chapter 2 construction relations - u of s … 2 8-9-07 student-1.pdfthe nature & scope of the...
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62.1 INTRODUCTION2.1 INTRODUCTION
2.2 OVERVIEW AND DEFINITIONS
2.3 MAJOR PLAYERS IN THE CONSTRUCTION INDUSTRY
2.4 THE BUILDING PROCESS
2.5 CONSTRUCTION INDUSTRY
2.6 ENGINEERING PROFESSION
2.7 CONSTRUCTION ORGANIZATION
2.8 COMPANY ORGANIZATION AND STRUCTURE
2.9 COMPANY OPERATIONAL PHILOSOPHIES
72.2 OVERVIEW AND DEFINITIONS2.2 OVERVIEW and DEFINITIONS
CONSTRUCTION -The creative effort that converts the four M’s of construction -, , , and into a
constructed facility.
CONSTRUCTION MANAGEMENT - Comprises the planning, initiating, and direction of the construction process required in a specific project.
THE NATURE & SCOPE OF THE CONSTRUCTION MANAGEMENT EFFORT WILL DEPEND UPON:
1) 2)3)4) 5)
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i) BOTH HAVE LOTS OF PROBLEMS
ii) USUALLY MOST PRIVATE OWNERS BUILD ONLY ONCE.
iii) WANT A FIRM PRICE
iv) PUBLIC OWNERS BENEFIT FROM BETTER ORGANIZATION IN THE FORM OF STATUTES AND REGULATIONS.
2.3.1 OWNER
A) OR B)
2.3 MAJOR PLAYERS IN THE CONSTRUCTION INDUSTRY
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2.3.2 GENERAL CONTRACTORi) BEST DESCRIBED AS A “RESOURCE MANAGER ”
ii) DECIDES WHAT PORTION OF THE WORK WILL BE SUB-CONTRACTED OUT.iii) MONITORS THE WORK OF THE SUBSiv) USUALLY PERFORMS 10 - 70% OF THE WORK.v) JOB BROKERS ???????
MOTIVATION
OR
2.3 MAJOR PLAYERS IN THE CONSTRUCTION INDUSTRY
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2.3.3 ARCHITECT/ENGINEER [CONSULTANT]
PROVIDES THE OWNER AN ESTIMATE OF THE TOTAL COST BASED ON:
i) ii)iii)
THE OWNERS GENERALLY TAKE THIS $ FIGURE TO MEAN “FIRM PRICE”, WHICH CAN CAUSE CONSIDERABLE PROBLEMS, ESPECIALLY IF THE COST IS WELL OVER THE ESTIMATE.
IF THIS IS THE CASE, THE CONSUTLANT IS USUALLY REQUIRED TO MODIFY THE DESIGN AT HIS/HER OWN COST.
A/E’S ARE BECOMING RELUCTANT TO SUPERVISE PROJECTS BECAUSE OF LIABILITY PROBLEMS.
2.3 MAJOR PLAYERS IN THE CONSTRUCTION INDUSTRY
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2.3.4 REGULATORY AGENCIES
EVALUATE PROJECT TO ENSURE THE SAFETY AND LONG-TERM BENFIT TO SOCIETY.
i) SASKATCHEWAN ENVIRONMENT (SERM)ii) iii) FISHERIES AND OCEANSiv)
2.3 MAJOR PLAYERS IN THE CONSTRUCTION INDUSTRY
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2.4.1 THE LINEAR NATURE OF THE BUILDING PROCESS
2.4 THE BUILDING PROCESSConstruction is Engineering in Action
2.4 THE BUILDING PROCESS
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2.4.3 DESIGN BUILD PROCESS
THE CONSTRUCTION PROCESS WHERE A CONTRACTOR/ENGINEER IS CHOSEN TO DESIGN AND BUILD A FACILITY.
THIS MAY ALSO INCLUDE START-UP AND INITIAL OPERATION SOMETIMES REFERRED TO AS A TURN-KEY PROJECT RESULTS IN A SIGNIFICANT SHIFT OF RESPONSIBILITY TO THE DESIGN/BUILD FIRM.
CANADIAN DESIGN-BUILD INSTITUTE (CDBI)
THE CANADIAN DESIGN-BUILD INSTITUTE IS A SPECIAL COMMITTEE OF THE CANADIAN CONSTRUCTION ASSOCIATION. ESTABLISHED IN FEBRUARY 1998,THE NEW CDBI IS THE NATIONAL VOICE OF CANADIAN DESIGN-BUILD PRACTITIONERS.[www.cdbi.org]
2.4 THE BUILDING PROCESS
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DOC 14 - 2000 DESIGN-BUILD STIPULATED PRICE CONTRACT
Standard prime contract between Owner and Design-Builder where the Design-Builder performs Design Services and Construction under one agreement, for a single, pre-determined stipulated or fixed price.
DESIGN-BUILD DOCUMENTS
DOC 15 - 2000 DESIGN-BUILDER/CONSULTANT CONTRACT
Standard contract between Design-Builder and Consultant to perform the design services required under a design-build contract between Owner and Design-Builder.
To obtain these two documents please visit the CCDC web site at www.ccdc.org for a full listing of document outlets, or call your local association.
2.4 THE BUILDING PROCESS
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2.4.4 CM PROCESS
CONSTRUCTION MANAGEMENT IS THE TERM USED TO DESCRIBE THE COMPOSITE OF ALL MODERN MANAGEMENT METHODOLOGIES HAVING AS THEIR OBJECTIVES THE CONTROL OF TIME, COST, AND QUALITY IN THE DESIGN AND CONSTRUCTION OF A NEW FACILITY.
PROJECT MANAGEMENT IS USED TO EMPHASIZE THAT THE CONCEPTUAL PLANNING, PRE-DESIGN, AND DESIGN PHASES MAY BE OF EQUAL IMPORTANCE TO THE CONSTRUCTION PROCESS.THE TERM CM INCORPORATES BOTH OF THESE PHILOSOPHIES OF MANAGEMENT.
CM’S ROLE IS TO:
I) ADVISE THE DESIGNER ON FEASIBILITY.II) III) CM’S SOMETIMES PUT TOGETHER THE FINANCIAL PACKAGE -BECHTEL (AT PRESENT).
2.4 THE BUILDING PROCESS
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DEFINITION OF CMConstruction management/project management does not concern itself with the direction of work within a contract or a subcontract but rather deals with the planning for and manipulation of those contracts.
Thus, CM does not seek to eliminate the general contractor or to administer a series of separate contracts for a fee. It does focus on the fact that the greatest savings in ,
, and on a construction project can be achieved during the concept and design phase. Nor is CM solely a fast-track system, although the latter can indeed be an appropriate part of the CM process. CM DOES concern itself with a service to the owner seeking to control time, and during the entire project, and the construction manager should be selected to function concurrently with or preceding the planning and design phase of the work and continue his efforts throughout all the subsequent phase or design and construction. The construction manager, of course, may perform other services ancillary to the main objectives stated above, such as scheduling and CPM program maintenance, management of the procurement effort, administration of owner or tenant move-in, coordinator of site and off-site operations, furnishing of operating or maintenance manuals, and other serves as called for by the owner.
A definition of construction management may be stated as that group of management activities over an above normal architectural and engineering services related to a construction program, carried out during the conceptual planning. Pre-design, design and construction phases, that contributes to the control of time, cost, and quality in the construction of a new facility.
2.4 THE BUILDING PROCESS
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2.5 CONSTRUCTION INDUSTRY
2.5.1 CANADIAN CONSTRUCTION ASSOCIATION[http://www.cca-acc.com/home.html]
THE CCA IS BEST DESCRIBED AS THE NATIONAL VOICE OF CANADA’S LARGEST INDUSTRY
CCA is a large multi-disciplinary organization representing over 20,000 General Contractors, Specialty Contractors, Heavy Contractors, Road Builders, Industrial Contractors, Manufacturers and Suppliers.
2.5 CONSTRUCTION INDUSTRY
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2.5.1 CANADIAN CONSTRUCTION ASSOCIATION (Con’t)Construction Industry Economic Outlook- 2001 EXAMPLE
Volume/Output
The total construction expenditure in Canada in 1999 as measured by Statistics Canada, which includes both residential and non-residential construction, was approximately $100.9 billion. The nominal gross output in 2001, which is defined as total production of an industry (unadjusted for inflation and including input costs such as labour and materials) is expected to rise by 14% to $139.2 billion (Source: Informetrica).
In 2001, construction labour force is expected to grow by 6.3%, to reach 894,000 people, an indication of high labour demands spilling over from 2000. The tight labour markets have resulted in the need for companies to hire additional labour at greater cost to meet demand. With the combined effects of an increased labour force and increased salaries, input costs rose, even though year-over-year production (measured by construction GDP) actually shrank.
2.5 CONSTRUCTION INDUSTRY
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2000 construction investment figures compare to 1999 by province:
2001 2000 1999
BC 16.4 Billion $ 16.6 Billion 14.9Alberta 23.2 $ 23.8 19.9Saskatchewan 3.9 $ 3.6 3.1Manitoba 4.3 $ 2.8 2.6Ontario $ 33.9 32.5Quebec $ 20.5 19.0New Brunswick $ 1.7 1.7Nova Scotia $ 2.3 3.0PEI $ 0.3 0.3Newfoundland $ 2.4 2.5Territories $ 0.9 0.7Canada $ 108.7 Billion $ 100 Billion
$123 BILLION, 2003
2.5 CONSTRUCTION INDUSTRY
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CCA Briefs & Reports
December 10, 2001 - 2001 Federal Budget - A Construction-Related Analysis By The Canadian Construction Association
October 30, 2001 - CCA Submission To The House of Commons Standing Committee on Industry, Science and Technology
October 4, 2001 - CCA Presents to the House of Commons Finance Committee
2.5 CONSTRUCTION INDUSTRY
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The Gold Seal Program
CCA has taken a leadership role in developing a national certification program for Project Managers, Superintendents and Estimators within the disciplines of general, mechanical and electrical contracting. The Association is also exploring an expansion of the program to include specialty trades. This program recognizes a minimum standard of proficiency in each managerial occupation based on education, experience and examination. Gold Seal has already become a huge success and has contributed to a greater level of professionalism, mobility and pride for the industry.
2.5 CONSTRUCTION INDUSTRY
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2.5.2 SASKATCHEWAN CONSTRUCTION ASSOCIATION
CREATED TO
Saskatoon Construction Association,532 - 2nd. Ave. North, Saskatoon.Phone: 653-1771
2.5 CONSTRUCTION INDUSTRY
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Typical Project Listing Saskatoon Construction AssociationUpdated on October 1, 2001 1:00 PM.
PROJECT NAME, LOCATION, and CLOSING DATEHangar 6 Truss Repairs & Renos, 15 Wing Moose Jaw OCT 04Washrooms Upgrade, Government of Canada Building, Saskatoon OCT 11Fire Alarm & Sprinkler System Upgrade, Regina RCMP Training Academy OCT 10 Mechanical, Electrical & Elevator Upgrades, Saskatchewan Legislative Building, ReginaCree Nations Treatment Haven: Ahtahkakoop, Big River, Pelican Lake, Witchekan LakeFirst Nations OCT 10Superstore/Extra Foods Gas Bar Expansions: Calgary, Edmonton, Saskatoon OCT 09 Garden Market IGA, Moose Jaw OCT 15Water & Sewer Mains, Standing Buffalo Dakota First Nation OCT 10Modular Classrooms: Mother Teresa & St. James Schools, Saskatoon OCT 05Water Supply Pipeline Well #14, Yorkton OCT 10 Capital Improvement Project, Tender Package #3, Regina OCT 05Casino & Parkade, Moose Jaw OCT 04
2.5 CONSTRUCTION INDUSTRY
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2.6 ENGINEERING PROFESSION
2.6 ENGINEERING PROFESSION
Regulation of the Engineering and Geoscience Professions in Saskatchewan
Canadian EngineeringQualifications Board
(CEQB)
Canadian EngineeringAccreditation Board
(CEAB)
Other CCPECommittees
Canadian Councilof Professional Engineers
(CCPE)
Provincial and TerritorialAssociations
CCPE ORGANIZATIONAL CHART
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APEGS ORGANIZATIONAL CHART
APEGS STAFF
Committees
GovernanceBoard
Committees
Image and IdentityBoard
Committees
IssuesBoard
Committees
EducationBoard
Council
Members
Society
2.6 ENGINEERING PROFESSION
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2.7 CONSTRUCTION ORGANIZATION2.7.1 INTRODUCTON
The manner in which a construction company is organized has a significant impact on its ability to succeed and grow. Important organizational considerations are:
1) Type of business formation
2) Internal organization and structure
3) Range of Activities and Personnel, and
4) Operational Philosophy
2.7 CONSTRUCTION ORGANIZATION
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2.7.2 BUSINESS FORMATION
There are a number of different business arrangements which can be set up to manage the operations of a construction company, or for a specific project.
The basic formation is:
1]2]3]4]
2.7 CONSTRUCTION ORGANIZATION
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* Income taxed at an individual rate
Advantages
1)
2)
2.7.2.1 Sole Proprietorship
Disadvantages
1) Unlimited liability
A) Financial - bankruptcy may represent a way out
B) Criminal - No escape!
2.7 CONSTRUCTION ORGANIZATION
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2.7.2.2 Partnerships
Partnerships - based on trust
Tends to suffer when money is involved
Advantages1)2) Share Liability - May depend on the type of partnership
A) General - Joint and Several LiabilityB) Limited - (Value of shares or just for one of the general
partners)3) Limited partners not usually required to be listed4) Profit shared by a percentage of “ownership”5) Increased owner talent and credit standing
A dispute clause/ arbitration should be listed in the partnership agreement; also put something in to facilitate a smooth termination of the partnership.
2.7 CONSTRUCTION ORGANIZATION
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2.7.2.3 Corporations
Organization1) Common purpose – Profit and other goals2) Communication - very important3) Cooperation among officers to reach objective4) Ability to advance or grow with company - [family
company situation]
Disadvantages1) Must file a number of documents2) Government restrictions3) Tax approx. _______________ -
Sask.
Profit DistributionProfit -retained earning
-dividends-tax
Advantages1)2)3)
2.7 CONSTRUCTION ORGANIZATION
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2.7.2.4 Joint Ventures and Consortiums
Reason For Formation
-Need to pool-
-
-Other risk
-Political judgment- marketing standpoint
- Minority partners - i.e.: offshore Lester B. Pearson International Airport - Toronto
2.7 CONSTRUCTION ORGANIZATION
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2.8 COMPANY ORGANIZATION AND STRUCTURE
Organization in terms of operational functions can be defined as:
“The process of determining what individual job positions are required, defining the responsibilities of each such position, and establishing the relationship of one position with another insofar as carrying out of those responsibilities is concerned.” (Clough, 1981).
Before an organizational chart can be set up it is necessary to examine the different which will be performed by the company, and what are the assets and liability of the employees presently in the company.
This does not mean that some of the work cannot be contracted out, i.e.: accounting; or that new personnel won’t be hired to fill newly created positions. It means that the organizational chart should reflect the personality of the company (what it does and the people who are familiar with its operation).
2.8 COMPANY ORGANIZATION AND STRUCTURE
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2.8.1 Philosophy of Setting up an Organization
In small organizations two or three people may all be at the topCommon but has some inherent disadvantages
The key to setting up an organization is looking at the people you have, similarly you often have to look at the traditional responsibilities certain functions have reported to. Some of these functions can be located under more than one particular area.
The preliminary functions within a company include:
1) 2)3)
2.8 COMPANY ORGANIZATION AND STRUCTURE
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2.8.1.3 SupportStaff function – Responsible for:
1) Estimating2) Scheduling3) Soils Investigation
2.8.1.1 OperationsLine function – Responsible for:A] Basic PlanB] Supervision - Use of Resources
LaborEquipmentMaterial
C] SafetyD] Engineering Technology
2.8.1.2 AdministrationStaff function – Responsible for:
1) Payroll2) Taxes3) Union4) Personnel
2.8 COMPANY ORGANIZATION AND STRUCTURE
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The number of people one individual can effectively control is 3 - 5
In setting up a structure for an organization you must keep in mind the concept of function mapping, and placing over that, the ability of individuals to handle those jobs.
We must also keep in mind that this organization must change as the volume of work grows.
Thus, the first thing to change or grow is the operations section.
During this time additional support in the administration section may be contracted out.
2.8.2 Span of Control
2.8 COMPANY ORGANIZATION AND STRUCTURE
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Responsible for:1)2) Interaction with policy group & public3) Must be able to delegate authority
2.8.4 The Policy Group
2.8.3 President
Responsible for:1)2) Short term goals used to monitor the companies progress
towards its long term goals.
2.8 COMPANY ORGANIZATION AND STRUCTURE
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2.8.5 Typical Organizational ChartHome Office
BOARD OF DIRECTORS
PRESIDENT
VICE-PRESIDENT
OPERATIONS
HEAVY ENGIN.
CONSTR DIVISION
BUILDING CONSTR DIVISION
PROJECT ENGINEER
PURCHASING
ENGINEERING
SCHEDULE & ESTIMATE
DESIGN
STAFF SPECIALISTS
COMPUTING SERVICES
ADMINISTRATION
PERSONNEL STAFF SPECIALISTS
2.8 COMPANY ORGANIZATION AND STRUCTURE
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2.8.6 Typical Organizational ChartField Organization
ADMINISTRATIVE
RECORDS OFFICE COSTPROJECTIONS
AIDE
FUNCTION
SHOPFOREMAN
PROJECTENGINEER
WORKSUPERINTENDENT
PROJECTMANAGER
SURVEYCREWS
FIELDENGIN.
CONSTR.MONITOR.
CAMPOPERATIONS
WAREHOUSING
PURCHASING FIELDOPS.
SUB-CONTR.
SUPERVIS.SAFETY
2.8 COMPANY ORGANIZATION AND STRUCTURE
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2.9 COMPANY OPERATIONAL PHILOSOPHIES2.9.1 Expansion
It is generally recognized that maintaining the same level or volume of work is dangerous in the long run. Thus most companies must expand to ensure their continued growth and security
HorizontalMoving into other areas (diversification)Maintaining the same level in the industry
VerticalMoving into other areas of your present work, such as taking over the work traditionally handled by the subcontractors (down), or by becoming a developer and handling the overall development (up).
2.9 COMPANY OPERATIONAL PHILOSOPHIES
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2.9.2 Centralized and Decentralized Control
Centralized
•Strong home office - i.e.: (Bechtel)
Decentralized
•Send out a team and almost form a new company, especially for that project.•Tremendous amount of authority at the job site.•Advantages in dealing with the head office.•May be no employment after the project is completed.
2.9 COMPANY OPERATIONAL PHILOSOPHIES
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