Upload File

pmc

304
7/8/2015 Project Management for Construction http://pmbook.ce.cmu.edu/ 1/3 Project Management for Construction Fundamental Concepts for Owners, Engineers, Architects and Builders 1. The_Owners'_Perspective 2. Organizing_For_Project_Management 3. The_Design_And_Construction_Process 4. Labor,_Material,_And_Equipment_Utilization 5. Cost_Estimation 6. Economic_Evaluation_of_Facility_Investments 7. Financing_of_Constructed_Facilities 8. Construction_Pricing_and_Contracting 9. Construction_Planning 10. Fundamental_Scheduling_Procedures 11. Advanced_Scheduling_Techniques 12. Cost_Control,_Monitoring,_and_Accounting 13. Quality_Control_and_Safety_During_Construction 14. Organization_and_Use_of_Project_Information by Chris Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon University, Pittsburgh, PA l52l3 Copyright C. Hendrickson 1998 First Edition originally printed by Prentice Hall, ISBN 0-13-731266-0, 1989 with co-author Tung Au. Second Edition prepared for world wide web publication in 2000. Version 2.2 prepared Summer, 2008. Preface This book is provided on the worldwide web as a service to the community of practitioners and students. Reproduction for educational purposes is permitted with appropriate citation. If you find this work helpful or have suggestions for additions or corrections, please email Chris Hendrickson: [email protected]. A hardcopy Instructor's Manual with problem solutions is available for a fee of $ 10 to cover reproduction, mailing and handling. Send a check made out to Carnegie Mellon University to Ms. Patty Langer, Department of Civil and Environmental Engineering, Carnegie Mellon University, Pittsburgh, PA 15213. This book develops a specific viewpoint in discussing the participants, the processes and the techniques of project management for construction. This viewpoint is that of owners who desire completion of projects in a timely, cost effective fashion. Some profound implications for the objectives and methods of project management result from this perspective: The "life cycle" of costs and benefits from initial planning through operation and disposal of a facility are relevant to decision making. An owner is concerned with a project from the cradle to the grave. Construction costs represent only one portion of the overall life cycle costs. Optimizing performance at one stage of the process may not be beneficial overall if additional costs or delays occur elsewhere. For example, saving money on the design process will be a false economy if the result is excess construction costs. Fragmentation of project management among different specialists may be necessary, but good communication and coordination among the participants is essential to accomplish the overall

Upload: amidalen

Post on 16-Aug-2015

3 views

Category:

Documents


0 download

Report

Tags:

DESCRIPTION

Project Management for Construction

TRANSCRIPT

7/8/2015 ProjectManagementforConstructionhttp://pmbook.ce.cmu.edu/ 1/3Pr ojectManagementfor Constr uctionFundamentalConceptsfor Owner s,Engineer s,Ar chitectsandBuilder s1. The_Owners'_Perspective2. Organizing_For_Project_Management3. The_Design_And_Construction_Process4. Labor,_Material,_And_Equipment_Utilization5. Cost_Estimation6. Economic_Evaluation_of_Facility_Investments7. Financing_of_Constructed_Facilities8. Construction_Pricing_and_Contracting9. Construction_Planning10. Fundamental_Scheduling_Procedures11. Advanced_Scheduling_Techniques12. Cost_Control,_Monitoring,_and_Accounting13. Quality_Control_and_Safety_During_Construction14. Organization_and_Use_of_Project_InformationbyChrisHendrickson,DepartmentofCivilandEnvironmentalEngineering,CarnegieMellonUniversity,Pittsburgh,PAl52l3CopyrightC.Hendrickson1998FirstEditionoriginallyprintedbyPrenticeHall,ISBN0-13-731266-0,1989withco-authorTungAu.SecondEditionpreparedforworldwidewebpublicationin2000.Version2.2preparedSummer,2008.PrefaceThisbookisprovidedontheworldwidewebasaservicetothecommunityofpractitionersandstudents.Reproductionforeducationalpurposesispermittedwithappropriatecitation.Ifyoufindthisworkhelpfulorhavesuggestionsforadditionsorcorrections,pleaseemailChrisHendrickson:[email protected]'sManualwithproblemsolutionsisavailableforafeeof$10tocoverreproduction,mailingandhandling.SendacheckmadeouttoCarnegieMellonUniversitytoMs.PattyLanger,DepartmentofCivilandEnvironmentalEngineering,CarnegieMellonUniversity,Pittsburgh,PA15213.Thisbookdevelopsaspecificviewpointindiscussingtheparticipants,theprocessesandthetechniquesofprojectmanagementforconstruction.Thisviewpointisthatofownerswhodesirecompletionofprojectsinatimely,costeffectivefashion.Someprofoundimplicationsfortheobjectivesandmethodsofprojectmanagementresultfromthisperspective:The"lifecycle"ofcostsandbenefitsfrominitialplanningthroughoperationanddisposalofafacilityarerelevanttodecisionmaking.Anownerisconcernedwithaprojectfromthecradletothegrave.Constructioncostsrepresentonlyoneportionoftheoveralllifecyclecosts.Optimizingperformanceatonestageoftheprocessmaynotbebeneficialoverallifadditionalcostsordelaysoccurelsewhere.Forexample,savingmoneyonthedesignprocesswillbeafalseeconomyiftheresultisexcessconstructioncosts.Fragmentationofprojectmanagementamongdifferentspecialistsmaybenecessary,butgoodcommunicationandcoordinationamongtheparticipantsisessentialtoaccomplishtheoverall7/8/2015 ProjectManagementforConstructionhttp://pmbook.ce.cmu.edu/ 2/3goalsoftheproject.Newinformationtechnologiescanbeinstrumentalinthisprocess,especiallytheInternetandspecializedExtranets.Productivityimprovementsarealwaysofimportanceandvalue.Asaresult,introducingnewmaterialsandautomatedconstructionprocessesisalwaysdesirableaslongastheyarelessexpensiveandareconsistentwithdesiredperformance.Qualityofworkandperformancearecriticallyimportanttothesuccessofaprojectsinceitistheownerwhowillhavetolivewiththeresults.Inessence,adoptingtheviewpointoftheownerfocusesattentiononthecosteffectivenessoffacilityconstructionratherthancompetitiveprovisionofservicesbythevariousparticipants.Whilethisbookisdevotedtoaparticularviewpointwithrespecttoprojectmanagementforconstruction,itisnotsolelyintendedforownersandtheirdirectrepresentatives.Byunderstandingtheentireprocess,allparticipantscanrespondmoreeffectivelytotheowner'sneedsintheirownwork,inmarketingtheirservices,andincommunicatingwithotherparticipants.Inaddition,thespecifictechniquesandtoolsdiscussedinthisbook(suchaseconomicevaluation,scheduling,managementinformationsystems,etc.)canbereadilyappliedtoanyportionoftheprocess.Asaresultofthefocusontheeffectivemanagementofentireprojects,anumberofnovelorganizationalapproachesandtechniquesbecomeofinterest.Firstandforemostistheincentivetoreplaceconfrontationandadversarialrelationshipswithaspiritofjointendeavor,partnershipandaccomplishment.Forexample,wediscusstheappropriatemeanstoevaluaterisksandtheappropriateparticipantstoassumetheunavoidablerisksassociatedwithconstructedfacilities.Scheduling,communicationofdata,andqualityassurancehaveparticularsignificancefromtheviewpointofanowner,butnotnecessarilyforindividualparticipants.Theuseofcomputer-basedtechnologyandautomationalsoprovidesopportunitiesforincreasedproductivityintheprocess.Presentingsuchmodernmanagementoptionsinaunifiedfashionisamajorobjectiveofthisbook.Theunifiedviewpointoftheentireprocessofprojectmanagementinthisbookdiffersfromnearlyallotherliteratureonthesubject.Mosttextbooksintheareatreatspecialproblems,suchascostestimating,fromtheviewpointofparticularparticipantssuchasconstructionmanagersorcontractors.Thisliteraturereflectsthefragmentationoftheconstructionprocessamongdifferentorganizationsandprofessionals.Evenwithinasingleprofessionsuchascivilengineering,therearequitedistinctgroupsofspecialistsinplanning,design,management,constructionandothersub-specialties.Fragmentationofinterestandattentionalsoexistsinnearlyalleducationalprograms.Whilespecialtyknowledgemaybeessentialtoaccomplishparticulartasks,participantsintheprocessshouldalsounderstandthecontextandroleoftheirspecialtasks.Thisbookisintendedprimarilyasatextforadvancedundergraduates,beginninggraduatestudentsorprofessionalscontinuingtheireducationinengineering,construction,architectureorfacilitiesmanagement.Examplesanddiscussionarechosentoremindreadersthatprojectmanagementisachallenging,dynamicandexcitingenterpriseandnotjustarecordofpastpractices.Itshouldalsobeusefultoprofessionalswhowishanup-to-datereferenceonprojectmanagement.Chapters1to3presentanoverviewoftheconstructionmanagementanddesignprocesswhichshouldbeofinteresttoanyoneengagedinprojectmanagementforconstruction.Oneneednothavedetailedknowledgeaboutindividualtasksortechniquesforthispart.Individualscanreadthesechaptersandunderstandthebasicphilosophyandprincipleswithoutfurtherelaboration.Chapters4through14describespecificfunctionsandtechniquesusefulintheprocessofprojectmanagement.Thispartpresentstechniquesandrequirementsduringprojectplanning,includingriskassessment,costestimation,forecastingandeconomicevaluation.Itisduringthisplanninganddesignphaseinwhichmajorcostsavingsmaybeobtainedduringtheeventualconstructionandoperationphases.Italsoaddressesprogrammingandfinancingissues,suchascontractingandbiddingforservices,financing,organizingcommunicationandinsuringeffectiveuseofinformation.Itfurther7/8/2015 ProjectManagementforConstructionhttp://pmbook.ce.cmu.edu/ 3/3discussestechniquesforcontroloftime,costandqualityduringtheconstructionphase.Beginningcoursesinengineeringeconomics(includingcashflowanalysisanddiscounting),useofcomputers,probabilityandstatisticswouldbeuseful.Furthermore,accesstoapersonalcomputerwithspreadsheetorequationsolvingsoftwarewouldbehelpfulforreadersattemptingsomeoftheproblemsinChapters4to14.Numeroussoftwareprogramscouldbeusedforthispurpose,includingbothspreadsheetandequationsolvingprograms.Problemsinsomechapterscouldalsobedoneonanynumberofexistingsoftwarepackagesforinformationmanagementandprojectscheduling.However,theuseofpersonalcomputersinthisfashionisnotrequiredinfollowingthetextmaterial.Eachinstructormayexercisediscretioninomittingsomeofthematerialinthesechaptersiftheyareredundantwithotherclassesortooadvancedforstudentsinhisorherownclass.Itisourhopethatstudentsbeginningtheircareerinprojectmanagementforconstructionwillbepreparedtoadopttheintegratedapproachemphasizedinthisbook.Furthermore,experiencedprofessionalsinvariousfieldsmaydiscoverinthisbooksomesurprisesthateventheyhavenotanticipated.Highleveldecisionmakersinownerorganizationswhoarenotdirectlyinvolvedintheprojectmanagementprocessmayfindthebasicphilosophyandprinciplesofinterest,especiallyinChapters1through3,asownersmustinvariablypayforconstructedfacilities,forbetterorworse.Ifthebookcanfulfillevenasmallpartofitspromisestoinfluencethefutureofprojectmanagementforconstruction,oureffortswillhavebeenamplyrewarded.Forversion2.1(Summer2003),anumberofnewexamples,updatesandreferenceshavebeeninsertedthroughoutthetext.Forexample,therearenewdiscussionsofleanconstructionandgreenbuildings.However,thebasicstructureandmethodsremainthesame.Thefundamentalsofprojectmanagementtreatedherearetimeless.Numerousindividualshelpedwiththepreparationofthefirstandsecondeditionsofthisbook.Inparticular,wewishtoacknowledgeBurcuAkinci,WilliamJ.Hall,PaulChristiano,StevenFenves,DanielRehak,DebbieScappatura,andShirleyKnapp.IavorKostov,TommyHendrickson,CurtYeskeandIn-SooJungwereinstrumentalindevelopingthewebversionofthisbook.Thisbookalsoreflectsthecontributionsofnumerousstudentsandcolleaguesinindustrywhohavechallengeduswithproblemsandsharedtheirownideasandexperienceovermanyyears.Wearegratefultoalloftheseindividuals.SomematerialinthisbookhasbeentakenfromseveralpapersauthoredbyusandpublishedbytheAmericanSocietyofCivilEngineers.Materialstakenfromothersourcesareacknowledgedinfootnotes,tablesorfigures.Wegratefullyacknowledgethepermissionsgiventousbytheseindividuals,publishersandorganizations.AseriesofphotographsdepictingvariousstagesofconstructionofthePPGbuildinginPittsburgh,PAisinsertedinsequencebetweenchapters.WewishtothankPPGIndustriesforitscooperationinprovidingthesephotographs.ChrisHendricksonandTungAu7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 1/19GoUptoTableofContentsGoToChapter2(OrganizingforProjectManagement)TheOwners'PerspectiveIntroductionTheProjectLifeCycleMajorTypesofConstructionSelectionofProfessionalServicesConstructionContractorsFinancingofConstructedFacilitiesLegalandRegulatoryRequirementsTheChangingEnvironmentoftheConstructionIndustryTheRoleofProjectManagersReferencesFootnotes1.TheOwner s' Per spective1.1Intr oductionLikethefiveblindmenencounteringdifferentpartsofanelephant,eachofthenumerousparticipantsintheprocessofplanning,designing,financing,constructingandoperatingphysicalfacilitieshasadifferentperspectiveonprojectmanagementforconstruction.Specializedknowledgecanbeverybeneficial,particularlyinlargeandcomplicatedprojects,sinceexpertsinvariousspecialtiescanprovidevaluableservices.However,itisadvantageoustounderstandhowthedifferentpartsoftheprocessfittogether.Waste,excessivecostanddelayscanresultfrompoorcoordinationandcommunicationamongspecialists.Itisparticularlyintheinterestofownerstoinsurethatsuchproblemsdonotoccur.Anditbehoovesallparticipantsintheprocesstoheedtheinterestsofownersbecause,intheend,itistheownerswhoprovidetheresourcesandcalltheshots.Byadoptingtheviewpointoftheowners,wecanfocusourattentiononthecompleteprocessofprojectmanagementforconstructedfacilitiesratherthanthehistoricalrolesofvariousspecialistssuchasplanners,architects,engineeringdesigners,constructors,fabricators,materialsuppliers,financialanalystsandothers.Tobesure,eachspecialtyhasmadeimportantadvancesindevelopingnewtechniquesandtoolsforefficientimplementationofconstructionprojects.However,itisthroughtheunderstandingoftheentireprocessofprojectmanagementthatthesespecialistscanrespondmoreeffectivelytotheowner'sdesiresfortheirservices,inmarketingtheirspecialties,andinimprovingtheproductivityandqualityoftheirwork.Theintroductionofinnovativeandmoreeffectiveprojectmanagementforconstructionisnotanacademicexercise.Asreportedbythe"ConstructionIndustryCostEffectivenessProject"oftheBusinessRoundtable:[1]Bycommonconsensusandeveryavailablemeasure,theUnitedStatesnolongergetsit'smoney'sworthinconstruction,thenation'slargestindustry...ThecreepingerosionofconstructionefficiencyandproductivityisbadnewsfortheentireU.S.economy.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 2/19Constructionisaparticularlyseminalindustry.Thepriceofeveryfactory,officebuilding,hotelorpowerplantthatisbuiltaffectsthepricethatmustbechargedforthegoodsorservicesproducedinitorbyit.Andthateffectgenerallypersistsfordecades...Toomuchoftheindustryremainstetheredtothepast,partlybyinertiaandpartlybyhistoricdivisions...Improvementofprojectmanagementnotonlycanaidtheconstructionindustry,butmayalsobetheengineforthenationalandworldeconomy.However,ifwearetomakemeaningfulimprovements,wemustfirstunderstandtheconstructionindustry,itsoperatingenvironmentandtheinstitutionalconstraintsaffectingitsactivitiesaswellasthenatureofprojectmanagement.Backtotop1.2ThePr ojectLifeCycleTheacquisitionofaconstructedfacilityusuallyrepresentsamajorcapitalinvestment,whetheritsownerhappenstobeanindividual,aprivatecorporationorapublicagency.Sincethecommitmentofresourcesforsuchaninvestmentismotivatedbymarketdemandsorperceivedneeds,thefacilityisexpectedtosatisfycertainobjectiveswithintheconstraintsspecifiedbytheownerandrelevantregulations.Withtheexceptionofthespeculativehousingmarket,wheretheresidentialunitsmaybesoldasbuiltbytherealestatedeveloper,mostconstructedfacilitiesarecustommadeinconsultationwiththeowners.Arealestatedevelopermayberegardedasthesponsorofbuildingprojects,asmuchasagovernmentagencymaybethesponsorofapublicprojectandturnsitovertoanothergovernmentunituponitscompletion.Fromtheviewpointofprojectmanagement,theterms"owner"and"sponsor"aresynonymousbecausebothhavetheultimateauthoritytomakeallimportantdecisions.Sinceanownerisessentiallyacquiringafacilityonapromiseinsomeformofagreement,itwillbewiseforanyownertohaveaclearunderstandingoftheacquisitionprocessinordertomaintainfirmcontrolofthequality,timelinessandcostofthecompletedfacility.Fromtheperspectiveofanowner,theprojectlifecycleforaconstructedfacilitymaybeillustratedschematicallyinFigure1-1.Essentially,aprojectisconceivedtomeetmarketdemandsorneedsinatimelyfashion.Variouspossibilitiesmaybeconsideredintheconceptualplanningstage,andthetechnologicalandeconomicfeasibilityofeachalternativewillbeassessedandcomparedinordertoselectthebestpossibleproject.Thefinancingschemesfortheproposedalternativesmustalsobeexamined,andtheprojectwillbeprogrammedwithrespecttothetimingforitscompletionandforavailablecashflows.Afterthescopeoftheprojectisclearlydefined,detailedengineeringdesignwillprovidetheblueprintforconstruction,andthedefinitivecostestimatewillserveasthebaselineforcostcontrol.Intheprocurementandconstructionstage,thedeliveryofmaterialsandtheerectionoftheprojectonsitemustbecarefullyplannedandcontrolled.Aftertheconstructioniscompleted,thereisusuallyabriefperiodofstart-uporshake-downoftheconstructedfacilitywhenitisfirstoccupied.Finally,themanagementofthefacilityisturnedovertotheownerforfulloccupancyuntilthefacilitylivesoutitsusefullifeandisdesignatedfordemolitionorconversion.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 3/19Figur e1-1:TheProjectLifeCycleofaConstructedFacilityOfcourse,thestagesofdevelopmentinFigure1-1maynotbestrictlysequential.Someofthestagesrequireiteration,andothersmaybecarriedoutinparallelorwithoverlappingtimeframes,dependingonthenature,sizeandurgencyoftheproject.Furthermore,anownermayhavein-housecapacitiestohandletheworkineverystageoftheentireprocess,oritmayseekprofessionaladviceandservicesfortheworkinallstages.Understandably,mostownerschoosetohandlesomeoftheworkin-houseandtocontractoutsideprofessionalservicesforothercomponentsoftheworkasneeded.Byexaminingtheprojectlifecyclefromanowner'sperspectivewecanfocusontheproperrolesofvariousactivitiesandparticipantsinallstagesregardlessofthecontractualarrangementsfordifferenttypesofwork.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 4/19IntheUnitedStates,forexample,theU.S.ArmyCorpsofEngineershasin-housecapabilitiestodealwithplanning,budgeting,design,constructionandoperationofwaterwayandfloodcontrolstructures.Otherpublicagencies,suchasstatetransportationdepartments,arealsodeeplyinvolvedinallphasesofaconstructionproject.Intheprivatesector,manylargefirmssuchasDuPont,Exxon,andIBMareadequatelystaffedtocarryoutmostactivitiesforplantexpansion.Alltheseowners,bothpublicandprivate,useoutsideagentstoagreaterorlesserdegreewhenitbecomesmoreadvantageoustodoso.Theprojectlifecyclemaybeviewedasaprocessthroughwhichaprojectisimplementedfromcradletograve.Thisprocessisoftenverycomplexhowever,itcanbedecomposedintoseveralstagesasindicatedbythegeneraloutlineinFigure1-1.Thesolutionsatvariousstagesarethenintegratedtoobtainthefinaloutcome.Althougheachstagerequiresdifferentexpertise,itusuallyincludesbothtechnicalandmanagerialactivitiesintheknowledgedomainofthespecialist.Theownermaychoosetodecomposetheentireprocessintomoreorlessstagesbasedonthesizeandnatureoftheproject,andthusobtainthemostefficientresultinimplementation.Veryoften,theownerretainsdirectcontrolofworkintheplanningandprogrammingstages,butincreasinglyoutsideplannersandfinancialexpertsareusedasconsultantsbecauseofthecomplexitiesofprojects.Sinceoperationandmaintenanceofafacilitywillgoonlongafterthecompletionandacceptanceofaproject,itisusuallytreatedasaseparateproblemexceptintheconsiderationofthelifecyclecostofafacility.AllstagesfromconceptualplanningandfeasibilitystudiestotheacceptanceofafacilityforoccupancymaybebroadlylumpedtogetherandreferredtoastheDesign/Constructprocess,whiletheprocurementandconstructionalonearetraditionallyregardedastheprovinceoftheconstructionindustry.Ownersmustrecognizethatthereisnosinglebestapproachinorganizingprojectmanagementthroughoutaproject'slifecycle.Allorganizationalapproacheshaveadvantagesanddisadvantages,dependingontheknowledgeoftheownerinconstructionmanagementaswellasthetype,sizeandlocationoftheproject.Itisimportantfortheownertobeawareoftheapproachwhichismostappropriateandbeneficialforaparticularproject.Inmakingchoices,ownersshouldbeconcernedwiththelifecyclecostsofconstructedfacilitiesratherthansimplytheinitialconstructioncosts.Savingsmallamountsofmoneyduringconstructionmaynotbeworthwhileiftheresultismuchlargeroperatingcostsornotmeetingthefunctionalrequirementsforthenewfacilitysatisfactorily.Thus,ownersmustbeveryconcernedwiththequalityofthefinishedproductaswellasthecostofconstructionitself.Sincefacilityoperationandmaintenanceisapartoftheprojectlifecycle,theowners'expectationtosatisfyinvestmentobjectivesduringtheprojectlifecyclewillrequireconsiderationofthecostofoperationandmaintenance.Therefore,thefacility'soperatingmanagementshouldalsobeconsideredasearlyaspossible,justastheconstructionprocessshouldbekeptinmindattheearlystagesofplanningandprogramming.Backtotop1.3Major TypesofConstr uctionSincemostownersaregenerallyinterestedinacquiringonlyaspecifictypeofconstructedfacility,theyshouldbeawareofthecommonindustrialpracticesforthetypeofconstructionpertinenttothem.Likewise,theconstructionindustryisaconglomerationofquitediversesegmentsandproducts.Someownersmayprocureaconstructedfacilityonlyonceinalongwhileandtendtolookforshorttermadvantages.However,manyownersrequireperiodicacquisitionofnewfacilitiesand/orrehabilitationofexistingfacilities.Itistotheiradvantagetokeeptheconstructionindustryhealthyandproductive.Collectively,theownershavemorepowertoinfluencetheconstructionindustrythantheyrealizebecause,bytheirindividualactions,theycanprovideincentivesordisincentivesforinnovation,efficiencyandqualityinconstruction.Itistotheinterestofallpartiesthattheownerstakeanactiveinterestintheconstructionandexercisebeneficialinfluenceontheperformanceoftheindustry.Inplanningforvarioustypesofconstruction,themethodsofprocuringprofessionalservices,7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 5/19awardingconstructioncontracts,andfinancingtheconstructedfacilitycanbequitedifferent.Forthepurposeofdiscussion,thebroadspectrumofconstructedfacilitiesmaybeclassifiedintofourmajorcategories,eachwithitsowncharacteristics.ResidentialHousingConstr uctionResidentialhousingconstructionincludessingle-familyhouses,multi-familydwellings,andhigh-riseapartments.Duringthedevelopmentandconstructionofsuchprojects,thedevelopersorsponsorswhoarefamiliarwiththeconstructionindustryusuallyserveassurrogateownersandtakecharge,makingnecessarycontractualagreementsfordesignandconstruction,andarrangingthefinancingandsaleofthecompletedstructures.Residentialhousingdesignsareusuallyperformedbyarchitectsandengineers,andtheconstructionexecutedbybuilderswhohiresubcontractorsforthestructural,mechanical,electricalandotherspecialtywork.Anexceptiontothispatternisforsingle-familyhouseswhichmaybedesignedbythebuildersaswell.Theresidentialhousingmarketisheavilyaffectedbygeneraleconomicconditions,taxlaws,andthemonetaryandfiscalpoliciesofthegovernment.Often,aslightincreaseintotaldemandwillcauseasubstantialinvestmentinconstruction,sincemanyhousingprojectscanbestartedatdifferentlocationsbydifferentindividualsanddevelopersatthesametime.Becauseoftherelativeeaseofentry,atleastatthelowerendofthemarket,manynewbuildersareattractedtotheresidentialhousingconstruction.Hence,thismarketishighlycompetitive,withpotentiallyhighrisksaswellashighrewards.Figur e1-2:ResidentialHousingConstruction(courtesyofCaterpillar,Inc.)InstitutionalandCommer cialBuildingConstr uctionInstitutionalandcommercialbuildingconstructionencompassesagreatvarietyofprojecttypesandsizes,suchasschoolsanduniversities,medicalclinicsandhospitals,recreationalfacilitiesandsportsstadiums,retailchainstoresandlargeshoppingcenters,warehousesandlightmanufacturingplants,andskyscrapersforofficesandhotels.Theownersofsuchbuildingsmayormaynotbefamiliarwithconstructionindustrypractices,buttheyusuallyareabletoselectcompetentprofessionalconsultantsandarrangethefinancingoftheconstructedfacilitiesthemselves.Specialtyarchitectsandengineersareoftenengagedfordesigningaspecifictypeofbuilding,whilethebuildersorgeneralcontractorsundertakingsuchprojectsmayalsobespecializedinonlythattypeofbuilding.Becauseofthehighercostsandgreatersophisticationofinstitutionalandcommercialbuildingsincomparisonwithresidentialhousing,thismarketsegmentissharedbyfewercompetitors.Sincetheconstructionofsomeofthesebuildingsisalongprocesswhichoncestartedwilltakesometimetoproceeduntilcompletion,thedemandislesssensitivetogeneraleconomicconditionsthanthatforspeculativehousing.Consequently,theownersmayconfrontanoligopolyofgeneralcontractorswho7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 6/19competeinthesamemarket.Inanoligopolysituation,onlyalimitednumberofcompetitorsexist,andafirm'spriceforservicesmaybebasedinpartonitscompetitivestrategiesinthelocalmarket.Figur e1-3:ConstructionofthePPGBuildinginPittsburgh,Pennsylvania(courtesyofPPGIndustries,Inc.)SpecializedIndustr ialConstr uctionSpecializedindustrialconstructionusuallyinvolvesverylargescaleprojectswithahighdegreeoftechnologicalcomplexity,suchasoilrefineries,steelmills,chemicalprocessingplantsandcoal-firedornuclearpowerplants.Theownersusuallyaredeeplyinvolvedinthedevelopmentofaproject,andprefertoworkwithdesigners-builderssuchthatthetotaltimeforthecompletionoftheprojectcanbeshortened.Theyalsowanttopickateamofdesignersandbuilderswithwhomtheownerhasdevelopedgoodworkingrelationsovertheyears.Althoughtheinitiationofsuchprojectsisalsoaffectedbythestateoftheeconomy,longrangedemandforecastingisthemostimportantfactorsincesuchprojectsarecapitalintensiveandrequireconsiderableamountofplanningandconstructiontime.GovernmentalregulationsuchastherulingsoftheEnvironmentalProtectionAgencyandtheNuclearRegulatoryCommissionintheUnitedStatescanalsoprofoundlyinfluencedecisionsontheseprojects.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 7/19Figur e1-4:ConstructionofaBenzenePlantinLima,Ohio(courtesyofManitowocCompany,Inc.)Infr astr uctur eandHeavyConstr uctionInfrastructureandheavyconstructionincludesprojectssuchashighways,masstransitsystems,tunnels,bridges,pipelines,drainagesystemsandsewagetreatmentplants.Mostoftheseprojectsarepubliclyownedandthereforefinancedeitherthroughbondsortaxes.Thiscategoryofconstructionischaracterizedbyahighdegreeofmechanization,whichhasgraduallyreplacedsomelaborintensiveoperations.Theengineersandbuildersengagedininfrastructureconstructionareusuallyhighlyspecializedsinceeachsegmentofthemarketrequiresdifferenttypesofskills.However,demandsfordifferentsegmentsofinfrastructureandheavyconstructionmayshiftwithsaturationinsomesegments.Forexample,astheavailablehighwayconstructionprojectsaredeclining,someheavyconstructioncontractorsquicklymovetheirworkforceandequipmentintothefieldofminingwherejobsareavailable.Figur e1-5:ConstructionoftheDamePointBridgeinJacksonville,Florida(courtesyofMaryLouMaher)Backtotop7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 8/191.4SelectionofPr ofessionalSer vicesWhenanownerdecidestoseekprofessionalservicesforthedesignandconstructionofafacility,heisconfrontedwithabroadvarietyofchoices.Thetypeofservicesselecteddependstoalargedegreeonthetypeofconstructionandtheexperienceoftheownerindealingwithvariousprofessionalsinthepreviousprojectsundertakenbythefirm.Generally,severalcommontypesofprofessionalservicesmaybeengagedeitherseparatelyorinsomecombinationbytheowners.FinancialPlanningConsultantsAttheearlystageofstrategicplanningforacapitalproject,anowneroftenseekstheservicesoffinancialplanningconsultantssuchascertifiedpublicaccounting(CPA)firmstoevaluatetheeconomicandfinancialfeasibilityoftheconstructedfacility,particularlywithrespecttovariousprovisionsoffederal,stateandlocaltaxlawswhichmayaffecttheinvestmentdecision.Investmentbanksmayalsobeconsultedonvariousoptionsforfinancingthefacilityinordertoanalyzetheirlong-termeffectsonthefinancialhealthoftheownerorganization.Ar chitectur alandEngineer ingFir msTraditionally,theownerengagesanarchitecturalandengineering(A/E)firmorconsortiumastechnicalconsultantindevelopingapreliminarydesign.Aftertheengineeringdesignandfinancingarrangementsfortheprojectarecompleted,theownerwillenterintoaconstructioncontractwithageneralcontractoreitherthroughcompetitivebiddingornegotiation.Thegeneralcontractorwillactasaconstructorand/oracoordinatorofalargenumberofsubcontractorswhoperformvariousspecialtiesforthecompletionoftheproject.TheA/Efirmcompletesthedesignandmayalsoprovideonsitequalityinspectionduringconstruction.Thus,theA/Efirmactsastheprimeprofessionalonbehalfoftheownerandsupervisestheconstructiontoinsuresatisfactoryresults.Thispracticeismostcommoninbuildingconstruction.Inthepasttwodecades,thistraditionalapproachhasbecomelesspopularforanumberofreasons,particularlyforlargescaleprojects.TheA/Efirms,whichareengagedbytheownerastheprimeprofessionalsfordesignandinspection,havebecomemoreisolatedfromtheconstructionprocess.ThishasoccurredbecauseofpressurestoreducefeestoA/Efirms,thethreatoflitigationregardingconstructiondefects,andlackofknowledgeofnewconstructiontechniquesonthepartofarchitectandengineeringprofessionals.Insteadofpreparingaconstructionplanalongwiththedesign,manyA/Efirmsarenolongerresponsibleforthedetailsofconstructionnordotheyprovideperiodicfieldinspectioninmanycases.Asamatteroffact,suchfirmswillplaceaprominentdisclaimerofresponsibilitiesonanyshopdrawingstheymaycheck,andtheywilloftenregardtheirrepresentativesinthefieldasobserversinsteadofinspectors.Thus,theA/Efirmandthegeneralcontractoronaprojectoftenbecomeantagonistswhoarelookingaftertheirowncompetinginterests.Asaresult,eventheconstructibilityofsomeengineeringdesignsmaybecomeanissueofcontention.Tocarrythisprotectiveattitudetotheextreme,thespecificationspreparedbyanA/EfirmforthegeneralcontractoroftenprotectstheinterestoftheA/Efirmattheexpenseoftheinterestsoftheownerandthecontractor.Inordertoreducethecostofconstruction,someownersintroducevalueengineering,whichseekstoreducethecostofconstructionbysolicitingaseconddesignthatmightcostlessthantheoriginaldesignproducedbytheA/Efirm.Inpractice,theseconddesignissubmittedbythecontractorafterreceivingaconstructioncontractatastipulatedsum,andthesavingincostresultingfromtheredesignissharedbythecontractorandtheowner.Thecontractorisabletoabsorbthecostofredesignfromtheprofitinconstructionortoreducetheconstructioncostasaresultofthere-design.IftheownerhadbeenwillingtopayahigherfeetotheA/Efirmortobetterdirectthedesignprocess,theA/Efirmmighthaveproducedanimproveddesignwhichwouldcostlessinthefirstplace.Regardlessofthe7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 9/19meritofvalueengineering,thispracticehasunderminedtheroleoftheA/Efirmastheprimeprofessionalactingonbehalfoftheownertosupervisethecontractor.Design/Constr uctFir msAcommontrendinindustrialconstruction,particularlyforlargeprojects,istoengagetheservicesofadesign/constructfirm.Byintegratingdesignandconstructionmanagementinasingleorganization,manyoftheconflictsbetweendesignersandconstructorsmightbeavoided.Inparticular,designswillbecloselyscrutinizedfortheirconstructibility.However,anownerengagingadesign/constructfirmmustinsurethatthequalityoftheconstructedfacilityisnotsacrificedbythedesiretoreducethetimeorthecostforcompletingtheproject.Also,itisdifficulttomakeuseofcompetitivebiddinginthistypeofdesign/constructprocess.Asaresult,ownersmustberelativelysophisticatedinnegotiatingrealisticandcost-effectiveconstructioncontracts.Oneofthemostobviousadvantagesoftheintegrateddesign/constructprocessistheuseofphasedconstructionforalargeproject.Inthisprocess,theprojectisdividedupintoseveralphases,eachofwhichcanbedesignedandconstructedinastaggeredmanner.Afterthecompletionofthedesignofthefirstphase,constructioncanbeginwithoutwaitingforthecompletionofthedesignofthesecondphase,etc.Ifpropercoordinationisexercised.thetotalprojectdurationcanbegreatlyreduced.Anotheradvantageistoexploitthepossibilityofusingtheturnkeyapproachwherebyanownercandelegateallresponsibilitytothedesign/constructfirmwhichwilldelivertotheowneracompletedfacilitythatmeetstheperformancespecificationsatthespecifiedprice.Pr ofessionalConstr uctionManager sInrecentyears,anewbreedofconstructionmanagers(CM)offersprofessionalservicesfromtheinceptiontothecompletionofaconstructionproject.TheseconstructionmanagersmostlycomefromtheranksofA/Efirmsorgeneralcontractorswhomayormaynotretaindualrolesintheserviceoftheowners.Inanycase,theownercanrelyontheserviceofasingleprimeprofessionaltomanagetheentireprocessofaconstructionproject.However,liketheA/Efirmsofseveraldecadesago,theconstructionmanagersareappreciatedbysomeownersbutnotbyothers.Beforelong,someownersfindthattheconstructionmanagerstoomaytrytoprotecttheirowninterestinsteadofthatoftheownerswhenthestakesarehigh.Itshouldbeobvioustoallinvolvedintheconstructionprocessthatthepartywhichisrequiredtotakehigherriskdemandslargerrewards.IfanownerwantstoengageanA/Efirmonthebasisoflowfeesinsteadofestablishedqualifications,itoftengetswhatitdeservesoriftheownerwantsthegeneralcontractortobearthecostofuncertaintiesinconstructionsuchasfoundationconditions,thecontractpricewillbehigherevenifcompetitivebiddingisusedinreachingacontractualagreement.Withoutmutualrespectandtrust,anownercannotexpectthatconstructionmanagerscanproducebetterresultsthanotherprofessionals.Hence,anownermustunderstanditsownresponsibilityandtheriskitwishestoassigntoitselfandtootherparticipantsintheprocess.Oper ationandMaintenanceManager sAlthoughmanyownerskeepapermanentstafffortheoperationandmaintenanceofconstructedfacilities,othersmayprefertocontractsuchtaskstoprofessionalmanagers.Understandably,itiscommontofindin-housestaffforoperationandmaintenanceinspecializedindustrialplantsandinfrastructurefacilities,andtheuseofoutsidemanagersundercontractsfortheoperationandmaintenanceofrentalpropertiessuchasapartmentsandofficebuildings.However,thereareexceptionstothesecommonpractices.Forexample,maintenanceofpublicroadwayscanbecontractedtoprivatefirms.Inanycase,managerscanprovideaspectrumofoperationandmaintenanceservicesforaspecifiedtimeperiodinaccordancetothetermsofcontractualagreements.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 10/19Thus,theownerscanbesparedtheprovisionofin-houseexpertisetooperateandmaintainthefacilities.FacilitiesManagementAsalogicalextensionforobtainingthebestservicesthroughouttheprojectlifecycleofaconstructedfacility,someownersanddevelopersarereceptivetoaddingstrategicplanningatthebeginningandfacilitymaintenanceasafollow-uptoreducespace-relatedcostsintheirrealestateholdings.Consequently,somearchitectural/engineeringfirmsandconstructionmanagementfirmswithcomputer-basedexpertise,togetherwithinteriordesignfirms,areofferingsuchfront-endandfollow-upservicesinadditiontothemoretraditionalservicesindesignandconstruction.ThisspectrumofservicesisdescribedinEngineeringNews-Record(nowENR)asfollows:[2]Facilitiesmanagementisthedisciplineofplanning,designing,constructingandmanagingspace--ineverytypeofstructurefromofficebuildingstoprocessplants.Itinvolvesdevelopingcorporatefacilitiespolicy,long-rangeforecasts,realestate,spaceinventories,projects(throughdesign,constructionandrenovation),buildingoperationandmaintenanceplansandfurnitureandequipmentinventories.Acommondenominatorofallfirmsenteringintothesenewservicesisthattheyallhavestrongcomputercapabilitiesandheavycomputerinvestments.Inadditiontotheuseofcomputersforaidingdesignandmonitoringconstruction,theserviceincludesthecompilationofacomputerrecordofbuildingplansthatcanbeturnedoverattheendofconstructiontothefacilitiesmanagementgroupoftheowner.Acomputerdatabaseoffacilitiesinformationmakesitpossibleforplannersintheowner'sorganizationtoobtainoverviewinformationforlongrangespaceforecasts,whilethelinemanagerscanuseas-builtinformationsuchaslease/tenantrecords,utilitycosts,etc.forday-to-dayoperations.Backtotop1.5Constr uctionContr actor sBuilderswhosupervisetheexecutionofconstructionprojectsaretraditionallyreferredtoascontractors,ormoreappropriatelycalledconstructors.Thegeneralcontractorcoordinatesvarioustasksforaprojectwhilethespecialtycontractorssuchasmechanicalorelectricalcontractorsperformtheworkintheirspecialties.Materialandequipmentsuppliersoftenactasinstallationcontractorstheyplayasignificantroleinaconstructionprojectsincetheconditionsofdeliveryofmaterialsandequipmentaffectthequality,cost,andtimelycompletionoftheproject.Itisessentialtounderstandtheoperationofthesecontractorsinordertodealwiththemeffectively.Gener alContr actor sThefunctionofageneralcontractoristocoordinatealltasksinaconstructionproject.Unlesstheownerperformsthisfunctionorengagesaprofessionalconstructionmanagertodoso,agoodgeneralcontractorwhohasworkedwithateamofsuperintendents,specialtycontractorsorsubcontractorstogetherforanumberofprojectsinthepastcanbemosteffectiveininspiringloyaltyandcooperation.Thegeneralcontractorisalsoknowledgeableaboutthelaborforceemployedinconstruction.Thelaborforcemayormaynotbeunionizeddependingonthesizeandlocationoftheprojects.Insomeprojects,nomemberoftheworkforcebelongstoalaborunioninothercases,bothunionandnon-unioncraftsmenworktogetherinwhatiscalledanopenshop,orallcraftsmenmustbeaffiliatedwithlaborunionsinaclosedshop.Sincelaborunionsprovidehiringhallsstaffedwithskilledjourneymanwhohavegonethroughapprenticeprogramsfortheprojectsaswellasservingascollectivebargainunits,anexperiencedgeneralcontractorwillmakegooduseofthebenefitsandavoidthepitfallsindealingwithorganizedlabor.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 11/19SpecialtyContr actor sSpecialtycontractorsincludemechanical,electrical,foundation,excavation,anddemolitioncontractorsamongothers.Theyusuallyserveassubcontractorstothegeneralcontractorofaproject.Insomecases,legalstatutesmayrequireanownertodealwithvariousspecialtycontractorsdirectly.IntheStateofNewYork,forexample,specialtycontractors,suchasmechanicalandelectricalcontractors,arenotsubjectedtothesupervisionofthegeneralcontractorofaconstructionprojectandmustbegivenseparateprimecontractsonpublicworks.Withtheexceptionofsuchspecialcases,anownerwillholdthegeneralcontractorresponsiblefornegotiatingandfulfillingthecontractualagreementswiththesubcontractors.Mater ialandEquipmentSupplier sMajormaterialsuppliersincludespecialtycontractorsinstructuralsteelfabricationanderection,sheetmetal,readymixedconcretedelivery,reinforcingsteelbardetailers,roofing,glazingetc.Majorequipmentsuppliersforindustrialconstructionincludemanufacturersofgenerators,boilersandpipingandotherequipment.Manysuppliershandleon-siteinstallationtoinsurethattherequirementsandcontractualspecificationsaremet.Asmoreandlargerstructuralunitsareprefabricatedoff-site,thedistributionbetweenspecialtycontractorsandmaterialsuppliersbecomesevenlessobvious.Backtotop1.6FinancingofConstr uctedFacilitiesAmajorconstructionprojectrequiresanenormousamountofcapitalthatisoftensuppliedbylenderswhowanttobeassuredthattheprojectwillofferafairreturnontheinvestment.Thedirectcostsassociatedwithamajorconstructionprojectmaybebroadlyclassifiedintotwocategories:(1)theconstructionexpensespaidtothegeneralcontractorforerectingthefacilityonsiteand(2)theexpensesforlandacquisition,legalfees,architect/engineerfees,constructionmanagementfees,interestonconstructionloansandtheopportunitycostofcarryingemptyspaceinthefacilityuntilitisfullyoccupied.Thedirectconstructioncostsinthefirstcategoryrepresentapproximately60to80percentofthetotalcostsinmostconstructionprojects.Sincethecostsofconstructionareultimatelybornebytheowner,carefulfinancialplanningforthefacilitymustbemadepriortoconstruction.Constr uctionFinancingConstructionloanstocontractorsareusuallyprovidedbybanksorsavingsandloanassociationsforconstructionfinancing.Uponthecompletionofthefacility,constructionloanswillbeterminatedandthepost-constructionfacilityfinancingwillbearrangedbytheowner.Constructionloansprovidedfordifferenttypesofconstructionvary.Inthecaseofresidentialhousing,constructionloansandlong-termmortgagescanbeobtainedfromsavingsandloansassociationsorcommercialbanks.Forinstitutionalandcommercialbuildings,constructionloansareusuallyobtainedfromcommercialbanks.Sincethevalueofspecializedindustrialbuildingsascollateralforloansislimited,constructionloansinthisdomainarerare,andconstructionfinancingcanbedonefromthepoolofgeneralcorporatefunds.Forinfrastructureconstructionownedbygovernment,thepropertycannotbeusedassecurityforaprivateloan,buttherearemanypossiblewaystofinancetheconstruction,suchasgeneralappropriationfromtaxationorspecialbondsissuedfortheproject.Traditionally,banksserveasconstructionlendersinathree-partyagreementamongthecontractor,theownerandthebank.Thestipulatedloanwillbepaidtothecontractoronanagreedscheduleupontheverificationofcompletionofvariousportionsoftheproject.Generally,apaymentrequesttogetherwithastandardprogressreportwillbesubmittedeachmonthbythecontractortotheownerwhichin7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 12/19turnsubmitsadrawrequesttothebank.Providedthattheworktodatehasbeenperformedsatisfactorily,thedisbursementismadeonthatbasisduringtheconstructionperiod.Undersuchcircumstances,thebankhasbeenprimarilyconcernedwiththecompletionofthefacilityontimeandwithinthebudget.Theeconomiclifeofthefacilityafteritscompletionisnotaconcernbecauseofthetransferofrisktotheowneroraninstitutionallender.FacilityFinancingManyprivatecorporationsmaintainapoolofgeneralfundsresultingfromretainedearningsandlong-termborrowingonthestrengthofcorporateassets,whichcanbeusedforfacilityfinancing.Similarly,forpublicagencies,thelong-termfundingmaybeobtainedfromthecommitmentofgeneraltaxrevenuesfromthefederal,stateand/orlocalgovernments.Bothprivatecorporationsandpublicagenciesmayissuespecialbondsfortheconstructedfacilitieswhichmayobtainlowerinterestratesthanotherformsofborrowing.Short-termborrowingmayalsobeusedforbridgingthegapsinlong-termfinancing.Somecorporatebondsareconvertibletostocksundercircumstancesspecifiedinthebondagreement.Forpublicfacilities,theassessmentofuserfeestorepaythebondfundsmeritsconsiderationforcertaintypesoffacilitiessuchastollroadsandsewagetreatmentplants.[3]Theuseofmortgagesisprimarilyconfinedtorentalpropertiessuchasapartmentsandofficebuildings.Becauseofthesuddensurgeofinterestratesinthelate1970's,manyfinancialinstitutionsoffer,inadditiontothetraditionalfixedratelong-termmortgagecommitments,otherarrangementssuchasacombinationofdebtandapercentageofownershipinexchangeforalong-termmortgageortheuseofadjustableratemortgages.Insomecases,theconstructionloanmaybegrantedonanopen-endedbasiswithoutalong-termfinancingcommitment.Forexample,theplanmightbeissuedfortheconstructionperiodwithanoptiontoextenditforaperiodofuptothreeyearsinordertogivetheownermoretimetoseekalternativelong-termfinancingonthecompletedfacility.Thebankwillbedrawnintosituationsinvolvingfinancialriskifitchoosestobealenderwithoutlong-termguarantees.Forinternationalprojects,thecurrencyusedforfinancingagreementsbecomesimportant.Iffinancialagreementsarewrittenintermsoflocalcurrencies,thenfluctuationsinthecurrencyexchangeratecansignificantlyaffectthecostandultimatelyprofitofaproject.Insomecases,paymentsmightalsobemadeinparticularcommoditiessuchaspetroleumortheoutputfromthefacilityitself.Again,thesearrangementsresultingreateruncertaintyinthefinancingschemebecausethepriceofthesecommoditiesmayvary.Backtotop1.7LegalandRegulator yRequir ementsTheownersoffacilitiesnaturallywantlegalprotectionforalltheactivitiesinvolvedintheconstruction.Itisequallyobviousthattheyshouldseekcompetentlegaladvice.However,therearecertainprinciplesthatshouldberecognizedbyownersinordertoavoidunnecessarypitfalls.LegalResponsibilitiesActivitiesinconstructionofteninvolverisks,bothphysicalandfinancial.Anownergenerallytriestoshifttheriskstootherpartiestothedegreepossiblewhenenteringintocontractualagreementswiththem.However,suchactionisnotwithoutcostorrisk.Forexample,acontractorwhoisassignedtherisksmayeitheraskforahighercontractpricetocompensateforthehigherrisks,orendupinnon-performanceorbankruptcyasanactofdesperation.Suchconsequencescanbeavoidediftheownerisreasonableinriskallocation.Whenrisksareallocatedtodifferentparties,theownermustunderstandtheimplicationsandspellthemoutclearly.Sometimestherearestatutorylimitationsontheallocationofliabilitiesamongvariousgroups,suchasprohibitionagainsttheallocationofnegligenceindesign7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 13/19tothecontractor.Anownermustrealizeitssuperiorpowerinbargainingandhencetheresponsibilitiesassociatedwiththispowerinmakingcontractualagreements.MitigationofConflictsItisimportantfortheownertouselegalcounselorsasadvisorstomitigateconflictsbeforetheyhappenratherthantowieldconflictsasweaponsagainstotherparties.Thereareenoughproblemsindesignandconstructionduetouncertaintyratherthanbadintentions.Theownershouldrecognizethemoreenlightenedapproachesformitigatingconflicts,suchasusingowner-controlledwrap-upinsurancewhichwillprovideprotectionforallpartiesinvolvedintheconstructionprocessforunforeseenrisks,orusingarbitration,mediationandotherextra-judicialsolutionsfordisputesamongvariousparties.However,thesecompromisesolutionsarenotwithoutpitfallsandshouldbeadoptedonlyonthemeritofindividualcases.Gover nmentRegulationToprotectpublicsafetyandwelfare,legislaturesandvariousgovernmentagenciesperiodicallyissueregulationswhichinfluencetheconstructionprocess,theoperationofconstructedfacilities,andtheirultimatedisposal.Forexample,buildingcodespromulgatedbylocalauthoritieshaveprovidedguidelinesfordesignandconstructionpracticesforaverylongtime.Sincethe1970's,manyfederalregulationsthatarerelateddirectlyorindirectlytoconstructionhavebeenestablishedintheUnitedStates.AmongthemaresafetystandardsforworkersissuedbytheOccupationalHealthandSafetyAdministration,environmentalstandardsonpollutantsandtoxicwastesissuedbytheEnvironmentalProtectionAgency,anddesignandoperationproceduresfornuclearpowerplantsissuedbytheNuclearRegulatoryCommission.Ownersmustbeawareoftheimpactsoftheseregulationsonthecostsanddurationsofvarioustypesofconstructionprojectsaswellaspossibilitiesoflitigationduetovariouscontentions.Forexample,ownersacquiringsitesfornewconstructionmaybestrictlyliableforanyhazardouswastesalreadyonthesiteorremovedfromthesiteundertheU.S.ComprehensiveEnvironmentalResponseCompensationandLiability(CERCL)Actof1980.Forlargescaleprojectsinvolvingnewtechnologies,theconstructioncostsoftenescalatewiththeuncertaintyassociatedwithsuchrestrictions.Backtotop1.8TheChangingEnvir onmentoftheConstr uctionIndustr yTheconstructionindustryisaconglomerationofdiversefieldsandparticipantsthathavebeenlooselylumpedtogetherasasectoroftheeconomy.Theconstructionindustryplaysacentralroleinnationalwelfare,includingthedevelopmentofresidentialhousing,officebuildingsandindustrialplants,andtherestorationofthenation'sinfrastructureandotherpublicfacilities.Theimportanceoftheconstructionindustryliesinthefunctionofitsproductswhichprovidethefoundationforindustrialproduction,anditsimpactsonthenationaleconomycannotbemeasuredbythevalueofitsoutputorthenumberofpersonsemployedinitsactivitiesalone.Tobemorespecific,constructionreferstoalltypesofactivitiesusuallyassociatedwiththeerectionandrepairofimmobilefacilities.Contractconstructionconsistsofalargenumberoffirmsthatperformconstructionworkforothers,andisestimatedtobeapproximately85%ofallconstructionactivities.Theremaining15%ofconstructionisperformedbyownersofthefacilities,andisreferredtoasforce-accountconstruction.AlthoughthenumberofcontractorsintheUnitedStatesexceedsamillion,over60%ofallcontractorconstructionisperformedbythetop400contractors.ThevalueofnewconstructionintheUnitedStates(expressedinconstantdollars)andthevalueofconstructionasa7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 14/19percentageofthegrossnationalproductsfrom1950to1985areshowninFigures1-6and1-7.ItcanbeseenthatconstructionisasignificantfactorintheGrossNationalProductalthoughitsimportancehasbeendeclininginrecentyears.[4]Nottobeignoredisthefactthatasthenation'sconstructedfacilitiesbecomeolder,thetotalexpenditureonrehabilitationandmaintenancemayincreaserelativetothevalueofnewconstruction.Figur e1-6:ValueofNewConstructionintheUnitedStates,1975-1995Figur e1-7:ConstructionasPercentageofGrossDomesticProductintheUnitedStates,1975-1995Ownerswhopaycloseattentiontothepeculiarcharacteristicsoftheconstructionindustryanditschangingoperatingenvironmentwillbeabletotakeadvantageofthefavorableconditionsandtoavoidthepitfalls.Severalfactorsareparticularlynoteworthybecauseoftheirsignificantimpactsonthequality,costandtimeofconstruction.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 15/19NewTechnologiesInrecentyears,technologicalinnovationindesign,materialsandconstructionmethodshaveresultedinsignificantchangesinconstructioncosts.Computer-aidshaveimprovedcapabilitiesforgeneratingqualitydesignsaswellasreducingthetimerequiredtoproducealternativedesigns.Newmaterialsnotonlyhaveenhancedthequalityofconstructionbutalsohaveshortenedthetimeforshopfabricationandfielderection.Constructionmethodshavegonethroughvariousstagesofmechanizationandautomation,includingthelatestdevelopmentofconstructionrobotics.ThemostdramaticnewtechnologyappliedtoconstructionhasbeentheInternetanditsprivate,corporateIntranetversions.TheInternetiswidelyusedasameanstofostercollaborationamongprofessionalsonaproject,tocommunicateforbidsandresults,andtoprocurenecessarygoodsandservices.Realtimevideofromspecificconstructionsitesiswidelyusedtoillustrateconstructionprogresstointerestedparties.Theresulthasbeenmoreeffectivecollaboration,communicationandprocurement.Theeffectsofmanynewtechnologiesonconstructioncostshavebeenmixedbecauseofthehighdevelopmentcostsfornewtechnologies.However,itisunmistakablethatdesignprofessionalsandconstructioncontractorswhohavenotadaptedtochangingtechnologieshavebeenforcedoutofthemainstreamofdesignandconstructionactivities.Ultimately,constructionqualityandcostcanbeimprovedwiththeadoptionofnewtechnologieswhichareprovedtobeefficientfromboththeviewpointsofperformanceandeconomy.Labor Pr oductivityThetermproductivityisgenerallydefinedasaratiooftheproductionoutputvolumetotheinputvolumeofresources.Sincebothoutputandinputcanbequantifiedinanumberofways,thereisnosinglemeasureofproductivitythatisuniversallyapplicable,particularlyintheconstructionindustrywheretheproductsareoftenuniqueandthereisnostandardforspecifyingthelevelsforaggregationofdata.However,sincelaborconstitutesalargepartofthecostofconstruction,laborproductivityintermsofoutputvolume(constantdollarvalueorfunctionalunits)perperson-hourisausefulmeasure.Laborproductivitymeasuredinthiswaydoesnotnecessarilyindicatetheefficiencyoflaboralonebutrathermeasuresthecombinedeffectsoflabor,equipmentandotherfactorscontributingtotheoutput.Whileaggregateconstructionindustryproductivityisimportantasameasureofnationaleconomy,ownersaremoreconcernedaboutthelaborproductivityofbasicunitsofworkproducedbyvariouscraftsonsite.Thus,anownercancomparethelaborperformanceatdifferentgeographiclocations,underdifferentworkingconditions,andfordifferenttypesandsizesofprojects.Constructioncostsusuallyrunparalleltomaterialpricesandlaborwages.Actually,overtheyears,laborproductivityhasincreasedinsometraditionaltypesofconstructionandthusprovidesalevelingorcompensatingeffectwhenhourlyratesforlaborincreasefasterthanothercostsinconstruction.However,laborproductivityhasbeenstagnantorevendeclinedinunconventionalorlargescaleprojects.PublicScr utinyUnderthepresentlitigiousclimateintheUnitedStates,thepublicisincreasinglyvocalinthescrutinyofconstructionprojectactivities.Sometimesitmayresultinconsiderabledifficultyinsitingnewfacilitiesaswellasadditionalexpensesduringtheconstructionprocessitself.Ownersmustbepreparedtomanagesuchcrisesbeforetheygetoutofcontrol.Figure1-8canservetoindicatepublicattitudestowardsthesitingofnewfacilities.Itrepresentsthecumulativepercentageofindividualswhowouldbewillingtoacceptanewindustrialfacilityat7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 16/19variousdistancesfromtheirhomes.Forexample,overfiftypercentofthepeoplesurveyedwouldacceptaten-storyofficebuildingwithinfivemilesoftheirhome,butonlytwenty-fivepercentwouldacceptalargefactoryorcoalfiredpowerplantatasimilardistance.Anevenlowerpercentagewouldacceptahazardouswastedisposalsiteoranuclearpowerplant.Evenatadistanceofonehundredmiles,asignificantfractionofthepublicwouldbeunwillingtoaccepthazardouswastefacilitiesornuclearpowerplants.Figur e1-8:PublicAcceptanceTowardsNewFacilities(ReprintedfromEnvironmentalQuality-1980,theEleventhAnnualReportoftheCouncilonEnvironmentalQuality,U.S.GovernmentPrintingOffice,Washington,DC,December1980.)Thisobjectiontonewfacilitiesisawidespreadpublicattitude,representingconsiderableskepticismabouttheexternalbenefitsandcostswhichnewfacilitieswillimpose.Itisthispublicattitudewhichislikelytomakepublicscrutinyandregulationacontinuingconcernfortheconstructionindustry.Inter nationalCompetition7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 17/19Afinaltrendwhichdeservesnoteistheincreasinglevelofinternationalcompetitionintheconstructionindustry.Ownersarelikelytofindnon-traditionalfirmsbiddingforconstructionwork,particularlyonlargeprojects.SeparatebidsfromnumerousEuropean,NorthAmerican,andAsianconstructionfirmsarenotunusual.IntheUnitedStates,overseasfirmsarebecomingincreasinglyvisibleandimportant.Inthisenvironmentofheightenedcompetition,goodprojectmanagementandimprovedproductivityaremoreandmoreimportant.Abiddingcompetitionforamajornewoffshoredrillingplatformillustratesthecompetitiveenvironmentinconstruction.AsdescribedintheWallStreetJournal:[5]Throughmostofthepostwaryears,thenation'sbiggestbuildersofoffshoreoilplatformsenjoyedanunusuallycozyrelationshipwiththeBigOilCompaniestheyserved.Theirtopofficialsdevelopedpersonalfriendshipswithoilexecutives,entertainedthematopulenthuntingcamps-andwoncontractstobuildnearlyeverymajoroffshoreoilplatformintheworld....Butthissummer,thegood-oldboynetworkfellapart.Shell[OilCo.]awardedthemaincontractfor[anew]platform-tallerthanChicago'sSearsTower,fourtimesheavierthantheBrooklynBridge-toatinyupstart.Thewinningbidderarrangedoverseasfabricationoftherig,keptoverheadcostslow,andproposedanovelassemblyprocedurebywhichconstructionequipmentwasmountedoncompletedsectionsoftheplatforminordertospeedthecompletionoftheentirestructure.Theresultwaslowercoststhanthoseestimatedandbidbytraditionalfirms.Ofcourse,U.S.firmsincludingA/Efirms,contractorsandconstructionmanagersarealsocompetinginforeigncountries.TheirsuccessorfailureintheinternationalarenamayalsoaffecttheircapacitiesandvitalitytoprovideservicesinthedomesticU.S.market.Contr actor FinancedPr ojectsIncreasingly,someownerslooktocontractorsorjointventuresasaresourcetodesign,tobuildandtofinanceaconstructedfacility.Forexample,autilitycompanymayseekaconsortiumconsistingofadesign/constructfirmandafinancialinvestmentfirmtoassumetotalliabilityduringconstructionandtherebyeliminatetherisksofcostescalationtoratepayers,stockholdersandthemanagement.Ontheotherhand,alocalsanitationdistrictmayseeksuchaconsortiumtoprovideprivateownershipforaproposednewsewagetreatmentplant.Intheformercase,theownermaytakeoverthecompletedfacilityandservicethedebtonconstructionthroughlong-termfinancingarrangementsinthelattercase,theprivateownermayoperatethecompletedfacilityandrecoveritsinvestmentthroughuserfees.Theactivitiesofjointventuresamongdesign,constructionandinvestmentfirmsaresometimesreferredtoasfinancialengineering.Thistypeofjointventurehasbecomemoreimportantintheinternationalconstructionmarketwhereaggressivecontractorsoftenwincontractsbyofferingamoreattractivefinancingpackageratherthansuperiortechnology.Withadeepeningshadowofinternationaldebtsinrecentyears,manydevelopingcountriesarenotinapositiontoundertakeanynewprojectwithoutcontractor-backedfinancing.Thus,thecontractorsorjointventuresinoverseasprojectsareforcedintoveryriskypositionsiftheyintendtostayinthecompetition.LeanConstr uction"Leanmanufacturing"hadarevolutionaryeffectonmanyindustries,especiallyautomotiveassemblycompanies.Characteristicsofthisapproachinclude:Improvementinqualityandreductionofwasteeverywhere.Ratherthanincreasingcosts,reducingdefectsandwasteprovedtoimprovequalityandreducecosts.7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 18/19Empoweringworkerstoberesponsibleforsatisfyingcustomerneeds.Inconstruction,forexample,craftsmanshouldmakesuretheirworksatisfiedthedesignintent.Continuousimprovementofprocessesinvolvingtheentireworkforce.Leanconstructionisintendedtospreadthesepracticeswithintheconstructionindustry.Ofcourse,wellmanagedconstructionprojectsalreadyhavemanyaspectsofleanconstruction.Forexample,just-in-timedeliveryofmaterialsiscommonplacetoavoidthewasteoflargeinventorystockpiles.Greenbuildingprojectsattempttore-useorrecycleallconstructionwastes.Butthesystematicattentiontocontinuousimprovementandzeroaccidentsanddefectsisnew.Backtotop1.9TheRoleofPr ojectManager sIntheprojectlifecycle,themostinfluentialfactorsaffectingtheoutcomeoftheprojectoftenresideattheearlystages.Atthispoint,decisionsshouldbebasedoncompetenteconomicevaluationwithdueconsiderationforadequatefinancing,theprevalentsocialandregulatoryenvironment,andtechnologicalconsiderations.Architectsandengineersmightspecializeinplanning,inconstructionfieldmanagement,orinoperation,butasprojectmanagers,theymusthavesomefamiliaritywithallsuchaspectsinordertounderstandproperlytheirroleandbeabletomakecompetentdecisions.Sincethe1970's,manylarge-scaleprojectshaverunintoseriousproblemsofmanagement,suchascostoverrunsandlongscheduledelays.Actually,themanagementofmegaprojectsorsuperprojectsisnotapracticepeculiartoourtime.WitnesstheconstructionoftranscontinentalrailroadsintheCivilWareraandtheconstructionofthePanamaCanalattheturnofthiscentury.Althoughthemegaprojectsofthisgenerationmayappearingreaterfrequencyandpresentanewsetofchallenge,theproblemsareorganizationalratherthantechnical.AsnotedbyHardyCross:[6]Itiscustomarytothinkofengineeringasapartofatrilogy,purescience,appliedscienceandengineering.Itneedsemphasisthatthistrilogyisonlyoneofatriadoftrilogiesintowhichengineeringfits.Thisfirstispurescience,appliedscienceandengineeringthesecondiseconomictheory,financeandengineeringandthethirdissocialrelations,industrialrelationsandengineering.Manyengineeringproblemsareascloselyalliedtosocialproblemsastheyaretopurescience.Asengineersadvanceprofessionally,theyoftenspendasmuchormoretimeonplanning,managementandothereconomicorsocialproblemsasonthetraditionalengineeringdesignandanalysisproblemswhichformthecoreofmosteducationalprograms.Itisupontheabilityofengineerstotackleallsuchproblemsthattheirperformancewillultimatelybejudged.Thegreateststumblingblocktoeffectivemanagementinconstructionistheinertiaandhistoricdivisionsamongplanners,designersandconstructors.Whiletechnicalcompetenceindesignandinnovationremainsthefoundationofengineeringpractice,thesocial,economicandorganizationalfactorsthatarepervasiveininfluencingthesuccessandfailureofconstructionprojectsmustalsobedealtwitheffectivelybydesignandconstructionorganizations.Ofcourse,engineersarenotexpectedtoknoweverydetailofmanagementtechniques,buttheymustbeknowledgeableenoughtoanticipatetheproblemsofmanagementsothattheycanworkharmoniouslywithprofessionalsinrelatedfieldstoovercometheinertiaandhistoricdivisions.Paradoxically,engineerswhoarecreativeinengineeringdesignareofteninnovativeinplanningandmanagementsincebothtypesofactivitiesinvolveproblemsolving.Infact,theycanreinforceeachotherifbothareincludedintheeducationprocess,providedthatcreativityandinnovationinsteadofroutinepracticeareemphasized.Aprojectmanagerwhoiswelleducatedinthefundamentalprinciplesofengineeringdesignandmanagementcanusefullyapplysuchprinciplesonceheorshehasacquiredbasicunderstandingofanewapplicationarea.Aprojectmanagerwhohasbeentrainedbyrotelearningforaspecifictypeofprojectmaymerelygainoneyearofexperiencerepeatedtwenty7/8/2015 ProjectManagementforConstruction:TheOwners' Perspectivehttp://pmbook.ce.cmu.edu/01_The_Owners' _Perspective.html 19/19timesevenifheorshehasbeeninthefieldfortwentyyears.Abroadlyeducatedprojectmanagercanreasonablyhopetobecomealeaderintheprofessionanarrowlytrainedprojectmanagerisoftenrelegatedtotheroleofhisorherfirstjoblevelpermanently.Theownershavemuchatstakeinselectingacompetentprojectmanagerandinprovidingherorhimwiththeauthoritytoassumeresponsibilityatvariousstagesoftheprojectregardlessofthetypesofcontractualagreementsforimplementingtheproject.Ofcourse,theprojectmanagermustalsopossesstheleadershipqualityandtheabilitytohandleeffectivelyintricateinterpersonalrelationshipswithinanorganization.Theultimatetestoftheeducationandexperienceofaprojectmanagerforconstructionliesinherorhisabilitytoapplyfundamentalprinciplestosolvingproblemsinthenewandunfamiliarsituationswhichhavebecomethehallmarksofthechangingenvironmentintheconstructionindustry.Backtotop1.10Refer ences1. Au,T.andC.Hendrickson,"EducationinEngineeringPlanningandManagement,"ProceedingsoftheASCEConferenceonCivilEngineeringEducation,Columbus,Ohio,1985.2. Barrie,D.S.(editor),DirectionsinManagingConstruction,JohnWileyandSons,NewYork,1981.3. LeanConstructionInstitute,http://www.leanconstruction.org/4. Bonny,J.B.andJ.P.Frein,HandbookofConstructionManagementandOrganization,2ndEdition,VanNostrandReinholdCo.,NewYork,1980.5. Hasagawa,Fumioet.al.,"BuiltbyJapan,"JohnWiley&Sons,1988.6. Lang,J.E.andD.Q.Mills,TheConstructionIndustry,LexingtonBooks,Lexington,MA,1979.7. Walker,N.,E.N.WalkerandT.K.Rohdenburg,LegalPitfallsinArchitecture,EngineeringandBuildingConstruction,2ndEdition,McGraw-HillBookCo.,NewYork,1979.Backtotop1.11Footnotes1. TheBusinessRoundtable,MoreConstructionfortheMoney,SummaryReportoftheConstructionIndustryCostEffectivenessProject,January1983,p.11.Back2. "HotNewMarketLuresA-EPlayerstoCuttingEdges,"EngineeringNews-Record,April4,1985,pp.30-37.Back3. SeeHendrickson,C.,"FinancingCivilWorkswithUserFees,"CivilEngineering,Vol.53,No.2,February1983,pp.71-72.Back4. Thegraphisderivedfromdatain"ValueofNewConstructionPutinPlace,1960-1983",StatisticalAbstractoftheUnitedStates,105thEdition,U.S.DepartmentofCommerce,BureauofCensus,1985,pp.722-723,aswellastheinformationinearliereditions.Back5. SeePetzinger,ThomasJr.,"Upstart'sWinningBidforOffshorePlatformStunsitsOlderRivals,"WallStreetJournal,p.1,c.6,Nov.20,1985.Back6. SeeH.Cross,EngineersandIvoryTowers,McGraw-HillBookCo.,Inc.,NewYork,1952.BackTableofContents | NextChapter7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 1/18GoUptoTableofContentsGoToChapter1(TheOwners'Perspective)GoToChapter3(TheDesignandConstructionProcess)OrganizingforProjectManagementWhatisProjectManagement?TrendsinModernManagementStrategicPlanningandProjectProgrammingEffectsofProjectRisksonOrganizationOrganizationofProjectParticipantsTraditionalDesigner-ConstructorSequenceProfessionalConstructionManagementOwner-BuilderOperationTurnkeyOperationLeadershipandMotivationfortheProjectTeamInterpersonalBehaviorinProjectOrganizationsPerceptionsofOwnersandContractorsReferencesFootnotes2.Or ganizingfor Pr ojectManagement2.1WhatisPr ojectManagement?Themanagementofconstructionprojectsrequiresknowledgeofmodernmanagementaswellasanunderstandingofthedesignandconstructionprocess.Constructionprojectshaveaspecificsetofobjectivesandconstraintssuchasarequiredtimeframeforcompletion.Whiletherelevanttechnology,institutionalarrangementsorprocesseswilldiffer,themanagementofsuchprojectshasmuchincommonwiththemanagementofsimilartypesofprojectsinotherspecialtyortechnologydomainssuchasaerospace,pharmaceuticalandenergydevelopments.Generally,projectmanagementisdistinguishedfromthegeneralmanagementofcorporationsbythemission-orientednatureofaproject.Aprojectorganizationwillgenerallybeterminatedwhenthemissionisaccomplished.AccordingtotheProjectManagementInstitute,thedisciplineofprojectmanagementcanbedefinedasfollows:[1]Projectmanagementistheartofdirectingandcoordinatinghumanandmaterialresources7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 2/18throughoutthelifeofaprojectbyusingmodernmanagementtechniquestoachievepredeterminedobjectivesofscope,cost,time,qualityandparticipationsatisfaction.Bycontrast,thegeneralmanagementofbusinessandindustrialcorporationsassumesabroaderoutlookwithgreatercontinuityofoperations.Nevertheless,therearesufficientsimilaritiesaswellasdifferencesbetweenthetwosothatmodernmanagementtechniquesdevelopedforgeneralmanagementmaybeadaptedforprojectmanagement.Thebasicingredientsforaprojectmanagementframework[2]mayberepresentedschematicallyinFigure2-1.Aworkingknowledgeofgeneralmanagementandfamiliaritywiththespecialknowledgedomainrelatedtotheprojectareindispensable.Supportingdisciplinessuchascomputerscienceanddecisionsciencemayalsoplayanimportantrole.Infact,modernmanagementpracticesandvariousspecialknowledgedomainshaveabsorbedvarioustechniquesortoolswhichwereonceidentifiedonlywiththesupportingdisciplines.Forexample,computer-basedinformationsystemsanddecisionsupportsystemsarenowcommon-placetoolsforgeneralmanagement.Similarly,manyoperationsresearchtechniquessuchaslinearprogrammingandnetworkanalysisarenowwidelyusedinmanyknowledgeorapplicationdomains.Hence,therepresentationinFigure2-1reflectsonlythesourcesfromwhichtheprojectmanagementframeworkevolves.Figur e2-1:BasicIngredientsinProjectManagementSpecifically,projectmanagementinconstructionencompassesasetofobjectiveswhichmaybeaccomplishedbyimplementingaseriesofoperationssubjecttoresourceconstraints.Therearepotentialconflictsbetweenthestatedobjectiveswithregardtoscope,cost,timeandquality,andtheconstraintsimposedonhumanmaterialandfinancialresources.Theseconflictsshouldberesolvedattheonsetofaprojectbymakingthenecessarytradeoffsorcreatingnewalternatives.Subsequently,thefunctionsofprojectmanagementforconstructiongenerallyincludethefollowing:1. Specificationofprojectobjectivesandplansincludingdelineationofscope,budgeting,scheduling,settingperformancerequirements,andselectingprojectparticipants.2. Maximizationofefficientresourceutilizationthroughprocurementoflabor,materialsandequipmentaccordingtotheprescribedscheduleandplan.3. Implementationofvariousoperationsthroughpropercoordinationandcontrolofplanning,design,estimating,contractingandconstructionintheentireprocess.4. Developmentofeffectivecommunicationsandmechanismsforresolvingconflictsamongthevariousparticipants.TheProjectManagementInstitutefocusesonninedistinctareasrequiringprojectmanagerknowledgeandattention:1. Projectintegrationmanagementtoensurethatthevariousprojectelementsareeffectivelycoordinated.2. Projectscopemanagementtoensurethatalltheworkrequired(andonlytherequiredwork)isincluded.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 3/183. Projecttimemanagementtoprovideaneffectiveprojectschedule.4. Projectcostmanagementtoidentifyneededresourcesandmaintainbudgetcontrol.5. Projectqualitymanagementtoensurefunctionalrequirementsaremet.6. Projecthumanresourcemanagementtodevelopmentandeffectivelyemployprojectpersonnel.7. Projectcommunicationsmanagementtoensureeffectiveinternalandexternalcommunications.8. Projectriskmanagementtoanalyzeandmitigatepotentialrisks.9. Projectprocurementmanagementtoobtainnecessaryresourcesfromexternalsources.ThesenineareasformthebasisoftheProjectManagementInstitute'scertificationprogramforprojectmanagersinanyindustry.Backtotop2.2Tr endsinModer nManagementInrecentyears,majordevelopmentsinmanagementreflecttheacceptancetovariousdegreesofthefollowingelements:(1)themanagementprocessapproach,(2)themanagementscienceanddecisionsupportapproach,(3)thebehavioralscienceapproachforhumanresourcedevelopment,and(4)sustainablecompetitiveadvantage.Thesefourapproachescomplementeachotherincurrentpractice,andprovideausefulgroundworkforprojectmanagement.Themanagementprocessapproachemphasizesthesystematicstudyofmanagementbyidentifyingmanagementfunctionsinanorganizationandthenexaminingeachindetail.Thereisgeneralagreementregardingthefunctionsofplanning,organizingandcontrolling.Amajortenetisthatbyanalyzingmanagementalongfunctionallines,aframeworkcanbeconstructedintowhichallnewmanagementactivitiescanbeplaced.Thus,themanager'sjobisregardedascoordinatingaprocessofinterrelatedfunctions,whichareneithertotallyrandomnorrigidlypredetermined,butaredynamicastheprocessevolves.Anothertenetisthatmanagementprinciplescanbederivedfromanintellectualanalysisofmanagementfunctions.Bydividingthemanager'sjobintofunctionalcomponents,principlesbaseduponeachfunctioncanbeextracted.Hence,managementfunctionscanbeorganizedintoahierarchicalstructuredesignedtoimproveoperationalefficiency,suchastheexampleoftheorganizationforamanufacturingcompanyshowninFigure2-2.Thebasicmanagementfunctionsareperformedbyallmanagers,regardlessofenterprise,activityorhierarchicallevels.Finally,thedevelopmentofamanagementphilosophyresultsinhelpingthemanagertoestablishrelationshipsbetweenhumanandmaterialresources.Theoutcomeoffollowinganestablishedphilosophyofoperationhelpsthemanagerwinthesupportofthesubordinatesinachievingorganizationalobjectives.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 4/18Figur e2-2:IllustrativeHierarchicalStructureofManagementFunctionsThemanagementscienceanddecisionsupportapproachcontributestothedevelopmentofabodyofquantitativemethodsdesignedtoaidmanagersinmakingcomplexdecisionsrelatedtooperationsandproduction.Indecisionsupportsystems,emphasisisplacedonprovidingmanagerswithrelevantinformation.Inmanagementscience,agreatdealofattentionisgiventodefiningobjectivesandconstraints,andtoconstructingmathematicalanalysismodelsinsolvingcomplexproblemsofinventory,materialsandproductioncontrol,amongothers.Atopicofmajorinterestinmanagementscienceisthemaximizationofprofit,orintheabsenceofaworkablemodelfortheoperationoftheentiresystem,thesuboptimizationoftheoperationsofitscomponents.Theoptimizationorsuboptimizationisoftenachievedbytheuseofoperationsresearchtechniques,suchaslinearprogramming,quadraticprogramming,graphtheory,queuingtheoryandMonteCarlosimulation.Inadditiontotheincreasinguseofcomputersaccompaniedbythedevelopmentofsophisticatedmathematicalmodelsandinformationsystems,managementscienceanddecisionsupportsystemshaveplayedanimportantrolebylookingmorecarefullyatprobleminputsandrelationshipsandbypromotinggoalformulationandmeasurementofperformance.Artificialintelligencehasalsobeguntobeappliedtoprovidedecisionsupportsystemsforsolvingill-structuredproblemsinmanagement.Thebehavioralscienceapproachforhumanresourcedevelopmentisimportantbecausemanagemententailsgettingthingsdonethroughtheactionsofpeople.Aneffectivemanagermustunderstandtheimportanceofhumanfactorssuchasneeds,drives,motivation,leadership,personality,behavior,andworkgroups.Withinthiscontext,someplacemoreemphasisoninterpersonalbehaviorwhichfocusesontheindividualandhis/hermotivationsasasocio-psychologicalbeingothersemphasizemoregroupbehaviorinrecognitionoftheorganizedenterpriseasasocialorganism,subjecttoalltheattitudes,habits,pressuresandconflictsoftheculturalenvironmentofpeople.Themajorcontributionsmadebythebehavioralscientiststothefieldofmanagementinclude:(1)theformulationofconceptsandexplanationsaboutindividualandgroupbehaviorintheorganization,(2)theempiricaltestingoftheseconceptsmethodicallyinmanydifferentexperimentalandfieldsettings,and(3)theestablishmentofactualmanagerialpoliciesanddecisionsforoperationbasedontheconceptualandmethodicalframeworks.Sustainablecompetitiveadvantagestemsprimarilyfromgoodmanagementstrategy.AsMichaelPorteroftheHarvardBusinessSchoolargues:Strategyiscreatingfitamongacompany'sactivities.Thesuccessofastrategydependsondoingmanythingswell-notjustafew-andintegratingamongthem.Ifthereisnofitamongactivites,thereisnodistinctivestrategyandlittlesustainability.Inthisview,successfulfirmsmustimproveandalignthemanyprocessesunderwaytotheirstrategicvision.Strategicpositioninginthisfashionrequires:Creatingauniqueandvaluableposition.Makingtrade-offscomparedtocompetitorsCreatinga"fit"amongacompany'sactivities.Projectmanagersshouldbeawareofthestrategicpositionoftheirownorganizationandtheotherorganizationsinvolvedintheproject.Theprojectmanagerfacesthedifficulttaskoftryingtoalignthegoalsandstrategiesofthesevariousorganizationstoaccomplishtheprojectgoals.Forexample,theownerofanindustrialprojectmaydefineastrategicgoalasbeingfirsttomarketwithnewproducts.Inthiscase,facilitiesdevelopmentmustbeorientedtofast-track,rapidconstruction.Asanotherexample,acontractingfirmmayseetheirstrategicadvantageinnewtechnologiesandemphasizeprofitopportunitiesfromvalueengineering(asdescribedinChapter3).Backtotop2.3Str ategicPlanningandPr ojectPr ogr ammingTheprogrammingofcapitalprojectsisshapedbythestrategicplanofanorganization,whichisinfluencedbymarketdemandsandresourcesconstraints.Theprogrammingprocessassociatedwithplanningandfeasibility7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 5/18studiessetstheprioritiesandtimingforinitiatingvariousprojectstomeettheoverallobjectivesoftheorganizations.However,oncethisdecisionismadetoinitiateaproject,marketpressuremaydictateearlyandtimelycompletionofthefacility.Amongvarioustypesofconstruction,theinfluenceofmarketpressureonthetimingofinitiatingafacilityismostobviousinindustrialconstruction.[3]Demandforanindustrialproductmaybeshort-lived,andifacompanydoesnothitthemarketfirst,theremaynotbedemandforitsproductlater.Withintensivecompetitionfornationalandinternationalmarkets,thetrendofindustrialconstructionmovestowardshorterprojectlifecycles,particularlyintechnologyintensiveindustries.Inordertogaintime,someownersarewillingtoforegothoroughplanningandfeasibilitystudysoastoproceedonaprojectwithinadequatedefinitionoftheprojectscope.Invariably,subsequentchangesinprojectscopewillincreaseconstructioncostshowever,profitsderivedfromearlierfacilityoperationoftenjustifytheincreaseinconstructioncosts.Generally,iftheownercanderivereasonableprofitsfromtheoperationofacompletedfacility,theprojectisconsideredasuccessevenifconstructioncostsfarexceedtheestimatebasedonaninadequatescopedefinition.Thisattitudemaybeattributedinlargeparttotheuncertaintiesinherentinconstructionprojects.Itisdifficulttoarguethatprofitsmightbeevenhigherifconstructioncostscouldbereducedwithoutincreasingtheprojectduration.However,someprojects,notablysomenuclearpowerplants,areclearlyunsuccessfulandabandonedbeforecompletion,andtheirdemisemustbeattributedatleastinparttoinadequateplanningandpoorfeasibilitystudies.Theownerorfacilitysponsorholdsthekeytoinfluencetheconstructioncostsofaprojectbecauseanydecisionmadeatthebeginningstageofaprojectlifecyclehasfargreaterinfluencethanthosemadeatlaterstages,asshownschematicallyinFigure2-3.Moreover,thedesignandconstructiondecisionswillinfluencethecontinuingoperatingcostsand,inmanycases,therevenuesoverthefacilitylifetime.Therefore,anownershouldobtaintheexpertiseofprofessionalstoprovideadequateplanningandfeasibilitystudies.Manyownersdonotmaintainanin-houseengineeringandconstructionmanagementcapability,andtheyshouldconsidertheestablishmentofanongoingrelationshipwithoutsideconsultantsinordertorespondquicklytorequests.Evenamongthoseownerswhomaintainengineeringandconstructiondivisions,manytreatthesedivisionsasreimbursable,independentorganizations.Suchanarrangementshouldnotdiscouragetheirlegitimateuseasfalseeconomiesinreimbursablecostsfromsuchdivisionscanindeedbeverycostlytotheoverallorganization.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 6/18Figur e2-3:AbilitytoInfluenceConstructionCostOverTimeFinally,theinitiationandexecutionofcapitalprojectsplacesdemandsontheresourcesoftheownerandtheprofessionalsandcontractorstobeengagedbytheowner.Forverylargeprojects,itmaybidupthepriceofengineeringservicesaswellasthecostsofmaterialsandequipmentandthecontractpricesofalltypes.Consequently,suchfactorsshouldbetakenintoconsiderationindeterminingthetimingofaproject.Example2-1:Settingpr ior itiesfor pr ojectsAdepartmentstoreplannedtoexpanditsoperationbyacquiring20acresoflandinthesoutheastofametropolitanareawhichconsistsofwellestablishedsuburbsformiddleincomefamilies.Anarchitectural/engineering(A/E)firmwasengagedtodesignashoppingcenteronthe20-acreplotwiththedepartmentstoreasitsflagshipplusalargenumberofstorefrontsfortenants.Oneyearlater,thedepartmentstoreownerpurchased2,000acresoffarmlandinthenorthwestoutskirtsofthesamemetropolitanareaanddesignated20acresofthislandforashoppingcenter.TheA/Efirmwasagainengagedtodesignashoppingcenteratthisnewlocation.TheA/Efirmwaskeptcompletelyinthedarkwhiletheassemblageofthe2,000acresoflandinthenorthwestquietlytookplace.Whentheplansandspecificationsforthesoutheastshoppingcenterwerecompleted,theownerinformedtheA/Efirmthatitwouldnotproceedwiththeconstructionofthesoutheastshoppingcenterforthetimebeing.Instead,theownerurgedtheA/Efirmtoproduceanewsetofsimilarplansandspecificationsforthenorthwestshoppingcenterassoonaspossible,evenatthesacrificeofcostsavingmeasures.Whentheplansandspecificationsforthenorthwestshoppingcenterwereready,theownerimmediatelyauthorizeditsconstruction.However,ittookanotherthreeyearsbeforethesoutheastshoppingcenterwasfinallybuilt.Thereasonbehindthechangeofplanwasthattheownerdiscoveredtheavailabilityofthefarmlandinthenorthwestwhichcouldbedevelopedintoresidentialrealestatepropertiesforuppermiddleincomefamilies.Theimmediateconstructionofthenorthwestshoppingcenterwouldmakethelanddevelopmentparcelsmoreattractivetohomebuyers.Thus,theownerwasabletorecoupenoughcashflowinthreeyearstoconstructthesoutheastshoppingcenterinadditiontofinancingtheconstructionofthenortheastshoppingcenter,aswellasthelanddevelopmentinitsvicinity.Whiletheownerdidnotwanttheconstructioncostofthenorthwestshoppingcentertorunwild,itapparentlywassatisfiedwiththecostestimatebasedonthedetailedplansofthesoutheastshoppingcenter.Thus,theownerhadageneralideaofwhattheconstructioncostofthenorthwestshoppingcenterwouldbe,anddidnotwishtowaitforamorerefinedcostestimateuntilthedetailedplansforthatcenterwereready.Totheowner,thetimelinessofcompletingtheconstructionofthenorthwestshoppingcenterwasfarmoreimportantthanreducingtheconstructioncostinfulfillingitsinvestmentobjectives.Example2-2:Resour ceConstr aintsfor MegaPr ojectsAmajorproblemwithmegaprojectsistheseverestrainplacedontheenvironment,particularlyontheresourcesintheimmediateareaofaconstructionproject."Mega"or"macro"projectsinvolveconstructionofverylargefacilitiessuchastheAlaskapipelineconstructedinthe1970'sorthePanamaCanalconstructedinthe1900's.Thelimitationsinsomeorallofthebasicelementsrequiredforthesuccessfulcompletionofamegaprojectinclude:engineeringdesignprofessionalstoprovidesufficientmanpowertocompletethedesignwithinareasonabletimelimit.constructionsupervisorswithcapacityandexperiencetodirectlargeprojects.thenumberofconstructionworkerswithproperskillstodothework.themarkettosupplymaterialsinsufficientquantitiesandofrequiredqualityontime.theabilityofthelocalinfrastructuretosupportthelargenumberofworkersoveranextendedperiodoftime,includinghousing,transportationandotherservices.Tocompoundtheproblem,megaprojectsareoftenconstructedinremoteenvironmentsaway7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 7/18frommajorpopulationcentersandsubjecttosevereclimateconditions.Consequently,specialfeaturesofeachmegaprojectmustbeevaluatedcarefully.Backtotop2.4EffectsofPr ojectRisksonOr ganizationTheuncertaintyinundertakingaconstructionprojectcomesfrommanysourcesandofteninvolvesmanyparticipantsintheproject.Sinceeachparticipanttriestominimizeitsownrisk,theconflictsamongvariousparticipantscanbedetrimentaltotheproject.Onlytheownerhasthepowertomoderatesuchconflictsasitaloneholdsthekeytoriskassignmentthroughpropercontractualrelationswithotherparticipants.Failuretorecognizethisresponsibilitybytheowneroftenleadstoundesirableresults.Inrecentyears,theconceptof"risksharing/riskassignment"contractshasgainedacceptancebythefederalgovernment.[4]Sincethistypeofcontractacknowledgestheresponsibilitiesoftheowners,thecontractpricesareexpectedtobelowerthanthoseinwhichallrisksareassignedtocontractors.Inapproachingtheproblemofuncertainty,itisimportanttorecognizethatincentivesmustbeprovidedifanyoftheparticipantsisexpectedtotakeagreaterrisk.Thewillingnessofaparticipanttoacceptrisksoftenreflectstheprofessionalcompetenceofthatparticipantaswellasitspropensitytorisk.However,society'sperceptionofthepotentialliabilitiesoftheparticipantcanaffecttheattitudeofrisk-takingforallparticipants.Whenaclaimismadeagainstoneoftheparticipants,itisdifficultforthepublictoknowwhetherafraudhasbeencommitted,orsimplythatanaccidenthasoccurred.Risksinconstructionprojectsmaybeclassifiedinanumberofways.[5]Oneformofclassificationisasfollows:1. SocioeconomicfactorsEnvironmentalprotectionPublicsafetyregulationEconomicinstabilityExchangeratefluctuation2. OrganizationalrelationshipsContractualrelationsAttitudesofparticipantsCommunication3. TechnologicalproblemsDesignassumptionsSiteconditionsConstructionproceduresConstructionoccupationalsafetyTheenvironmentalprotectionmovementhascontributedtotheuncertaintyforconstructionbecauseoftheinabilitytoknowwhatwillberequiredandhowlongitwilltaketoobtainapprovalfromtheregulatoryagencies.Therequirementsofcontinuedre-evaluationofproblemsandthelackofdefinitivecriteriawhicharepracticalhavealsoresultedinaddedcosts.Publicsafetyregulationshavesimilareffects,whichhavebeenmostnoticeableintheenergyfieldinvolvingnuclearpowerplantsandcoalmining.Thesituationhascreatedconstantlyshiftingguidelinesforengineers,constructorsandownersasprojectsmovethroughthestagesofplanningtoconstruction.Thesemovingtargetsaddasignificantnewdimensionofuncertaintywhichcanmakeitvirtuallyimpossibletoscheduleandcompleteworkatbudgetedcost.Economicconditionsofthepastdecadehavefurtherreinforcedtheclimateofuncertaintywithhighinflationandinterestrates.Thederegulationoffinancialinstitutionshasalsogeneratedunanticipatedproblemsrelatedtothefinancingofconstruction.Uncertaintystemmingfromregulatoryagencies,environmentalissuesandfinancialaspectsofconstructionshouldbeatleastmitigatedorideallyeliminated.Ownersarekeenlyinterestedinachievingsomeformofbreakthroughthatwilllowerthecostsofprojectsandmitigateoreliminatelengthydelays.Suchbreakthroughsareseldomplanned.Generally,theyhappenwhentherightconditionsexist,suchaswheninnovationispermittedorwhenabasisforincentiveorrewardexists.However,thereisalongwaytogo7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 8/18beforeatruepartnershipofallpartiesinvolvedcanbeforged.Duringperiodsofeconomicexpansion,majorcapitalexpendituresaremadebyindustriesandbidupthecostofconstruction.Inordertocontrolcosts,someownersattempttousefixedpricecontractssothattherisksofunforeseencontingenciesrelatedtoanoverheatedeconomyarepassedontocontractors.However,contractorswillraisetheirpricestocompensatefortheadditionalrisks.Therisksrelatedtoorganizationalrelationshipsmayappeartobeunnecessarybutarequitereal.Strainedrelationshipsmaydevelopbetweenvariousorganizationsinvolvedinthedesign/constructprocess.Whenproblemsoccur,discussionsoftencenteronresponsibilitiesratherthanprojectneedsatatimewhenthefocusshouldbeonsolvingtheproblems.Cooperationandcommunicationbetweenthepartiesarediscouragedforfearoftheeffectsofimpendinglitigation.Thisbarriertocommunicationresultsfromtheill-conceivednotionthatuncertaintiesresultingfromtechnologicalproblemscanbeeliminatedbyappropriatecontractterms.Thenetresulthasbeenanincreaseinthecostsofconstructedfacilities.Therisksrelatedtotechnologicalproblemsarefamiliartothedesign/constructprofessionswhichhavesomedegreeofcontroloverthiscategory.However,becauseofrapidadvancesinnewtechnologieswhichpresentnewproblemstodesignersandconstructors,technologicalriskhasbecomegreaterinmanyinstances.Certaindesignassumptionswhichhaveservedtheprofessionswellinthepastmaybecomeobsoleteindealingwithnewtypesoffacilitieswhichmayhavegreatercomplexityorscaleorboth.Siteconditions,particularlysubsurfaceconditionswhichalwayspresentsomedegreeofuncertainty,cancreateanevengreaterdegreeofuncertaintyforfacilitieswithheretoforeunknowncharacteristicsduringoperation.Becauseconstructionproceduresmaynothavebeenfullyanticipated,thedesignmayhavetobemodifiedafterconstructionhasbegun.Anexampleoffacilitieswhichhaveencounteredsuchuncertaintyisthenuclearpowerplant,andmanyowners,designersandcontractorshavesufferedforundertakingsuchprojects.Ifeachoftheproblemscitedabovecancauseuncertainty,thecombinationofsuchproblemsisoftenregardedbyallpartiesasbeingoutofcontrolandinherentlyrisky.Thus,theissueofliabilityhastakenonmajorproportionsandhasinfluencedthepracticesofengineersandconstructors,whointurnhaveinfluencedtheactionsoftheowners.Manyownershavebeguntounderstandtheproblemsofrisksandareseekingtoaddresssomeoftheseproblems.Forexample,someownersareturningtothoseorganizationsthatoffercompletecapabilitiesinplanning,design,andconstruction,andtendtoavoidbreakingtheprojectintomajorcomponentstobeundertakenindividuallybyspecialtyparticipants.Propercoordinationthroughouttheprojectdurationandgoodorganizationalcommunicationcanavoiddelaysandcostsresultingfromfragmentationofservices,eventhoughthecomponentsfromvariousservicesareeventuallyintegrated.Attitudesofcooperationcanbereadilyappliedtotheprivatesector,butonlyinspecialcircumstancescantheybeappliedtothepublicsector.Theabilitytodealwithcomplexissuesisoftenprecludedinthecompetitivebiddingwhichisusuallyrequiredinthepublicsector.Thesituationbecomesmoredifficultwiththeproliferationofregulatoryrequirementsandresultingdelaysindesignandconstructionwhileawaitingapprovalsfromgovernmentofficialswhodonotparticipateintherisksoftheproject.Backtotop2.5Or ganizationofPr ojectPar ticipantsThetopmanagementoftheownersetstheoverallpolicyandselectstheappropriateorganizationtotakechargeofaproposedproject.Itspolicywilldictatehowtheprojectlifecycleisdividedamongorganizationsandwhichprofessionalsshouldbeengaged.Decisionsbythetopmanagementoftheownerwillalsoinfluencetheorganizationtobeadoptedforprojectmanagement.Ingeneral,therearemanywaystodecomposeaprojectintostages.Themosttypicalwaysare:Sequentialprocessingwherebytheprojectisdividedintoseparatestagesandeachstageiscarriedoutsuccessivelyinsequence.Parallelprocessingwherebytheprojectisdividedintoindependentpartssuchthatallstagesarecarriedoutsimultaneously.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 9/18Staggeredprocessingwherebythestagesmaybeoverlapping,suchastheuseofphaseddesign-constructproceduresforfasttrackoperation.Itshouldbepointedoutthatsomedecompositionsmayworkoutbetterthanothers,dependingonthecircumstances.Inanycase,theprevalenceofdecompositionmakesthesubsequentintegrationparticularlyimportant.Thecriticalissuesinvolvedinorganizationforprojectmanagementare:Howmanyorganizationsareinvolved?Whataretherelationshipsamongtheorganizations?Whenarethevariousorganizationsbroughtintotheproject?Therearetwobasicapproachestoorganizeforprojectimplementation,eventhoughmanyvariationsmayexistasaresultofdifferentcontractualrelationshipsadoptedbytheownerandbuilder.Thesebasicapproachesaredividedalongthefollowinglines:1. Separ ationofor ganizations.Numerousorganizationsserveasconsultantsorcontractorstotheowner,withdifferentorganizationshandlingdesignandconstructionfunctions.Typicalexampleswhichinvolvedifferentdegreesofseparationare:TraditionalsequenceofdesignandconstructionProfessionalconstructionmanagement2. Integr ationofor ganizations.Asingleorjointventureconsistingofanumberoforganizationswithasinglecommandundertakesbothdesignandconstructionfunctions.Twoextremesmaybecitedasexamples:Owner-builderoperationinwhichallworkwillbehandledinhousebyforceaccount.TurnkeyoperationinwhichallworkiscontractedtoavendorwhichisresponsiblefordeliveringthecompletedprojectSinceconstructionprojectsmaybemanagedbyaspectrumofparticipantsinavarietyofcombinations,theorganizationforthemanagementofsuchprojectsmayvaryfromcasetocase.Ononeextreme,eachprojectmaybestaffedbyexistingpersonnelinthefunctionaldivisionsoftheorganizationonanad-hocbasisasshowninFigure2-4untiltheprojectiscompleted.Thisarrangementisreferredtoasthematrixorganizationaseachprojectmanagermustnegotiateallresourcesfortheprojectfromtheexistingorganizationalframework.Ontheotherhand,theorganizationmayconsistofasmallcentralfunctionalstafffortheexclusivepurposeofsupportingvariousprojects,eachofwhichhasitsfunctionaldivisionsasshowninFigure2-5.Thisdecentralizedset-upisreferredtoastheprojectorientedorganizationaseachprojectmanagerhasautonomyinmanagingtheproject.Therearemanyvariationsofmanagementstylebetweenthesetwoextremes,dependingontheobjectivesoftheorganizationandthenatureoftheconstructionproject.Forexample,alargechemicalcompanywithin-housestaffforplanning,designandconstructionoffacilitiesfornewproductlineswillnaturallyadoptthematrixorganization.Ontheotherhand,aconstructioncompanywhoseexistencedependsentirelyonthemanagementofcertaintypesofconstructionprojectsmayfindtheproject-orientedorganizationparticularlyattractive.Whileorganizationsmaydiffer,thesamebasicprinciplesofmanagementstructureareapplicabletomostsituations.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 10/18Figur e2-4:AMatrixOrganizationFigur e2-5:AProject-OrientedOrganizationToillustratevarioustypesoforganizationsforprojectmanagement,weshallconsidertwoexamples,thefirstonerepresentinganownerorganizationwhilethesecondonerepresentingtheorganizationofaconstructionmanagementconsultantunderthedirectsupervisionoftheowner.Example2-3:Matr ixOr ganizationofanEngineer ingDivisionTheEngineeringDivisionofanElectricPowerandLightCompanyhasfunctionaldepartmentsasshowninFigure2-6.Whensmallscaleprojectssuchastheadditionofatransmissiontowerorasub-stationareauthorized,amatrixorganizationisusedtocarryoutsuchprojects.Forexample,inthedesignofatransmissiontower,theprofessionalskillofastructuralengineerismostimportant.Consequently,theleaderoftheprojectteamwillbeselectedfromtheStructuralEngineeringDepartmentwhiletheremainingteammembersareselectedfromalldepartmentsasdictatedbythemanpowerrequirements.Ontheotherhand,inthedesignofanewsub-station,theprofessionalskillofanelectricalengineerismostimportant.Hence,theleaderoftheprojectteamwillbeselectedfromtheElectricalEngineeringDepartment.7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 11/18Figur e2-6:TheMatrixOrganizationinanEngineeringDivisionExample2-4:ExampleofConstr uctionManagementConsultantOr ganizationWhenthesameElectricPowerandLightCompanyinthepreviousexampledecidedtobuildanewnuclearpowerplant,itengagedaconstructionmanagementconsultanttotakechargeofthedesignandconstructioncompletely.However,thecompanyalsoassignedaprojectteamtocoordinatewiththeconstructionmanagementconsultantasshowninFigure2-7.Figur e2-7:CoordinationbetweenOwnerandConsultant7/8/2015 ProjectManagementforConstruction:OrganizingforProjectManagementhttp://pmbook.ce.cmu.edu/02_Organizing_For_Project_Management.html 12/18Sincethecompanyeventuallywilloperatethepowerplantuponitscompletion,itishighlyimportantforitsstafftomonitorthedesignandconstructionoftheplant.Suchcoordinationallowstheownernotonlytoassurethequalityofconstructionbutalsotobefamiliarwiththedesigntofacilitatefutureoperationandmaintenance.Notetheclosedirectrelationshipsofvariousdepartmentsoftheownerandtheconsultant.Sincetheprojectwilllastformanyyearsbeforeitscompletion,thestaffmembersassignedtotheprojectteamarenotexpectedtorejointheEngineeringDepartmentbutwillprobablybeinvolvedinthefutureoperationofthenewplant.Thus,theprojectteamcanactindependentlytowarditsdesignatedmission.Backtotop2.6Tr aditiona


PMC Imobiliária

Rapporti ISTISAN 16/45 · PMC insetto-repellenti), PMC insetticidi concentrati, PMC insetticidi in polvere e PMC con utilizzo di attrezzature specifiche. Per i PMC disinfettanti invece,

PMC NNECT - PMC CERTIFICATION...for management consultants in Singapore? PMConnect speaks to PMC Susan See (SS); PMC, PMC Bilingual Chinese & English, Luke Lim (LL) and PMC, PMC-Bilingual

Brochure PMC

Power Modular Concept PMC 40 - rittal.de · Power Modular Concept PMC 40 FRIEDHELM LOH GROUP Leistungsbereich: 10 - 40 kW pro Schrank PMC 40 – Highlights auf einen Blick • PMC

NAMC-PMC- Technical Reference Manual - · PDF fileNAMC-PMC- Technical Reference Manual NAMC-PMC AMC Carrier for PMC Modules Technical Reference Manual V1.0 HW Revision 1.0 T e c h

PMC Tableros

PMC Banano

PMC - MECHATRONICS

Magnetic PMC

PMC-A/PMC/PMP/PMR/PMM SERIES - KIKUSUI …°型・高性能、各種アプリケーション機能を充実（PMC-Aシリーズ） 小型、ロープライス（PMCシリーズ）

PMC 1003 - Paper Machinery Corporationpapermc.com/wp-content/uploads/2016/02/PMC-1003_SpecSheet.pdf · PMC 1003 Cup & Container Forming Machine PMC 1003 Machine Specifications Paper

PMC Manufactured Mineral Products Training Package Documents/PMC Training... · PMC Manufactured Mineral Products Training Package ... in the in the PMC Manufactured Mineral Products

The Ear PMC cor reprint.pdf - PMC Loudspeakerspmc-speakers.com/sites/default/files/attachments/The Ear PMC cor... · hardware review PMC cor a natural partnership in every way.

Pmc webquest

User Manual ccPMC-PARALLEL-TTL-BA18 - PMC XMC … · PMC MODULE LOGIC INTERFACE PIN ASSIGNMENT 44. Embedded Solutions Page 4 PMC MODULE LOGIC INTERFACE PIN ASSIGNMENT 45 PMC MODULE

progressivestaffing.netprogressivestaffing.net/RPO/PMC-Leader.pdf · Position: PMC Leader Role Reports to: Client PMT PMC Leader reports to Client Project Management Team. PMC leader

NcPCI PMC – Technical Reference · PDF fileNcPCI PMC – Technical Reference Manual NcPCI PMC cPCI Carrier for 2 PMC Modules for Telecom Applications Technical Reference Manual

PMC Brocoli

Europe PMC Funders Group . Author manuscript; available in ... · Author manuscript; available in PMC 2014 September 20. Europe PMC Funders Author Manuscripts Europe PMC Funders Author

PM – PMC – PMK · PM PMC PMK PREVODOVKY PRE DOMIEŠAVAÈE BETÓNU PM – PMC – PMK Prevodovky PM, PMC a PMK sú urèené pre priamy pohon bubna autodomiešavaèa betónovej

Pmc. libro pmc otra forma de hacer escuela

PMC Report

Pmc 2014_2015

PMC - prefeituradecameta.pa.gov.br

Presentación PMC

PMC DOUBLE-CHANNEL - Pedrollo · PMC 15/50 7.6 A 4.3 A 3.7 A PMC 20/50 8.9 A 5.2 A 4.5 A PMC 30/50 12.0 A 7.0 A 5.2 A PMC 40/50 15.2 A 8.8 A 7.0 A PMC 30/70 11.3 A 6.5 A 5.1 A PMC

PMC Engineering (Private) Limitedpmc-engineering.com.sg/.../uploads/2019/06/Newsletter-Brochure.pdf · PMC ENGINEERING (PRIVATE) LIMITED Vision ‐ PMC Engineering (Private) Limited

PMC CA.pdf

Nature Europe PMC Funders Group These authors …Author manuscript; available in PMC 2014 November 25. Europe PMC Funders Author Manuscripts Europe PMC Funders Author Manuscripts

Digital Parallel Interface PMC Module · PMC MODULE BACKPLANE IO INTERFACE PIN ASSIGNMENT 22 PMC MODULE FRONT PANEL IO ALTERNATE PIN ASSIGNMENT 23 PMC MODULE BACKPLANE IO ALTERNATE

PMC VALLENAR

CERCETARE PMC

SUBJECT: Repeal PMC Chapter 6.04 and Add PMC Chapter 6.05 ... · ORDINANCE NO. 2007-46 SUBJECT: Repeal PMC Chapter 6.04 and Add PMC Chapter 6.05, Potentiallv Danaerous and Danaerous

Pmc biomasa