would seem to prevent risks for the client
where in fact it just changes them. An important risk t the client is that of not receiving competitive bids
from desirable contractors who may avoid a high-risk lump-sum contract.
This contract may be used for a turnkey construction. It is appropriate when work is defined in detail,
limited variations are expected, level of risk is low and quantifiable, and client does not wish to be
involved in the management of his project.
3.1.6.2 Ad-measurement contract

In this type of contracting, items of work are specified in Bills of Quantities or Schedule of Rates. The
contractor then specifies rates against each item. The rates include risk contingency. Payment is paid
monthly for all work completed during the month. The contract offers a facility for the client to introduce
changes in the work defined in the tender documents.
The contractor can claim additional payment for any changes in the work content of the contract. Claims
resolution is very difficult because the client has no knowledge of actual cost or
hiddencontingency.Tenderpriceisusuallyincreasedbyvariationsandclaims.Twoformsofadmeasurementcontra
ctareusuallyused: bill of quantities and schedule of rates.
 Bill of Quantities Contract: Tenderers enter rates against each item of the estimated quantities of
work. The quantities are re-measured during the course of the contract, valued at the tendered rates
and the contract price adjusted accordingly.
 Schedule of Rates Contract: It contains inaccurate quantities of work, possibly with upper and
lower probable limits. Therefore, it is common for separate rates to be quoted for labor, plant, and
materials. The contract price is derived by measuring the man-hours, plant-hours and the quantities
of materials actually consumed, and then pricing them at the tendered price. This contract is best
suitable for repetitive works.
The ad-measurement contract is well understood and widely used. It can be used when little or no changes
are expected, level of risk is low and quantifiable, and when design and construction need to be
overlapped.
10
3.1.6.3 Cost-reimbursable contract (cost-plus contract)
The contractor is reimbursed for actual cost plus a special fee for head office overheads and profit, no
special payment for risk. Payment may be made monthly in advance. The contract involves a high
level of flexibility for design changes. Final price depends on changes and extent to which risks
materialize. The contractor must make all his records and accounts available for inspection by the
client or by some agreed third party. The fee may be a fixed amount or a percentage of actual costs.
This contract has no direct financial incentives for the contractor to perform efficiently. It may be
used when it is desirable for design to proceed concurrently with construction and when the client
wishes to be involved in contract management.
3.1.6.4 Target cost contract

Costtargetsmaybeintroducedintocost-reimbursablecontracts.Inadditiontothereimbursement of actual
cost plus percentage fee, the contractor will be paid a share for any saving between target and actual
cost, while the fee will be reduced if actual cost exceeds the target.
The target figure should be realistic and the incentive must be sufficient to generate the desired
motivation. Specified risk' can be excluded from the tendered target cost. When these occur, the target
cost is adjusted accordingly and the client pays the actual cost incurred by the contractor. The target
may also be adjusted for major changes in work and cost inflation. This contract can be used in the
same circumstances as the cost-plus contract.
A brief summary of the level of risk exposed by each of the discussed contract forms is illustrated in
Fig. 3.3. As shown in the figure, competitive bidding contracts (Lump Sum and Unit Price) are among
the top risky contracts to contracts and thus present a challenge in estimating their cost and schedule
at the bidding stage and before a commitment is made.
Figure 3.3: Level of risk associated with various contracts
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3.1.6.5 Time and material (T&M) contracts
T&M contracts are a hybrid type of contractual arrangement that contains aspects of both
cost-reimbursable and fixed-price-type arrangements.
T&M contracts resemble cost-type arrangements in that they are open ended, because the
full value of the arrangement is not defined at the time of the award. Thus, T&M contracts
can grow in contract value as if they were cost-reimbursable-type arrangements.
Conversely, T & M arrangements can also resemble fixed-unit arrangements when, for
example, the unit rates are preset by the buyer and seller, as when both parties agree on the
rates for the category of "senior engineers."
Most appropriate when the buyer wants to be more in control. It is also used in an
emergency to begin work immediately when a scope of work has not yet been completed.
Not possible at time of placing contract to estimate extent or duration of the work, or
anticipated cost, with any degree of confidence.
3.1.7 Contract administration
As it was discussed in the previous sections, there is variety of types of contracts used in
civil engineering projects. Each type has its specific characteristics. Contracts may be
prepared under the heading of one type but could include characteristics of more than a
single type. Many professional societies and government agencies have done a great deal
toward the standardization of construction contracts such that the general form and content
are well established for the various types of construction that may arise.
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3.1.8 Contract articles
3.1.8.1 Contract parties
A. The Client (Employer):

Also referred to as the owner or developer, the party who initiates the project and hires the
contractor
Responsibilities:
o Defines project scope, objectives, and budget.
o Obtains necessary permits and approvals.
o Provides the site for construction.
o Makes payments to the contractor according to the contract schedule.
o Oversees the project (may appoint a representative).
B. The Contractor:
 The party responsible for planning, managing, and executing the construction work.
 May subcontract portions of the work to specialized subcontractors.
 Responsibilities:
o Reviews project plans and specifications.
o Obtains necessary permits and licenses for specific trades.
o Hires and manages labor.
o Schedules and supervises construction activities.
o Ensures quality control and adherence to safety regulations.
o Submits invoices and manages project finances.
C. Professional/Designer:
This can encompass a variety of roles depending on project complexity:
o Architect: Designs the building, creates drawings and specifications.
o Engineer: Provides structural, mechanical, and other technical expertise.
o Landscape Architect: Designs the landscaping around the building.
o Interior Designer: Designs the interior spaces of the building.
 Responsibilities:
o Creates project drawings and specifications that define the project details.
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o May provide construction administration services, such as reviewing contractor
submittals and inspecting work.
o May not be directly involved in construction, but their work guides the
contractor's execution.
3.1.8.2 Scope of Work

A. General Scope of Work
This section provides a high-level overview of the entire project.
 It should include:
o Project description and objectives
o Location and site details
o References to project drawings and specifications
o Overall project schedule with key milestones
o Roles and responsibilities of all major stakeholders (owner, contractor, architect,
engineer, etc.)
o Quality assurance and control procedures
o Safety protocols
B. Structural Scope of Work
This section details the work required to support the building's physical structure.
o Foundation construction (e.g., excavation, footings, slabs)
o Framing materials and methods (e.g., concrete, steel, wood)
o Structural wall construction
o Roofing systems (e.g., trusses, beams, sheathing)
o Lintels and supports for openings
o Specifications for concrete mixes and reinforcing steel
o Structural inspections and testing requirements
C. Mechanical Scope of Work
This section outlines the installation and commissioning of all mechanical systems.
o Heating, Ventilation, and Air Conditioning (HVAC) systems
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o Plumbing systems (domestic water, sanitary, storm drainage)
o Fire protection systems (sprinklers, alarms)
o Medical gas systems (if applicable)
o Fuel gas piping
o Exhaust systems
o Testing and balancing procedures for all mechanical systems
o
D. Electrical Scope of Work

This section details the installation and testing of all electrical systems.
o Service entrance and main switchgear
o Power distribution panels and branch circuits
o Lighting systems (interior and exterior)
o Communication systems (data, telephone, security)
o Grounding and lightning protection systems
o Load calculations and panel schedules
o Testing and inspection requirements for electrical systems
E. Instrumentation and Controls Scope of Work (if applicable)
This section outlines the installation, configuration, and commissioning of any instrumentation
and control systems.
o Building Management Systems (BMS)
o Process control systems (industrial facilities)
o Fire alarm and security system controls
o Integration with other building systems (HVAC, lighting)
o Testing and calibration procedures for all instrumentation
3.1.8.3 Conditions of contract
A. General Conditions of the Contract (GCC):

The GCC forms the foundation of your contract and addresses broad topics applicable to most
construction projects. Some common elements include:
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 Definitions: Define key terms used throughout the contract to avoid confusion.
 Contract Documents: Specify all documents forming the contract, including drawings,
specifications, schedules, and addendums.
 Contractor's Obligations: Outline the contractor's general responsibilities, such as
providing labor, materials, equipment, and completing the works as per specifications.
 Employer's Obligations: Detail the employer's responsibilities, including providing the
site, approving work, and making payments.
 Site Conditions: Address issues like site access, utilities, and unforeseen ground
conditions.
 Variations and Changes: Establish the process for approving and handling changes to
the original scope of work.
 Inspections and Testing: Define procedures for inspections, testing, and obtaining
approvals throughout construction.
 Delays and Extensions of Time: Outline acceptable reasons for delays and the process
for requesting extensions.
 Payments: Specify the payment terms, including milestones, applications for payment,
and dispute resolution procedures.
 Termination: Define circumstances under which either party can terminate the contract.
 Insurance: Specify the types and minimum amounts of insurance required for the
contractor and other relevant parties.
 Dispute Resolution: Establish the process for resolving disagreements arising during the
project.
B. Supplementary Conditions of the Contract (SCC):
The SCC provides additional details relevant to specific procurement methods or industry
standards. Common examples include:
 Standard forms published by industry bodies: These can address specific aspects like
tendering procedures, measurement, or health and safety.
 Conditions specific to contract types: For example, design-build contracts might have
specific SCCs addressing design responsibilities.
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C. Special Conditions of the Contract (SPEC):
The SPEC deals with project-specific requirements that don't fit neatly into the GCC or SCC.
This is where you tailor the contract to your unique project needs. Examples include:
 Specific completion deadlines for different project phases.
 Procedures for handling hazardous materials.
 Quality control requirements beyond industry standards.
 Environmental protection measures.
 Confidentiality requirements.
3.1.8.4 Contact payments

A. Invoices:
 Who prepares: The contractor typically prepares the invoice based on the agreed-upon
payment schedule outlined in the contract.
 Content: The invoice should be clear, professional, and include the following details:
o Contractor information (name, contact details)
o Client information (name, contact details, project name)
o Invoice number and date
o Description of work completed (linked to contract milestones or deliverables)
o Quantity of work completed (if applicable)
o Unit price (if applicable)
o Total amount due
o Payment terms (due date, any discounts offered for early payment)
o Reference to the contract (mention the contract number)
 Supporting Documents: The contractor may attach relevant supporting documents to the
invoice, such as:
o Material receipts
o Labor time sheets
o Subcontractor invoices (if applicable)
o Photos of completed work (for progress payments)
B. Invoice Approval:
 Client Review: The client reviews the invoice to ensure it aligns with the contract terms
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and reflects the work completed to their satisfaction.
 Possible Discrepancies: If there are any discrepancies, the client should promptly
communicate them to the contractor. This could involve missing documentation, errors in
calculations, or work not completed according to specifications.
 Approval Process: The approval process can vary depending on the project size and
complexity. It may involve internal approvals within the client's organization or approval
from an architect/engineer.
C. Payment:
 Payment Terms: The contract should clearly outline the payment schedule,
including:
o Milestone Payments: Payments made at specific stages of project completion
(e.g., foundation completion, framing completion).
o Progress Payments: Periodic payments based on the percentage of work
completed. This is common for larger projects.
o Retainage: A percentage (often 5-10%) of the total contract amount withheld by
the client until project completion and final inspection. This ensures the contractor
completes the work to a satisfactory standard.
o Payment Method: Specify the preferred method of payment (check, wire
transfer, electronic payment system).
3.1.8.5 Permits and licenses
Obtaining the proper permits and licenses is crucial before starting any construction project.
These documents ensure your project adheres to safety regulations, zoning codes, and building
standards.
A. Planning Permits:
 Purpose: Planning permits grant approval for the overall concept and use of your
proposed development. This focuses on whether your project aligns with the community's
development plan.
 Issuing Authority: Typically issued by the local planning department or commission.
 Possible Considerations: Zoning restrictions, traffic flow, impact on surrounding areas,
environmental concerns, and future development plans.
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B. Zoning Permits:
 Purpose: Zoning permits verify that your project complies with the specific zoning
regulations for your property. These regulations dictate things like building height,
setbacks from property lines, permitted uses (residential, commercial, etc.), and lot size
requirements.
 Issuing Authority: Issued by the local zoning department or commission.
 Possible Considerations: Building size and height limitations, setbacks from property
lines, parking requirements, and allowed uses based on the zoning designation.
C. Building Permits:
 Purpose: Building permits authorize the physical construction of your project. This
ensures your plans meet building codes related to structural integrity, safety features,
materials, and accessibility.
 Issuing Authority: Issued by the local building department.
 Possible Considerations: Structural soundness, fire safety measures, foundation design,
electrical and plumbing systems, accessibility features (ramps, doorways), and energy
efficiency standards.
3.1.8.6 Insurance
A. Project Property Insurance:
 This policy protects the completed structure (building) itself against physical damage or
loss after construction is finished.
 It's similar to homeowners insurance but applies to commercial or residential structures
under development.
 Coverage typically starts when the builder's risk policy ends (explained below).
 Common coverages include fire, theft, vandalism, and weather events.
B. Builder's Risk Insurance (Course of Construction Insurance):
 This is the primary insurance for a construction project while it's underway.
 It protects the structure itself, along with materials, tools, and temporary structures on the
site.
 Covers losses due to fire, theft, vandalism, weather events, and other specified perils.
 Can be purchased by the project owner or the general contractor.
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C. All-Risk Builder's Risk Insurance:
 This is a broader form of builder's risk insurance.
 In addition to the coverages included in a standard builder's risk policy, it also insures
against unforeseen events not explicitly listed in the policy.
 This broader coverage comes at a higher premium.
D. Termination of Risk Insurance:
 This is not a standalone policy but rather an endorsement that can be added to a builder's
risk policy.
 It provides coverage for a specified period after construction is complete but before the
project is officially handed over to the owner.
 This covers any potential issues that might arise during this period, such as damage
caused by testing or cleaning activities.
1. Termination of the contract
There are several ways a construction contract can be terminated,
A. Impossibility of Performance (Frustration):
This occurs when an unforeseen event makes completing the contract impossible, illegal, or
fundamentally different from what was originally anticipated. Here's what it entails:
 Trigger: An unexpected event that renders fulfilling the contract impractical or
impossible. Examples include natural disasters, war, or a sudden change in the law that
makes the project illegal.
 Impact: Both parties are excused from further performance. The contractor may be
entitled to compensation for work already completed.
B. Breach of Condition of Contract:
This happens when a party fails to fulfill a fundamental term of the contract. A breach of
condition is more serious than a breach of warranty (minor term).
 Trigger: A serious breach by either party, such as the owner failing to make payments or
the contractor delivering substandard work.
 Impact: The innocent party (who did not breach) can terminate the contract and
potentially sue for damages.
C. Foreclosure by Agreement:
This is a mutual termination agreed upon by both the owner and the contractor.
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 Trigger: Both parties decide it's in their best interest to end the contract, perhaps due to
unforeseen circumstances or a change in project scope.
 Impact: The terms of termination are negotiated and documented in an agreement. This
may involve settling outstanding payments and determining who owns partially
completed work.
D. Rescission:
This involves canceling the contract and returning both parties to the positions they were in
before it began. It's rare in construction but can occur in specific situations.
 Trigger: Misrepresentation, fraud, or duress used to induce one party to enter the
contract.
 Impact: The contract is considered void, and any work completed or payments made
may need to be reversed.
E. Completion of Contract:
This is the ideal scenario where the project is finished according to the plans and specifications
outlined in the contract.
 Trigger: The contractor fulfills all their obligations, and the owner accepts the completed
work.
 Impact: The contract terminates successfully, and final payments are made to the
contractor.
3.1.8.7 Indemnification (Levels of Protection)
Indemnification clauses in construction contracts vary in the extent to which they shift liability
from one party (indemnitor) to another (indemnitee). Three common forms of construction
indemnification, ranging from least to most protective for the indemnitee:
A. Limited-Form Indemnification
This is the most basic and least risky option for the indemnitor. It offers minimal protection to
the indemnitee.
 Scope: The indemnitor typically agrees to cover only their own negligence and the
negligence of their employees or subcontractors directly under their control.
 Protects Against: Losses arising from the indemnitor's faulty workmanship, omissions,
or breaches of contract.
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 Benefits: Limited financial risk for the indemnitor.
 Drawbacks: Provides minimal protection for the indemnitee, who may still be liable for
other parties' negligence or unforeseen events.
Example: The contractor agrees to indemnify the owner for any damages caused by the
contractor's own negligence or the negligence of their employees while performing the work.
B. Intermediate-Form Indemnification
This form offers a more balanced approach, providing broader protection for the indemnitee.
 Scope: The indemnitor agrees to cover their own negligence, as well as the negligence of
their employees and subcontractors (including lower-tier subcontractors).
 Protects Against: In addition to the limited-form coverage, it may extend to losses
arising from defective materials supplied by the indemnitor or their subcontractors,
certain code violations, and some third-party claims.
 Benefits: Provides the indemnitee with more protection than a limited-form clause.
 Drawbacks: The indemnitor takes on more risk, but it's still not as broad as a broad-form
clause.
Example: The contractor agrees to indemnify the owner for any damages caused by the
contractor, their employees, or any subcontractors working on the project, including damages
caused by defective materials supplied by the contractor or a subcontractor.
C. Broad-Form Indemnification
This is the most comprehensive form of indemnification, offering the strongest protection for the
indemnitee but also carrying the most risk for the indemnitor.
 Scope: The indemnitor agrees to cover a very wide range of losses, potentially including
their own negligence (which may be unenforceable in some jurisdictions) and the
negligence of anyone involved in the project, even third parties not under the
indemnitor's control.
 Protects Against: In addition to intermediate-form coverage, it may extend to delays,
environmental issues, injuries to third parties, and permitting issues, regardless of fault.
 Benefits: Provides the indemnitee with the most protection from potential liabilities.
 Drawbacks: The indemnitor takes on significant financial risk, and some provisions may
be found unenforceable by courts (particularly those indemnifying for own negligence).
Example: The contractor agrees to indemnify the owner for all claims, losses, or expenses
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arising out of or in connection with the project, regardless of cause.
3.1.8.8 Amendment
The terms listed are all reasons why a construction contract might need to be amended,
A. Change Order: This is a formal, written agreement between the owner and contractor
that outlines modifications to the original scope of work, price, or schedule. Change
orders are typically used for significant changes that impact the project in a meaningful
way.
B. Construction Change Directive (CCD): This is a written instruction from the owner to
the contractor to perform work outside the original contract scope. CCDs are often used
for smaller changes, but they should still be documented to avoid confusion or disputes
later.
C. Written Order for a Minor Change: Similar to a CCD, this is a written instruction for a
minor adjustment to the project. This might be used for things like changing a paint color
or adding an outlet. While minor, it's still important to have a written record to ensure
everyone is aware of the change.
Authority to sign construction contracts
A. Actual Authority: This refers to the power a person has to bind their company or client
to a contract based on their official position or a specific grant of authority. For example,
a company president might have actual authority to sign any contract, while a project
manager might only have actual authority to sign contracts up to a certain dollar amount.
B. Apparent Authority: This arises when a company or client leads someone to believe,
through words or actions, that a person has the authority to sign a contract on their behalf.
Even if the person doesn't have actual authority, the company or client can still be bound
by the contract if they created the appearance of authority. For instance, if a company
consistently allows a project manager to sign contracts without objection, they might be
held liable for a contract signed by that manager even if they exceeded their actual
authority.
C. Authority to Sign Contracts: This is a broader concept encompassing both actual and
apparent authority. When evaluating a construction contract, it's essential to verify that
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the person signing has the legal power to bind the other party. This can be done by
reviewing the individual's job title, company structure, or any specific delegation of
authority documents.
3.1.9 Contract awarding process
3.1.9.1 Competitive bid contracting

Competitive bid contracting is a common method used by organizations to procure goods or
services,
Procedure:
i. Project Definition & Documents: The project owner outlines the project scope,
specifications, and timelines. They then create bidding documents including plans,
specifications, and contract terms.
ii. Invitation to Bid (ITB): The owner releases an ITB announcing the project and inviting
qualified contractors to submit bids.
iii. Pre-Bid Meeting: The owner may hold a pre-bid meeting to clarify the project details
and answer contractor questions.
iv. Bid Submission: Contractors review the documents, estimate project costs, and submit
sealed bids by the deadline. Bids typically include a detailed breakdown of costs and a
timeline for completion.
v. Bid Evaluation: The owner evaluates bids based on pre-defined criteria like price,
qualifications, experience, safety record, and references. They may shortlist a few
contractors for further discussion or clarification.
vi. Contract Award: The owner selects the bid that best meets their needs and negotiates
the final contract terms with the chosen contractor. This doesn't always have to be the
lowest bid, but price is usually a major factor.
vii. Contract Signing: Once terms are finalized, both parties sign the formal construction
contract.
Advantages of competitive bidding:
 Cost-Effective: Competition among contractors encourages them to offer competitive

pricing, potentially saving the owner money.
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 Fairness & Transparency: The process is open to qualified contractors, promoting
fairness and reducing the risk of favoritism.
 Multiple Options: The owner receives proposals from various contractors, allowing
them to compare qualifications and choose the best fit for the project.
 Benchmarking: Competitive bids help establish a benchmark for project costs, aiding
future project budgeting.
Disadvantages of competitive bidding:
 Time Consuming: The bidding process can be lengthy, involving advertising, bid
preparation, evaluation, and negotiation.
 Focus on Price over Quality: The emphasis on low bids may lead some contractors to
submit proposals with unrealistic timelines or sacrifice quality materials or workmanship
to meet a lower price point.
 Limited Contractor Selection: The pool of qualified bidders may be limited, especially
for specialized projects.
 Discourages Innovation: Contractors might be hesitant to propose innovative solutions
if they fear their bids will be seen as too risky or expensive.
3.1.9.2 Negotiated contracting in construction projects

Negotiated contracting is an alternative approach to selecting a contractor for a construction
project, compared to the competitive bid process.
1. Contract cost:
 Negotiated contracts may not necessarily be the cheapest option. The focus is often on
finding the best fit for the project, considering factors beyond just price.
 The final cost can be influenced by the contractor's expertise, proposed solutions, and risk
allocation in the contract.
2. Contract obligations:
 The contract clearly defines the obligations of both parties. This includes the scope of
work, quality standards, completion timelines, payment terms, and risk allocation for
unforeseen circumstances.
 Negotiated contracts often allow for greater flexibility in adapting to changes during
25
construction compared to rigid bid contracts.
3. The program of works:
 The program of works, which outlines the project schedule and key milestones, is
typically developed collaboratively during negotiations. This fosters better
communication and understanding between owner and contractor.
Advantages of negotiated contracting:
 Collaboration & Innovation: The collaborative nature encourages innovation and

finding solutions that meet the project's specific needs.
 Expertise & Quality: Negotiating with qualified contractors allows the owner to
leverage their expertise and potentially achieve higher quality construction.
 Risk Management: Risk allocation can be tailored during negotiations, ensuring a fairer
distribution of responsibility for unforeseen circumstances.
 Faster Project Start: Negotiated contracting can sometimes expedite the project start
time compared to waiting for bids and evaluations.
Disadvantages of negotiated contracting:

 Lack of Transparency: The process can be less transparent than competitive bidding,
raising concerns about favoritism or hidden costs.
 Limited Competition: Negotiating with a select few contractors reduces competition,
potentially leading to less competitive pricing.
 Time Investment: Negotiations can be time-consuming, requiring significant effort from
both the owner and the contractor.
 Reliance on Negotiation Skills: The success of negotiated contracting heavily depends
on the owner's ability to negotiate effectively.
3.1.9.3 Competitive sealed proposals
A competitive sealed proposal (CSP) is a formal procurement method used to award contracts
based on a combination of factors, not just price. The key aspects of CSP in the contract
awarding process:
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Process:
A. Request for Proposal (RFP): The awarding entity issues an RFP document outlining the
project scope, evaluation criteria, and submission requirements. This document clearly
defines what they're looking for and how proposals will be judged.
B. Proposal Submission: Interested vendors or contractors submit sealed proposals by a
deadline. These proposals typically include:
o Technical approach to completing the project
o Qualifications and experience of the team
o Project timeline and milestones
o Cost breakdown (though not always the sole focus)
C. Proposal Evaluation: A committee evaluates proposals based on the pre-defined criteria
in the RFP. This may involve scoring each proposal against categories like technical
merit, experience, project schedule, and cost.
D. Shortlisting & Discussions: The committee shortlists a few top proposals and may hold
discussions with these vendors to clarify aspects of their proposals or negotiate minor
changes.
E. Contract Award: The committee selects the proposal that best meets the project's
overall needs and negotiates the final contract terms with the chosen vendor.
3.1.9.4 Other contract awards

 Construction by force account: In this approach, the owner directly hires and manages
the labor, materials, and equipment for the project. This method gives the owner the most
control over the project, but it also requires significant in-house expertise in construction
management.
 Job order contracting: Here, the owner contracts with a pre-selected pool of contractors
to complete specific tasks or "jobs" as needed. This is a good option for ongoing
maintenance or repair work where the scope of work may not be fully defined upfront.
 Time and materials contracts: With this method, the owner pays the contractor for the
actual labor hours spent and materials used on the project, plus a markup for overhead
and profit. This can be helpful for projects with an uncertain scope of work, but it's
important to have a clear agreement on the labor rates and material costs beforehand.
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Learning outcome 3.2: Prepare contractual documents
3.2.1 Contract documents

The contract is defined by the contract documents, which are developed from the tender
documents. In a logical order, these documents refer to the following subjects:
 Input from the client (task description).

 Output of the contract (specifications, results to be achieved).
 Prices for the contractor's contribution.
 Responsibilities and procedures (liability, resources provided, time
schedule, payment conditions, changes procedures, etc).
Contract documents are usually arranged according to the following sequence:

 General (for any project).
 Special (for a specialty area of the project).
 Supplementary (unique to a given project).
 Additional (during bidding or negotiation).
 Agreement form (for singing very important and particular clauses).
 Modifications (during contract fulfillment).
The complete contract agreement usually consists of the following documents:
 Conditions (general, special, supplementary).
 Drawing and specifications.
 Addenda (an attachment to a document, typically used to modify the original terms, it is
used to include new information that was discovered after a report was finalized)
 Agreement form.
 Modifications.
The most important document from the legal point of view is the agreement. It is sometimes
called the contract. Since so many documents are included as contract documents, the
agreement is the better term for this particular one. The form of the agreement can be
standardized and used for many projects, or a unique document can be prepared for each
project. The standard form of agreement prescribed by the American
Institute of Architects has proved to be satisfactory and has been used on many building
28
projects with good results. The form followed for non-building projects is often more
varied. Man: agencies have own standard forms, which are used on all their projects.
Information usually included in the agreement is of three parts. The first part is a short
introductory paragraph which defines the parties, gives the date of the agreement, and state
that each party agrees to what follows. The second part contains the elements of contract
and defines the work to be undertaken. The final paragraph confirms the agreement and
provides space for signatures of the parties.
3.2.2 Form of contract
3.2.2.1 The contract forms

The three construction project contract forms you listed cater to different needs in a construction
project,
A. Standard Building Contract with Quantities (SBCQ):

 This is a detailed contract that outlines the specific quantities of materials and labor
required for the project.
 It's suitable for projects with a well-defined scope of work, where both parties (owner and
contractor) have a clear understanding of the requirements.
Benefits:
o Provides clarity on costs and reduces the risk of disputes over unexpected
expenses.
o Simplifies the change order process if adjustments are needed during
construction.
Drawbacks:
o Requires detailed planning and upfront investment in creating the bill of
quantities.
o May not be ideal for projects with an evolving scope of work.
B. Standard Building Contract without Quantities (SBCNQ):
 This contract outlines the general scope of work but doesn't specify exact quantities of
materials or labor.
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 It's used for projects where the final design is still under development or there's some
uncertainty about the materials needed.
Benefits:
o Offers more flexibility for changes during construction.
o May be quicker and less expensive to set up compared to SBCQ.
Drawbacks:
o Increases the risk of cost overruns if the project requires more materials or labor
than anticipated.
o Change orders can be more complex to negotiate without pre-defined quantities.
C. Intermediate Building Contract (IBC):
 This is a less common option that falls somewhere between SBCQ and SBCNQ.
 It may specify some key materials or labor quantities, but not with the same level of
detail as an SBCQ.
 It can be used for projects with a moderately defined scope where some flexibility is
desired.
3.2.2.2 Selection criteria of the form of contract

The type of work, project size, and procurement method are all crucial factors to consider when
selecting the most suitable construction contract form,
A. Type of Work to be performed:

 Complexity: Complex projects with intricate specifications might benefit from a detailed
Standard Building Contract with Quantities (SBCQ) for clarity and reduced risk of
disputes. Conversely, simpler projects could function well with a Standard Building
Contract Without Quantities (SBCNQ) or Intermediate Building Contract (IBC) for more
flexibility.
 Risks involved: High-risk projects, like those involving hazardous materials or
innovative technologies, might require a more risk-averse contract like a SBCQ. Lower-
risk projects might allow for a more flexible approach with a SBCNQ or IBC.
B. Size of Project:
 Project Budget: Larger projects with significant budgets might justify the investment in
creating a detailed SBCQ to manage costs effectively. Smaller projects might find a
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SBCNQ or IBC more cost-effective.
 Project Resources: Large projects often have dedicated teams for planning and
managing details. A SBCQ might be manageable in such a case. Smaller projects with
limited resources might struggle with the upfront effort required for a SBCQ.
C. Procurement Method to be used:
 Design-Bid-Build (DBB): This traditional method, where the owner provides the design
and then solicits bids for construction, often uses a SBCQ for clear pricing and risk
allocation.
 Design & Build (D&B): Here, the contractor handles both design and construction. A
SBCNQ or IBC might be more suitable to accommodate design changes during
construction.
 Public-Private Partnership (PPP): These complex projects often involve custom

contracts tailored to the specific risk-sharing agreement between public and private
entities.
3.2.2.3 Advantages of using standard forms of contract

A. Efficiency and Cost Savings:
 Reduced Drafting Time: Standard forms eliminate the need to draft a contract from
scratch for each project, saving significant time and legal fees.
 Streamlined Negotiations: Predefined terms provide a foundation for negotiations,
focusing discussions on specific project details rather than core legal principles.
B. Clarity and Consistency:
 Clear Wording: Standard forms are typically drafted by legal professionals to ensure
clear and concise language, minimizing misinterpretations.
 Consistent Application: Using the same form for similar projects promotes consistency
in contractual expectations and risk allocation.
C. Risk Management and Dispute Resolution:
 Established Precedents: Standard forms often have a well-established legal history, with
court cases interpreting their clauses. This can be helpful in resolving disputes.
 Balanced Risk Allocation: Standardized terms are often developed by industry bodies to
ensure a fair balance of risks and responsibilities between owner and contractor.
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3.2.3 Construction project contract drawings
3.2.3.1 General arrangement of drawings

The general arrangement of drawings, often referred to as General Arrangement (GA) drawings,
typically show a collection of different views that depict a complete picture of a building or
structure on a site,
A. Site Location: This might be a separate drawing or included in a plan view, showing the
position of the plot within the larger context. It could include details like neighboring
buildings, roads, and relevant topographical features.
B. Position of the Structure at Site: This is typically shown in a plan view (looking down
from above) and indicates how the building sits on the plot. It considers factors like
setbacks from property lines, access points, and orientation.
C. Floor Plans: These are horizontal cross-sections of the building at specific levels,
typically ground floor, each floor level, and maybe the roof. Floor plans depict the layout
of rooms, walls, doors, windows, and other fixtures on that level.
D. Elevations: These are vertical representations of the exterior walls of the building, often
from various sides (front, back, sides). Elevations show the external appearance,
including the number of floors, window and door placements, and any architectural
details on the facade.
E. Sections: These are vertical representations that cut through the building to reveal the
internal layout. Sections can be used to show details like floor-to-ceiling heights, roof
pitch, interior wall locations, and how different building elements come together.
3.2.3.2 Construction project drawing content (key information)

A. Name and Address of the Consultant:
 This identifies the professional who created the drawing, be it an architect, engineer,
surveyor, or other design consultant.
 It ensures accountability and allows for contacting the originator for clarification if
needed.
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B. Drawing Number for Reference:
 This unique identifier helps differentiate various drawings within a project set.
 It facilitates easy referencing and retrieval of specific drawings during construction.
C. Scale:
 This indicates the proportional relationship between the drawing dimensions and the
actual building measurements.
 It allows construction workers and engineers to accurately interpret the dimensions
shown on the drawings and translate them into real-world construction.
D. Title:
 The title clearly describes the content of the drawing.
 This could be "Ground Floor Plan," "North Elevation," or "Roof Section Detail,"
depending on the specific view or information depicted.
 A clear title quickly conveys the purpose of the drawing to anyone reviewing it.
In addition to these core elements, construction drawings may also include other relevant
information such as:
 Revision Cloud: This highlights areas on the drawing that have been modified, along
with a revision number for reference.
 Date: This indicates when the drawing was created or last revised.
 Client Name and Project Name: This identifies the project for which the drawing is
intended.
 Key Plan: A small-scale inset drawing showing the location of the specific drawing
within the entire project site.
 Legend: This explains symbols, abbreviations, or specific materials used in the drawing.
3.2.4 The purpose of schedules in contract
Schedules in contracts serve several important purposes that benefit both the owner and the
contractor in a construction project:
 Performance Measurement: Schedules can be used as a benchmark to track the
progress of the project against the planned timeline. This allows for course correction if
there are any deviations or delays.
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 Resource Allocation: By outlining the sequence of activities, schedules help determine
when and where specific resources (like manpower or equipment) will be needed. This
facilitates efficient resource allocation throughout the project.
 Budget Management: Schedules can be linked to the project budget to estimate cash
flow requirements at different stages. This allows for better financial planning and avoids
potential cash flow issues.
 Client/Stakeholder Communication: Schedules can be a useful tool for keeping clients
and stakeholders informed about the project's progress. Clear and concise schedules can
help manage expectations and demonstrate accountability.
 Incentivization: Some contracts may use completion bonuses tied to specific milestones
outlined in the schedule. This can incentivize the contractor to adhere to the timeline.
3.2.5 The content of bills of quantity in contract
A bill of quantities (BOQ) typically contains the following elements:

A. Preliminaries: This section sets the overall context for the project. It might include items
like contract conditions, insurances required, program timelines, and site information.
B. Preambles: This section clarifies how to interpret the BOQ itself. It explains things like
units of measurement, how quantities are calculated, and any abbreviations or symbols
used.
C. Measured Works: This is the core of the BOQ. It's a detailed breakdown of all the
physical works required for the project. This includes things like:
o Materials: Listed by type, quantity, and specification (e.g., 100 cubic meters of
ready-mix concrete, 500 square meters of gypsum board).
o Labor: Listed by type of work and estimated labor hours.
o Plant and equipment: Listed by type and duration of use.
D. Prime Cost and Provisional Sums:
o Prime cost (PC) items are those where the owner purchases materials directly, like
specialized equipment or finishes. The BOQ might allocate a budget amount for
these items based on estimates.
o Provisional Sums (PS) are allowances for unforeseen works that may be identified
later in the project. The BOQ includes a sum to cover these potential costs.
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E. Appendices: This section can contain any additional supporting information relevant to
the BOQ, such as detailed specifications, drawings, or manufacturer's data for specific
materials.
3.2.6 The purpose of bill of quantities in contract
 Tendering: This is the primary purpose of a BOQ. It provides a standardized document

for contractors bidding on a project. The BOQ outlines the exact quantities and qualities
of materials and labor required, ensuring all bids are based on the same information. This
allows for a fair and apples-to-apples comparison of bids from different contractors.
 Cost planning: The BOQ can also be used by the project owner or their consultants for
initial cost estimating and budgeting purposes. By having a breakdown of the materials
and labor quantities, they can get a sense of the overall project cost.
 Fair agreement among contract parties: With a clear BOQ outlining the scope of
work, both the owner and the contractor have a shared understanding of the project
requirements. This reduces the risk of misunderstandings, disputes, and claims later on
during construction. The BOQ becomes a key reference point throughout the project
lifecycle.
Elements of specifications
3.2.7.1 Specification during tendering

A. Functional Specifications:
Focuses on the "what" and "why" of the project. This describes the intended use of the
construction and the desired outcomes.
Examples of functional specifications:
o The building needs to accommodate 100 occupants.
o The office space should have access to natural light.
o The fire alarm system must meet all relevant safety codes.
B. Technical Specifications:
Focuses on the "how" of the project. This details the specific requirements for materials,
dimensions, performance criteria, and construction methods.
Examples of technical specifications:
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o Walls shall be constructed with concrete blocks of a minimum compressive strength of
30 MPa.
o Windows must have a U-factor of below 0.5 for energy efficiency.
o All electrical wiring must comply with national standards (e.g., National Electrical Code
- NEC).
3.2.7.2 Specification during construction
A. Specifications during material purchasing:

o The technical specifications from the tender documents become the reference point for
purchasing materials.
o These specs ensure the materials meet the required standards for quality, performance,
and compatibility.
o For instance, the concrete block specification will dictate the strength and size of blocks
purchased for the walls.
B. Specifications during construction activities:
o The specifications provide detailed instructions for how construction activities should be
performed.
o This includes things like installation methods, sequence of works, workmanship
standards, and health and safety protocols.
o For example, specifications might detail the proper way to install drywall, including joint
treatment and finishing techniques.
C. Specifications during building commissioning:
o Once construction is complete, the building systems are tested and commissioned to
ensure they meet the performance criteria outlined in the specifications.
o This applies to heating, ventilation, air conditioning (HVAC), plumbing, electrical
systems, and fire safety systems.
o The specifications will define the testing procedures and acceptable performance
benchmarks.
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3.2.7.3 Specification applied by building contractor:
A. Specification during personnel recruitment:
While not a direct specification, the project requirements outlined in the overall project
specifications will influence the type of personnel the contractor needs to recruit. For example, a
project requiring specialized welding techniques would necessitate recruiting workers with those
skills.
B. Specifications to measure labor performance:
Specifications themselves wouldn't be used to measure performance, but they do provide the
benchmarks against which performance is judged. For example, specifications might outline the
expected quality of a finished weld. Supervisors would then use these quality standards to assess
the performance of welders on the job.
C. Specifications to get legal documents:
Specifications are not legal documents themselves. However, well-written specifications can
help to avoid legal disputes during construction. Clear and detailed specifications ensure all
parties involved understand the project requirements, reducing the risk of disagreements about
what was supposed to be delivered.
3.2.7.4 Contract provisions

A contract provision is a specific clause or stipulation within a legal agreement, outlining the
rights and obligations of the parties involved. These provisions are designed to be clear and
enforceable, and they cover a variety of aspects related to the agreed-upon task or service,
1. Contract document copies to contractor
These are the typical contract documents that would be provided to a contractor during the
bidding or tendering process for a construction project:
A. Copy of the form of contract: This document outlines the general terms and conditions
of the contract, including things like payment terms, risk allocation, dispute resolution
procedures, and insurance requirements. It provides a clear understanding of the rights
and obligations of both the owner and the contractor.
B. Copies of the contract drawings: These are detailed technical drawings that illustrate
the design and layout of the project. They specify things like dimensions, materials,
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finishes, and the location of building elements. Having these drawings is essential for the
contractor to understand the scope of work and prepare an accurate bid.
C. Copies of the unpriced bill of quantities (BOQ): As mentioned earlier, the BOQ is a
breakdown of the materials, labor, and equipment required for the project. An unpriced
BOQ provides the contractor with a detailed list of the quantities needed, but without any
pricing information. This allows all bidders to base their bids on the same workload and
promotes fair competition during tendering.
D. Copies of any descriptive schedules: These schedules might include additional details
that aren't captured in the drawings or BOQ. They could specify things like specific
material brands or product models, required finishes or performance criteria, or
sequencing of construction activities.
2. Availability of documents on construction site:
A. Contract drawings: Printed copies of the contract drawings are usually kept on-site in a
designated document holder or toolbox. These drawings are critical for reference by
various personnel throughout construction, such as site supervisors, quality control
inspectors, and subcontractors.
B. Bills of quantities (BOQ): Similar to drawings, a printed copy of the BOQ might be kept
on-site for reference. However, in increasingly digital job sites, the BOQ might be
available electronically on tablets or computers used by site personnel. This allows for
easier access and reduces reliance on paper copies.
C. Descriptive schedules: The availability of descriptive schedules on-site depends on their
format and importance to daily tasks. For crucial information, printed copies might be
included with the drawings or BOQ. If the schedules are lengthy or updated frequently,
they might be accessed electronically through shared drives or project management
software.
D. Master program: This document outlines the overall project schedule, including
milestones, key activities, and their durations. The master program is essential for
planning and coordination on-site. Traditionally, a printed copy might be displayed in a
central location like the site office. However, digital versions are becoming more
common, accessible through project management software or web-based platforms. This
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allows for real-time updates and easier sharing among stakeholders.
In addition to these documents, construction sites may also have access to other relevant
paperwork electronically or in hard copy, such as:
 Site safety plans
 Material submittal approvals
 Inspection reports
 Change order documents
 Meeting minutes
3.2.8 Discrepancies in Construction Documents: Techniques and Resolution
Discrepancies in construction documents can lead to delays, cost overruns, and even legal
disputes. Here's how to handle them effectively:
3.2.8.1 Discrepancies:
A discrepancy is any inconsistency or contradiction between different project documents. It can
occur between:
 Contract drawings and specifications: Dimensions might not match, materials might be
specified differently, or details might be missing in one document.
 Bill of quantities (BOQ) and drawings: Quantities listed in the BOQ might not
correspond with the actual work required in the drawings.
 Specifications and descriptive schedules: There might be conflicting information about
specific materials or finishes.
3.2.8.2 Techniques to Scrutinize Discrepancies:

 Thorough review: Carefully examine all contract documents during the bidding and
tendering stage. Look for inconsistencies and ambiguities.
 Cross-referencing: Compare information across drawings, specifications, BOQs, and
schedules. Identify any contradictions.
 Issue logs: Maintain a log to record identified discrepancies, their location in the
documents, and the potential impact on the project.
 Communication: Promptly communicate any discrepancies to the relevant parties, such
as the architect, engineer, or contract administrator.
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3.2.8.3 Discrepancies Correction:
3 Clarification: Seek clarification from the document author (e.g., architect, engineer) if the
discrepancy is due to unclear wording or omissions.
4 Issuing amendments: If clarification reveals an error, a formal amendment (e.g.,
addendum, revision) should be issued to all parties, updating the affected document.
5 Negotiation: If discrepancies involve changes to the scope of work or budgets, negotiation
might be necessary between the contractor and the owner to reach a mutually agreeable
solution. This may involve adjusting the contract price or schedule.
Learning Outcome 3.3: Execute contract
3.3.1 Construction project Contract parties
A. The Client (Employer):
 The party commissioning the construction project.

 This could be a property owner, developer, government agency, or any entity who desires
a building or structure to be built.
 Responsibilities:
o Defines project requirements and objectives.
o Secures funding for the project.
o Appoints the architect, engineer, and potentially other consultants.
o Enters into a contract with the main contractor.
o Makes payments to the contractor according to the contract terms.
B. The Contractor (Main Contractor):
 The party responsible for the overall construction and delivery of the project according to
the contract specifications.
 May subcontract specific tasks to specialist subcontractors, but remains ultimately
accountable to the client.
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Responsibilities:
o Reads and understands the contract documents.

o Plans, schedules, and manages the construction process.
o Procures materials and labor.
o Ensures compliance with building codes and regulations.
o Manages health and safety on the construction site.
o Communicates progress and any issues to the client.
o Completes the project on time, within budget, and according to the agreed-upon
standards.
C. The Specialist (Subcontractor):

A company or individual hired by the main contractor to perform specific tasks within the
construction project.
Examples include electrical contractors, plumbers, roofing specialists, or excavation companies.
Responsibilities:
o Enters into a subcontract agreement with the main contractor, outlining specific
tasks and deliverables.
o Provides the necessary labor and materials to complete their assigned work.
o Maintains safety standards on their portion of the project.
o Completes their work as per the subcontract terms and schedule.
3.3.2 Contract obligations:
In a construction project contract, "contact obligations" likely refers to the individual duties each
party involved in the project agrees to fulfill.
A. Client obligations
 Payment for the work done
 Legal duties
 Cooperating with the contractor
 Selecting all professionals on the project
 Warranting the plans and specifications
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B. Contactor obligations
 Planning for construction
 Leading construction activities
 Supervising construction activities
 Correction of patent Errors
 Coordination of all parts of the Work
C. Specialist obligations
 Production and coordination of all plans and specifications
 Code compliance
 Interpretation of the documents
 Diligence, skill and good judgment
3.3.3 Contract negotiations
3.3.3.1 Groundwork for negotiation

 Laying foundations: This refers to the initial steps of preparing for a negotiation, which
involve understanding your own interests and priorities, researching the other party's
position, and setting realistic goals for the outcome.
 Establishing procedure: This involves agreeing on the format of the negotiation, such as
the location, communication channels, and who will be involved from each side. It also
includes setting ground rules for respectful communication and decision-making.
 Preparing for negotiations: This is a broad term that encompasses all the activities you
do to get ready for the actual negotiation. This could involve researching market rates,
anticipating the other party's arguments, practicing your negotiation style, and preparing
any presentations or visual aids you might use.
 Developing alternatives: This is a crucial aspect of groundwork. It involves
brainstorming and planning for different scenarios in case the negotiation doesn't go as
planned. Having a "Plan B" (or even a Plan C) strengthens your position and gives you
the confidence to walk away if the other party's offer doesn't meet your needs.
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3.3.3.2 Contract negotiation performance
The recommended approach for negotiating a construction project contract:
A. Constructive Tactics
 Focus on open communication, collaboration, and building a win-win situation for all
parties involved.
 By working together, you can achieve a balanced contract that sets the project up for
success and minimizes the risk of future disputes.
B. Aggressive Tactics: This approach involves pressuring the other party with threats or
ultimatums. While it might get you what you want in the short term, it can damage
working relationships and lead to resentment. This can hinder future collaboration and
potentially result in poorer quality work or delays.
C. Tactics and Counter Tactics: This focuses on outmaneuvering the other party. It can be
stressful and time-consuming, and it doesn't guarantee a good outcome for the project
itself. The focus becomes "winning" the negotiation rather than finding an agreement that
works well for both sides.
3.4 Selecting the contractor

Selecting key personnel and organizations that will participate in a project is a major step
for the owner and can mean the success or failure of a project. By large, the competitive
bidding process has been the main vehicle for contractors to obtain jobs. The process is
required by law for public projects, which has been the largest percentage of all projects,
except in emergencies such as war or natural disasters. Under this process, a simple
quantitative criterion is used to award the bid to the lowest responsible bidder, thus
potentially obtaining the lowest construction cost. The process, however, has its drawbacks,
including: (1) overlooking important criteria such as contractor’s experience and strength;
(2) potentially causing construction delays and problems if the contractor bids below cost to
win the job; and (3) contributing to adverse relationships between the owner and the
contractor. The competitive bidding process encompasses three main steps: announcement,
bid preparation and bide valuation.
To announce for a project, the owner should have the design completed and a bid package
prepared with all design information. The owner then announces a general call for bidders or
sends a limited invitation to a list of pre-qualified contractors. Through the limited invitation,
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the owner organization can reduce potential construction problems by avoiding unknown
contractors who intentionally reduce their bids to win jobs, particularly if the project requires a
certain experience. Owners, therefore, need to maintain a list of qualified contractors with
whom they had successful experience or by advertising a call for pre-qualification.
3.5 Sub-contracting
On almost all construction projects, some of the work is sub-contracted to specialty
contractors, known as sub-contractors. The greatest part of the work is sub-contracted on
building projects, with a lesser amount usually sub-contracted on heavy construction
projects. Construction contracts generally have clauses pertaining to sub-contracting.
Such clauses often limit the amount of work to be sub-contracted and generally provide that
the client retains the right to approve sub-contractors. The contractor who employs sub-
contractors to carry out part of the works must be totally responsible for their workmanship,
performance, and general behavior on the contract. Any communication on these aspects
should be made between the main contractor and the client.
It is the former's responsibility. Any restrictions on sub-contracting should be made in the

tender documents. If the client wishes a particular sub-contractor to carryout part of the
work, he may then make such a nomination. Nominating sub-contractors in such way is
useful when work of specialized nature dictates such action. It is common for clients to
place other restrictions on sub-contracting, through confirming the main contractor to a list
of approved contractor. This occurs at the tender stage.
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LU4: CARRY OUT PROJECT MONITORING AND EVALUATION
LEARNING OUTCOME 4.1: MONITOR WORK PROGRESS
4.1.1 Interpretation of project outlines
4.1.1.1 Project drawings:
Construction project drawings are a vital part of the building process. They serve as a visual instruction
manual, conveying the design intent and technical specifications to everyone involved in the project from
architects and engineers to construction workers. Here are the three main types of construction project
drawings:
i. Plans: These are horizontal drawings, typically drawn to scale, that depict a building from above as
if the roof has been cut off. They show the layout of walls, doors, windows, and other features on a
particular level of a structure.
ii. Sections: Sections are vertical drawings created as if you cut through the building to reveal the
interior details. They illustrate the relationship between different floors, ceiling heights, and the
location of mechanical, electrical, and plumbing (MEP) systems.
iii. Perspectives: Unlike plans and sections which are technical drawings, perspectives are more
illustrative. They are three-dimensional representations of the building that show what the finished
structure will look like, often from a specific viewpoint. While not essential for construction,
perspectives can be helpful for visualizing the design and communicating it to clients or the public.
4.1.1.2 Contracts and bill of quantities
A bill of quantities, or BoQ or simply BQ, is like a detailed shopping list for a construction project.
Imagine you’re building a house and you need to know exactly how much of each material such as bricks,
cement, and wood you will need. The BoQ does just that. It lists how much of each item is required for
the project.
A bill of quantities is put together by a construction professional called a quantity surveyor. To create it,
they need to know exactly what the building will look like and what materials will be used. Bills of
quantities are mostly used for big construction projects. In the case of smaller projects or renovations, you
might not need a BoQ.
Uses of bills of quantities

Bills of quantities form an integral component of the tender package provided to potential suppliers to
solicit pricing. This is a detailed breakdown of their critical functions:

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i. Standardizing the tendering process
BoQs standardize the tendering process, allowing contractors to prepare precise cost estimates based on
the same information.
ii. Facilitating tender analysis
BoQs enable thorough tender analysis, where both total project costs and individual rates can be
evaluated.
iii. Cost control and projections
BoQs provide detailed schedules and breakdowns, offering owners visibility into cash flow needs over
various project cycles.
iv. Foundation for contracts
BoQs act as the foundation for the final contract between the client and the contractor. In case of disputes
or claims during construction, they provide a reference point for conflict resolution.
v. Transparency and error reduction
By specifying materials and labor, BoQs create transparency around scope and pricing, reducing errors
and misunderstandings.
vi. Maintenance and future expansion
The comprehensive information within a BoQ becomes an invaluable record for future maintenance,
repairs, and potential expansions.
COMPONENTS OF BILL OF QUANTITIES
By now, we all have understood the significance of bills of quantities in construction projects as they
provide us with accurate quantities of items, materials, and labour required for the completion of the
project. While the format may vary, several essential components are typically found in a comprehensive
BoQ:
a. Project information
It includes project details like the project name, owner, location, and the BoQ’s date of creation. This
context is essential for clarity and record-keeping.
b. Items
Each entry in the BoQ is assigned a unique item number to simplify referencing, especially in
extensive lists.
c. Item differentiation
Items are categorised as materials or labour, providing a clear distinction for measurement and pricing
purposes.

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d. Detailed descriptions
The BoQ often includes brief but precise descriptions for each item. For instance, if the list includes
‘paint,’ it might specify whether it is ‘interior’ or ‘exterior’ paint to avoid ambiguity.
e. Unit of measurement
The unit of measurement varies based on whether it is a material or labour unit. Materials are
typically measured in counts such as gallons, cubic, square, linear metres, tons, etc. whereas labor is
measured in time units, such as hours or per installation, depending on the specific task.
f. Quantities
The BoQ specifies the quantity of each material or the time required for each labour item. This
quantification is fundamental to understanding the scope of the project.
g. Unit costs
It indicates the prices for materials and hourly rates or fees for labour. These unit costs are pivotal in
calculating the total costs.
h. Total item cost
For each entry, the BoQ calculates the total cost by multiplying the unit price by its quantity. To
arrive at the overall budget, we sum up the costs of these individual items.
i. Terms and conditions (optional)
Some BoQs include terms and conditions related to the project, such as warranties, payment terms,
and other contractual details.
4.1.1.3 Project schedule review

A thorough project schedule review involves examining three key elements: activities, resources, and
costs. Here is how to approach each:
A. Activities vs. Duration:
 Review Activities: Ensure all necessary activities are included in the schedule. Are there any
missing tasks that could impact the project?
 Duration Estimation: Critically evaluate the estimated duration for each activity. Is it realistic
considering the complexity of the task, resource availability, and potential dependencies?
 Sequencing: Verify the logical flow of activities.
 Schedule Padding: Consider buffer time (slack) for unexpected delays. This helps maintain the
overall project timeline.
 Critical Path Analysis: Identify the critical path - the longest sequence of activities that directly
impacts the project completion date. Delays in any critical path activity will push back the entire
project.

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B. Resource Estimation:
 Resource Identification: Determine the specific resources (human, equipment, materials)
required for each activity.
 Resource Availability: Check if the required resources are available throughout the project
duration. Are there any potential resource conflicts?
 Resource Allocation: Ensure resources are assigned efficiently, avoiding overloading or
underutilizing them.
 Skillsets: Match resources with the specific skillsets needed for each activity.
C. Cost Estimation:
 Direct Costs: Estimate the direct costs associated with each activity, such as labor costs, material
costs, and equipment rental fees.
 Indirect Costs: Factor in indirect costs like project management overhead, utilities, and
insurance.
 Cost Contingency: Include a buffer in your budget to account for unforeseen expenses that may
arise during the project.
 Cost Tracking: Develop a plan to track actual costs throughout the project and identify any
variances from the estimates.
4.1.1.4 Project outline
This outline presents a typical construction project life cycle, encompassing key phases from concept to
completion and handover.
I. Design Phase
 Develop the project concept and vision.
 Conduct feasibility studies and site evaluations.
 Engage architects and engineers for detailed design drawings and specifications.
 Obtain necessary permits and approvals from regulatory authorities.
 Finalize project scope, budget, and schedule.
II. Pre-Construction Phase
 Secure project financing (if applicable).
 Select a general contractor (GC) through bidding or negotiation.
 Finalize contracts with the GC, subcontractors, and key suppliers.
 Develop a detailed construction management plan (CMP) outlining procedures, communication
protocols, and safety measures.

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III. Procurement Phase
 Purchase or source all materials, equipment, and supplies required for construction, ensuring
quality and timely delivery.
 Manage logistics and ensure materials are stored securely on-site.
IV. Construction & Building Phase
 Mobilize the construction team and equipment to the site.
 Execute construction activities according to the approved plans and specifications.
 Conduct regular quality control inspections to ensure adherence to standards.
 Manage health and safety protocols on-site to minimize risks.
 Track progress against the schedule and budget, identifying and addressing any deviations
promptly.
V. Commissioning Phase
 Test, inspect, and verify that all building systems (electrical, plumbing, HVAC, etc.) are
functioning properly and meet performance specifications.
 Train building occupants on the operation and maintenance of these systems.
 Obtain final permits and certificates of occupancy from authorities.
VI. Owner Occupancy
 Handover the completed facility to the owner.
 Provide warranty information and after-sales support for any installed systems or equipment.
VII. Project Close Out
 Finalize all outstanding payments to contractors and suppliers.
 Obtain lien waivers to ensure no outstanding claims exist against the project.
 Archive project documentation for future reference.
 Conduct a project review to identify lessons learned and areas for improvement in future
endeavors.

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4.1.2 Establishing project monitoring plan
4.1.2.1 Purpose of a project work plan
A project work plan is a fundamental tool used in project management to define the steps required to
achieve a specific goal. It serves as a roadmap, outlining the tasks, resources, timelines, and budget
needed to complete a project successfully.
ESSENTIAL INGREDIENTS IN A PROJECT WORK PLAN
a) Scope Definition: A clear and concise description of the project's goals, deliverables, and
boundaries.
b) Work Breakdown Structure (WBS): A hierarchical breakdown of the project into smaller,
more manageable tasks.
c) Task Dependencies: Identifying how tasks are interrelated and which ones need to be completed
before others can begin.
d) Resource Allocation: Assigning the necessary resources (human, equipment, materials) to each
task.
e) Timeline and Schedule: The estimated duration for each task and the overall project timeframe.
f) Budget: A breakdown of the expected costs associated with each task and the total project
budget.
Process of project work plan development
i. Project Initiation: Define the project goals, scope, and stakeholders.

ii. Planning and Scheduling: Develop the WBS, identify task dependencies, and create a timeline.
iii. Resource Allocation: Determine the resources required for each task.
iv. Budgeting: Estimate the costs associated with resources, materials, and other project expenses.
v. Communication and Monitoring: Communicate the plan to all stakeholders and track progress
against the baseline plan.
WAYS TO MAKE A PROJECT WORK PLAN
There are several ways to create a project work plan. Here are a few options:
a) Manual Approach: Use pen and paper or a spreadsheet to list tasks, durations, resources, and
dependencies.
b) Project Management Software: Utilize project management tools that offer features for work

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plan creation, collaboration, and progress tracking.
c) Templates: Find industry-specific or generic project work plan templates online and adapt them
to your specific project needs.
4.1.2.2 Project monitoring plan
A project monitoring plan is a formal document that defines how project performance will be measured
and controlled throughout the project life cycle.
Purpose
It helps to track progress, identify issues early, informed decision-making and get improved
communication of project.
Steps in Project Monitoring:

i. Data Collection: Gather information on project performance based on the defined KPIs and data
collection methods.
ii. Data Analysis: Analyze the collected data to identify trends, deviations from the plan, and
potential risks.
iii. Reporting: Prepare progress reports summarizing project performance against the baseline plan.
iv. Communication and Decision-Making: Communicate findings and potential issues to
stakeholders and make informed decisions to address deviations or adjust the plan as necessary.
v. Continuous Improvement: Regularly review the monitoring plan and make adjustments to
improve its effectiveness throughout the project life cycle.
4.1.2.3 Project management tools

A project management tool is software that helps project managers and teams centralize planning,
organize, and manage their projects. It provides project managers and their teams with a centralized
platform to collaborate, track progress, and manage tasks. They are an essential part of any project
management strategy to ensure that projects are completed on time and within budget.
Project management tools are categorized into four types:
A. Task Management Tools help teams track, assign, and monitor tasks. These tools provide a
central platform for organizing and prioritizing work, enabling teams to meet deadlines and
deliver successful projects.

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B. Collaboration Tools help teams communicate and collaborate on projects. These tools include
features such as chat, video conferencing, and file sharing allowing teams to work together
regardless of their location.
C. Project Planning Tools help project managers plan and manage projects. These tools include
features such as task lists, calendars, and budget tracking helping managers stay organized and
on track with the project.
D. Resource Management Tools help resource managers manage and allocate resources. These
tools include features such as team directories, task assignments, and time tracking. They
ensure that the right people and resources are in place to complete projects and provide data for
optimizing resource allocation.
Key features of project management tools
Project management tools provide a range of features that help teams stay on track and deliver successful
projects. They possess the following key features:
a) Project planning: Project management tools allow teams to create project plans and timelines,
helping to define the scope of the project and identify the tasks and resources needed to
complete it.
b) Collaboration: These tools offer various ways for teams to work together and share
information, such as team calendars, chat, and file sharing. By providing these tools, teams can
stay connected and aligned, even if they in different locations.
c) Reporting: Helps teams track the progress of their projects and identify potential issues in real-
time. By providing regular updates and reports, teams stay informed about the status of their
projects and take action to keep them on track.
d) Time tracking: Enables teams to track the time they spend on tasks, which helps them identify
areas where the project may be behind schedule. By providing this information, teams can take
action to get back on track and ensure that they are making progress toward their goals.
e) Documenting: They provide a central location for storing and accessing all project-related
documents, allowing teams to share and access critical project information easily.
f) Budget tracking: Allows teams to track their project budget and expenses, ensuring that they
stay on track and avoid overspending.

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4.1.2.4 Construction monitoring tools
Construction projects involve numerous moving parts, making close monitoring essential for success.
Some key tools used to track progress, identify potential issues, and ensure projects stay on schedule and
within budget:
a) Gantt Chart: A classic scheduling tool that visually represents project tasks as horizontal bars on a
timeline. It provides a clear overview of the project schedule, task durations, and dependencies.
b) Logic Network: Also known as a Critical Path Method (CPM) network, this tool depicts the logical
relationships between project activities. It helps identify the critical path, the longest sequence of
tasks that directly impacts project completion. Delays in any critical path activity will push back the
entire project timeline.
c) PERT Chart (Program Evaluation and Review Technique): Similar to a logic network, a PERT
Chart focuses on scheduling tasks with estimated durations and variances (optimistic, most likely,
pessimistic). It allows for a more probabilistic approach to scheduling, considering potential
uncertainties in task completion times.
d) Work Breakdown Structure (WBS): A hierarchical breakdown of the project deliverables into
smaller, more manageable tasks. The WBS organizes the project scope into a tree structure, detailing
all the work required to achieve the project goals. It serves as a foundation for planning, scheduling,
resource allocation, and cost estimation.
e) Product Breakdown Structure (PBS): While a WBS focuses on the tasks required to complete a
project, a PBS focuses on the physical components or deliverables that make up the final product (the
building). The PBS breaks down the finished product into its constituent parts, assemblies, and sub-
assemblies. In construction, this could involve breaking down the building into major elements like
foundation, framing, electrical systems, etc., then further detailing each element.
4.1.2.5 Issues to be advised on during project monitoring
Potential issues to monitor and advice on during various aspects of a construction project:
A. Land and Property Acquisition:

o Delays in obtaining land titles or permits.
o Unforeseen property access limitations.
o Unexpected relocation challenges.
o Discrepancies between expected and actual site conditions.

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B. Statutory Consents:
o Delays in securing necessary permits and approvals from authorities.
o Changes in regulations impacting project design or construction methods.
o Non-compliance with environmental regulations.
C. Developer and Project Management Systems:
o Ineffective communication or coordination between stakeholders.
o Weak risk management practices.
o Lack of clear decision-making processes.
o Inadequate resource allocation or planning.
D. Financial Appraisals:
o Cost overruns due to unforeseen circumstances.
o Delays impacting project cash flow.
o Inaccurate initial cost estimates.
o Difficulty securing financing due to changing market conditions.
E. Construction Agreements:
o Ambiguous contract clauses leading to disputes.
o Delays in resolving contractual issues.
o Changes in scope of work not properly documented.
o Contractor performance issues or non-compliance with specifications.
F. Costs:
o Rising material costs impacting project budget.
o Labor cost fluctuations exceeding initial estimates.
o Inefficient resource utilization leading to cost overruns.
o Scope creep (unauthorized changes) increasing project costs.
G. Programme (Schedule):
o Delays caused by bad weather conditions.
o Material shortages or late deliveries impacting construction sequence.
o Labor strikes or unforeseen workforce disruptions.
o Poor planning or scheduling errors leading to inefficiencies.
H. Design and Construction Quality:
o Deviations from design specifications or building codes.
o Poor workmanship or use of substandard materials.
o Defects or errors identified during construction or after completion.
o Inadequate quality control measures.

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4.1.2.6 Monitoring scope creep
Scope creep (sometimes known as “requirement creep” or even “feature creep”) refers to how a project’s
requirements tend to increase over a project lifecycle, e.g., what once started as a single deliverable
becomes five. No one ever wants to see their project fail or lose sight of its original objectives.
Common causes of scope creep and prevention measures:
1. No project scope
This might be an obvious one, but it bears repeating. Without knowing the scope of a project, you don’t
have a clear way to align on and communicate your work to everyone involved. Additionally, if you’re
working with an outside team or agency, you won’t have documentation (such as a statement of
work or work breakdown structure (WBS)) to point to when stakeholders attempt to add new elements to
your project.
2. Poor communication
Once you have your project scope, you then have to share it. If you don’t distribute the document
effectively at the beginning of a project, then your stakeholders won’t be able to give feedback early on.
This early communication prevents things from spiraling later on, when requests to change the deliverable
or timeline could derail your project. Plus, if you get stakeholder buy-in early, you're essentially creating
allies against scope creep.
3. Unclear project objectives
Ultimately, you’re working on this project because you’re aiming to deliver something in particular those
achievements and assets are your project objectives. When you have clear project objectives, your project
team has easy insight into what tasks are and are not contributing to the project’s ultimate success. That
way, you can focus your effort and energy on productive, high-priority work. On the other hand, if you
don’t have clear project objectives, your team members might not know what work to prioritize, and they
might end up working on tasks that don’t contribute to the project’s objectives.
4. Unrealistic project objectives
Ok, so maybe your project objectives are clear but if they’re not something your team can realistically
achieve in the amount of time (and within the scope of your project), then your project will inevitably
either fail or experience scope creep.
5. Too many stakeholders
It’s really hard to steer a project if everyone is trying to grab hold of the steering wheel. Without a clear
project owner the project manager your work can get muddied, and your scope can get muddied, too.
Though you’ll have various stakeholders and collaborators on the project, make sure every team has a

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project lead that’s directly responsible for driving the work forward. To build additional project roles,
consider creating a RACI matrix. RACI stands for the four main roles in project management:
 Responsible. This is the person who is driving the project. They’ll make most of the on-the-
ground decisions.
 Approver. Sometimes, you may need approval from a stakeholder or group of stakeholders. Your
Approvers might set the budget, objectives, or tone, to name a few examples.
 Consulted. Consulted stakeholders are people you might check in with to get their opinion,
insight, or guidance. Though the Responsible & Approver roles have final say, the Consulted role
is usually an expert in the field.
 Informed. This is anyone who needs to know about your project. The Informed role might
include your project team, cross-functional stakeholders, or executive leaders.
6. Ineffective change control process

Even with clearly-defined roles, you still need an effective change control process in place. Change
control is the process of changing an important or foundational element of a project, including project
scope. Instead of allowing stakeholders to simply make changes, a change control process implements a
set of rules and restrictions to guide any project changes. Usually, that includes a process for team
members or stakeholders to submit change requests, a step for those requests to be reviewed by the
project manager and other important project stakeholders, and then a system to judge whether those
changes will be accepted, denied, or deferred.
7. Last minute customer feedback
Customer feedback is key for customer-facing work like new products, launching additional features, or
marketing campaigns. But if you aren’t proactive about collecting feedback, you may get customer
feedback late in the game that completely changes the intent, scope, timeline, or objectives of your
project. This pivot might include changing what you’re already doing, or completely starting over with
new features and new requirements. Sometimes, you will need to change large elements of your project,
and there might not be anything you could have done to stop it.
The best way to reduce the likelihood of this happening is to get plenty of customer feedback, and get it
early.
Benefits to preventing scope creep:
 Producing what you say you’re going to, when you say you’re going to. By preventing scope
creep, you’re more likely to stick to deadlines.
 More time for focused work in the flow state. Scope creep is distracting at best, and downright
disruptive at worst. Without it, you can stay engaged and focused at work, making you

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more productive and happier while you do it.
 The more you put out high-quality, focused work, the more satisfied your customers will be.
Preventing scope creep ultimately results in better results, which means better products and
services for your customers.
Ways to fix scope creep
If you feel scope creep coming on, there are a few things you can do:
a) Resurface the project scope. If project stakeholders are pushing for new deliverables, remind
them of the project scope and what was and wasn’t included in it. Hopefully, that will help the
entire project team re-align on the project’s requirements.
b) If that doesn’t work, try a change control process. Ask the requestor to submit their change
requests through the change control process you’ve set up. Then, review those requests with your
project stakeholders and decide if the request is worth altering your project scope for.
c) If the scope changes are accepted, consider de-prioritizing another deliverable. Is there anything
you can delay or cut altogether to make room for this new work?
d) If there isn’t a way to de-prioritize any currently-planned work, take a look at your project
resources. Use your resource management plan to see if there are any resources you can use to
help you achieve your project objectives.
4.1.3 Project work progress checking
4.1.3.1 Purpose of Project Work Progress Checking

Regularly checking project work progress is crucial for ensuring a project stays on schedule, within
budget, and meets its objectives. Progress reports provide information about the status of the project: the
work completed, work still to be done and potential challenges. They enable organizations to determine if
the project is on track to achieve its goals.
4.1.3.2 Issues to perform in work progress
1) Document management
Proper documentation is the backbone of any construction project, ensuring that everyone is on the same
page. It also helps you track progress accurately. However, many projects suffer due to inadequate
document management systems, which can lead to various problems:

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 Lost or Misplaced Documents: When important project documents, such as blueprints,
contracts, or permits, go missing, it can disrupt the project timeline and lead to costly delays.
 Legal and Regulatory Non-Compliance: Inadequate document management can lead to non-
compliance with legal and regulatory requirements, which can result in costly fines or project
shutdowns.
2) Miscommunication
Miscommunication can lead to a cascade of issues, affecting everything from project scope to safety.
Common miscommunication issues in construction projects:
 Ambiguity in Project Requirements: Unclear project requirements can lead to
misunderstandings and discrepancies in the work to be performed.
 Lack of Timely Updates: Failing to keep stakeholders informed about project progress and
changes can result in dissatisfaction and mistrust.
 Poor Coordination: When different teams and subcontractors are not effectively coordinated, it
can lead to bottlenecks and delays in project execution.
 Safety Risks: Miscommunication about safety protocols can result in accidents and injuries on
the construction site.
3) Scope creep
Specifically, it refers to the gradual expansion of project scope beyond the initial plan without proper
documentation and approval. Scope creep can lead to:
 Budget Overruns: Additional work not accounted for in the budget can lead to increased costs
and financial strain.
 Delays: Expanding the scope without extending the timeline can lead to project delays.
 Disputes: Unapproved scope changes can result in conflicts between project stakeholders,
including clients and contractors.
4) Risk management
Consequently, failing to identify and address these risks can lead to significant issues.
Common risks include unforeseen site conditions, supply chain disruptions, weather-related delays, and
labor shortages. Overall, inadequate risk management can result in:

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 Increased Costs: Unmitigated risks can lead to cost overruns as the project encounters
unexpected obstacles.
 Delays: Managing risks poorly can cause delays in the project schedule.
 Safety Concerns: Ignoring potential safety risks can lead to accidents and injuries on the
construction site.
5) Quality control
Maintaining high-quality construction standards is crucial for the longevity and safety of the built
structure. Common issues in construction projects concerning quality control include:
 Poor Workmanship: Shoddy workmanship can lead to structural issues, maintenance problems,
and, in extreme cases, safety hazards.
 Insufficient Inspections: Failing to conduct thorough inspections and quality checks can result in
subpar construction or defects.
 Material Quality: The use of substandard or counterfeit materials can compromise the quality of
the project.
 Lack of Documentation: Incomplete or inaccurate documentation can make it challenging to
track the quality of work and materials used.
6) Resource management
Effective resource management is a critical aspect of construction projects. This includes managing labor,
equipment, and materials efficiently. Common issues in resource management include:
 Resource Allocation: Allocating too many resources to a specific task can lead to resource
shortages in other areas, causing delays and inefficiencies. On the flip side, insufficient resources
can slow down project progress and lead to missed deadlines.
 Inadequate Inventory Control: Poor control over material inventory can result in wasted
resources, as well as increased costs and delays.
 Unplanned Downtime: Inefficient use of equipment and labor can lead to unnecessary downtime
and lost productivity.

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7) Safety measures
Safety is always a primary concern in construction. Failing to prioritize it can lead to accidents, injuries,
and even fatalities. A few of the common issues in construction projects to consider include:
 Lack of Proper Training: Inadequate training can result in unsafe practices and accidents.
 Insufficient Safety Protocols: Not having clear and enforced safety protocols can lead to
hazardous conditions on the construction site.
 Ignoring Regulations: Non-compliance with safety regulations can result in fines, shutdowns,
and legal issues.
 Inadequate Equipment: Failing to provide and enforce the use of necessary safety equipment
can jeopardize a worker’s well-being.
8) Contingency planning
Construction projects are subject to a wide range of uncertainties, from adverse weather conditions to
unforeseen delays. Having a lack of contingency planning can lead to the following issues:
 Cost Overruns: Without contingency plans, unexpected costs can strain the project budget.
 Customer Dissatisfaction: Failing to manage contingencies properly can lead to customer
dissatisfaction and potential legal disputes.
4.1.3.2 Factors influencing construction progress of construction projects
A. Human Factors:
 Labor Skills and Experience: A skilled and experienced workforce can significantly improve
construction efficiency.
 Labor Availability: Availability of sufficient labor to meet project demands is crucial. Labor
shortages can cause delays and potentially increase labor costs.
 Motivation and Morale: A motivated and engaged workforce is more productive and less likely
to make mistakes. Low morale can lead to decreased productivity and safety issues.
B. Material Factors:
 Material Availability: Timely availability of high-quality materials is essential for maintaining
construction progress. Delays in material deliveries can cause significant disruptions.
 Material Quality: Using poor-quality materials can lead to defects, rework, and potential safety
hazards.
 Material Cost Fluctuations: Fluctuations in material costs can impact project budgets and
potentially require adjustments to the project scope or schedule.

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C. Equipment Factors:
 Equipment Availability and Reliability: Having the right equipment in good working order is
crucial for efficient construction. Equipment breakdowns or lack of availability can cause delays.
 Equipment Maintenance: Proper equipment maintenance is essential to prevent breakdowns and
ensure equipment functions optimally throughout the project.
 Operator Skills: The skills and experience of equipment operators can significantly impact
productivity and safety on the construction site.
D. Financial Problems:
 Cash Flow Issues: Insufficient cash flow can hinder the ability to pay contractors, suppliers, and
workers on time. This can lead to delays, disruptions, and potential legal issues.
 Cost Overruns: Unexpected cost increases due to various factors (e.g., scope creep, material
price hikes) can strain the project budget and necessitate adjustments to the scope or schedule.
 Improper Budgeting and Cost Control: Inaccurate cost estimates or poor cost control measures
can lead to financial problems later in the project.
E. Construction Conditions:
 Weather Conditions: Adverse weather conditions like rain, snow, or extreme temperatures can
slow down construction progress or even halt work completely.
 Site Conditions: Unforeseen site conditions (e.g., unstable soil, presence of hazardous materials)
can lead to delays and require additional resources or engineering solutions.
 Site Access and Logistics: Limited access to the construction site or logistical challenges in
transporting materials and equipment can impact progress.
F. Construction Technology:
 Improper Technology Implementation: Implementing new construction technologies without
proper planning or training can lead to inefficiencies and delays.
 Lack of Technology Adoption: Not leveraging available technologies like Building Information
Modeling (BIM) or project management software can hinder communication, coordination, and
overall project efficiency.
 Technology Integration Challenges: Integrating different construction technologies and
software can be complex and require careful planning to ensure smooth operation and data
exchange.

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4.1.3.3 Steps in project work progress
Those are the five typical stages of a project life cycle, each with distinct objectives and activities,
a) Conception and Initiation

b) Definition and Planning
c) Launch and Execution
d) Performance and Control
e) Project Close
4.1.3.4 Methods to measure project work progress
Project stakeholders are mostly paying attention to three subjects during the execution of projects. They
wonder to know;
(i) whether the project activities are progressing in line with the target work schedule or not,
(ii) Whether the project cost is within the estimated project budget or not, and
(iii) How much is the physical progress of the project?
Usually, the answer to the last question is the most inconsistent one. Since an unbiased measurement
system could not be established at the beginning, progress figures are mainly based on project
stakeholders’ own experiences or subjective judgments. Thus, it will be better to concentrate on the
meaning of physical progress in a project in advance. Physical progress is “the status of a task, activity or
discipline, based on pre-established guidelines related to the amount or extent of work completed”
COMMON METHODS FOR MEASURING PROJECT PROGRESS
Various progress measurement methods have previously been discussed in several studies. Most
commonly accepted methods are listed below:
(i) Units Completed: This method could be used for repeated works where each of the unit work
requires almost the same resources and duration. For example, if it is planned to plant 1.000
trees to a park and 250 of them were already planted, the completion percentage of the work
equals to 25%.
(ii) Incremental Milestones: If a work includes several steps that should be followed in an order,
incremental milestones method could be useful for measuring the project progress. For
example, construction of a foundation basically includes steps such as lean concrete,

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formwork, reinforcement and concrete pouring. Taking into account the total effort required
for the whole foundation, the ratio of total effort required for each step can be calculated as a
weighting in the total scope. Scalar product of progress ratio of each step and its weighting
will give the contribution of that step to the project progress.
(iii) Start / Finish: Some activities have only start and finish points and no other activity has been
defined in between. Leakage test of a pipeline can be taken as an example. Progress ratios of
each point achievement can be defined as 30% - 70%, 50% - 50%, 0% - 100% and progress of
the work can be calculated accordingly.
(iv) Cost Ratio: This method can be used when the project scope is limited with supply of labor
only. Cost will be a linear function of man-hours spent. Thus, cost ratio will be almost same as
spent labor ratio of the project.
(v) Experience / Opinion: This subjective method should be preferred as the last option since
progress figures are mainly based on personal experiences of those who makes the judgment.
(vi) Weighted or Equivalent Units: This method is accepted as the most reliable and consistent
technique. Considering the scope of the project, one of the production units is selected as the
standard unit, and all others production units are converted to the selected one. For example,
welding of a 6” standard sketch carbon steel pipe joint in a pipeline project could be accepted
as the standard welding unit. Then, all other joints on the pipeline should be converted to the
predefined standard welding unit by using coefficients previously determined for
standardization of welding parameters such as diameter, sketch thickness and material type.
Progress ratio of the welding activity is the ratio of total welded 6” equivalent joints to sum of
all 6” equivalent joints in the subject pipeline project.

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Table 1: Example of summary of work progress

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How to measure project progress and monitor status?
To achieve the following should apply these three things:
a) Time monitoring
b) Budget Monitoring
c) Regular Check-Ins [project status meetings, progress reports and site visits]

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4.1.3.5 Monitor project progress
Main Types of Project Monitoring
During each phase, different types of monitoring are essential:

i. Schedule Monitoring:
o Track progress towards milestones and deadlines.
o Utilize Gantt charts, Critical Path Method (CPM), and Earned Value Management (EVM)
techniques.
ii. Budget Monitoring:
o Monitor actual costs against the project budget.
o Identify and address cost variances promptly.
o Utilize cost forecasting to adjust the budget if necessary.
iii. Scope Monitoring:
o Track adherence to the defined project scope.
o Manage changes to scope through a formal process.
o Assess the impact of scope changes on schedule and budget.
iv. Quality Monitoring:
o Ensure project deliverables meet quality standards.
o Conduct inspections, testing, and quality control procedures.
o Address any identified quality defects promptly.
v. Risk Monitoring:
o Proactively track potential risks that could impact the project.
o Implement mitigation plans to minimize the impact of risks.
o Update risk assessments based on project progress.

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LO4.2 CARRY OUT CONSTRUCTION PROJECT CONTROL
4.2.1 Communication at construction site
On the construction site, we communicate through signs, drawings, hand signals, and meetings.
We compile daily reports, take photos, create requests for information (RFIs) and review change
orders. All methods of communication have their advantages and disadvantages.
4.2.1 Project organization structure
It is an essential tool for determining the hierarchy of people, their function, workflow and
reporting system. It is a factor in project management that plays a fundamental role in guiding
and defining the way in which the organization carries out its operations.
Effective corporate communication is vital for the successful execution of Project Management
functions. Primarily the success of a project is measured by technical performance and cost and
schedule objectives¹. In order to achieve this, the PM functions should be executed effectively.
As all PM functions are directly influenced by (in) effective communication, it follows that
organization structures lending itself to effective corporate communication, must be considered
in the organizational planning of every project.
Figure 4.1: Project organization structure

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Forms of communication
 Email
 Text
 Phone calls
 Instant messaging
 Radios
 Intercoms
 In-persons
 meetings
 Signs
 Hand signals
Types of communication
A. Good Communication: It should be,
 Clear and Concise: The message is easy to understand and unambiguous.

 Complete: All necessary information is conveyed.
 Accurate: The information is factually correct and truthful.
B. Effective Communication:
 Good Communication + Achieving the Desired Outcome: In addition to the qualities
of good communication, effective communication achieves the intended impact or
response from the recipient.
 Understanding Audience: The message is tailored to the audience's level of
understanding and background.
 Two-Way Communication: It involves not just delivering a message but also actively
listening and considering the recipient's perspective.
 Body Language and Tone: Effective communication considers nonverbal cues like body
language and tone of voice to ensure the message is interpreted correctly.

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4.2. 2 Description of project control
4.2.2.1 Explanation of project control:
Project controls are processes for gathering and analyzing project data to keep costs and
schedules on track. The functions of project controls include initiating, planning, monitoring and
controlling, communicating, and closing out project costs and schedule. Ultimately, project
controls are repeatable processes for measuring project status, forecasting likely outcomes
based on those measurements and then improving project performance if those projected
outcomes are unacceptable.
Activities under the umbrella of project controls may include:
 Aligning projects with portfolio/organization goals and objectives

 Developing a work-breakdown structure (WBS)
 Collaborating on initial project schedules
 Developing a risk management plan
 Project budgeting and forecasting
 Monitoring project costs
 Feedback and reporting
 Optimizing project strategies to enable better outcomes in the future
Importance of Project Control
 Increased project success rates: By proactively identifying and addressing issues,

project control helps avoid costly delays, scope creep, and budget overruns.
 Improved decision-making: Project control data provides valuable insights to support
informed decisions regarding resource allocation, schedule adjustments, and risk
mitigation strategies.
 Enhanced stakeholder confidence: Effective project control fosters transparency and
accountability, increasing stakeholder confidence in the project's overall success.
 Improved project repeatability: Lessons learned through project control practices can
be applied to future projects, leading to continuous improvement in project management
capabilities.

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Processes that define project control
a) Planning and Budgeting: Establish a clear project baseline including scope definition,
schedule, budget, and quality criteria.
b) Performance Measurement: Continuously monitor project progress against the
baselines through techniques like schedule variance, cost variance, earned value
management, and quality control inspections.
c) Reporting and Communication: Regularly generate progress reports and communicate
project performance data to stakeholders.
d) Change Management: Implement a process to manage changes to the project scope,
schedule, or budget. This ensures impacts are assessed, and plans are adjusted
accordingly.
e) Risk Management: Proactively identify potential risks, assess their impact, and develop
mitigation plans to address them.
f) Corrective Action: Identify and implement corrective actions when project performance
deviates from the baseline.
Benefits of Project Controls:
 Reduced project costs through ability to make timely decisions using KPIs
 Increased project predictability for cost and completion date
 Increased visibility into the financial health of the project as it progresses
 Ability to mitigate project scope creep
 Meaningful benchmarking data for future projects via well-structured projects
 Increased margins when working in a fixed-price environment
 Improved reputation for properly managing and controlling projects
 Competitive advantage over organizations with less mature project management
capabilities
 Increased job satisfaction for project team members

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4.2.2.2 Core components of project controls
1. Cost Control
Show me the money! Well, cost control is all about keeping an eye on the cash flow. It involves
tracking and managing the project’s expenses, ensuring they align with your budget. This
includes estimating costs for resources, labor, equipment, and materials, and implementing cost-
saving measures whenever possible.
2. Schedule Control
Time waits for no one, especially not construction projects. Schedule control is all about keeping
your project on time. It involves developing project schedules, tracking progress against them,
identifying potential delays, and implementing corrective strategies as needed. Schedule control
ensures that every task is completed within the allotted time frame, keeping your project on
track.
3. Scope Control
In essence, this is your project’s mission control. It’s about clearly defining what needs to be
done (the project deliverables) and ensuring that only these tasks are completed. It’s about
managing any changes to the project’s scope and preventing ‘scope creep’—when the project’s
scope expands beyond its original objectives. Scope control is crucial in ensuring your project
stays focused and delivers exactly what it should.
4. Quality Control
Not all that glitters is gold, but your project should be! Quality control ensures that the
construction work meets the required standards and specifications. It’s about checking the
quality of materials, techniques, and the final output, ensuring your project not only looks good
but is structurally sound and safe too.
5. Risk Management
Every project comes with its fair share of uncertainties, and risk management is about facing
them head-on. It’s about identifying potential risks that could impact your project’s success and
developing mitigation plans. Risk management helps to foresee obstacles and prepares you to
tackle them effectively, ensuring your project continues to move forward, come what may.
6. Time & Resource Management
Last but not least, efficient management of time and resources is crucial for any project. It’s
about using your team, materials, and equipment effectively and efficiently. Proper time and

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resource management ensure you get the maximum output from your inputs, leading to increased
productivity and successful project completion.
4.2.2.3 Challenges within Project Controls
1. Lack of commitment and support from senior management: This is one of the biggest
challenges. Control does not simply mean monitoring; while monitoring is passive, control
refers to actively making decisions based on analysis and reporting. Hence, this cannot be
achieved without sufficient authority provided by leadership. In the absence of autonomy
and support, controllers cannot achieve their goals. Many project controls teams tend to be
understaffed or not backed with enough budget to invest in the right tools.
2. Perception as just another cost function: As controls do not come into limelight unless
things go awry, they can be perceived as an overhead expense. However, this is far from
true. One study on this subject conducted by IPA Global indicates that while project
controls function costs range from 0.5% to 3% of the project, cost improvement from their
best practices can range from 6% to 20%. Organizations can resolve this perception issue by
training project teams and executives of the potential ROI from controls.
3. Confrontational dynamic: Functions such as controls and audit are often viewed with a
suspicious approach by people focused on delivery and timelines. By building partnerships
rather than a me-versus-you approach, this can be overcome. It’s also important for
organizations to integrate the function with other areas of project management. A project
controller is not someone who visits once every few weeks or months with bad news.
Rather, the role should be blended harmoniously into the project lifecycle.
4. Manual and outdated processes: Even when there is sufficient support from management
and awareness in teams about the importance of controls, the actual implementation may not
be keeping pace with the difficult challenges in projects. Many organizations still use
manual processes with cumbersome spreadsheets to attempt to track and manage risk
matrices and change requests.

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4.2.2.4 Project Controls vs. Project Management
The overlap in function between these two disciplines can at times make it difficult to
differentiate between them. Many organizations assign the role of a project controller to one of
the project managers, making this even more confusing. However, it’s important to discern the
differences between these two in order to fully appreciate the role of project controls.
 Project Management
Project management is a holistic function that involves managing people, processes and
deliverables in a project through various sub-functions. It focuses on quality and scope, in
addition to cost and schedule. The objective of project management is more exhaustive in that it
aims to successfully complete a project given the resources available.
 Project Controls
Project controls are a sub-function and focus on just two parameters: cost and schedule. People
management and quality control, for example, does not fall under the purview of project
controls. The main objective of project controls is to minimize the variance in costs and schedule
from what was originally planned.
4.2.3 Project change management
4.2.3.1 Claim in construction domain
In the construction industry, a claim is a formal request by one party (usually the contractor or
the owner) for compensation or other relief due to changes in circumstances that arose during the
work or after the parties entered into a contract. Or A construction claim is a request for payment
or time extension to which the contractor considers him/herself entitled.
Purpose of Claims in Construction:
 Seeking Compensation for Losses: The primary purpose of a claim is to recoup

financial losses incurred by a party due to circumstances beyond their reasonable control.
 Protecting Contractual Rights: Claims allow parties to formally assert their rights
under the construction contract.
 Documenting Events: A well-prepared claim documents events that led to losses and
supports the claiming party's position during negotiations or dispute resolution processes.
 Negotiation Leverage: A documented claim can serve as a negotiating tool to reach a

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settlement with the other party.
 Dispute Resolution: If negotiations fail, claims can be escalated through formal dispute
resolution mechanisms outlined in the contract, such as mediation or arbitration.
The types of delays
A) Critical or non-critical Delays:

A delay that is responsible for extending project duration is a critical delay. Few results are
mentioned below:
 Extended Field Overhead
 Unabsorbed home office overhead
 Liquidated Damage
 Idle labor & equipment cost
 Labor & Material Cost Escalation and many more.
A delay that is not the cause of extended project duration is a non-critical delay; however, it will
have an effect in terms of activities getting completed late than scheduled completion. These
activities will also affect project cost estimates as reiterated below;
i. Idle labor & equipment cost
ii. Labor & Material Cost Escalation and many more.
B) Excusable & non-excusable Delay
A delay where the contractor is entitled for extension of time or compensation or both, under the
terms & conditions of contract is excusable delay. In this case, contractor does not have any
control on the activity getting delayed. The causes may be;
1. Force Measure Clause
2. Natural Calamities
3. Political/Social Unrest
4. Terrorist Attacks
5. Delay from Client (Approvals, Decisions, etc.), etc.
A delay where the contractor is fully responsible for the activities getting delayed and resulted in
extending project duration (responsible for critical delays) are non-excusable delays. In this
case, the contractor has to bear the risk of cost consequences including the liability to pay

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damages for itself but possibly for the other parties as well. The causes may be:
 Delayed Mobilization
 Delayed Procurement
 Delayed submission of important documents
 Planning & Scheduling
 Critical events that were not highlighted to client on right time, etc.
C) Concurrent Delays in Construction Projects
A situation where more than one delay event occurs at the same time affecting multiple activities
simultaneously/independently affecting the completion is a concurrent delay. However, not all
those events enable the contractor to be entitled for extension of time & cost claim. Importantly,
it is the causes of delay rather the delay themselves, that must overlap.
D) Compensable or non-compensable Delays in in Construction Projects
Scenario where contractor is liable for Time Extension & Cost compensation is compensable
delays. All compensable delays fall under excusable delays-Whereas, if the contractor is solely
at fault for a delay event, it is termed as non-compensable delay. However, non-compensable
may fall under critical, non-critical, excusable or non-excusable; depending upon the situation it
has created and conditions of contract.
THE GENERAL REASONS FOR CONSTRUCTION CLAIMS MAY INCLUDE:

 Late possession of site or late provision of working drawings.
 Change of contract start or activities schedule.
 Design change and variation.
 Delays in approval and examining work.
 Work acceleration by the client.
 Late delivery of materials supplied by the client.
 Different ground and/or site conditions.
 Unforeseen events and disasters.

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4.2.4 Project cost control
4.2.4.1 Cost control in project management
Cost control is a fundamental pillar of successful project management. It ensures you deliver
projects within the allocated budget, maximizing efficiency and profitability. Let's delve into the
importance of cost control, explore cost management practices, and provide tips for achieving
successful cost control:
Importance of Cost Control in Project Management:

 Project Success: Meeting budget targets is a key metric for project success.
 Improved Resource Allocation: Effective cost control promotes efficient resource
allocation.
 Enhanced Risk Management: Cost control practices often uncover potential risks early
on.
 Increased Stakeholder Confidence: Meeting budget expectations fosters trust and
confidence among stakeholders, including clients, investors, and project sponsors.
 Improved Decision-Making: Cost control data provides valuable insights to support
informed decisions about project scope, resource allocation, and potential schedule
adjustments.
Cost Management vs. Cost Control:

 Cost Management: The broader process of planning, estimating, budgeting, and
monitoring project costs throughout the project lifecycle.
 Cost Control: A specific set of actions taken to keep project costs within the approved
budget. It involves monitoring actual costs against the budget, identifying variances, and
taking corrective measures to get back on track.

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4.2.4.2 Elements of cost control
These terms listed are all elements of cost control, but they can be categorized into two main
groups: direct costs and indirect costs.
A. Direct Costs:
Directly attributable to the production of a specific unit or project. These costs can be easily
traced and linked to a particular good or service.
 Direct Material Cost: The cost of raw materials or components that are directly
incorporated into the final product. For example, the lumber used to build a house or the
fabric used to make a shirt.
 Direct Wages: The salaries and wages paid to workers who are directly involved in
producing the good or service. For example, the wages paid to construction workers
building a house or the wages paid to factory workers assembling a product.
B. Indirect Costs:
Not directly attributable to a specific unit or project. These costs are necessary for the overall
operation of the business but cannot be easily traced to a particular good or service.
 Chargeable Expenses: Expenses that can be directly tied to a specific project but are not
materials or labor. This might include things like travel costs, professional fees, or
permits required for a specific project.
 Indirect Materials: Materials that are necessary for production but are not directly
incorporated into the final product. For example, sandpaper used during construction or
thread used in sewing that gets discarded.
 Indirect Labor: The salaries and wages paid to workers who are not directly involved in
producing the good or service, but who are necessary for the overall operation of the
business. This might include supervisors, maintenance workers, or HR personnel.
 Indirect Expenses: Expenses that are necessary for the overall operation of the business
but cannot be directly traced to a specific unit or project. Examples include utilities, rent,
office supplies, and insurance.
 Overhead Expenses: A general term that encompasses all indirect costs associated with
running a business. This includes indirect materials, indirect labor, and indirect expenses.

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ADVANTAGES OF COST CONTROL
A. For the Company:

 Increased Profitability: The most significant advantage is the direct impact on a
company's financial health. By keeping costs under control, companies maximize profits
and improve financial stability.
 Enhanced Resource Allocation: Cost control practices encourage efficient allocation of
resources (people, equipment, materials). This minimizes waste and maximizes the return
on investment for resources used in projects.
 Reduced Risks: Proactive cost control practices can help identify potential risks early
on, allowing for mitigation strategies to minimize financial impact.
B. For Employees:
 Job Security: Companies with strong financial performance are more likely to be stable
and provide job security for their employees.
 Improved Morale: When employees see the company operating efficiently and avoiding
waste, it can boost morale and create a more positive work environment.
C. Aid to Planning:
 Realistic Budgeting: Effective cost control practices involve accurate cost estimation
techniques, leading to more realistic project budgets. This improves planning and reduces
the risk of budget overruns.
 Improved Resource Forecasting: Cost control data helps forecast resource needs more
accurately, ensuring the right resources are available at the right time for project
execution.
D. Measurements of Performance:
 Cost Performance Index (CPI): This metric compares the earned value of completed
work to the actual cost incurred. A CPI of 1 indicates project is on budget, while values
less than 1 indicate cost overruns.
 Schedule Performance Index (SPI): This metric compares the earned value of
completed work to the planned value for that stage of the project. An SPI of 1 indicates
project is on schedule, while values less than 1 indicate delays.

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4.2.4.3 Cost control techniques
 Planning project budget

 Keeping a track of costs
 Effective time management
 Project change control
 Use of earned value
4.2.4.4 Monitoring and control project costs
Monitoring and controlling project costs involves a continuous cycle of tracking actual expenses
against the project budget, identifying deviations, and taking corrective actions to keep the
project within budget.
Techniques to Monitor and Control Project Costs:
a) Cost Breakdown Structure (CBS): Break down the project budget into smaller,
manageable categories like labor, materials, equipment, and other expenses. This allows
for easier monitoring and analysis of specific cost components.
b) Earned Value Management (EVM): This technique uses three key metrics: Planned
Value (PV), Earned Value (EV), and Actual Cost (AC). Deviations from these values
(Schedule Variance - SV and Cost Variance - CV) indicate if the project is ahead or
behind schedule and budget.
c) Cost Performance Index (CPI): This metric (CPI = EV / AC) compares the earned
value of completed work to the actual cost incurred. A CPI of 1 indicates the project is on
budget. Values less than 1 indicate cost overruns.
d) Schedule Performance Index (SPI): This metric (SPI = EV / PV) compares the earned
value of completed work to the planned value for that stage of the project. An SPI of 1
indicates the project is on schedule. Values less than 1 indicate delays.
e) Regular Cost Reporting: Generate regular cost reports that compare actual costs to the
budget and analyze trends. This allows for early identification of potential cost overruns.
f) Variance Analysis: Analyze the reasons behind cost variances to understand root causes
and identify areas for improvement.

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g) Change Management Process: Implement a formal process to manage changes to the
project scope. This ensures cost implications of changes are assessed and incorporated
into the budget.
Ways to Successfully Manage a Project Budget and Maintain Cost Control:
 Develop a Realistic Budget: Utilize accurate cost estimation techniques to create a

realistic project budget that considers all potential costs.
 Schedule Reviews: Conduct regular schedule reviews to identify potential delays that
could impact costs.
 Value Engineering: Continuously evaluate project deliverables and identify
opportunities to optimize costs without compromising quality or functionality.
 Procurement Management: Establish efficient procurement processes to secure
resources at competitive prices and manage vendor contracts effectively.
 Project Management Software: Utilize project management software tools to track
budgets, costs, and resource allocation. These tools can automate tasks and provide real-
time data for better decision-making.
 Communication and Collaboration: Maintain open communication with stakeholders
about project budgets and potential cost risks. Foster collaboration among team members
to identify cost-saving opportunities.
4.2.4.5 Project cost planning and control

Project cost planning and control is a comprehensive process that ensures efficient use of
financial resources throughout a project's lifecycle. It involves:
A. Cost Planning: This stage lays the groundwork for effective cost control. It encompasses
several key activities:
 Estimating Costs: Utilize accurate cost estimating techniques to determine the project's
total cost. This involves considering labor, materials, equipment, permits, taxes, and other
potential expenses.
 Budgeting: Develop a detailed project budget that allocates the estimated total cost to
specific project elements like work breakdown structure (WBS) components. The budget
serves as a baseline for cost control.

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 Forecasting: Project cost forecasting involves predicting future financial needs based on
project progress and potential risks. This helps ensure sufficient resources are available
and potential cost overruns are identified early.
B. Cost Control Problem: Despite careful planning, cost control problems can arise during
project execution. Here are some common issues:
 Inaccurate Cost Estimates: Underestimating costs can lead to budget shortfalls and
project delays.
 Scope Creep: Uncontrolled changes to the project scope can significantly impact costs.
 Schedule Delays: Delays can lead to increased labor costs, equipment rental fees, and
other expenses.
 Poor Resource Management: Inefficient resource allocation can result in wasted
resources and higher costs.
 Lack of Communication: Poor communication between stakeholders can lead to
misunderstandings and missed opportunities for cost savings.

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LEARNING OUTCOME 4.3: CARRY OUT PROJECT TIME COST TRADE
OFF, PROJECT FINANCING AND CONTRACT PRICING
4.3.1 Project time cost trade off
In the previous chapters, duration of activities discussed as either fixed or random numbers with
known characteristics. However, activity durations can often vary depending upon the type and
amount of resources that are applied. Assigning more workers to a particular activity will normally
result in a shorter duration. Greater speed may result in higher costs and lower quality, however. In this
section, we shall consider the impacts of time and cost trade-offs in activities.
Reducing both construction projects’ cost and time is critical in today’s market -driven economy.
This relationship between construction projects’ time and cost is called t ime- cost trade-off decisions,
which has been investigated extensively in the construction management literature.
Time-cost trade-off decisions are complex and require selection of appropriate construction method for
each project task. Time-cost trade-off, in fact, is an important management tool of overcoming one of the
critical path method limitations of being unable to bring the project schedule to a specified duration.
4.3.1.1 Factors Affecting the Trade-Off:
 Project Scope: The defined functionalities and deliverables of the project significantly impact the
time-cost relationship. A complex project with a tight deadline will likely require more expensive
methods to expedite completion.
 Resource Availability: The availability and cost of labor, equipment, and materials** influence
the trade-off. Limited resources might necessitate faster but more expensive approaches, while
readily available resources might allow for a more relaxed schedule with potentially lower costs.
 Contractual Obligations: Deadlines and financial penalties outlined in contracts** can influence
the time-cost decision-making. Tight deadlines with hefty penalties for delays might push the
project towards a crash schedule, even if it incurs higher costs.
4.3.1.2 Objectives of time cost trade off

The main objectives of a time-cost trade-off analysis in project management are to optimize project
delivery by achieving the following:
 Project Completion Speed: Expediting project completion to meet critical deadlines or
capitalize on market opportunities. This can be crucial for projects with time-sensitive

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deliverables or those where early completion translates to earlier revenue generation.
 Cost Efficiency: Minimizing overall project expenditures by identifying the most cost-effective
approach within the acceptable time constraints.
 Resource Utilization: Balancing resource availability with project demands. The time-cost trade-
off analysis helps determine if crashing the schedule to meet a tight deadline is feasible
considering resource limitations.
 Risk Management: The analysis considers the risks associated with both schedule compression
and schedule extension. Crashing the schedule might introduce risks like quality issues, safety
hazards, or increased rework.
4.3.1.3 Activity time cost relationship

In general, there is a trade-off between the time and the direct cost to complete an activity; the less
expensive the resources, the larger duration they take to complete an activity. Shortening the duration on
an activity will normally increase its direct cost which comprises: the cost of labor, equipment, and
material. It should never be assumed that the quantity of resources deployed and the task duration are
inversely related. Thus one should never automatically assume that the work that can be done by one man
in 16 weeks can actually be done by 16 men in one week.
A simple representation of the possible relationship between the duration of an activity and its direct costs
appears in Figure 4.2. Considering only this activity in isolation and without reference to the project
completion deadline, a manager would choose a duration which implies minimum direct cost, called the
normal duration. At the other extreme, a manager might choose to complete the activity in the minimum
possible time, called crashed duration, but at a maximum cost.
Figure 4.2: Illustration of linear time/cost trade-off for an activity

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The linear relationship shown in the Figure 4.2 between these two points implies that any intermediate
duration could also be chosen. It is possible that some intermediate point may represent the ideal or
optimal trade-off between time and cost for this activity. The slope of the line connecting the normal point
(lower point) and the crash point (upper point) is called the cost slope of the activity. The slope of this
line can be calculated mathematically by knowing the coordinates of the normal and crash points.
Cost slope = crash cost – normal cost / normal duration – crash duration
As shown in Figures 4.2, 4.3, and 4.4, the least direct cost required to complete an activity is called the
normal cost (minimum cost), and the corresponding duration is called the normal duration. The shortest
possible duration required for completing the activity is called the crash duration, and the corresponding
cost is called the crash cost. Normally, a planner start his/her estimation and scheduling process by
assuming the least costly option.
Figure 4.3: Illustration of non-linear time/cost trade-off for an activity
Figure 4.4: Illustration of discrete time/cost trade-off for an activity

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A. Project Time-Cost Relationship
Total project costs include both direct costs and indirect costs of performing the activities of the project.
Direct costs for the project include the costs of materials, labor, equipment, and subcontractors. Indirect
costs, on the other hand, are the necessary costs of doing work which cannot be related to a particular
activity, and in some cases cannot be related to a specific project.
If each activity was scheduled for the duration that resulted in the minimum direct cost in this
way, the time to complete the entire project might be too long and substantial penalties associated
with the late project completion might be incurred. Thus, planners perform what is called time-cost trade-
off analysis to shorten the project duration. This can be done by selecting some activities on the critical
path to shorten their duration.
As the direct cost for the project equals the sum of the direct costs of its activities, then the project direct
cost will increase by decreasing its duration. On the other hand, the indirect cost will decrease by
decreasing the project duration, as the indirect cost are almost a linear function with the project duration.
Figure 4.5 illustrates the direct and indirect cost relationships with the project duration.
Figure 4.5: Project time-cost relationship
The project total time-cost relationship can be determined by adding up the direct cost and indirect cost
values together as shown in Figure 4.5. The optimum project duration can be determined as the project
duration that results in the least project total cost.

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B. Shortening Project Duration
The minimum time to complete a project is called the project-crash time. This minimum completion time
can be found by applying critical path scheduling with all activity durations set to their minimum values.
This minimum completion time for the project can then be used to determine the project-crash cost. Since
there are some activities not on the critical path that can be assigned longer duration without delaying the
project, it is advantageous to change the all crash schedule and thereby reduce costs.
APPROACHES USED IN SHORTENING PROJECT DURATION
Project duration is one of the key factors that affect the success of any project. However, reducing the
time required to complete a project can also pose some challenges, such as compromising the quality,
scope, or cost of the project. How can you shorten project duration without sacrificing quality? Here are
some tips and techniques that can help you achieve this goal.
A. Identify the critical path
This is essential for shortening project duration. You can use tools such as network diagrams, Gantt
charts, or critical path method (CPM) to analyze the dependencies and durations of the project activities
and find the critical path. Once you have the critical path, you can focus on optimizing its activities and
reducing its length.
B. Apply fast-tracking
Fast-tracking is a technique that involves performing activities in parallel or overlapping them, instead of
doing them sequentially. This can reduce the project duration by eliminating or reducing the waiting time
between activities. However, fast-tracking also increases the risk of rework, errors, or conflicts, as some
activities may depend on the outcomes of others. Therefore, you should carefully assess the feasibility
and implications of fast-tracking before applying it. Monitor and communicate the progress and issues of
the fast-tracked activities closely.
C. Apply crashing
Crashing is a technique that involves adding more resources or working overtime to accelerate the
completion of activities. This can reduce the project duration by increasing the productivity or efficiency
of the project team or contractors. However, crashing also increases the project cost, as more resources or
overtime hours incur more expenses.
D. Reduce scope creep
Scope creep is the unplanned and uncontrolled expansion of the project scope, which can result from
unclear requirements, changing expectations, or poor change management. Scope creep can increase the
project duration by adding more work, complexity, or uncertainty to the project. Reduce scope creep by

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defining and documenting the project scope clearly, managing the stakeholders' expectations and
feedback and following a formal change control process. Communicate and document any changes to the
project scope and their impact on the project duration.
E. Improve communication
Communication is vital for any project, as it enables the exchange of information, ideas, and feedback
among the project team and stakeholders. Effective communication can reduce the project duration by
improving the coordination, collaboration, and problem-solving among the project participants. Improve
communication by establishing and following a communication plan that defines the communication
goals, methods, frequency, and channels.
F. Review and adjust
Review and adjust the project duration regularly, as the project progresses and new information or issues
emerge. Use tools such as earned value analysis (EVA) or schedule variance (SV) to measure and
compare the actual and planned project performance and identify any deviations or trends. Conduct
periodic reviews and audits to assess the quality and compliance of the project deliverables and processes.
procedure for shortening project duration can be summarized in the following steps:
i. Draw the project network.

ii. Perform CPM calculations and identify the critical path, use normal durations and costs for all
activities.
iii. Compute the cost slope for each activity from the following equation:
Cost slope = crash cost – normal cost / normal duration – crash duration
iv. Start by shortening the activity duration on the critical path which has the least cost slope and not
been shortened to its crash duration.
v. Reduce the duration of the critical activities with least cost slope until its crash duration is
reached or until the critical path changes.
vi. When multiple critical paths are involved, the activity(ies) to shorten is determined by comparing
the cost slope of the activity which lies on all critical paths (if any), with the sum of cost slope for
a group of activities, each one of them lies on one of the critical paths.
vii. Having shortened a critical path, you should adjust activities timings, and floats.
viii. The cost increase due to activity shortening is calculated as the cost slope multiplied by
the time of time units shortened.
ix. Continue until no further shortening is possible, and then the crash point is reached.

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x. The results may be represented graphically by plotting project completion time against
cumulative cost increase. This is the project direct-cost / time relationship. By adding the project
indirect cost to this curve to obtain the project time / cost curve. This curve gives the optimum
duration and the corresponding minimum cost.
4.3.2 Project cash flow
Project cash flow refers to the movement of money in and out of a project over its entire
lifecycle. It tracks all the cash inflows (revenue generated) and outflows (expenses incurred)
associated with the project.
 Types of cash flow in construction projects
There are two types of cash flow in construction projects: positive and negative. Positive cash flow occurs
when the amount of cash coming into the project is greater than the amount going out. Negative cash flow
occurs when the amount of cash going out of the project is greater than the amount coming in. Positive
cash flow is desirable in construction projects, as it ensures that the contractor has enough money to cover
expenses, pay bills, and invest in the projects growth. Negative cash flow, on the other hand, can be
problematic, as it can lead to financial difficulties, delays in the project, and even project failure.
4.3.2.1 Description of project cash flow concepts
Purpose of Project Cash Flow
In construction accounting, managing cash flow ensures the availability of funds, which is
essential for procuring materials and labor without interruptions to the schedule.
Project Cash Flow Studies
They involve detailed analysis of the project's expected cash inflows and outflows. This typically involves
creating a project cash flow forecast which outlines the timing and amount of each cash flow item.
Contract Cash Flow
It focuses specifically on the cash flows associated with project contracts. This includes inflows from
customer payments and outflows for payments to vendors and subcontractors.
Cumulative Cash Flow
It refers to the net cash flow (inflows minus outflows) for the project up to a specific point in time. It
shows the overall project's cash position at that point. A positive cumulative cash flow indicates the
project is generating more cash than it is spending, while a negative value indicates the opposite.

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Maximum Capital Requirement
It is the highest amount of cash funding that will be needed for the project at any given time. This helps
determine the necessary funding arrangements to ensure the project has sufficient cash throughout its
lifecycle.
Typical Project Cash Flow: It follows a predictable pattern,
i. Initial Outflow: Significant cash outflow occurs at the project's beginning for expenses like land
acquisition, permitting, and initial construction activities.
ii. Gradual Inflow: As the project progresses, cash inflows start coming in from progress payments,
sales of completed units (for construction projects), or revenue generation (for operational
projects).
iii. Peak Outflow: Cash outflow might peak during major construction phases or equipment
procurement.
iv. Positive Cash Flow: In the later stages, the project ideally generates positive cash flow as
inflows from sales or operations exceed project expenses.
 CASH FLOW FORMULA FOR CONSTRUCTION PROJECTS
1. Net Cash Flow Formula
Net cash flow is calculated by subtracting total cash outflows from total cash inflows over a specific
period of time. The formula for net cash flow is as follows:
Net Cash Flow = Total Cash Inflows - Total Cash Outflows
2. Operating Cash Flow Formula
Operating cash flow is the cash generated or used by a company's operations, and it is calculated as
follows:
Operating Cash Flow = Net Income + Depreciation + Amortization + Changes in Working Capital
3. Free Cash Flow Formula
Free cash flow is the cash generated by a company after accounting for capital expenditures, and it is
calculated as follows:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
4. Cash Flow to Debt Formula
Cash flow to debt is a measure of a company's ability to pay off its debts using the cash generated by its
operations. The formula for cash flow to debt is as follows:

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Cash Flow to Debt = Operating Cash Flow / Total Debt
5. Cash Flow Yield Formula
Cash flow yield is a measure of a company's ability to generate cash flow relative to its market value. The
formula for cash flow yield is as follows:
Cash Flow Yield = Operating Cash Flow / Market Capitalization
 IMPORTANCE OF CASH FLOW IN CONSTRUCTION PROJECTS
Cash flow is crucial in construction projects, as it affects the projects ability to meet financial obligations,
maintain cash reserves, manage risk, and stay on schedule. A positive cash flow helps contractors to pay
for materials, labor, and other expenses on time, avoiding delays and interruptions in the project. It also
enables contractors to invest in the projects growth, such as hiring additional workers or purchasing new
equipment. Moreover, cash flow management helps to identify potential financial risks early, allowing
contractors to take appropriate measures to mitigate them. For example, if a general contractor anticipates
a late payment from the client they can take steps to reduce expenses or secure alternative sources of
funding to ensure that the project stays on track.
 COMMON CASH FLOW ISSUES IN CONSTRUCTION
1. Delayed Payments: One of the biggest cash flow challenges in construction is delayed payments.
Clients may delay payments due to disputes over contract terms or changes in project scope, which can
create a cash flow gap and lead to financial strain for the contractor.
2. Cost Overruns: Another common cash flow issue in construction is cost overruns. Unforeseen
expenses or changes in project scope can cause costs to exceed the budget, which can strain cash flow and
make it difficult to cover expenses.
3. Poor Cash Flow Planning: Poor cash flow planning can also be a major issue in construction. Project
managers may underestimate expenses or overestimate cash inflows, which can create cash flow gaps and
make it difficult to cover expenses.
4. Inventory Management: Managing inventory can also be a cash flow issue in construction.
Construction projects require a lot of materials and equipment, and if inventory is not managed properly,
it can tie up cash flow and make it difficult to cover expenses.

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5. Payment Disputes: Payment disputes can also be a cash flow issue in construction. If subcontractors
or suppliers are not paid on time, they may halt work on the project, which can cause delays and lead to
additional expenses.
 TOOLS AND TECHNIQUES FOR TRACKING CASH FLOW
There are various tools and techniques available for tracking cash flow in construction projects. These
include cash flow software, spreadsheets, and financial management tools. Contractors may also use
financial statements, such as cash flow statements and balance sheets, to track cash flow.
In addition, contractors may use key performance indicators (KPIs) to monitor cash flow, such as days
sales outstanding (DSO), days payables outstanding (DPO), and working capital ratios. By tracking these
KPIs, contractors can identify trends and patterns in cash flow and take appropriate measures to manage
cash flow effectively.
4.3.3 Construction Project Costs
In preparing the cash flow for a project, it is necessary to compute the costs that must be expended in
executing the works using activities durations and their direct and indirect costs.
The principal components of a contractor's costs and expenses result from the use of labors,
materials, equipment, and subcontractors.
Additional general overhead cost components include taxes, premiums on bonds and insurance,
and interest on loans. The sum of a project's direct costs and its allocated indirect costs is termed the
project cost.
The costs that spent on a specific activity or project can be classified as;
 Fixed cost: costs that spent once at specific point of time (e.g., the cost of purchasing
equipment, etc.)
 Time-related cost: costs spent along the activity duration (e.g., labor wages, equipment rental
costs, etc.)
 Quantity-proportional cost: costs changes with the quantities (e.g., material cost)

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CLASSIFICATION OF COST TO SPEND ON ACTIVITY
A. Project direct costs

The costs and expenses that are incurred for a specific activity are termed direct costs. These costs are
estimates based on detailed analysis of contract activities, the site conditions, resources productivity data,
and the method of construction being used for each activity. A breakdown of direct costs includes labor
costs, material costs, equipment costs, and subcontractor costs.
B. Project indirect costs
Other costs such as the overhead costs are termed indirect costs. Part of the company’s indirect costs is
allocated to each of the company's projects. The indirect costs always classified to: project (site)
overhead; and General (head-office) overhead.
C. Project overhead
Project overhead are site-related costs and includes the cost of items that can not be directly charged to a
specific work element and it can be a fixed or time-related costs. These include the costs of site utilities,
supervisors, housing and feeding of project staff, parking facilities, offices, workshops, stores, and first
aid facility. Also, it includes plants required to support working crews in different activities.
 General overhead
The costs that cannot be directly attributed a specific project called general overhead. These are the
costs that used to support the overall company activities. They represent the cost of the head-office
expenses, mangers, directors, design engineers, schedulers, etc. Continuous observations of the company
expenses will give a good idea of estimating reasonable values for the general overhead expenses.
Generally, the general overhead for a specific contract can be estimated to be between 2% - 5% of
the contract direct cost. The amount of the general overhead that should be allocated to a specific project
equals:
Having identified the direct costs, indirect costs, then the project total cost equals the sum of both direct
and indirect costs. When studying cash flow, it is very important to determine the actual dates when the
expenditures (cost) will take place. At that time, the expenditures will renamed as the expenses. Figure
below illustrate the difference between the costs and the expenses. As shown in the figure, they are the
same except the expenses are shifted (delayed) tan the costs.

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Figure 4.6: Project cost and expense curves
Example 1:
Consider the construction of 8-week foundation activity with operation cost of $8800. The operation cost
is broken down into the following elements:
 Labor $1600 paid weekly
 Plant $4000 paid weekly after 4 weeks credit facility
 Materials $800 paid weekly after 5 weeks credit facility
 Subcontractors $2400 paid weekly after 3 weeks credit facility
Determine the expenses (cash out) of this activity).
 Solution
A time-scaled plan is developed for this activity for the payments for labor, plant, material, and
subcontractors. The cot will be plotted weekly with the delay specified in Example

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7.1.2 The S-Curve
The curve represents the cumulative expenditures of a project direct and indirect costs over time is called
the S-curve as it take the S-shape as shown in Figure 4.7. In many contracts, the owner requires the
contractor to provide an S-curve of his estimated progress and costs across the life of the project.
This S-shaped of the curve results because early in the project, activities are mobilizing and the
expenditure curve is relatively flat. As many other activities come on-line, the level of expenditures
increases and the curve has a steeper middle section. Toward the end of a project, activities are winding
down and expenditures flatten again (Figure 4.7). The S-Curve is one of the most commonly techniques
to control the project costs.
Figure 4.7: A sample S-curve

An S-curve for a project can be developed using the following steps:
 Constructing a simple bar chart for all the tasks of the project.
 Assigning costs to each task using task duration.
 Plotting the cumulative amounts of expenditures versus time by smoothly connecting the
projected amounts of expenditures over time.
Example .2
Consider the project shown in Figure below. The costs of activities are assumed as shown in
Table
7.1. The indirect costs of tasks are calculated considering a daily cost of $500. It is required to
draw the S-curve of the total cost of the project.

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Figure 4.8: Project network of Example 4.7
Table 4.2: Cost data of Example 4.7
 Solution
The S-curve is calculated based on the project's bar chart and the expenditures of each activity.
As illustrated in Figure 4.9, the eleven activities of this project are scheduled across a 32-day
time span. A bar chart representation of these activities is drawn in Figure 4.9 showing the total
costs associated with each activity above each activity's bar. The figure shows the total
expenditures and the cumulative bi-daily expenditures across the life of the project. The S-curve
of the cumulative expenditures over time is plotted in Figure 4.10.

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Figure 4.9: Project bar chart of Example 4.7
4.3.4 Project Income (Cash-in)
The flow of money from the owner to the contractor is in the form of progress payments.
Estimates of work completed are made by the contractors periodically (usually monthly), and are
verified by the owner's representative. Depending on the type of contract (e.g., lump sum, unit
price, etc.), these estimates are based on evaluations of the percentage of total contract
completion or actual field measurements of quantities placed. Owners usually retain 10% of all
validated progress payment claims submitted by contractors.
The accumulated retainage payments are usually paid to the contractor with the last payment.
As opposed the expenses presented in Figure 4.6 with smooth profile, the revenue will be a
stepped curve. Also, when the contractor collects his/her money it is named project income (cash
in) as shown in Figure 7.6.

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Figure 4.10: The S-Curve for the Example Project
Figure 4.11: Project revenue and income curves
The time period shown in Figure 8.6 represents the time intervals at which changes in income
occur. When calculating contract income it is necessary to pay attention to the retention and/or
the advanced payment to the contractor if any.
Retention
Retention is the amount of money retained by the owner from every invoice, before a payment is made to
the contractor. This is to ensure that the contractor will continue the work and that no problems will arise
after completion. This retainage amount ranges from 5% to 10% and hold by the owner from every

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invoice till the end of the contract. The whole amount will be paid to the contractor at the end of the
contract.
Advanced payment
This is amount of money paid to the contractor for mobilization purposes. Then, it is deducted from
contract progress payment. Applying this strategy improves the contractor cash flow and prevents him/her
from loading the prices at the beginning of the contract. This strategy, however, may be used only in
projects that require expensive site preparation, temporary facilities on site, and storage of expensive
materials at the beginning of the project.
 Calculating Contract Cash Flow

Having determined the contract expenses and income as presented in the previous section,
it is possible to calculate the contract cash flow. If we plotted the contract expense and income curves
against each other, then the cash flow is the difference between the points of both curves. Figure 4.12
shows the cash flow of a specific contract. The hatched area represents the difference between the
contractor’s expense and income curves, i.e., the amount that the contractor will need to finance. The
larger this area, the more money to be financed and the more interest charges are expected to cost the
contractor.
Figure 4.12: Cash flow based on monthly payments
The contractor may request an advanced or mobilization payment from the owner. This shifts the position
of the income profile so that no overdraft occurs as shown in Figure 4.12.

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Figure 4.13: Effect of advanced payment on improving cash flow
In case of less number of payments (two or three payments) along the contract period, this will lead to
increase the overdraft as shown in Figure 4.13. From the previous study, the factors that affect the project
finance (cash flow) should be considered when calculating the cash flow:
 The project bar chart (project schedule).

 Act ivit ies’ direct and indirect cost.
 Contractor method of paying his/her expenses.
 Contractor’s markup (mainly the profit margin).
 Retention amount and its payback time.
 Time of payment delay by owner.
 Advanced or mobilization payment
Figure 7.9: Effect of receiving two payments on cash flow

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 The cash flow calculations are made as described in the following steps:
i. Perform project schedule and determine project and activities timing.

ii. Draw bar chart based on early or late timings.
iii. Calculate the cost per time period.
iv. Calculate the cumulative cost.
v. Adjust the cost according the method of paying it to produce the expenses.
vi. Calculate the cumulative revenue (revenue = cost x (1 + markup)).
vii. Adjust the revenue based on the retention and delay of owner payment to determine the income.
viii. Calculate the cash flow (cash flow = income – expense) at the contract different times.
4.3.5 Cost of borrowing (return on investment)

The cost of borrowing refers to the interest you pay to use someone else's money. It's often expressed as a
percentage of the principal amount borrowed, represented as the Annual Percentage Rate (APR) or
Effective Interest Rate (EIR). Understanding the cost of borrowing is crucial when evaluating the
return on investment (ROI) for any project requiring financing.
Here's a breakdown of how these concepts are connected:
Cash Requirements:
Project financing often involves borrowing money to cover cash shortfalls between project expenses and
inflows. These shortfalls can occur during the early stages when significant upfront costs are incurred or
later in the project if progress payments are delayed.
Sources of Funds
 Debt Financing: Borrowing money from a bank, credit union, or other lender is a common
source of funds. The lender charges interest on the loan, increasing the overall cost of the project.
 Equity Financing: This involves investing your own money or raising capital from investors.
While equity financing doesn't involve interest payments, investors typically expect a return on
their investment, often in the form of profits or dividends.

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Methods to Determine Interest
There are two main ways to calculate the interest on a loan:

 Simple Interest: This method calculates interest only on the original principal amount. It's a
simpler calculation, but it doesn't reflect the compounding effect of interest, where interest is
earned on previously accrued interest. Simple Interest is typically used for short-term loans.
 Compound Interest: This method takes into account both the principal amount and the
accumulated interest from previous periods. Interest is earned on interest, leading to a faster
growth of the total amount owed over time. Compound Interest is more commonly used for long-
term loans (mortgages, business loans).
Cost of Borrowing:
The cost of borrowing is influenced by several factors:
 Interest Rate: The annual percentage rate (APR) or effective interest rate (EIR) charged by the
lender. This rate reflects the risk associated with the loan (your creditworthiness and the project's
viability) and prevailing market conditions.
 Loan Term: The length of time you have to repay the loan. Shorter terms often come with lower
interest rates, but the monthly payments might be higher. Conversely, longer terms typically have
higher interest rates but lower monthly payments.
 Loan Fees: Some lenders charge origination fees, processing fees, prepayment penalties, or other
administrative costs associated with the loan. These fees increase the overall cost of borrowing.
4.3.6 Discounted cash flow:

Discounted cash flow (DCF) is a valuation technique used to estimate the present value of a series of
future cash flows generated by an investment. It considers the time value of money, which means a dollar
today is worth more than a dollar received in the future due to factors like inflation and the potential for
earning interest on invested funds. Key components of DCF analysis:
 Present Value (PV): This refers to the current worth of a future cash flow, discounted at a
specific discount rate. The discount rate reflects the cost of capital or the minimum rate of
return you expect from an investment. A higher discount rate will result in a lower present value
for future cash flows.
 Net Present Value (NPV): This is the difference between the present value of all future cash
inflows associated with an investment and the present value of all the initial investment costs.

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A positive NPV indicates that the investment is expected to generate a positive return after
considering the time value of money. Conversely, a negative NPV suggests a potential loss.
 Internal Rate of Return (IRR): This is the discount rate that makes the NPV of an investment
equal to zero. In simpler terms, it's the projected rate of return an investment is expected to
generate if all future cash flows are discounted back to their present value using the IRR.
Uses of DCF:
 Capital Budgeting: Businesses use DCF to evaluate potential investments and compare different
project options by analyzing their NPVs.
 Company Valuation: Investors can use DCF to estimate the intrinsic value of a company by
considering its future cash flow generation potential.
 Mergers and Acquisitions: DCF can be a tool for valuing companies involved in mergers and
acquisitions to determine a fair acquisition price.
4.3.7 Tender price and contract pricing

4.3.7.1 Definitions
 Tender price: It is the initial price a company or supplier submits in a bid to win a project contract.
It represents the estimated total cost the company expects to incur to complete the project according
to the specifications outlined in the tender documents.
 Total Price of Tender

This term can have varying interpretations depending on the specific tender documents and procurement
practices. This might include:
o The core tender price: The cost of completing the core project activities as specified in the
tender documents.
o Additional costs: This could include material costs, labor costs, equipment rentals, permits,
insurances, and any other project-related expenses.
o Profit margin: The amount of profit the company expects to earn by undertaking the project.
This profit is typically embedded within the overall tender price.
 Mark-Up:
In the context of tender pricing, the mark-up refers to the percentage a company adds to its direct costs
(material, labor, etc.) to arrive at the tender pric. This mark-up represents the profit the company expects
to earn on the project.

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COMPONENTS OF TENDER PRICE
Cost and mark-up are the two fundamental components that make up a tender price are:
A. Cost: This refers to all the expenses directly associated with delivering the goods or services
outlined in the tender. It can be further broken down into categories like:
 Direct Costs: These are the tangible expenses directly tied to the project. Examples include
materials, labor, equipment rentals, and subcontractor fees.
 Indirect Costs: These are overhead expenses that support the overall operations but aren't
directly attributable to a specific project. Examples include rent, utilities, insurance, and
administrative costs.
B. Mark-Up: This is the profit margin that the company adds to the total cost to arrive at the final
tender price. It represents the company's compensation for its expertise, risk-taking, and overhead
not covered by direct costs.
In essence, the tender price is calculated by adding the mark-up to the total cost:
Tender Price = Total Cost (Direct Costs + Indirect Costs) + Mark-Up
Figure 4.14: Components of a tender price
The total price of a tender comprises the cost and the markup. The cost includes direct and indirect costs.
The markup, on the other hand, includes profit margin, financial charges (cost of borrowing), and a risk
allowance margin (Figure 4.14). If you are much involved in the construction business, you must have
experienced how difficult it is to decide on a suitable margin to make your bid competitive against other
contractors. We need to decide on the markup percentage that makes the bid low enough to win and, at
the same time, high enough to make reasonable profit.

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Methods of assessing a specific contract mark up
Generally, contractors often have two main methods of assessing a specific contract markup:
A. Estimating a single percentage markup to be added to the total cost. It is assumed that this
percentage will cover all the components of markup as shown in Figure 4.14; and
B. Detailed analysis of the risky components in the project and their impact on the project in terms
of increased time and cost. Also, cash flow analysis to estimate the financial charge and
estimating a reasonable profit margin.
Calculations of the financial charges (cost of borrowing) were, also, presented previously in this chapter
based on the cash flow analysis of the contract. Estimating profit and risk allowance margins will be
presented in the next subsection.
Estimating Profit Margin

Profit is the reward the contractor expecting to gain from performing a specific contract in retune of his
efforts and skills. Also, profit is the part of money that the contractor will retain after paying everything
including the taxes, the insurance, etc. Estimating a value for the profit margin is usually depends on the
market conditions. However, the factors that might affect choosing a profit margin values are summarized
as follows:
 The contactors’ competition to win a project;
 A contractor’s desirability for work;
 Volume of work that the contractor has at a certain time;
 Size of the project and it complexity;
 Location of the project; and
 Identity of the client and the engineer.
4.3.8 Risk management
It is the process for systematically identifying, analyzing, and responding to risk events throughout the
life of a project to obtain t he optimum or acceptable degree of risk elimination or control.
Purpose of Risk Management:
 Protect Project Objectives: By identifying and addressing risks, you can safeguard the project's
goals, such as completing the project on time, within budget, and according to specifications.
 Improved Decision-Making: Risk management provides valuable information to make informed

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decisions about how to allocate resources and prioritize tasks.
 Enhanced Communication: The risk management process fosters open communication among
stakeholders about potential issues and mitigation plans.
 Increased Project Success Rate: Proactive risk management increases the probability of project
success by reducing the impact of unforeseen events.
Uncertainty and risks usually leads to project completion delays and cost overruns. Uncertainty is the gap
between the information required to estimate an outcome and the information already possessed by the
decision maker. Thus, the early assessment of the risks and uncertainties which would affect the
construction of a project may improve the performance in terms of time and money. We need risk
management to minimize management by crisis; minimize surprises and problems; increase probability of
project success; and better handle on true costs and schedules by properly estimating contingencies.
 Steps in risk management
i. Identification of risks;
ii. Responses to avoid, reduce, or transfer risk;
iii. Analysis and assessment of residual risks after the risk responses; and
iv. Adding time and /or cost contingency for residual risks in the project estimates.
In general, in risk allocation, the risk should be carried out by the party (client or contractor)
who is best able to make the assessment of the risk or uncertainty. If there is any doubt, it should be
carried out by the client. This is because, it is better for the client to pay for what does happen rather than
for what the contractor thought might happen in these risks.
 Risk Identification
Construction risk is defined as the possibility of undesirable extra cost or delay due to factors having
uncertain future outcome. Or it the possibility of suffering loss and the impact that loss has on the
involved party. The purpose is to identify all risks to the project/contract and provide a preliminary
assessment of their consequences. Identify every factor that may harm the project as potential risk. For
example, one may state “If the lay-down area is not optimized then productivity y will be too low;”
“segmental liners may not be available prior to construction thus delaying project”. In identifying risks, a
number of approaches can be used including: standard checklists; comparison to other projects; expert
interviews; and brainstorming sessions.

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Main categories of sources of risks are listed along with some examples of each category as follow:
a) Administrative: Delay in possesses of site; Limited working hours; Limited access to the site;
and Troubles with public services
b) Logistical: Shortage or late supply of different resources;
c) Site remoteness problems; and
d) Difficulties in communications with different parties involved.
e) Construction: Limited work space; Changes in soil condition than the soil report; Construction
method used; Availability of skilled labor; Equipment breakdown; and Effect of varied weather
and environmental conditions on construction.
f) Physical: Periods of high tides, temperature, etc; placing fill in dry season; and Diverting water
canals in time of low flow.
g) Design: Design incomplete; Design changes; and Design errors.
h) Financial: Inflation which results in reducing the purchasing power of the currency; New
restrictions applied on importing materials and equipments; Exchange rate fluctuation; Changes
in taxes; Availability of funds; and Delay payments by client.
i) Political: Change of local laws and regulations; Inflation which result in reducing the
purchasing power of the currency; Effect of wars and revolutions; and Necessity to use local
resources.
j) Management: Scheduling errors; Space congestion; Errors in bill of quantities; and Estimating
of cost and duration based on standard figures.
k) Contractual: Contract type and its suitability for undertaken work; Co-ordination of work; and
Liability towards others.
l) Disasters: Floods and storms; Fires; Earthquakes; Accidents; Diseases; and Other acts of GOD.
 Response to Risk and Uncertainties (Actions to be taken or transfer risks)
Having identified a list of possible risks and uncertainties that a project may face, management should
develop responses to avoid, reduce or transfer these risks. The following list of actions may be taken to
reduce or transfer risks:
a) Using construction methods which have high degree of success;
b) Using extra resources to enhance the construction program to absorb possible delay;
c) Securing alternative suppliers and advanced delivery dates for materials;
d) Providing temporary roads to give flexibility of operations;
e) Allowing free housing near construction site for labors to reduce problems arising from

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remoteness of job site;
f) Locating site facilities away of the working space to give sufficient area for construction
works;
g) Assuming realistic reduced resources output;
h) Maintaining good roads to provide assumed production rates for hauling equipment;
i) Using equipment for which spare parts are easily available to reduce shortage of spare parts;
j) Providing facilities for mechanical maintenance of equipment; and
k) Purchasing insurance to cover the risk of site injuries.
Time and cost contingency
A. Time contingency
In addition to the above-mentioned responses to risks, time contingency is one of the contractor’s
responses to risks and uncertainties. Time contingency is an extra time that added to the contract time to
offset the effect of some risks that are known to the contractor in advance such as late delivery of
materials. This extra time may be added in two ways:
 A general allowance is added to the overall contract duration when most the activities will be
affected by the risk. For example, effect of bad weather which will affect all running activities.
 Allowance is added to a particular activity affected by the risk.
B. Cost contingency
Also, the contractor has to assess the risks he/she is going to retain and include appropriate cost
contingency allowance to the contract estimate. This allowance can be added as a fixed percentage of
money from the direct cost based on the contractor experience. However, this allowance might not be
appropriate for the specific risks. Also, it results in a single figure estimate. This method can be used
when there is no means for performing risk analysis. The second method is to make a detailed analysis of
risks as presented in the next subsection.
Example
In a specific, the following risks were identified.
 Client’s delays;
 Troubles encountered with public services;
 Late supply of materials; and
 Equipment breakdown.

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As a contractor, give your views on the possible responses to deal with them.
 Solution
Contractor’s response to the risks:
o Client’s delay: the contractor should supply an activity schedule to warn the client and to be an
evidence for the delay.
o Troubles encountered with public services: the contractor should use maps of new tools to locate
public services. Also, he may use trial pits.
o Late supply of materials: the contractor should secure advanced delivery dates and alternative
suppliers.
o Equipment breakdown: the contractor should supply the site with a complete workshop for
maintenance of equipment.
Risk Analysis
After applying the responses to risks mention in the previous section, there are still some residual risks
that need risk analysis to assess their impact on the project time and cost. This risk analysis is the process
which incorporates uncertainty in a quantitative manner, using probability theory, to evaluate the potential
impact of risk. The basic steps of risk analysis are:
i. Estimate range of risk variables;
ii. Choose the appropriate probability distribution which best fit risk variables;
iii. Define the affected activities by these risk variables; and
iv. Use a simulation model to evaluate the impact of risks.
This, risk analysis usually includes: sensitivity analysis; and probability analysis.
Sensitivity analysis
Sensitivity analysis is used to identify those variables which contribute most to the risk of the contract
(time and/or cost). The purpose of this analysis is to eliminate those risk variables which have minor
impact on the performance criteria and hence reduce problem size and effort. The following procedure for
risk sensitivity analysis will be followed:
Three values of each risk variables occurrence are to be specified: a most likely, an optimistic, and a
pessimistic;
a) To assess the effect of each risk variable:
b) Set all other risk variables at their most likely value;
c) Determine a value (A) for the performance (cost and/or time) criteria when risk variable under

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consideration is set at its optimistic value;
Determine another value (B) for the performance criteria (cost and/or time) when risk variable under
consideration is set at its pessimistic value;
The difference between the obtained two values (A – B) of the performance criteria is checked
(subjectively).
 Two cases can be encountered:
A. The difference corresponding to a risk variable has a little effect on the performance
criteria (time and/or cost). Then, this risk variable can be eliminated from the probability analysis;
B. A significant difference is found, and consequently this risk variable should be included in the
probability analysis.
Probability analysis
The purpose of the probability analysis is to determine the effect of those risk variables which have
a significant impact on the performance criteria of the project. The following procedure for risk
probability analysis will be followed
a) Consider the risk variables as random variables;
b) Specify the suitable probability distribution for each risk variable;
c) Use a suitable simulation technique to determine the probability distribution of the performance
criteria (Monte Carlo Simulation);
d) Cost contingency can be simply calculated after specifying the probability distribution of the
performance criteria (Cumulative Probability Distribution as shown in Figure 8.1) as follows:
e) Choose p; acceptable probability of project cost (time) overrun;
f) Allocate p on the Cumulative Probability Distribution curve, and determine the corresponding
value (target cost); D
g) Calculate the cost contingency (D- C), where C is the base contract estimate (time and
cost).

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Figure 4.15: Cost contingency
Contract pricing
Contract pricing builds upon the initial tender price submitted during the bidding process.
A. Contract cost:
This refers to the total cost incurred by the contractor to deliver the project according to the
agreed-upon contract terms. It encompasses all the expenses associated with the project,
including:
o Direct Costs: Material, labor, equipment rentals, permits, etc.
o Indirect Costs: Overhead costs, project management, insurances, etc.
o Project Financing Costs: Interest on loans, loan fees (if applicable).
B. Mark-Up components to finalize tender price
The tender price is typically calculated by adding a mark-up percentage to the direct costs. This
mark-up represents the contractor's desired profit on the project. Additional components might
also be factored in:
 Contingency Reserves: A buffer allocated for unforeseen circumstances.
 Taxes: Applicable sales taxes, property taxes, etc. (depending on location and project
type).

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Finalizing the Contract Price:
The tender price serves as a starting point for negotiation during the contract award stage. The
final contract price may be adjusted based on several factors:
 Clarification of Scope: Detailed discussions ensure a clear understanding of what's included
and excluded from the project. This might lead to adjustments in the contract price.
 Payment Terms: Negotiating payment schedules (e.g., milestone payments, progress
payments) can affect the final price.
 Risk Allocation: The contract will specify how risks are shared between the client and
contractor. This might influence the final price.
Balanced Bid vs. Unbalanced Bid (Loading of Rates):
 Balanced Bid: A desirable approach where the mark-up is consistently applied across all
cost categories (material, labor, equipment) in the tender price.
 Unbalanced Bid (Loading of Rates): This strategy involves intentionally inflating the
mark-up on certain cost categories (e.g., labor) to compensate for potentially lower mark-
ups applied elsewhere (e.g., materials). While it can be a tactic to remain competitive
during bidding, it lacks transparency and can raise concerns with the client during
negotiations.
Method of Related Charge (MRC):
This is a cost estimating technique used in some industries, particularly construction. It involves
using historical data from previous projects to estimate costs for new projects with similar
characteristics. Here is how it works:
1. Identify Similar Projects: Find past projects comparable in size, scope, and complexity
to the new project.
2. Analyze Costs: Gather data on actual costs incurred in those similar projects for various
cost categories (labor, materials and equipment).
3. Apply Adjustment Factors: Account for differences between the historical projects and
the new project (e.g., inflation, changes in material costs, labor rates).
4. Develop Estimates: Use the adjusted historical cost data to estimate the costs for the new
project's various cost categories.

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LEARNING OUTCOME 4.4: CALCULATE PROJECT COST OVERRUN
4.4.1 Project Cost Overruns
A cost overrun signifies a shortfall in the project budget. The project incurs higher expenses than
initially planned, leading to a variance between the estimated and actual costs.
Factors Influencing Cost Overruns:
Several factors can contribute to cost overruns. Here are some common culprits:
 Inaccurate Planning and Estimating: Poor initial budget estimates, underestimating
project complexity, or failing to account for all potential costs can lead to significant
overruns later.
 Scope Creep: Uncontrolled changes to the project scope after the budget is set increase
costs. This can be caused by client requests, design modifications, or unforeseen
requirements.
 Poor Project Management: Ineffective project management practices, lack of
communication, scheduling delays, inefficient resource allocation, or inadequate risk
management can all contribute to cost overruns.
 External Factors: Events beyond your control, like economic fluctuations, material price
hikes, labor disruptions, or extreme weather conditions**, can disrupt your budget**.
Mitigation Measures Against Delay and Cost Overrun:
 Thorough Planning and Estimating: Invest time in detailed planning and realistic cost
estimates. Consider historical data, industry benchmarks, and potential risks.
 Scope Management: Clearly define the project scope and establish a change control
process. Document and approve all scope changes formally to track their impact on the
budget and schedule.
 Effective Project Management: Implement robust project management practices. This
includes clear communication, regular progress monitoring, risk management strategies,
and effective resource allocation.
 Contingency Planning: Allocate buffer funds in the budget to address unforeseen
circumstances.

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Effective Tips on How to Deal with Project Cost Overruns:
 Early Identification: Proactive monitoring helps identify potential cost overruns early.
Take corrective actions as soon as deviations from the budget are detected.
 Communication and Transparency: Maintain open communication with all
stakeholders. Inform them transparently about cost overruns and proposed solutions.
 Cost Control Measures: Implement cost-saving measures like value engineering,
negotiating with suppliers, optimizing resource utilization, or exploring alternative
materials.
 Renegotiate Contracts: If necessary, renegotiate contracts with vendors or
subcontractors to share the cost burden.
4.4.2 Checking project planned works and executed works
Ensuring Project Alignment: Planned Works vs. Executed Works and Contract Terms
Verifying that a project aligns with its plan and contractual obligations is crucial for success. Key
elements involved:
4.4.2.1 Contract Terms:
 This is the foundational document outlining the agreed-upon scope of work, deliverables,
schedule, budget, quality standards, and payment terms between the client and the
contractor.
4.4.2.2 Planned Work:
 This refers to the detailed breakdown of all activities required to complete the project
according to the contract terms. It's typically documented in the project schedule (Gantt
chart) and the Work Breakdown Structure (WBS).
 Project Schedule: This outlines the planned sequence and duration of all project tasks. It
establishes milestones and deadlines for project completion.
 Work Breakdown Structure (WBS): This breaks down the project into a hierarchical
structure, decomposing the project into manageable work packages.

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4.4.2.3 Checking Planned Work vs. Contract Terms:
 Ensure Alignment: Verify that the planned activities outlined in the schedule and WBS
accurately reflect the scope of work defined in the contract.
 Identify Gaps: Look for any discrepancies between the planned work and the contract.
Missing tasks or activities exceeding the agreed-upon scope need to be addressed.
 Manage Expectations: A clear understanding of planned work helps manage client
expectations regarding project deliverables and completion timelines.
4.4.2.4 Executed Works: This refers to the actual work completed on the project site. It
encompasses tasks finished, work currently in progress, and deliverables achieved.
4.4.2.5 Planned Works vs. Executed Works:
 Monitoring Progress: Regularly comparing planned work with executed work helps
assess project progress. Identify any deviations from the plan, such as delays,
uncompleted tasks, or work exceeding the planned scope.
 Identify Issues: Proactive monitoring helps detect problems like resource constraints,
material shortages, or quality control issues early on.
 Course Correction: By understanding deviations, project managers can implement
corrective actions to get the project back on track.
 Benefits of Checking Alignment:
 Early Intervention: Identifying discrepancies early allows for timely adjustments to the
plan, mitigating potential risks and cost overruns.
 Improved Communication: Regular checks foster clear communication with
stakeholders about progress, challenges, and changes to the plan.
 Enhanced Project Control: Effective monitoring provides greater control over project
execution, ensuring adherence to contractual obligations and project goals.

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4.4.3 Executed work estimation
4.4.3.1 Work Plan Review: A Roadmap to Success
A work plan review is a systematic assessment of a previously created work plan. It analyzes the
progress made against the outlined tasks, timelines, and objectives.
Purpose of Work Plan Review:

 Evaluate Progress: It helps you understand how far you've come towards achieving your
project goals. This allows you to identify areas where you're on track and areas needing
additional focus.
 Identify Issues: Proactive review helps detect challenges like resource constraints,
scheduling conflicts, or unexpected roadblocks.
 Adapt and Improve: Based on the review, you can adjust the work plan to address
identified issues, realign priorities, or modify strategies to ensure project success.
 Enhanced Communication: Regular reviews facilitate open communication with
stakeholders. You can share progress updates, discuss challenges, and gain valuable
feedback.
Creating a Work Plan
An effective work plan serves as a roadmap for your project or task. These are key steps in
creating a work plan:
i. Define Goals and Objectives: Clearly articulate the overall goal you want to achieve
and break it down into specific, measurable, achievable, relevant, and time-bound
(SMART) objectives.
ii. Identify Tasks and Activities: List all the individual tasks required to achieve your
objectives. Break down complex tasks into smaller, manageable steps.
iii. Estimate Timelines: Assign realistic timeframes for completing each task. Consider
dependencies between tasks (e.g., Task B can't start until Task A is finished).
iv. Allocate Resources: Determine the resources needed for each task (e.g., people,
equipment, materials and budget).
v. Establish Monitoring and Review: Define a schedule for reviewing your work plan.
This could be weekly, bi-weekly, or monthly, depending on the project complexity.

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4.4.3.2 Measuring Executed Work [Keeping Track of Project Progress]
Measuring executed work involves determining the amount of work that has been physically
accomplished on a project. This can be done through various methods depending on the project
type and deliverables.
METHODS FOR MEASURING EXECUTED WORK:
a) Unit-Based Measurement: This method applies to quantifiable deliverables. For

example, measuring completed construction work by the number of cubic meters of
concrete poured or the meters of electrical cable laid.
b) Percentage of Completion: This method is useful for activities that are difficult to
quantify in specific units. It involves estimating the percentage of completion for a task
based on professional judgment.
c) Earned Value Management (EVM): This project management technique uses earned
value (value of completed work) to assess project performance against the budget and
schedule.
Cross-Checking Executed Work and Planned Work:
Once you've measured the executed work, it's crucial to compare it with the planned work
outlined in your project schedule and WBS (Work Breakdown Structure). This comparison helps
identify variances.
Benefits of Cross-Checking:
 Early Warning System: Deviations from the plan can signal potential problems like
delays, scope creep, or resource constraints. Early identification allows for timely
corrective actions.
 Improved Decision-Making: By understanding progress and deviations, project
managers can make informed decisions about resource allocation, schedule adjustments,
or risk mitigation strategies.
 Enhanced Communication: Regularly comparing planned and executed work facilitates
clear communication with stakeholders. They can understand project progress and
potential challenges.

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Cross-Checking Techniques:
 Progress Reports: Reviewing progress reports submitted by team members can reveal
completed tasks, percentage of completion for ongoing tasks, and any deviations from the
plan.
 Site Inspections: Physically verifying the work completed on the project site can provide
valuable insights into progress and identify any discrepancies with the plan.
 Project Management Software: Many project management tools offer visual
dashboards that compare planned versus actual progress for tasks and deliverables.
4.4.3.3 CALCULATING QUANTITIES AND COST FOR THE EXECUTED WORKS
It involves measuring the amount of work completed and multiplying it by the predetermined
unit rates to determine the total cost incurred.
The key steps:
A. Measuring Quantities
The methods used to measure quantities depend on the type of project and the deliverables:
 Unit-Based Measurement: For quantifiable deliverables, measure the actual work
completed in standard units. This could involve:
o Construction: Cubic meters of concrete poured, meters of piping installed, square
meters of painting completed.
o Software Development: Lines of code written, number of features completed, hours
of development effort.
 Percentage of Completion: For activities that are difficult to quantify in specific units,
estimate the percentage of completion based on professional judgment. This is often used for
tasks like design work or engineering calculations.
B. Utilizing Unit Rates

 Predetermined Rates: During project planning, establish unit rates for various work
activities. These rates consider labor costs, material costs, equipment costs, and any
overhead charges. They can be sourced from historical data, industry benchmarks, or
vendor quotes.

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 Rate Adjustments: In some cases, unit rates may need to be adjusted to reflect changes
in material prices, labor costs, or unexpected site conditions.
C. Cost Calculation
Once you have the quantities and unit rates, use the following formula to calculate the total cost
for executed work: Total Cost = Quantity Executed x Unit Rate
D. Considerations for Accuracy:
 Detailed Records: Maintain accurate records of all measurements, unit rates, and cost
calculations. This is crucial for auditing purposes and future project reference.
 Transparency: Ensure transparency in the measurement and cost calculation process.
Document any assumptions or adjustments made to unit rates.
 Benefits of Accurate Calculation:
 Cost Control: Understanding the actual cost of executed work helps you monitor project
budget and identify potential cost overruns early on.
 Informed Decision-Making: Accurate cost data allows project managers to make
informed decisions about resource allocation, change orders, and project adjustments.
 Improved Client Communication: Regularly presenting cost information enhances
communication with clients and stakeholders. Transparency builds trust and fosters
collaboration.
4.4.4 Additional Work Estimation: Addressing Unforeseen Needs in Projects
4.4.4.1 Project Additional Work:

This encompasses any tasks or deliverables not identified in the initial project contract. It can
arise due to various reasons:
o Design changes: Client-requested modifications, errors in initial plans, or
unexpected site conditions may necessitate design changes, leading to additional
work.
o Omissions and Errors: Unforeseen omissions in the initial plans or errors in
specifications may require additional work to rectify.
o Changes in Regulations: New building codes or environmental regulations may
necessitate additional work to comply.

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4.4.4.2 Measurement of Project Additional Work Quantities:
Accurately measuring the quantity of additional work is crucial for fair and accurate cost
estimation. It is done in the following way,
 Review Change Orders: Formal change orders document modifications to the project
scope. They should clearly outline the additional work required and provide a basis for
quantity measurement.
 Field Verification: For unforeseen site conditions or omissions identified during
construction, physical verification through site inspections and measurements is
necessary to determine the quantities of additional work required.
 Industry Standards: For certain types of additional work, industry standard unit rates
may be used to estimate quantities. For example, painting additional square footage of a
wall.
4.4.4.3 Calculation of Additional Work Quantity and Cost:
Once you have the quantities of additional work, you can calculate the associated cost. This is
the approach to use:
a) Apply Unit Rates: Multiply the quantities of additional work by the predetermined unit
rates established during project planning or negotiated with subcontractors for specific
tasks. These unit rates consider labor costs, material costs, and equipment costs.
b) Consider Indirect Costs: Factor in additional indirect costs that may arise due to
additional work, such as extended project overhead or permitting fees.
 Formula:
Total Cost of Additional Work = (Quantity of Additional Work 1 x Unit Rate 1) + (Quantity of
Additional Work 2 x Unit Rate 2) + ... + Indirect Costs

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LEARNING UNIT 5 – CARRY OUT PROJECT CLOSE OUT
Learning outcome 5.1 Describing close out concepts
5.1.1 Importance of project close out
Project close out refers to the formal ending stage of a project. It signifies the completion of all
project deliverables and ensures a smooth transition from project mode to business as usual. This
stage involves various tasks like finalizing documentation, obtaining approvals, and capturing
lessons learned.
5.1.1.2 Importance of Project Close Out
Here are some reasons you might conduct a closing management process for projects:
a) Ensures an effortless financial process: Project closure contributes to an effortless
financial process that helps you make the necessary payments to team members.
b) Prepares you for a new project: In most cases, when one project ends, you may begin
another one, so it's essential to ensure that you prepare your team members for the
transition.
c) Ensures you meet the customer's objectives: The project closure process allows you to
meet with clients and verify if you completed all the necessary specifications.
d) Brings satisfaction: Successfully conducting a closure process can help build trust with
your clients and emphasize your desire to offer quality services. It can also bring
satisfaction to the team, who can enjoy the feeling of successfully completing a project.
e) Produces an effective finalization process: This process allows you to complete the
finalization steps for delivery and documentation efficiently.
f) Improves performance: Successful project closures can help you learn how you can
improve performance, communication, productivity, and collaboration in future projects.
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5.1.2 Project Close out Categories: Ensuring a Comprehensive Finish
A. Project Close Out

This refers to the overall administrative and logistical tasks required to formally conclude the
project. Key activities include:
 Final Deliverables Acceptance: Obtaining formal sign-off from the client on all project
deliverables.
 Project Documentation Collection: Compiling and archiving all project documents
(meeting minutes, reports, change orders, financial records).
 Lessons Learned Workshop: Conducting a session to identify successes, challenges, and
areas for improvement.
 Contract Closure: Finalizing all contractual obligations (final payments, warranties).
B. Client Close Out
This focuses on finalizing the relationship with the client. Key activities include:
 Client Satisfaction Survey: Gathering feedback to understand client experience and areas
for improvement.
 Handoff and Training: Providing client personnel with the necessary training and
documentation to operate and maintain the project deliverables.
 Warranty Support: Establishing clear procedures for addressing any warranty claims
during the post-implementation phase.
C. Organizational Close Out
This involves internal activities within the project team's organization. Key activities include:
 Resource Release: Releasing project resources (personnel, equipment, budget) for
allocation to new initiatives.
 Knowledge Transfer: Ensuring project knowledge and best practices are transferred to
relevant teams within the organization.
 Project Performance Review: Conducting an internal review to assess project
performance against goals and identify areas for organizational improvement.
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D. Subcontractor Close Out
If the project involved subcontractors, ensure a clean closure with them. Key activities include:
 Final Payment Processing: Settling all outstanding invoices and resolving any disputes.
 Performance Evaluation: Providing feedback to subcontractors on their performance.
 Contractual Release: Obtaining formal release from subcontractor obligations.
E. Risk Assessment
 Evaluate Residual Risks: Assess any remaining risks associated with the project's
completion or future operation of deliverables.
 Develop Mitigation Plans: Create contingency plans to address any identified residual
risks.
F. Write a Final Report
 Document Key Project Information: Compile a comprehensive report summarizing the
project's objectives, achievements, challenges, lessons learned, and final costs.
 Highlight Successes and Improvements: Showcase the project's positive outcomes and
areas where future projects can benefit.
G. Team Close Out
 Recognize Team Achievements: Acknowledge and celebrate the team's contributions to
the project's success.
 Provide Performance Feedback: Offer constructive feedback to team members on their
performance.
 Team Debriefing: Hold a debriefing session to discuss project experiences and foster
team learning.
5.1.3 Components of project close out
These are all important components of project close out, particularly in construction or physical
product development,
a) Punchlist: This is a detailed list of all remaining minor tasks or outstanding items that
need to be completed before final project sign-off. It ensures all agreed-upon deliverables
are met and the project meets quality standards.
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b) Inspections: Depending on the project, final inspections by relevant authorities or
stakeholders may be required. This could involve safety inspections, building code
compliance checks, or functional testing of equipment.
c) Site Cleanup: It ensures the work area is cleared of debris, waste materials, and
construction equipment. This promotes safety and leaves the space presentable for
handover.
d) Document Collection and Handover: This involves gathering all project-related
documents, such as plans, drawings, contracts, warranties, and user manuals. These
documents are then organized, archived, and handed over to the appropriate individuals
or departments for future reference and maintenance purposes.
COMMON ROADBLOCKS [CHALLENGES] THAT CAN ARISE DURING PROJECT CLOSE OUT ARE:
i. Punchlist Delays:
 Cause: Incomplete or unclear punchlist items, lack of prioritization, resource constraints

on the completion team.
 Solution: Clearly define each punchlist item with details and deadlines. Prioritize critical
items that impact project completion. Ensure the team completing the punchlist has the
necessary resources and capacity.
ii. Incomplete Document Production:
 Cause: Procrastination on documentation tasks, lack of clear ownership for documents,
missing information.
 Solution: Assign clear ownership for each document required. Schedule dedicated time
for document completion throughout the project, not just at close out.
iii. Communication Breakdown:
 Cause: Lack of clear communication channels, infrequent updates, unrealistic
expectations from stakeholders.
 Solution: Establish clear communication protocols at the beginning of the project close
out phase. Schedule regular meetings with stakeholders to discuss progress, address
concerns, and manage expectations. Utilize multiple communication channels like email,
meetings, and project management tools to keep everyone informed.
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Learning Outcome 5.2: Evaluate project close out requirements.
5.2.1 Scope of activities assessment
This assessment compares what was planned with what actually happened during the project
through three aspects:
1. Planned Activities: This refers to the activities originally outlined in the project plan or
schedule. It details the tasks, milestones, and deliverables that were expected to be
completed throughout the project lifecycle.
2. Executed Activities: This documents the activities that were actually carried out during
the project. It may include variations from the original plan due to unforeseen
circumstances or adjustments made during execution.
3. Changes: This section captures any deviations from the planned activities. It identifies the
reasons for the changes, the impact they had on the project (schedule, budget, etc.), and
any lessons learned from the modifications.
5.2.2 Quality of work assessment
5.2.2.1 Concepts of quality management
a) Quality Planning: This is the foundation, setting the roadmap for achieving quality
throughout the project. It involves activities like:
o Defining customer requirements and expectations for the product or service.
o Identifying critical quality characteristics - the essential features that determine
how well the product or service meets customer needs.
o Developing a quality management plan outlining the processes, resources, and
controls needed to achieve quality.
b) Quality Assurance (QA): This focuses on providing confidence that quality requirements
will be met. It's proactive and preventive, ensuring processes are in place to prevent
defects from occurring. QA activities include:
o Conducting audits and reviews to identify potential issues in processes or
products.
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o Developing and implementing quality standards and procedures.
o Monitoring and analyzing quality data to identify trends and areas for
improvement.
c) Quality Control (QC): This is more reactive, focusing on identifying and correcting
defects after they occur. QC activities involve:
o Inspections and testing of products or services at various stages of production.
o Maintaining control charts to monitor quality metrics and identify deviations.
o Taking corrective actions to address defects and prevent them from recurring.
d) Quality Improvement (QI): This is the continuous process of enhancing quality standards
and achieving excellence. It involves:
o Identifying opportunities for improvement based on data analysis and feedback.
o Implementing new processes or techniques to improve quality.
o Measuring the effectiveness of improvement initiatives and making adjustments
as needed.
5.2.2.2 Assessment of the quality of work
Assessing the quality of work is a crucial aspect of any project or ongoing operation. This is a
framework to consider when evaluating work quality:
A. Standards and Criteria:
Clearly defined standards and criteria are essential for a fair and objective assessment. These
benchmarks can be based on industry standards, customer requirements, or internal quality
guidelines. They should encompass factors like:
o Accuracy: Does the work meet the required specifications and achieve its intended
purpose?
o Completeness: Are all deliverables finished and necessary information included?
o Compliance: Does the work adhere to relevant regulations, policies, and procedures?
o Efficiency: Was the work completed within a reasonable timeframe and using
appropriate resources?
o Timeliness: Was the work delivered on schedule or within agreed-upon deadlines?
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B. Assessment Methods:
Depending on the nature of the work, various methods can be employed for assessment:
o Inspections and Reviews: Subject matter experts can evaluate the work for adherence to
standards and identify any discrepancies.
o Testing and Verification: For products or processes, testing can ensure functionality
and performance meet expectations.
o Performance Measurement: Tracking key metrics related to the work (e.g., error rates,
customer satisfaction scores) can provide quantitative data for assessment.
o Self-Assessment: For some tasks, allowing individuals to assess their own work against
quality criteria can be a valuable tool.
C. Feedback and Improvement:
The assessment process should provide constructive feedback to the person or team responsible
for the work. This feedback should be:
o Specific: Clearly identify areas where the work meets or falls short of
expectations.
o Actionable: Provide suggestions for improvement and next steps for addressing
any shortcomings.
o Timely: Deliver feedback promptly while the work is still fresh in mind.
5.2.2.3 Budget / financial reconciliation
Financial reconciliation is a vital process to ensure the accuracy of your financial records. Here's
a breakdown of its definition, types, importance, and steps involved:
A. Definition of Financial Reconciliation:
Financial reconciliation is the process of comparing two sets of financial records to identify and
rectify any discrepancies. It typically involves comparing your internal financial records, such as
your accounting software or checkbook register, with external records received from a third
party, most commonly a bank statement.
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 TYPES OF FINANCIAL RECONCILIATION
There are various types of financial reconciliation, each focusing on a specific account or area:
a) Bank Reconciliation: This is the most common type, where you compare your bank
statement to your internal bank account records.
b) Credit Card Reconciliation: Similar to bank reconciliation, but focuses on credit card
statements and ensures your records match the card issuer's records.
c) Accounts Receivable Reconciliation: This reconciles your accounts receivable records
(money owed to you by customers) with customer invoices and payments received.
d) Accounts Payable Reconciliation: This compares your accounts payable records (money
you owe to vendors) with supplier invoices and payments made.
e) Inventory Reconciliation: This involves physically counting inventory and comparing it
with your inventory records to identify any discrepancies due to shrinkage, damage, or
errors.
 Importance of Financial Reconciliation:
Financial reconciliation is crucial for several reasons:

 Accuracy: It ensures the accuracy of your financial statements, which are vital for
financial reporting, tax purposes, and making informed business decisions.
 Error Detection: It helps identify errors in your bookkeeping, such as missing
transactions, data entry mistakes, or fraudulent activity.
 Improved Cash Flow Management: By identifying discrepancies in accounts receivable
and payable, you can improve your cash flow management by collecting payments faster
and avoiding late fees.
 Fraud Prevention: Regular reconciliation helps detect unusual activity and potential fraud
attempts.
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 Steps in Financial Reconciliation:
The steps involved in financial reconciliation may vary slightly depending on the specific
account being reconciled. Here's a general outline:
1. Gather Documents: Collect your internal financial records for the account being
reconciled and the corresponding external statement (e.g., bank statement).
2. Compare Transactions: Match transactions listed on both statements, line by line.
3. Identify Discrepancies: Look for any unmatched transactions or differences in amounts.
4. Investigate Discrepancies: Research the cause of discrepancies. This might involve
reviewing receipts, invoices, or contacting the bank/vendor for clarification.
5. Make Adjustments: Once the cause is identified, make necessary adjustments to your
internal records to reflect the correct amount.
6. Document and Explain: Document any adjustments made and the reasons behind them.
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LEARNING OUTCOME 5.3: OFFICIATE CONSTRUCTION PROJECT CLOSE OUT.
5.3.1 Components of Officiating construction project close out
Notification of closure, work approval, and handover are indeed crucial components of
officiating construction project close out.
1. Notification of Closure:
This formally marks the end of the construction project. It's typically a written document sent by
the contractor to the client (owner) and other relevant stakeholders (architects, engineers). The
notification should clearly state the project completion date and highlight any remaining minor
tasks (punchlist items) to be addressed before final handover.
2. Work Approval:
This signifies that the client (owner) has officially accepted the completed construction work. It
usually involves an inspection by the client and their representatives to verify that the project
meets the agreed-upon specifications and standards outlined in the construction contract.
Depending on the project complexity, there might be multiple stages of work approval, with
inspections conducted at key milestones throughout the construction process.
3. Handover:
This is the formal transfer of ownership and responsibility for the completed construction project
from the contractor to the client (owner). It typically involves a handover meeting with key
stakeholders present.
During the handover, essential documents like warranties, operation and maintenance manuals,
and as-built drawings are provided to the client. This ensures the client has all the necessary
information to operate and maintain the building or infrastructure effectively.
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LEARNING OUTCOME 5.4: COMPILE REPORTS
5.4.1 Reporting channel
1. Construction Company Administrative Structure

This refers to how the construction company is organized, typically with a hierarchy that defines
roles and responsibilities. This structure impacts reporting as it determines who creates reports,
to whom they are submitted, and how information flows throughout the organization.
It includes executives at the top, with departments like project management, design,
procurement, and construction. Each department has managers and specialized staff overseeing
different aspects of the construction process. Small construction companies have a simpler
organizational structure than larger ones. The construction company org chart is a graphical
depiction of the roles and structure of the organization. Using an org chart, staffs and
stakeholders can clearly recognize the operational relationships, so that they know how does the
company work. Generally, a construction company contains basic function units including:
HR, purchasing, project, engineering, finacial, and marketing department.
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2. Project Reporting Best Practices
In construction, efficient reporting is not just a convenience but a necessity. Streamlining the
reporting process can lead to better decision-making, enhanced collaboration, and a more
successful project outcome. Here is how efficiency can be achieved in construction reporting:
A. Standardized templates
Standardizing templates for various reports can significantly alleviate discrepancies and make
the reporting process more efficient and streamlined. By having a uniform format, all parties
involved can easily understand and interpret the information.
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B. Digitalization
The digitalization of construction reporting brings about a new level of accessibility and
collaboration. By making reports available online, all stakeholders can easily access them in real-
time, enhancing visibility for all parties involved. Digitalization breaks down the silos that often
exist in traditional reporting methods, fostering more collaboration and ensuring that everyone is
on the same page.
C. Data aggregation
Data aggregation is the process of collecting and summarizing data in a way that provides
valuable insights. In construction reporting, this means capturing data across various forms and
reports to highlight issues or best practices. An informed data process can identify trends,
improve cost management, and pinpoint areas where changes need to be made. Aggregating data
allows for a more holistic view of the project, enabling more strategic decision-making.
D. Accuracy
Accuracy in reporting is paramount for clarity and efficiency. Automated tools and digital
platforms can enhance accuracy by reducing human error and providing a means to cross-check
information against what the client or owner is seeing from their perspective. Accurate
information leads to a better handle on project details and can be vital from an auditing
perspective, ensuring compliance and transparency.
E. Data protection
Construction reports often contain sensitive information and data, making the protection of that
data a critical consideration. Implementing robust security measures ensures that the information
is accessible only to authorized individuals. Data protection safeguards the integrity of the
reports and builds trust among stakeholders, knowing that their information is handled with the
utmost care and confidentiality.
By embracing these practices, construction professionals can enhance communication, reduce

errors, and build a more resilient and successful project management framework.
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3. Elements of a Progress Report
A progress report is a regular update on the project's status. Common elements include:
a) Project timeline: A comparison of planned vs. actual progress against the schedule.
b) Budget: A breakdown of actual costs incurred compared to the allocated budget.
c) Work Completed: A description of the tasks finished during the reporting period.
d) Challenges: Any issues or obstacles encountered that may impact progress.
e) Corrective Actions: Plans to address challenges and get the project back on track.
4. Reports on Construction Buildings
Types of construction reports

The importance of construction reporting extends beyond documentation. From daily reports and
safety inspections, to incremental progress tracking and comprehensive financial overviews, the
complexity and volume of this documentation can seem overwhelming.
Below, we’ll explore the different types of construction reports, their frequency, and what they
typically include:
a. Safety reports
Safety reports are essential for maintaining site safety and could relate to daily observations or
specific incidents. In the event of an accident, an incident report is created to document the
details. These reports may include information about safety equipment usage, adherence to safety
protocols, and any observed hazards.
b. Daily reports
Daily reports provide a snapshot of the day's activities, including visitors, deliveries made, and
general observations. These reports are crucial for tracking daily progress and may include
details about weather conditions, workforce attendance, and any challenges encountered.
c. Materials reports
Materials reports may include information about green material requirements, additional
stipulations by the owner, and any delays in material delivery. These reports can vary depending
on the type of project, such as healthcare, and may be standalone material reports.
Since healthcare facilities are designed with patient care at top of mind, there are certain project
requirements that must be adhered to.
15
d. Inspection reports
Inspection reports cover various aspects such as electrical, fire, and safety inspections conducted
throughout the project. These include inspections of the workforce, ensuring proper use of PPE,
and adherence to regulations. The frequency of these reports depends on whether they are
planned or unplanned and may require immediate action if discrepancies are found.
e. Work-in-progress (WIP) reports

WIP reports provide insights into how the project is tracking toward completion. They bring in
multiple stakeholders, including the owner and accounting team, to help understand the project's
current status. These reports are often submitted based on trades and specific parts of the project,
offering a detailed view of ongoing work.
f. Punch lists
Punch lists are summaries of pending tasks or items that need to be addressed before the project's
completion. These lists may include change orders, financial impacts, and scheduling
considerations. While typically done at the end of the project, punch lists can be created at any
time to ensure that all issues are addressed promptly.
g. Cost management reports
Cost management reports provide a comprehensive view of the project's financials, tied into
performance against the budget. These reports may be generated monthly or as needed,
depending on the project, and include details about fees incurred, budget variances, and overall
financial health.
h. Handover/closeout reports
During the handover or closeout phases, specific reports compile all project information,
including as-built drawings and final inspections. These reports are key to the closing-out
process and may be organized by trade or other criteria, depending on the project's size and
complexity.
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5. Responsibilities for reporting
In any construction project, reporting is a collaborative effort involving various stakeholders.

Each party has a specific role and responsibility in the reporting process, ensuring that the
information is accurate, timely, and relevant. Here's a breakdown of the key roles:
i. Owners
As key stakeholders, owners may have significant input into the reporting process. They may
offer suggestions or specific requirements that they want to see tracked in reports. Their
involvement could be at the beginning, middle, or any critical stage of the project, showcasing
their interest in the project's success.
ii. Onsite leadership
Onsite leadership plays a pivotal role in managing the reports. The project executive often takes
the lead, especially if there are issues that appear during the project, while the site
superintendent ensures that everything is tracked and observed. Foremen, on the other hand, are
typically responsible for reporting things they see in the field, acting as the eyes and ears of the
project.
1. Site Supervisors: Oversee daily operations and ensure that daily reports are accurately
maintained.
2. Project Managers: Coordinate various reports and ensure alignment with project goals.
3. Foremen: Report field observations and ensure that safety and quality standards are met.
4. Project Executives: Take overall responsibility for reporting, especially in handling
critical issues.
iii. Safety Personnel
Safety Officers and Site Safety Managers are guardians of site safety. They plan and implement
onsite safety measures, and help ensure safety protocols are followed. Additionally, safety
personnel may keep track of safety reports and confirm that they’re correctly maintained and
updated. Their vigilance helps in maintaining a safe working environment and complying with
legal requirements.
iv. Contractors and consultants
On the business operations side, contractors and consultants may have unique reporting
responsibilities. Trade partners may have their own set of reports for their business, while the
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General Contractor acts as the main aggregator of the reports. Specific consultants, such as
quantity surveyors, may be responsible for specialized reports like cost management.
1. Contractors: Provide detailed reports on their specific trades, including material usage,
labor, and progress.
2. Consultants: Offer expert insights and may handle specialized reports, such as cost
analysis and compliance checks.
v. Subcontractors
Subcontractors might be asked to complete punch items if the issue has to do with their scope of
work. During or before closeout, subcontractors should provide all necessary warranties,
manuals, and maintenance instructions. Depending on the work they did, they might also be
responsible for conducting training. Some subcontractors finish their work early in the
construction process, such as someone who did earthwork excavation or someone who put up
steel for the building. In these cases, the general contractor should try to collect all required
documentation while the subcontractor is still on the job or shortly after they finish.
vi. Suppliers/Vendors
The most pressing thing needed from suppliers and vendors during closeout is any warranties or
manuals that haven’t been collected, though most of these things are usually provided when their
product is installed.
After Closeout
After closeout, contractors are still involved in the process. They may conduct a project debrief,
store project documents, and track warranty deadlines.
Project Debrief
The project debrief is a meeting that gathers together project stakeholders to discuss and reflect
on what went well and what can be improved in the future. General contractors often use these
meetings to gain an understanding of how their system of organization fared, how their team
performed, or the performance of people with which they partnered.
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Debriefs are more purposeful when they include as many important people from the build as
possible, such as the design team, subcontractors, or the owner. Since coordinating schedules is
always difficult, project debriefs can include surveys from the client or
subcontractors. Contractors sometimes opt to skip project debriefs, considering them too time
consuming or believing that most takeaways are project specific.
Project Document Archival
Both owners and contractors should store all project-related documents for future reference,
especially those related to potential warranty claims or modifications. Documents should be
accessible and searchable, as they include necessary information for an owner to operate and
maintain their building and for a contractor to quickly answer client questions or concerns.
Warranty Work
Workmanship warranties often begin after a building is deemed substantially complete and
usually extend for about a year. During this time, contractors are expected to address defects or
issues related to their work. Depending on the product, equipment and systems, warranties
usually take effect from the date of installation and last for many years. Some issues require the
owner to call on both warranties. For example, a failed window seal might allow moisture to
collect between the double panes. The manufacturer would likely provide a new window and if
it’s within the workmanship warranty period, the contractor that installed the window would
return to the site, take out the old window, and install the new one.
6. How to Write an Effective Project Status Report
 Target Audience: Tailor the report to the recipient's level of expertise.

 Executive Summary: Provide a concise overview of the key points.
 Body: Present detailed information in a well-organized manner.
 Visuals: Include charts, graphs, and photos to enhance clarity.
 Conclusion: Summarize key findings and recommendations.
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7. Project Report Content
The content of a project report will vary depending on the specific needs of the project and
stakeholders. However, it typically covers:
 Project Overview: A brief description of the project goals and objectives.
 Scope of Work: A detailed outline of the project deliverables.
 Project Schedule: A timeline outlining key milestones and deadlines.
 Project Budget: A breakdown of estimated and actual costs.
 Risk Management Plan: A strategy for identifying, assessing, and mitigating potential
risks.
 Communication Plan: A protocol for how information will be shared among stakeholders.
8. Reporting Techniques
There are various techniques for construction project reporting, including:

a) Narrative Reports: Text-based reports providing a detailed explanation of project
progress.
b) Tabular Reports: Data presented in tables for easy comparison and analysis.
c) Graphical Reports: Charts and graphs to visually represent trends and performance.
d) Project Management Software: Many software programs offer reporting tools to
streamline data collection and presentation.
9. Reports in Project Control
Project control involves monitoring and managing a project's performance against the baseline
plan. Reports play a vital role in this process by providing data on:
 Schedule Performance: Track progress against the planned schedule and identify any
delays.
 Cost Performance: Monitor spending against the budget and identify cost variances.
 Quality Performance: Ensure work meets the required quality standards.
 Safety Performance: Track safety incidents and implement corrective measures.
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10. Effective Reporting for Construction Projects
Effective reporting is essential for successful construction project management. Here are some
key considerations:
 Identify Reporting Needs: Determine what information is crucial for stakeholders at
different levels.
 Standardize Reporting Formats: Ensure consistency and ease of comparison across
reports.
 Schedule Reports Regularly: Establish a reporting frequency that meets project needs.
 Automate Reporting When Possible: Utilize project management software to streamline
report generation.
 Communicate Effectively: Clearly present information and highlight key findings.
11. Construction project management report
Construction project management involves monitoring and control of multiple aspects –

progress, costs, quality, etc. Therefore any template for construction project management report
also has to be multi-dimensional. It is a formal document that summarizes the current status of a
construction project. It's a crucial tool for keeping stakeholders informed, identifying potential
issues, and ensuring the project stays on track.
Purpose:
The purpose of construction project management is to control the timeline or delivery of a

project, cost, and quality- that's also called the 'management triangle or triple constraints.' CM
becomes even more vital in large-scale projects as they have more chances of issues piling up
that can severely delay the construction process leading to loss of both human and financial
resources. Construction management is brought to the fore to optimize the best industrial
practices implement potent management tools and effective yet transparent reporting and
monitoring networks.
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Audience:
 Project managers rely on these reports to manage day-to-day operations and make
informed decisions.
 Senior management, clients, and other stakeholders use them to stay apprised of project
progress and identify potential areas of concern.
Content:
The specific content of a construction project management report will vary depending on the
project's needs and the recipient's level of detail required. However, it typically covers some of
the following elements:
a) Executive Summary
b) Project Background
c) Schedule Performance
d) Cost Performance
e) Quality Performance
f) Safety Performance
g) Risk Management
h) Challenges and Issues
i) Action to be taken
j) Look Ahead[ A brief overview of upcoming milestones and key activities planned]
Frequency:
The frequency of construction project management reports can vary depending on the project
size and complexity. Common reporting intervals include: Weekly Reports, Monthly Reports
and Quarterly Reports
Benefits:
Effective construction project management reports offer numerous benefits, including:

 Improved Communication and Transparency
 Enhanced Decision-Making
 Early Problem Identification
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 Increased Accountability
 Improved Project Control
How to Write a Project Closure Report (And What to Include)
What is a project closure report?

A project closure report is the last deliverable submitted at the end of a project, and it measures
the project's overall success. The project manager records details of every phase of the project
and provides a way for both themselves and senior management to determine what parts of the
project worked and what didn't. It also allows the company to analyze how to improve in the
future and the best practices for future projects. These reports show evidence of the team's hard
work and how they completed their specific objectives. They may also include feedback from
stakeholders and team members who worked on the project. Project closure reports are important
because they can close contracts, release project resources to the rest of the company,
communicate final information to stakeholders and plan the operational transition.
What to include in a project closure report

Project closure reports may vary in length or content depending on the size and complexity of the
project, but they usually include some of the same basic information. Here is a list of common
details featured in project closure reports:
 The original project guidelines, including stakeholder requests, budget and timeline
 Proof that the clients have received their deliverables
 Invoices from suppliers, stakeholders or other sources
 Release or transfer records of remaining resources
 Detailed performance reviews on each phase of the project
 Feedback from senior management, team members and stakeholders
 A separate folder with all project files and communication for archival purposes
 A request for project closure approval
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HOW TO CREATE A PROJECT CLOSURE REPORT
Eight Steps to a Successful Project Closeout
The closeout process involves several steps. Below are eight activities generally required to close
out a project.
1. Substantial completion
Substantial completion is the point in construction when the owner and contractor agree a
building is ready for its intended use, even if minor work still needs to be done. While owners
and contractors might agree the building is ready, they don’t have the authority to determine
whether a building is up to code and safe. That’s up to the local building authority which issues
certificates of occupancy. Determining what counts as being “substantially complete” can be
complex, and is very project-specific. The contractor and the owner or owner’s representative
will usually conduct a walk-through together where they compile a list of items that still need to
be done, aren’t working as expected, or deviate from approved building plans. These items make
up the punch list.
2. Completion of Punch List Items
The punch list consists mostly of incomplete or deficient items found on the substantial
completion walkthrough. Generally, these are important issues that might be needed to obtain a
certificate of occupancy, meet local building codes, or adhere to building plans, but are
manageable enough that they shouldn’t keep closeout from continuing.
Determining what is included on the punch list and when items have been addressed can be
challenging. The general contractor usually assigns an item to the subcontractor responsible for
that area of work. When the item is completed, it’s submitted back to the owner or, depending on
the work, the design team. A punch item is closed when the owner, or whoever created the item,
acknowledges it’s been satisfactorily addressed.
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If a contractor disagrees with a punch item, they can usually dispute it. The question in this
situation is whether the component meets the original approved building plans, as opposed to an
owner not liking how something turned out. Resolution might include consulting the drawings,
the contract, or running it by the design team or architect. It’s common for a project to have
hundreds or even thousands of punch items, which can make the punch list the most difficult part
of closeout. Large commercial buildings with many stories can easily have tens of thousands of
punch items.
3. Submission of Closeout Documents
Owners need all documents required to successfully manage and maintain the building. This
includes drawings that reflect final construction details, operation and maintenance manuals,
warranties, product data, and final affidavits. We will share details on each of these in the
documents section below. The general contractor should deliver these resources in a way that is
easy to navigate and search. Owners who struggle to find information often reach back out to the
contractor, so clear systems of organization can save time for everyone. These materials used to
be printed out and delivered in a bunch of three-ring binders. These days, materials are
commonly delivered digitally, which is easier to store and to search. However, these virtual
binders should still be very organized, with clear naming conventions and well-organized
folders.
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4. Final Inspection
The final inspection assesses the safety of buildings by checking for compliance with local
building codes and laws, and ensuring that any issues from previous inspections have been
resolved. Final inspections are done by a licensed inspector from the local building authority and
are usually a requirement to obtain a certificate of occupancy.
5. Training
Some equipment and systems installed during construction need training to operate and maintain,
particularly things that will be regularly used during the life of the building. Contractors or
vendors are often required to train the owner’s team before the handoff is complete. This is even
included in some contracts. A common training in many commercial buildings is for the air
handler unit, which might include instruction on how to restart the system or change an air filter.
Training is usually done in person and is often explicitly scheduled into a project’s timeline.
Documenting that a training occurred is often done by including a paper with key takeaways as
part of the closeout documents or including a video of the training itself. These serve the dual
purpose of demonstrating a contractor fulfilled their responsibilities while also creating a
reference that can be reviewed and shared in the future.
6. Final Payments and Release of Retainage
Many contracts define the deadline for final payments to a contractor as a project being
“substantially complete.” Some contracts allow for a retainage, which is a percentage (usually
between 5% and 10%) of a contract's value that is withheld from a contractor until the end of the
job. On projects using contracts from the AIA, this deadline is commonly defined as when a
building has received a certificate of substantial completion and a certificate of occupancy. This
deadline has a cascading impact, as it’s common for general contractors to pay a subcontractor
once they have received payment from the owner. Closeout is also the time to settle all
outstanding bills, change orders, or any other additional costs. Contractors will usually submit a
lien waiver to verify a payment has been received.
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7. Transfer of Utilities and Facilities
The contractor often manages utilities during construction and transfers them to the owner once
work is complete. Projects under construction often receive temporary electricity, which is
changed to permanent power when the building is substantially complete and the owner takes
over. Similar processes may be required for water, internet, or gas. The transfer process can often
take longer than the contractor and owner want, as it involves utility companies with no
investment in the construction timeline and are beholden to their own internal processes. It is
best to contact these companies early to know what to plan for, as some places have very specific
requirements.
8. Acquisition of Certificate of Occupancy
A certificate of occupancy is a legal document that certifies a building is safe and ready to be
used, by verifying the structure complies with local building codes, usage regulations, and safety
requirements. It is usually required anytime a property is newly constructed, has been converted
to a different usage classification, has had major renovations, or is changing ownership. To
ensure a building is done and safe for use, a local building authority will ensure all permits are
closed and conduct any necessary inspections to check if a structure meets relevant code and
laws.
What Happens When Closeout Goes Poorly
Snags, delays, and headaches happen. However, the longer closeout goes, the more resources are
lost. For owners, prolonged closeout can result in losing money, as they pay for additional work
while not have access to using or selling their building.
For contractors, an unexpectedly long closeout can drain their capacity to work on anything else.
Final payments are also often connected to completing closeout. In worst-case scenarios,
contractors who cause closeouts to go long can be responsible for paying liquidated damages.
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Key Documents Needed During Closeout
During closeout, contractors and suppliers will need to provide a variety of documents to the
owner based on the building, location and intended use. Many key documents listed below, such
as data sheets, manuals, or as-built drawings, are required to go through a submittal
process. Including proof of submittals is often required during closeout.
a) As-built drawings
b) Warranties
c) Certificate of Occupancy
d) Final lien waivers
e) Punch list
f) Final change orders
g) Operation and maintenance manuals
h) Data sheets
i) Reports
5.4.2 Update plans for executed works:
At the closure of a construction project, the most relevant document you will be dealing with is:
 As-Built Plans: These are the final, updated versions of the construction plans that
reflect the actual conditions of the completed project. They incorporate any deviations,
modifications, or changes made during the construction process compared to the original
design. Essentially, as-built plans are a record of what was actually built, as opposed to
what was initially planned.
 Construction Plans: These are the original blueprints and specifications that outline the
intended design and construction methods for the project. They serve as the roadmap for
construction activities.
 Plan Update: This is a broader term that could encompass any revision made to the
construction plans during the project lifecycle. It could be a minor update like specifying
a different material brand or a major change like altering the layout of a room.
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CIVIL ENGINEERING DEPARTMENT

CONSTRUCTION TECHNOLOGY PROGRAM

Construction Project Management (CPM):

Project Goal Setting

How does all this goal and scope analysis relate

The project life cycle may be viewed as a

constructed facilities may be classified into four

4. Infrastructure and Heavy Construction

Infrastructure and heavy construction includes projects

It defines the project activities and end products that will be

i. Define the scope of work, method statement, and

The larger the project, the greater the number

Example of standard WBS for a warehouse construction project

The Organization Breakdown Structure is a practical method to

One objective in many construction planning efforts is

EX: Divisions in MASTERFORMAT for Site Work

An activity is defined as any function or decision in the

2. Procurement activities: Activities that specify the time for

In order to identify the relationships among

Finish to Start (FS)

A network is a graphical representation of the

Basic patterns of AOA diagrams

a) Each activity must have a unique i–j numbers,

In some situations, when more than one arrow

Networks diagram with dummy

Activity on node network (AON)

Use of dummy activity

While both networks can be used to represent a project

X and Y are dummy activities

In this example, as there are two activities

Having defined the work activities, each activity has

Excavate trench 1.0

Place formwork Excavate trench 0.5

Place reinforcing Place formwork 0.5

Pour concrete Place reinforcing 1.0

The entire set of activities would require at least 3 days

All scheduling procedures rely upon estimates of the

Typically, the quantity of work is determined from

Knowing activity duration and resources employed, it is

The project schedule is the tool that communicates

Types of activity duration:

3- Fixed Units: Users need to use this type of

4- Fixed Units/Time: Users need to use this type

Project milestones are checkpoints in your plan

Figure: A comparison of key differences

Activity resource estimating is a process in

It is to estimate the resources required for each

3. Quantitatively based durations. The

4. Reserve time (contingency).

Project teams may choose to incorporate an

1. Activity duration estimates.

A project timeline shows the work needed to

3 common types of project timelines:

Example of a traditional PERT chart. PERT charts

Keeping your projects and team members

✓ Analyze the project brief or project charter

A project timeline template is a tool that displays

• Project Name: Enter the name of the project.

Tips to Identify project resources: