Chapter: 1

Construction Management Framework

• Construction is done from the caveman started building their homes

• Construction produced many facilities for the use of human beings.

• Construction industry helps to grow country economy.

• Construction projects contains various interdependent and inter-related activities.

• The project management is a young and emerging discipline.

·    The construction projects faces delay and cost over-runs        majorly      due management failures.

1.1. Construction Landmarks

• In ancient times, man created architectural marvels which later on regarded as wonders of the world, as the Great Wall of China, Pyramid of Egypt etc.

• The Great Wall of China built to protect against surface enemy raids which is about 6400 km long and its height and width at top varies from 5 to 10m. It has 20m high towers placed every few hundred meters.

• Others marvels construction as 5 storey temple, 55 windows palaces, Taj Mahal in India, Leaning Tower of Pisa in Italy etc.

• Nowadays, there is revolution in construction activity with highrise buildings, dams, industrial plants, infrastructural facilities as roads, bridges, railways, airports etc.

• The performance enhanced gradually with technology of lever, wheels, rollers and pulleys.

• The industrial revolution of 1800s enabled the builders to use steam tools as cranes, dozers, excavators etc in place of human muscles.

• In 20^th century, electrical and combustion engines replaced steam engines.
• Construction technology and new materials are emerging as use of latest from work and readymix concrete technology will reduced 80% of time.

1.2. Scope of Construction Management

1.2.1. Construction Market

• Construction business market is domestic as well as international.International Export Market ENR Top 250 Global Contractors (2014)

• The ENR Top 250 International Contractors had $543.97 billion in contracting revenue in 2013

from projects outside their home countries, up 6.4% from $511.05 billion in 2012. The Top 250, as a group, also had $871.50 billion in revenue from domestic projects in 2013, up 7.1% from $813.55 billion in 2012.

Rank	Firm
1	China State Construction Engineering Corp., Beijing, China
2	China Railway Construction Corp. Ltd., Beijing, China
3	China Railway Group Ltd., Beijing, China
4	China Communications Construction Group Ltd., Beijing, China
5	VINCI, Rueil-Malmaison, France
6	Grupo ACS, Madrid, Spain
7	HOCHTIEF AG, Essen, Germany
8	BOUYGUES, Paris, France
9	Bechtel, San Francisco, Calif., U.S.A.
10	China Metallurgical Group Corp., Beijing, China

Domestic Infrasturcture Market

• In the last two decade there has been considerable progress in the construction industry.

• Nepalese contractors have been able to develop their management skill, improve working capacity, financial and technical capabilities, and acquire suitable construction equipments.

• As a result local contractors have been able to compete and participate in mega construction project.

• Nepalese Construction Industry contributed around 10 to 11 percentages to GDP and it uses around 35 percent of government budget.

• It is estimated that this sector is creating employment opportunities to about one million people so it generate employment next to agricultural sector in the country.

·    Similarly             about   60           percentages       of           the         nation’s   development   budget    is

spent through the use of contractors.  From   this,       it             is             clearly seen       that

construction is a major sector and any productivity enhancement activity in this sector will have a positive impact in the overall improvement of the national economy.

• The first attempt was made in the name of ‘Banaune Adda’ or construction bureau, in 1769. During the Rana Regime (1846 – 1951) which was extended its departments to the various parts of the country.

• The new age of the Nepalese construction industry started only after 1951. The First Five Years Development Plan was started in 1956. After that, construction activities in the country boost up automatically.

• The Industrial Resolution, 1957 adopted by the government of Nepal declared construction as the ‘Priority Sector’ industry.

• After the restoration of multiparty democratic political system in 1990 the need of uniting the contractors for their enlistment and developing further professional skills was very much felt

among the contractors themselves and accordingly the Contractors’ Associations of Nepal (CAN) was born in 1990.

1.2.2. Construction participants

The        agencies              supporting         the         construction industry:

• Construction business promoters as government, public/private enterprises (client)
• Architect-engineering associates

• Construction manpower recruitment and training agencies.

• Construction material developing, manufacturing, distribution and repair and maintenance organizations.

• Banking and finance institutions.
• Risk insurance and legal services companies.

• Construction quality assurance and research and development establishment.

• Contractors and contracting firms.

Six main Agencies

1. Clients:
   1. Client is sponsors of construction work and use the property.

• It can be government, private/public agencies, an entrepreneur, builder, an investor.

• In reality client is the promoter of the construction business.

• Consultant:
  • The task assigned to consultant is generally:

• Project feasibility, including cost estimates

• Site survey and soil investigations
  • Scrutiny and coordination of designs and drawing work

• Estimating, initial planning and budgeting costs.

·	Processing	pre-qualification	of	construction  agencies,  tendering  and  awarding
·	contracts to the successful bidders.
Designing	project organizations	for	executing works
·  Develop detail construction plan
·	Supervising work

3. Architect-engineering associates:

·    They are the firms employing both architectsas

well

as

engineers

to

provide

• Banking and financial institutions:
  • Business operates under money constraints.
  • The financial institutions provide direct and indirect financial assistance.

·	Direct  financial	assistant	includes Term Loans, Foreign Currency Loans, Equity
·	Shares and Seed Capital.
Indirect	financial	assistance	helps   in Deferredpayment	Guarantee,
	Guarantee for Foreign Currency Loans and underwriting.

Major financial institutions in Nepal are:

Class A: Commercial Banks

Class B: Development Banks

Class C: Finance Companies

Class D: Micro Credit Development Banks

Saving and Credit Co-operatives(Limited Banking) (Licensed by NRB)

Non-Government Organizations (NGOs) (Licensed by NRB)

• Input Suppliers:
  • Construction inputs:
  • Man

• Materials

• Machinery

• Money

• Contractors:
  • Backbone of construction businesses they execute most of the construction works.

• Contractors can be classified as:

• General contractors
  • Building contractors

• Specialist contractors for heavy infrastructure construction as highway, bridge, dam etc.

• Specialist contractors for industrial works as power plants, process industries etc.

·    Specialist            utility   services               contractors        as    electrical   contractors,   water-supply

contractors etc.

1.2.3. Industry Contribution to Economic Growth

• Construction industry is one of the main contributors to the growth of the economy of a country.

• It generates capital , employs large work force and has national and international markets.

1.3. Construction Project Characteristics

• A construction project is a high value, time bound, special construction mission of creating a construction facility, with predetermined performance objectives defined in terms of quality specification, completion time, budgeted cost and other specified constraints.

• In general, Construction projects include numerous interdependent and interrelated activities and employ huge resources of men, materials and machines.

• Major Construction projects are grouped into:

• Building Construction projects
• Infrastructure construction projects

• Industrial Construction projects Special-purpose construction projects

Five main parameters that define a construction projects:

• Scope

• Quality

• Resources

• Completion time

• Cost

The above 5 parameters are interactive.

• The project planning, scheduling and controlling methodology employed for managing scope, time,

resources and cost within changing    environment    is             called   project management techniques.

Construction Project Environment

Internal environment of the project includes

• corporate objectives,

• stakeholders interests,

• resources problems,

• conversion process and

• people management.

The external environments are associated with changes in

• social,

• political,

• legal,

• economical and

• financial factors.

Most of the construction projects have one or more of the

following characteristics/     uncertainty associated with them

• Details of work are not precisely defined.
• Scope of work gets modified during execution.

• Nature of work varies from job to job.

• Site of works are located in remote areas.
• Places of works are spread out.

• Resource requirements and organization of works differ with each task.

• Investments involved are large and the decisions entail risk.

• Performance is sensitive to the unexplored site geology, uncertain weather and unforeseen natural calamities.

• Rapidly changing technology, fast moving economic conditions and susceptible environments add new dimensions to the complex nature of construction projects.