Project Management for Construction

Fundamental Concepts for Owners, Engineers, Architects

and Builders
1. The_Owners'_Perspective
2. Organizing_For_Project_Management
3. The_Design_An_!onstr"ction_Process
#. $a%or&_Materia'&_An_()"ipment_*ti'ization
+. !ost_(stimation
,. (conomic_(va'"ation_o-_Faci'it._/nvestments
0. Financing_o-_!onstr"cte_Faci'ities
1. !onstr"ction_Pricing_an_!onctracting
2. !onstr"ction_P'anning
13. F"namenta'_4che"'ing_Proce"res
11. Avance_4che"'ing_Techni)"es
12. !ost_!ontro'&_Monitoring&_an_Acco"nting
13. 5"a'it._!ontro'_an_4a-et._D"ring_!onstr"ction
1#. Organization_an_*se_o-_Project_/n-ormation
%. !hris 6enric7son& Department o- !ivi' an (nvironmenta'
(ngineering& !arnegie Me''on *niversit.& Pitts%"rgh& PA '+2'3 8"ne
21& 1222 !op.right !. 6enric7son 1221
First (ition origina''. printe %. Prentice 6a''& /49: 3;13;0312,,;3&
1212 with co;a"thor T"ng A".
4econ (ition prepare -or wor' wie we% p"%'ication in 2333.
Pre-ace
This %oo7 is provie on the wor'wie we% as a service to the
comm"nit. o- practitioners an st"ents. <epro"ction -or
e"cationa' p"rposes is permitte with appropriate citation. /- .o"
=n this wor7 he'p-"' or have s"ggestions -or aitions or
corrections& p'ease emai' !hris 6enric7son> cth?cm".e". A
harcop. /nstr"ctor's Man"a' with pro%'em so'"tions is avai'a%'e -or
a -ee o- @ 13 to cover repro"ction& mai'ing an han'ing. 4en a
chec7 mae o"t to !arnegie Me''on *niversit. to Ms. Patt. $anger&
Department o- !ivi' an (nvironmenta' (ngineering& !arnegie Me''on
*niversit.& Pitts%"rgh& PA 1+213.
This %oo7 eve'ops a speci=c viewpoint in isc"ssing the
participants& the processes an the techni)"es o- project
management -or constr"ction. This viewpoint is that o- owners who
esire comp'etion o- projects in a time'.& cost eAective -ashion.
4ome pro-o"n imp'ications -or the o%jectives an methos o-
project management res"'t -rom this perspective>
The B'i-e c.c'eB o- costs an %ene=ts -rom initia' p'anning
thro"gh operation an isposa' o- a -aci'it. are re'evant to
ecision ma7ing. An owner is concerne with a project -rom
the cra'e to the grave. !onstr"ction costs represent on'. one
portion o- the overa'' 'i-e c.c'e costs.
Optimizing per-ormance at one stage o- the process ma. not
%e %ene=cia' overa'' i- aitiona' costs or e'a.s occ"r
e'sewhere. For eCamp'e& saving mone. on the esign process
wi'' %e a -a'se econom. i- the res"'t is eCcess constr"ction
costs.
Fragmentation o- project management among iAerent
specia'ists ma. %e necessar.& %"t goo comm"nication an
coorination among the participants is essentia' to accomp'ish
the overa'' goa's o- the project. :ew in-ormation techno'ogies
can %e instr"menta' in this process& especia''. the /nternet
an specia'ize (Ctranets.
Pro"ctivit. improvements are a'wa.s o- importance an
va'"e. As a res"'t& intro"cing new materia's an a"tomate
constr"ction processes is a'wa.s esira%'e as 'ong as the. are
'ess eCpensive an are consistent with esire per-ormance.
5"a'it. o- wor7 an per-ormance are critica''. important to the
s"ccess o- a project since it is the owner who wi'' have to 'ive
with the res"'ts.
/n essence& aopting the viewpoint o- the owner -oc"ses attention
on the cost eAectiveness o- -aci'it. constr"ction rather than
competitive provision o- services %. the vario"s participants.
Dhi'e this %oo7 is evote to a partic"'ar viewpoint with respect to
project management -or constr"ction& it is not so'e'. intene -or
owners an their irect representatives. 9. "nerstaning the entire
process& a'' participants can respon more eAective'. to the owner's
nees in their own wor7& in mar7eting their services& an in
comm"nicating with other participants. /n aition& the speci=c
techni)"es an too's isc"sse in this %oo7 Es"ch as economic
eva'"ation& sche"'ing& management in-ormation s.stems& etc.F can
%e reai'. app'ie to an. portion o- the process.
As a res"'t o- the -oc"s on the eAective management o- entire
projects& a n"m%er o- nove' organizationa' approaches an
techni)"es %ecome o- interest. First an -oremost is the incentive to
rep'ace con-rontation an aversaria' re'ationships with a spirit o-
joint eneavor& partnership an accomp'ishment. For eCamp'e& we
isc"ss the appropriate means to eva'"ate ris7s an the appropriate
participants to ass"me the "navoia%'e ris7s associate with
constr"cte -aci'ities. 4che"'ing& comm"nication o- ata& an
)"a'it. ass"rance have partic"'ar signi=cance -rom the viewpoint o-
an owner& %"t not necessari'. -or inivi"a' participants. The "se o-
comp"ter;%ase techno'og. an a"tomation a'so provies
opport"nities -or increase pro"ctivit. in the process. Presenting
s"ch moern management options in a "ni=e -ashion is a major
o%jective o- this %oo7.
The "ni=e viewpoint o- the entire process o- project management
in this %oo7 iAers -rom near'. a'' other 'iterat"re on the s"%ject.
Most teCt%oo7s in the area treat specia' pro%'ems& s"ch as cost
estimating& -rom the viewpoint o- partic"'ar participants s"ch as
constr"ction managers or contractors. This 'iterat"re reGects the
-ragmentation o- the constr"ction process among iAerent
organizations an pro-essiona's. (ven within a sing'e pro-ession
s"ch as civi' engineering& there are )"ite istinct gro"ps o-
specia'ists in p'anning& esign& management& constr"ction an other
s"%;specia'ties. Fragmentation o- interest an attention a'so eCists
in near'. a'' e"cationa' programs. Dhi'e specia't. 7now'ege ma.
%e essentia' to accomp'ish partic"'ar tas7s& participants in the
process sho"' a'so "nerstan the conteCt an ro'e o- their specia'
tas7s.
This %oo7 is intene primari'. as a teCt -or avance
"nergra"ates& %eginning gra"ate st"ents or pro-essiona's
contin"ing their e"cation in engineering& constr"ction& architect"re
or -aci'ities management. (Camp'es an isc"ssion are chosen to
remin reaers that project management is a cha''enging& .namic
an eCciting enterprise an not j"st a recor o- past practices. /t
sho"' a'so %e "se-"' to pro-essiona's who wish an "p;to;ate
re-erence on project management.
!hapters 1 to 3 present an overview o- the constr"ction
management an esign process which sho"' %e o- interest to
an.one engage in project management -or constr"ction. One nee
not have etai'e 7now'ege a%o"t inivi"a' tas7s or techni)"es
-or this part. /nivi"a's can rea these chapters an "nerstan the
%asic phi'osoph. an princip'es witho"t -"rther e'a%oration.
!hapters # thro"gh 1# escri%e speci=c -"nctions an techni)"es
"se-"' in the process o- project management. This part presents
techni)"es an re)"irements "ring project p'anning& inc'"ing ris7
assessment& cost estimation& -orecasting an economic eva'"ation.
/t is "ring this p'anning an esign phase in which major cost
savings ma. %e o%taine "ring the event"a' constr"ction an
operation phases. /t a'so aresses programming an =nancing
iss"es& s"ch as contracting an %iing -or services& =nancing&
organizing comm"nication an ins"ring eAective "se o- in-ormation.
/t -"rther isc"sses techni)"es -or contro' o- time& cost an )"a'it.
"ring the constr"ction phase. 9eginning co"rses in engineering
economics Einc'"ing cash Gow ana'.sis an isco"ntingF& "se o-
comp"ters& pro%a%i'it. an statistics wo"' %e "se-"'. F"rthermore&
access to a persona' comp"ter with spreasheet or e)"ation so'ving
so-tware wo"' %e he'p-"' -or reaers attempting some o- the
pro%'ems in !hapters # to 1#. :"mero"s so-tware programs co"'
%e "se -or this p"rpose& inc'"ing %oth spreasheet an e)"ation
so'ving programs. Pro%'ems in some chapters co"' a'so %e one on
an. n"m%er o- eCisting so-tware pac7ages -or in-ormation
management an project sche"'ing. 6owever& the "se o- persona'
comp"ters in this -ashion is not re)"ire in -o''owing the teCt
materia'. (ach instr"ctor ma. eCercise iscretion in omitting some
o- the materia' in these chapters i- the. are re"nant with other
c'asses or too avance -or st"ents in his or her own c'ass.
/t is o"r hope that st"ents %eginning their career in project
management -or constr"ction wi'' %e prepare to aopt the
integrate approach emphasize in this %oo7. F"rthermore&
eCperience pro-essiona's in vario"s =e's ma. iscover in this %oo7
some s"rprises that even the. have not anticipate. 6igh 'eve'
ecision ma7ers in owner organizations who are not irect'.
invo've in the project management process ma. =n the %asic
phi'osoph. an princip'es o- interest& especia''. in !hapters 1
thro"gh 3& as owners m"st invaria%'. pa. -or constr"cte -aci'ities&
-or %etter or worse. /- the %oo7 can -"'='' even a sma'' part o- its
promises to inG"ence the -"t"re o- project management -or
constr"ction& o"r eAorts wi'' have %een amp'. reware.
:"mero"s inivi"a's he'pe with the preparation o- the =rst an
secon eitions o- this %oo7. /n partic"'ar& we with is to ac7now'ege
Di''iam 8. 6a''& Pa"' !hristiano& 4teven Fenves& Danie' <eha7& De%%ie
4cappat"ra& an 4hir'e. Hnapp. /avor Hostov& Tomm. 6enric7son
an !"rt Ies7e were instr"menta' in eve'oping the we% version o-
this %oo7. This %oo7 a'so reGects the contri%"tions o- n"mero"s
st"ents an co''eag"es in in"str. who have cha''enge "s with
pro%'ems an share their own ieas an eCperience over man.
.ears. De are grate-"' to a'' o- these inivi"a's.
4ome materia' in this %oo7 has %een ta7en -rom severa' papers
a"thore %. "s an p"%'ishe %. the American 4ociet. o- !ivi'
(ngineers. Materia's ta7en -rom other so"rces are ac7now'ege in
-ootnotes& ta%'es or =g"res. De grate-"''. ac7now'ege the
permissions given to "s %. these inivi"a's& p"%'ishers an
organizations.
A series o- photographs epicting vario"s stages o- constr"ction o-
the PPJ %"i'ing in Pitts%"rgh& PA is inserte in se)"ence %etween
chapters. De wish to than7 PPJ /n"stries -or its cooperation in
proviing these photographs.
!hris 6enric7son an T"ng A"
1. he Owners! Perspecti"e
1.1 #ntroduction
$i7e the =ve %'in men enco"ntering iAerent parts o- an e'ephant&
each o- the n"mero"s participants in the process o- p'anning&
esigning& =nancing& constr"cting an operating ph.sica' -aci'ities
has a iAerent perspective on project management -or constr"ction.
4pecia'ize 7now'ege can %e ver. %ene=cia'& partic"'ar'. in 'arge
an comp'icate projects& since eCperts in vario"s specia'ties can
provie va'"a%'e services. 6owever& it is avantageo"s to
"nerstan how the iAerent parts o- the process =t together.
Daste& eCcessive cost an e'a.s can res"'t -rom poor coorination
an comm"nication among specia'ists. /t is partic"'ar'. in the
interest o- owners to ins"re that s"ch pro%'ems o not occ"r. An it
%ehooves a'' participants in the process to hee the interests o-
owners %eca"se& in the en& it is the owners who provie the
reso"rces an ca'' the shots.
9. aopting the viewpoint o- the owners& we can -oc"s o"r attention
on the comp'ete process o- project management -or constr"cte
-aci'ities rather than the historica' ro'es o- vario"s specia'ists s"ch as
p'anners& architects& engineering esigners& constr"ctors&
-a%ricators& materia' s"pp'iers& =nancia' ana'.sts an others. To %e
s"re& each specia't. has mae important avances in eve'oping
new techni)"es an too's -or eKcient imp'ementation o-
constr"ction projects. 6owever& it is thro"gh the "nerstaning o-
the entire process o- project management that these specia'ists can
respon more eAective'. to the owner's esires -or their services& in
mar7eting their specia'ties& an in improving the pro"ctivit. an
)"a'it. o- their wor7.
The intro"ction o- innovative an more eAective project
management -or constr"ction is not an acaemic eCercise. As
reporte %. the B!onstr"ction /n"str. !ost (Aectiveness ProjectB o-
the 9"siness <o"nta%'e> L1M
9. common consens"s an ever. avai'a%'e meas"re&
the *nite 4tates no 'onger gets it's mone.'s worth in
constr"ction& the nation's 'argest in"str. ... The
creeping erosion o- constr"ction eKcienc. an
pro"ctivit. is %a news -or the entire *.4. econom..
!onstr"ction is a partic"'ar'. semina' in"str.. The price
o- ever. -actor.& oKce %"i'ing& hote' or power p'ant
that is %"i't aAects the price that m"st %e charge -or
the goos or services pro"ce in it or %. it. An that
eAect genera''. persists -or ecaes ... Too m"ch o- the
in"str. remains tethere to the past& part'. %. inertia
an part'. %. historic ivisions...
/mprovement o- project management not on'. can ai the
constr"ction in"str.& %"t ma. a'so %e the engine -or the nationa'
an wor' econom.. 6owever& i- we are to ma7e meaning-"'
improvements& we m"st =rst "nerstan the constr"ction in"str.&
its operating environment an the instit"tiona' constraints aAecting
its activities as we'' as the nat"re o- project management.
9ac7 to top
1.$ he Project %ife C&cle
The ac)"isition o- a constr"cte -aci'it. "s"a''. represents a major
capita' investment& whether its owner happens to %e an inivi"a'& a
private corporation or a p"%'ic agenc.. 4ince the commitment o-
reso"rces -or s"ch an investment is motivate %. mar7et emans
or perceive nees& the -aci'it. is eCpecte to satis-. certain
o%jectives within the constraints speci=e %. the owner an
re'evant reg"'ations. Dith the eCception o- the spec"'ative ho"sing
mar7et& where the resientia' "nits ma. %e so' as %"i't %. the rea'
estate eve'oper& most constr"cte -aci'ities are c"stom mae in
cons"'tation with the owners. A rea' estate eve'oper ma. %e
regare as the sponsor o- %"i'ing projects& as m"ch as a
government agenc. ma. %e the sponsor o- a p"%'ic project an
t"rns it over to another government "nit "pon its comp'etion. From
the viewpoint o- project management& the terms BownerB an
BsponsorB are s.non.mo"s %eca"se %oth have the "'timate
a"thorit. to ma7e a'' important ecisions. 4ince an owner is
essentia''. ac)"iring a -aci'it. on a promise in some -orm o-
agreement& it wi'' %e wise -or an. owner to have a c'ear
"nerstaning o- the ac)"isition process in orer to maintain =rm
contro' o- the )"a'it.& time'iness an cost o- the comp'ete -aci'it..
From the perspective o- an owner& the project 'i-e c.c'e -or a
constr"cte -aci'it. ma. %e i''"strate schematica''. in Fig"re 1;1.
(ssentia''.& a project is conceive to meet mar7et emans or
nees in a time'. -ashion. Nario"s possi%i'ities ma. %e consiere in
the concept"a' p'anning stage& an the techno'ogica' an economic
-easi%i'it. o- each a'ternative wi'' %e assesse an compare in
orer to se'ect the %est possi%'e project. The =nancing schemes -or
the propose a'ternatives m"st a'so %e eCamine& an the project
wi'' %e programme with respect to the timing -or its comp'etion an
-or avai'a%'e cash Gows. A-ter the scope o- the project is c'ear'.
e=ne& etai'e engineering esign wi'' provie the %'"eprint -or
constr"ction& an the e=nitive cost estimate wi'' serve as the
%ase'ine -or cost contro'. /n the proc"rement an constr"ction stage&
the e'iver. o- materia's an the erection o- the project on site m"st
%e care-"''. p'anne an contro''e. A-ter the constr"ction is
comp'ete& there is "s"a''. a %rie- perio o- start;"p or sha7e;own
o- the constr"cte -aci'it. when it is =rst occ"pie. Fina''.& the
management o- the -aci'it. is t"rne over to the owner -or -"''
occ"panc. "nti' the -aci'it. 'ives o"t its "se-"' 'i-e an is esignate
-or emo'ition or conversion.
Figure 1'1( The Project $i-e !.c'e o- a !onstr"cte Faci'it.
O- co"rse& the stages o- eve'opment in Fig"re 1;1 ma. not %e
strict'. se)"entia'. 4ome o- the stages re)"ire iteration& an others
ma. %e carrie o"t in para''e' or with over'apping time -rames&
epening on the nat"re& size an "rgenc. o- the project.
F"rthermore& an owner ma. have in;ho"se capacities to han'e the
wor7 in ever. stage o- the entire process& or it ma. see7
pro-essiona' avice an services -or the wor7 in a'' stages.
*nerstana%'.& most owners choose to han'e some o- the wor7 in;
ho"se an to contract o"tsie pro-essiona' services -or other
components o- the wor7 as neee. 9. eCamining the project 'i-e
c.c'e -rom an owner's perspective we can -oc"s on the proper ro'es
o- vario"s activities an participants in a'' stages regar'ess o- the
contract"a' arrangements -or iAerent t.pes o- wor7.
/n the *nite 4tates& -or eCamp'e& the *.4. Arm. !orps o- (ngineers
has in;ho"se capa%i'ities to ea' with p'anning& %"geting& esign&
constr"ction an operation o- waterwa. an Goo contro' str"ct"res.
Other p"%'ic agencies& s"ch as state transportation epartments&
are a'so eep'. invo've in a'' phases o- a constr"ction project. /n
the private sector& man. 'arge =rms s"ch as D"Pont& (CCon& an /9M
are ae)"ate'. staAe to carr. o"t most activities -or p'ant
eCpansion. A'' these owners& %oth p"%'ic an private& "se o"tsie
agents to a greater or 'esser egree when it %ecomes more
avantageo"s to o so.
The project 'i-e c.c'e ma. %e viewe as a process thro"gh which a
project is imp'emente -rom cra'e to grave. This process is o-ten
ver. comp'eCO however& it can %e ecompose into severa' stages
as inicate %. the genera' o"t'ine in Fig"re 1;1. The so'"tions at
vario"s stages are then integrate to o%tain the =na' o"tcome.
A'tho"gh each stage re)"ires iAerent eCpertise& it "s"a''. inc'"es
%oth technica' an manageria' activities in the knowledge domain o-
the specia'ist. The owner ma. choose to ecompose the entire
process into more or 'ess stages %ase on the size an nat"re o- the
project& an th"s o%tain the most eKcient res"'t in imp'ementation.
Ner. o-ten& the owner retains irect contro' o- wor7 in the p'anning
an programming stages& %"t increasing'. o"tsie p'anners an
=nancia' eCperts are "se as cons"'tants %eca"se o- the
comp'eCities o- projects. 4ince operation an maintenance o- a
-aci'it. wi'' go on 'ong a-ter the comp'etion an acceptance o- a
project& it is "s"a''. treate as a separate pro%'em eCcept in the
consieration o- the 'i-e c.c'e cost o- a -aci'it.. A'' stages -rom
concept"a' p'anning an -easi%i'it. st"ies to the acceptance o- a
-aci'it. -or occ"panc. ma. %e %roa'. '"mpe together an re-erre
to as the DesignP!onstr"ct process& whi'e the proc"rement an
constr"ction a'one are traitiona''. regare as the province o- the
constr"ction in"str..
Owners m"st recognize that there is no sing'e %est approach in
organizing project management thro"gho"t a project's 'i-e c.c'e. A''
organizationa' approaches have avantages an isavantages&
epening on the 7now'ege o- the owner in constr"ction
management as we'' as the t.pe& size an 'ocation o- the project. /t
is important -or the owner to %e aware o- the approach which is
most appropriate an %ene=cia' -or a partic"'ar project. /n ma7ing
choices& owners sho"' %e concerne with the 'i-e c.c'e costs o-
constr"cte -aci'ities rather than simp'. the initia' constr"ction
costs. 4aving sma'' amo"nts o- mone. "ring constr"ction ma. not
%e worthwhi'e i- the res"'t is m"ch 'arger operating costs or not
meeting the -"nctiona' re)"irements -or the new -aci'it.
satis-actori'.. Th"s& owners m"st %e ver. concerne with the )"a'it.
o- the =nishe pro"ct as we'' as the cost o- constr"ction itse'-.
4ince -aci'it. operation an maintenance is a part o- the project 'i-e
c.c'e& the owners' eCpectation to satis-. investment o%jectives
"ring the project 'i-e c.c'e wi'' re)"ire consieration o- the cost o-
operation an maintenance. There-ore& the -aci'it.'s operating
management sho"' a'so %e consiere as ear'. as possi%'e& j"st as
the constr"ction process sho"' %e 7ept in min at the ear'. stages
o- p'anning an programming.
9ac7 to top
1.) Major &pes of Construction
4ince most owners are genera''. intereste in ac)"iring on'. a
speci=c t.pe o- constr"cte -aci'it.& the. sho"' %e aware o- the
common in"stria' practices -or the t.pe o- constr"ction pertinent to
them. $i7ewise& the construction industry is a cong'omeration o-
)"ite iverse segments an pro"cts. 4ome owners ma. proc"re a
constr"cte -aci'it. on'. once in a 'ong whi'e an ten to 'oo7 -or
short term avantages. 6owever& man. owners re)"ire perioic
ac)"isition o- new -aci'ities anPor reha%i'itation o- eCisting -aci'ities.
/t is to their avantage to 7eep the constr"ction in"str. hea'th.
an pro"ctive. !o''ective'.& the owners have more power to
inG"ence the constr"ction in"str. than the. rea'ize %eca"se& %.
their inivi"a' actions& the. can provie incentives or isincentives
-or innovation& eKcienc. an )"a'it. in constr"ction. /t is to the
interest o- a'' parties that the owners ta7e an active interest in the
constr"ction an eCercise %ene=cia' inG"ence on the per-ormance o-
the in"str..
/n p'anning -or vario"s t.pes o- constr"ction& the methos o-
proc"ring pro-essiona' services& awaring constr"ction contracts&
an =nancing the constr"cte -aci'it. can %e )"ite iAerent. For the
p"rpose o- isc"ssion& the %roa spectr"m o- constr"cte -aci'ities
ma. %e c'assi=e into -o"r major categories& each with its own
characteristics.
*esidential +ousing Construction
<esientia' ho"sing constr"ction inc'"es sing'e;-ami'. ho"ses&
m"'ti;-ami'. we''ings& an high;rise apartments. D"ring the
eve'opment an constr"ction o- s"ch projects& the eve'opers or
sponsors who are -ami'iar with the constr"ction in"str. "s"a''.
serve as s"rrogate owners an ta7e charge& ma7ing necessar.
contract"a' agreements -or esign an constr"ction& an arranging
the =nancing an sa'e o- the comp'ete str"ct"res. <esientia'
ho"sing esigns are "s"a''. per-orme %. architects an engineers&
an the constr"ction eCec"te %. %"i'ers who hire s"%contractors
-or the str"ct"ra'& mechanica'& e'ectrica' an other specia't. wor7.
An eCception to this pattern is -or sing'e;-ami'. ho"ses which ma.
%e esigne %. the %"i'ers as we''.
The resientia' ho"sing mar7et is heavi'. aAecte %. genera'
economic conitions& taC 'aws& an the monetar. an =sca' po'icies
o- the government. O-ten& a s'ight increase in tota' eman wi''
ca"se a s"%stantia' investment in constr"ction& since man. ho"sing
projects can %e starte at iAerent 'ocations %. iAerent inivi"a's
an eve'opers at the same time. 9eca"se o- the re'ative ease o-
entr.& at 'east at the 'ower en o- the mar7et& man. new %"i'ers
are attracte to the resientia' ho"sing constr"ction. 6ence& this
mar7et is high'. competitive& with potentia''. high ris7s as we'' as
high rewars.
Figure 1'$( <esientia' 6o"sing !onstr"ction Eco"rtes. o-
!aterpi''ar& /nc.F
#nstitutional and Commercial Building Construction
/nstit"tiona' an commercia' %"i'ing constr"ction encompasses a
great variet. o- project t.pes an sizes& s"ch as schoo's an
"niversities& meica' c'inics an hospita's& recreationa' -aci'ities an
sports stai"ms& retai' chain stores an 'arge shopping centers&
wareho"ses an 'ight man"-act"ring p'ants& an s7.scrapers -or
oKces an hote's. The owners o- s"ch %"i'ings ma. or ma. not %e
-ami'iar with constr"ction in"str. practices& %"t the. "s"a''. are
a%'e to se'ect competent pro-essiona' cons"'tants an arrange the
=nancing o- the constr"cte -aci'ities themse'ves. 4pecia't.
architects an engineers are o-ten engage -or esigning a speci=c
t.pe o- %"i'ing& whi'e the %"i'ers or genera' contractors
"nerta7ing s"ch projects ma. a'so %e specia'ize in on'. that t.pe
o- %"i'ing.
9eca"se o- the higher costs an greater sophistication o-
instit"tiona' an commercia' %"i'ings in comparison with resientia'
ho"sing& this mar7et segment is share %. -ewer competitors. 4ince
the constr"ction o- some o- these %"i'ings is a 'ong process which
once starte wi'' ta7e some time to procee "nti' comp'etion& the
eman is 'ess sensitive to genera' economic conitions than that
-or spec"'ative ho"sing. !onse)"ent'.& the owners ma. con-ront an
oligopoly o- genera' contractors who compete in the same mar7et.
/n an o'igopo'. sit"ation& on'. a 'imite n"m%er o- competitors eCist&
an a =rm's price -or services ma. %e %ase in part on its
competitive strategies in the 'oca' mar7et.
Figure 1')> !onstr"ction o- the PPJ 9"i'ing in Pitts%"rgh&
Penns.'vania Eco"rtes. o- PPJ /n"stries& /nc.F
,peciali-ed #ndustrial Construction
4pecia'ize in"stria' constr"ction "s"a''. invo'ves ver. 'arge sca'e
projects with a high egree o- techno'ogica' comp'eCit.& s"ch as oi'
re=neries& stee' mi''s& chemica' processing p'ants an coa';=re or
n"c'ear power p'ants. The owners "s"a''. are eep'. invo've in the
eve'opment o- a project& an pre-er to wor7 with esigners;%"i'ers
s"ch that the tota' time -or the comp'etion o- the project can %e
shortene. The. a'so want to pic7 a team o- esigners an %"i'ers
with whom the owner has eve'ope goo wor7ing re'ations over
the .ears.
A'tho"gh the initiation o- s"ch projects is a'so aAecte %. the state
o- the econom.& 'ong range eman -orecasting is the most
important -actor since s"ch projects are capita' intensive an
re)"ire consiera%'e amo"nt o- p'anning an constr"ction time.
Jovernmenta' reg"'ation s"ch as the r"'ings o- the (nvironmenta'
Protection Agenc. an the :"c'ear <eg"'ator. !ommission in the
*nite 4tates can a'so pro-o"n'. inG"ence ecisions on these
projects.
Figure 1'.( !onstr"ction o- a 9enzene P'ant in $ima& Ohio
Eco"rtes. o- Manitowoc !ompan.& /nc.F
#nfrastructure and +ea"& Construction
/n-rastr"ct"re an heav. constr"ction inc'"es projects s"ch as
highwa.s& mass transit s.stems& t"nne's& %riges& pipe'ines&
rainage s.stems an sewage treatment p'ants. Most o- these
projects are p"%'ic'. owne an there-ore =nance either thro"gh
%ons or taCes. This categor. o- constr"ction is characterize %. a
high egree o- mechanization& which has gra"a''. rep'ace some
'a%or intensive operations.
The engineers an %"i'ers engage in in-rastr"ct"re constr"ction
are "s"a''. high'. specia'ize since each segment o- the mar7et
re)"ires iAerent t.pes o- s7i''s. 6owever& emans -or iAerent
segments o- in-rastr"ct"re an heav. constr"ction ma. shi-t with
sat"ration in some segments. For eCamp'e& as the avai'a%'e highwa.
constr"ction projects are ec'ining& some heav. constr"ction
contractors )"ic7'. move their wor7 -orce an e)"ipment into the
=e' o- mining where jo%s are avai'a%'e.
Figure 1'/( !onstr"ction o- the Dame Point 9rige in 8ac7sonvi''e&
F'oria Eco"rtes. o- Mar. $o" MaherF
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1.. ,election of Professional ,er"ices
Dhen an owner ecies to see7 pro-essiona' services -or the esign
an constr"ction o- a -aci'it.& he is con-ronte with a %roa variet.
o- choices. The t.pe o- services se'ecte epens to a 'arge egree
on the t.pe o- constr"ction an the eCperience o- the owner in
ea'ing with vario"s pro-essiona's in the previo"s projects
"nerta7en %. the =rm. Jenera''.& severa' common t.pes o-
pro-essiona' services ma. %e engage either separate'. or in some
com%ination %. the owners.
Financial Planning Consultants
At the ear'. stage o- strategic p'anning -or a capita' project& an
owner o-ten see7s the services o- =nancia' p'anning cons"'tants
s"ch as certi=e p"%'ic acco"nting E!PAF =rms to eva'"ate the
economic an =nancia' -easi%i'it. o- the constr"cte -aci'it.&
partic"'ar'. with respect to vario"s provisions o- -eera'& state an
'oca' taC 'aws which ma. aAect the investment ecision. /nvestment
%an7s ma. a'so %e cons"'te on vario"s options -or =nancing the
-aci'it. in orer to ana'.ze their 'ong;term eAects on the =nancia'
hea'th o- the owner organization.
Architectural and Engineering Firms
Traitiona''.& the owner engages an architect"ra' an engineering
EAP(F =rm or consorti"m as technica' cons"'tant in eve'oping a
pre'iminar. esign. A-ter the engineering esign an =nancing
arrangements -or the project are comp'ete& the owner wi'' enter
into a constr"ction contract with a genera' contractor either thro"gh
competitive %iing or negotiation. The genera' contractor wi'' act
as a constr"ctor anPor a coorinator o- a 'arge n"m%er o-
s"%contractors who per-orm vario"s specia'ties -or the comp'etion o-
the project. The AP( =rm comp'etes the esign an ma. a'so provie
on site )"a'it. inspection "ring constr"ction. Th"s& the AP( =rm
acts as the prime pro-essiona' on %eha'- o- the owner an
s"pervises the constr"ction to ins"re satis-actor. res"'ts. This
practice is most common in %"i'ing constr"ction.
/n the past two ecaes& this traitiona' approach has %ecome 'ess
pop"'ar -or a n"m%er o- reasons& partic"'ar'. -or 'arge sca'e projects.
The AP( =rms& which are engage %. the owner as the prime
pro-essiona's -or esign an inspection& have %ecome more iso'ate
-rom the constr"ction process. This has occ"rre %eca"se o-
press"res to re"ce -ees to AP( =rms& the threat o- 'itigation
regaring constr"ction e-ects& an 'ac7 o- 7now'ege o- new
constr"ction techni)"es on the part o- architect an engineering
pro-essiona's. /nstea o- preparing a constr"ction p'an a'ong with
the esign& man. AP( =rms are no 'onger responsi%'e -or the etai's
o- constr"ction nor o the. provie perioic =e' inspection in man.
cases. As a matter o- -act& s"ch =rms wi'' p'ace a prominent
isc'aimer o- responsi%i'ities on an. shop rawings the. ma. chec7&
an the. wi'' o-ten regar their representatives in the =e' as
o%servers instea o- inspectors. Th"s& the AP( =rm an the genera'
contractor on a project o-ten %ecome antagonists who are 'oo7ing
a-ter their own competing interests. As a res"'t& even the
constr"cti%i'it. o- some engineering esigns ma. %ecome an iss"e
o- contention. To carr. this protective attit"e to the eCtreme& the
speci=cations prepare %. an AP( =rm -or the genera' contractor
o-ten protects the interest o- the AP( =rm at the eCpense o- the
interests o- the owner an the contractor.
/n orer to re"ce the cost o- constr"ction& some owners intro"ce
value engineering& which see7s to re"ce the cost o- constr"ction %.
so'iciting a secon esign that might cost 'ess than the origina'
esign pro"ce %. the AP( =rm. /n practice& the secon esign is
s"%mitte %. the contractor a-ter receiving a constr"ction contract
at a stip"'ate s"m& an the saving in cost res"'ting -rom the
reesign is share %. the contractor an the owner. The contractor
is a%'e to a%sor% the cost o- reesign -rom the pro=t in constr"ction
or to re"ce the constr"ction cost as a res"'t o- the re;esign. /- the
owner ha %een wi''ing to pa. a higher -ee to the AP( =rm or to
%etter irect the esign process& the AP( =rm might have pro"ce
an improve esign which wo"' cost 'ess in the =rst p'ace.
<egar'ess o- the merit o- va'"e engineering& this practice has
"nermine the ro'e o- the AP( =rm as the prime pro-essiona' acting
on %eha'- o- the owner to s"pervise the contractor.
0esign1Construct Firms
A common tren in in"stria' constr"ction& partic"'ar'. -or 'arge
projects& is to engage the services o- a esignPconstr"ct =rm. 9.
integrating esign an constr"ction management in a sing'e
organization& man. o- the conGicts %etween esigners an
constr"ctors might %e avoie. /n partic"'ar& esigns wi'' %e c'ose'.
scr"tinize -or their constr"cti%i'it.. 6owever& an owner engaging a
esignPconstr"ct =rm m"st ins"re that the )"a'it. o- the constr"cte
-aci'it. is not sacri=ce %. the esire to re"ce the time or the cost
-or comp'eting the project. A'so& it is iKc"'t to ma7e "se o-
competitive %iing in this t.pe o- esignPconstr"ct process. As a
res"'t& owners m"st %e re'ative'. sophisticate in negotiating
rea'istic an cost;eAective constr"ction contracts.
One o- the most o%vio"s avantages o- the integrate
esignPconstr"ct process is the "se o- phased construction -or a
'arge project. /n this process& the project is ivie "p into severa'
phases& each o- which can %e esigne an constr"cte in a
staggere manner. A-ter the comp'etion o- the esign o- the =rst
phase& constr"ction can %egin witho"t waiting -or the comp'etion o-
the esign o- the secon phase& etc. /- proper coorination is
eCercise. the tota' project "ration can %e great'. re"ce. Another
avantage is to eCp'oit the possi%i'it. o- "sing the turnkey approach
where%. an owner can e'egate a'' responsi%i'it. to the
esignPconstr"ct =rm which wi'' e'iver to the owner a comp'ete
-aci'it. that meets the per-ormance speci=cations at the speci=e
price.
Professional Construction Managers
/n recent .ears& a new %ree o- constr"ction managers E!MF oAers
pro-essiona' services -rom the inception to the comp'etion o- a
constr"ction project. These constr"ction managers most'. come
-rom the ran7s o- AP( =rms or genera' contractors who ma. or ma.
not retain "a' ro'es in the service o- the owners. /n an. case& the
owner can re'. on the service o- a sing'e prime pro-essiona' to
manage the entire process o- a constr"ction project. 6owever& 'i7e
the AP( =rms o- severa' ecaes ago& the constr"ction managers are
appreciate %. some owners %"t not %. others. 9e-ore 'ong& some
owners =n that the constr"ction managers too ma. tr. to protect
their own interest instea o- that o- the owners when the sta7es are
high.
/t sho"' %e o%vio"s to a'' invo've in the constr"ction process that
the part. which is re)"ire to ta7e higher ris7 emans 'arger
rewars. /- an owner wants to engage an AP( =rm on the %asis o- 'ow
-ees instea o- esta%'ishe )"a'i=cations& it o-ten gets what it
eservesO or i- the owner wants the genera' contractor to %ear the
cost o- "ncertainties in constr"ction s"ch as -o"nation conitions&
the contract price wi'' %e higher even i- competitive %iing is "se
in reaching a contract"a' agreement. Ditho"t m"t"a' respect an
tr"st& an owner cannot eCpect that constr"ction managers can
pro"ce %etter res"'ts than other pro-essiona's. 6ence& an owner
m"st "nerstan its own responsi%i'it. an the ris7 it wishes to
assign to itse'- an to other participants in the process.
Operation and Maintenance Managers
A'tho"gh man. owners 7eep a permanent staA -or the operation an
maintenance o- constr"cte -aci'ities& others ma. pre-er to contract
s"ch tas7s to pro-essiona' managers. *nerstana%'.& it is common
to =n in;ho"se staA -or operation an maintenance in specia'ize
in"stria' p'ants an in-rastr"ct"re -aci'ities& an the "se o- o"tsie
managers "ner contracts -or the operation an maintenance o-
renta' properties s"ch as apartments an oKce %"i'ings. 6owever&
there are eCceptions to these common practices. For eCamp'e&
maintenance o- p"%'ic roawa.s can %e contracte to private =rms.
/n an. case& managers can provie a spectr"m o- operation an
maintenance services -or a speci=e time perio in accorance to
the terms o- contract"a' agreements. Th"s& the owners can %e
spare the provision o- in;ho"se eCpertise to operate an maintain
the -aci'ities.
Facilities Management
As a 'ogica' eCtension -or o%taining the %est services thro"gho"t the
project 'i-e c.c'e o- a constr"cte -aci'it.& some owners an
eve'opers are receptive to aing strategic p'anning at the
%eginning an -aci'it. maintenance as a -o''ow;"p to re"ce space;
re'ate costs in their rea' estate ho'ings. !onse)"ent'.& some
architect"ra'Pengineering =rms an constr"ction management =rms
with comp"ter;%ase eCpertise& together with interior esign =rms&
are oAering s"ch -ront;en an -o''ow;"p services in aition to the
more traitiona' services in esign an constr"ction. This spectr"m
o- services is escri%e in Engineering News-Record Enow ENRF as
-o''ows> L2M
Faci'ities management is the iscip'ine o- p'anning&
esigning& constr"cting an managing space ;; in ever.
t.pe o- str"ct"re -rom oKce %"i'ings to process p'ants.
/t invo'ves eve'oping corporate -aci'ities po'ic.& 'ong;
range -orecasts& rea' estate& space inventories& projects
Ethro"gh esign& constr"ction an renovationF& %"i'ing
operation an maintenance p'ans an -"rnit"re an
e)"ipment inventories.
A common enominator o- a'' =rms entering into these new services
is that the. a'' have strong comp"ter capa%i'ities an heav.
comp"ter investments. /n aition to the "se o- comp"ters -or
aiing esign an monitoring constr"ction& the service inc'"es the
compi'ation o- a comp"ter recor o- %"i'ing p'ans that can %e
t"rne over at the en o- constr"ction to the -aci'ities management
gro"p o- the owner. A comp"ter ata %ase o- -aci'ities in-ormation
ma7es it possi%'e -or p'anners in the owner's organization to o%tain
overview in-ormation -or 'ong range space -orecasts& whi'e the 'ine
managers can "se as;%"i't in-ormation s"ch as 'easePtenant recors&
"ti'it. costs& etc. -or a.;to;a. operations.
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1./ Construction Contractors
9"i'ers who s"pervise the eCec"tion o- constr"ction projects are
traitiona''. re-erre to as contractors& or more appropriate'. ca''e
constructors. The general contractor coorinates vario"s tas7s -or a
project whi'e the specialty contractors s"ch as mechanica' or
e'ectrica' contractors per-orm the wor7 in their specia'ties. Materia'
an e)"ipment s"pp'iers o-ten act as installation contractorsO the.
p'a. a signi=cant ro'e in a constr"ction project since the conitions
o- e'iver. o- materia's an e)"ipment aAect the )"a'it.& cost& an
time'. comp'etion o- the project. /t is essentia' to "nerstan the
operation o- these contractors in orer to ea' with them eAective'..
2eneral Contractors
The -"nction o- a genera' contractor is to coorinate a'' tas7s in a
constr"ction project. *n'ess the owner per-orms this -"nction or
engages a pro-essiona' constr"ction manager to o so& a goo
genera' contractor who has wor7e with a team o- s"perintenents&
specia't. contractors or s"%contractors together -or a n"m%er o-
projects in the past can %e most eAective in inspiring 'o.a't. an
cooperation. The genera' contractor is a'so 7now'egea%'e a%o"t the
'a%or -orce emp'o.e in constr"ction. The 'a%or -orce ma. or ma.
not %e "nionize epening on the size an 'ocation o- the projects.
/n some projects& no mem%er o- the wor7 -orce %e'ongs to a 'a%or
"nionO in other cases& %oth "nion an non;"nion cra-tsmen wor7
together in what is ca''e an open shop& or a'' cra-tsmen m"st %e
aK'iate with 'a%or "nions in a c'ose shop. 4ince 'a%or "nions
provie hiring ha''s staAe with s7i''e jo"rne.man who have gone
thro"gh apprentice programs -or the projects as we'' as serving as
co''ective %argain "nits& an eCperience genera' contractor wi''
ma7e goo "se o- the %ene=ts an avoi the pit-a''s in ea'ing with
organize 'a%or.
,pecialt& Contractors
4pecia't. contractors inc'"e mechanica'& e'ectrica'& -o"nation&
eCcavation& an emo'ition contractors among others. The. "s"a''.
serve as s"%contractors to the genera' contractor o- a project. /n
some cases& 'ega' stat"tes ma. re)"ire an owner to ea' with
vario"s specia't. contractors irect'.. /n the 4tate o- :ew Ior7& -or
eCamp'e& specia't. contractors& s"ch as mechanica' an e'ectrica'
contractors& are not s"%jecte to the s"pervision o- the genera'
contractor o- a constr"ction project an m"st %e given separate
prime contracts on p"%'ic wor7s. Dith the eCception o- s"ch specia'
cases& an owner wi'' ho' the genera' contractor responsi%'e -or
negotiating an -"'=''ing the contract"a' agreements with the
s"%contractors.
Material and E3uipment ,uppliers
Major materia' s"pp'iers inc'"e specia't. contractors in str"ct"ra'
stee' -a%rication an erection& sheet meta'& rea. miCe concrete
e'iver.& rein-orcing stee' %ar etai'ers& roo=ng& g'azing etc. Major
e)"ipment s"pp'iers -or in"stria' constr"ction inc'"e
man"-act"rers o- generators& %oi'ers an piping an other
e)"ipment. Man. s"pp'iers han'e on;site insta''ation to ins"re that
the re)"irements an contract"a' speci=cations are met. As more
an 'arger str"ct"ra' "nits are pre-a%ricate oA;site& the istri%"tion
%etween specia't. contractors an materia' s"pp'iers %ecomes even
'ess o%vio"s.
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1.4 Financing of Constructed Facilities
A major constr"ction project re)"ires an enormo"s amo"nt o-
capita' that is o-ten s"pp'ie %. 'eners who want to %e ass"re that
the project wi'' oAer a -air ret"rn on the investment. The irect costs
associate with a major constr"ction project ma. %e %roa'.
c'assi=e into two categories> E1F the constr"ction eCpenses pai to
the genera' contractor -or erecting the -aci'it. on site an E2F the
eCpenses -or 'an ac)"isition& 'ega' -ees& architectPengineer -ees&
constr"ction management -ees& interest on constr"ction 'oans an
the opport"nit. cost o- carr.ing empt. space in the -aci'it. "nti' it is
-"''. occ"pie. The irect constr"ction costs in the =rst categor.
represent approCimate'. ,3 to 13 percent o- the tota' costs in most
constr"ction projects. 4ince the costs o- constr"ction are "'timate'.
%orne %. the owner& care-"' =nancia' p'anning -or the -aci'it. m"st
%e mae prior to constr"ction.
Construction Financing
!onstr"ction 'oans to contractors are "s"a''. provie %. %an7s or
savings an 'oan associations -or constr"ction =nancing. *pon the
comp'etion o- the -aci'it.& constr"ction 'oans wi'' %e terminate an
the post;constr"ction -aci'it. =nancing wi'' %e arrange %. the
owner.
!onstr"ction 'oans provie -or iAerent t.pes o- constr"ction var..
/n the case o- resientia' ho"sing& constr"ction 'oans an 'ong;term
mortgages can %e o%taine -rom savings an 'oans associations or
commercia' %an7s. For instit"tiona' an commercia' %"i'ings&
constr"ction 'oans are "s"a''. o%taine -rom commercia' %an7s.
4ince the va'"e o- specia'ize in"stria' %"i'ings as co''atera' -or
'oans is 'imite& constr"ction 'oans in this omain are rare& an
constr"ction =nancing can %e one -rom the poo' o- genera'
corporate -"ns. For in-rastr"ct"re constr"ction owne %.
government& the propert. cannot %e "se as sec"rit. -or a private
'oan& %"t there are man. possi%'e wa.s to =nance the constr"ction&
s"ch as genera' appropriation -rom taCation or specia' %ons iss"e
-or the project.
Traitiona''.& %an7s serve as constr"ction 'eners in a three;part.
agreement among the contractor& the owner an the %an7. The
stip"'ate 'oan wi'' %e pai to the contractor on an agree sche"'e
"pon the veri=cation o- comp'etion o- vario"s portions o- the project.
Jenera''.& a pa.ment re)"est together with a stanar progress
report wi'' %e s"%mitte each month %. the contractor to the owner
which in t"rn s"%mits a raw re)"est to the %an7. Provie that the
wor7 to ate has %een per-orme satis-actori'.& the is%"rsement is
mae on that %asis "ring the constr"ction perio. *ner s"ch
circ"mstances& the %an7 has %een primari'. concerne with the
comp'etion o- the -aci'it. on time an within the %"get. The
economic 'i-e o- the -aci'it. a-ter its comp'etion is not a concern
%eca"se o- the trans-er o- ris7 to the owner or an instit"tiona'
'ener.
Facilit& Financing
Man. private corporations maintain a poo' o- genera' -"ns res"'ting
-rom retaine earnings an 'ong;term %orrowing on the strength o-
corporate assets& which can %e "se -or -aci'it. =nancing. 4imi'ar'.&
-or p"%'ic agencies& the 'ong;term -"ning ma. %e o%taine -rom the
commitment o- genera' taC reven"es -rom the -eera'& state anPor
'oca' governments. 9oth private corporations an p"%'ic agencies
ma. iss"e specia' %ons -or the constr"cte -aci'ities which ma.
o%tain 'ower interest rates than other -orms o- %orrowing. 4hort;
term %orrowing ma. a'so %e "se -or %riging the gaps in 'ong;term
=nancing. 4ome corporate %ons are converti%'e to stoc7s "ner
circ"mstances speci=e in the %on agreement. For p"%'ic -aci'ities&
the assessment o- "ser -ees to repa. the %on -"ns merits
consieration -or certain t.pes o- -aci'ities s"ch as to'' roas an
sewage treatment p'ants. L3M The "se o- mortgages is primari'.
con=ne to renta' properties s"ch as apartments an oKce
%"i'ings.
9eca"se o- the s"en s"rge o- interest rates in the 'ate 1203's&
man. =nancia' instit"tions oAer& in aition to the traitiona' =Ce
rate 'ong;term mortgage commitments& other arrangements s"ch as
a com%ination o- e%t an a percentage o- ownership in eCchange
-or a 'ong;term mortgage or the "se o- aj"sta%'e rate mortgages. /n
some cases& the constr"ction 'oan ma. %e grante on an open;
ene %asis witho"t a 'ong;term =nancing commitment. For
eCamp'e& the p'an might %e iss"e -or the constr"ction perio with
an option to eCten it -or a perio o- "p to three .ears in orer to
give the owner more time to see7 a'ternative 'ong;term =nancing on
the comp'ete -aci'it.. The %an7 wi'' %e rawn into sit"ations
invo'ving =nancia' ris7 i- it chooses to %e a 'ener witho"t 'ong;term
g"arantees.
For internationa' projects& the c"rrenc. "se -or =nancing
agreements %ecomes important. /- =nancia' agreements are written
in terms o- 'oca' c"rrencies& then G"ct"ations in the c"rrenc.
eCchange rate can signi=cant'. aAect the cost an "'timate'. pro=t
o- a project. /n some cases& pa.ments might a'so %e mae in
partic"'ar commoities s"ch as petro'e"m or the o"tp"t -rom the
-aci'it. itse'-. Again& these arrangements res"'t in greater
"ncertaint. in the =nancing scheme %eca"se the price o- these
commoities ma. var..
9ac7 to top
1.5 %egal and *egulator& *e3uirements
The owners o- -aci'ities nat"ra''. want 'ega' protection -or a'' the
activities invo've in the constr"ction. /t is e)"a''. o%vio"s that the.
sho"' see7 competent 'ega' avice. 6owever& there are certain
princip'es that sho"' %e recognize %. owners in orer to avoi
"nnecessar. pit-a''s.
%egal *esponsi6ilities
Activities in constr"ction o-ten invo've ris7s& %oth ph.sica' an
=nancia'. An owner genera''. tries to shi-t the ris7s to other parties
to the egree possi%'e when entering into contract"a' agreements
with them. 6owever& s"ch action is not witho"t cost or ris7. For
eCamp'e& a contractor who is assigne the ris7s ma. either as7 -or a
higher contract price to compensate -or the higher ris7s& or en "p
in non;per-ormance or %an7r"ptc. as an act o- esperation. 4"ch
conse)"ences can %e avoie i- the owner is reasona%'e in ris7
a''ocation. Dhen ris7s are a''ocate to iAerent parties& the owner
m"st "nerstan the imp'ications an spe'' them o"t c'ear'..
4ometimes there are stat"tor. 'imitations on the a''ocation o-
'ia%i'ities among vario"s gro"ps& s"ch as prohi%ition against the
a''ocation o- neg'igence in esign to the contractor. An owner m"st
rea'ize its s"perior power in %argaining an hence the
responsi%i'ities associate with this power in ma7ing contract"a'
agreements.
Mitigation of Con7icts
/t is important -or the owner to "se 'ega' co"nse'ors as avisors to
mitigate conGicts %e-ore the. happen rather than to wie' conGicts
as weapons against other parties. There are eno"gh pro%'ems in
esign an constr"ction "e to "ncertaint. rather than %a
intentions. The owner sho"' recognize the more en'ightene
approaches -or mitigating conGicts& s"ch as "sing owner;contro''e
wrap-up ins"rance which wi'' provie protection -or a'' parties
invo've in the constr"ction process -or "n-oreseen ris7s& or "sing
ar%itration& meiation an other eCtra;j"icia' so'"tions -or isp"tes
among vario"s parties. 6owever& these compromise so'"tions are
not witho"t pit-a''s an sho"' %e aopte on'. on the merit o-
inivi"a' cases.
2o"ernment *egulation
To protect p"%'ic sa-et. an we'-are& 'egis'at"res an vario"s
government agencies perioica''. iss"e reg"'ations which inG"ence
the constr"ction process& the operation o- constr"cte -aci'ities& an
their "'timate isposa'. For eCamp'e& %"i'ing coes prom"'gate %.
'oca' a"thorities have provie g"ie'ines -or esign an
constr"ction practices -or a ver. 'ong time. 4ince the 1203's& man.
-eera' reg"'ations that are re'ate irect'. or inirect'. to
constr"ction have %een esta%'ishe in the *nite 4tates. Among
them are sa-et. stanars -or wor7ers iss"e %. the Occ"pationa'
6ea'th an 4a-et. Aministration& environmenta' stanars on
po''"tants an toCic wastes iss"e %. the (nvironmenta' Protection
Agenc.& an esign an operation proce"res -or n"c'ear power
p'ants iss"e %. the :"c'ear <eg"'ator. !ommission.
Owners m"st %e aware o- the impacts o- these reg"'ations on the
costs an "rations o- vario"s t.pes o- constr"ction projects as we''
as possi%i'ities o- 'itigation "e to vario"s contentions. For eCamp'e&
owners ac)"iring sites -or new constr"ction ma. %e strict'. 'ia%'e -or
an. hazaro"s wastes a'rea. on the site or remove -rom the site
"ner the *.4. !omprehensive (nvironmenta' <esponse
!ompensation an $ia%i'it. E!(<!$F Act o- 1213. For 'arge sca'e
projects invo'ving new techno'ogies& the constr"ction costs o-ten
esca'ate with the "ncertaint. associate with s"ch restrictions.
9ac7 to top
1.8 he Changing En"ironment of the Construction #ndustr&
The constr"ction in"str. is a cong'omeration o- iverse =e's an
participants that have %een 'oose'. '"mpe together as a sector o-
the econom.. The constr"ction in"str. p'a.s a centra' ro'e in
nationa' we'-are& inc'"ing the eve'opment o- resientia' ho"sing&
oKce %"i'ings an in"stria' p'ants& an the restoration o- the
nation's in-rastr"ct"re an other p"%'ic -aci'ities. The importance o-
the constr"ction in"str. 'ies in the -"nction o- its pro"cts which
provie the -o"nation -or in"stria' pro"ction& an its impacts on
the nationa' econom. cannot %e meas"re %. the va'"e o- its o"tp"t
or the n"m%er o- persons emp'o.e in its activities a'one.
To %e more speci=c& constr"ction re-ers to a'' t.pes o- activities
"s"a''. associate with the erection an repair o- immo%i'e -aci'ities.
!ontract constr"ction consists o- a 'arge n"m%er o- =rms that
per-orm constr"ction wor7 -or others& an is estimate to %e
approCimate'. 1+Q o- a'' constr"ction activities. The remaining 1+Q
o- constr"ction is per-orme %. owners o- the -aci'ities& an is
re-erre to as force-account constr"ction. A'tho"gh the n"m%er o-
contractors in the *nite 4tates eCcees a mi''ion& over ,3Q o- a''
contractor constr"ction is per-orme %. the top #33 contractors. The
va'"e o- new constr"ction in the *nite 4tates EeCpresse in
constant o''arsF an the va'"e o- constr"ction as a percentage o-
the gross nationa' pro"cts -rom 12+3 to 121+ are shown in Fig"res
1;, an 1;0. /t can %e seen that constr"ction is a signi=cant -actor in
the Jross :ationa' Pro"ct a'tho"gh its importance has %een
ec'ining in recent .ears. L#M :ot to %e ignore is the -act that as the
nation's constr"cte -aci'ities %ecome o'er& the tota' eCpenit"re
on reha%i'itation an maintenance ma. increase re'ative to the
va'"e o- new constr"ction.
Figure 1'4( Na'"e o- :ew !onstr"ction in the *nite 4tates& 120+;
122+
Figure 1'5( !onstr"ction as Percentage o- Jross Domestic Pro"ct
in the *nite 4tates& 120+;122+
Owners who pa. c'ose attention to the pec"'iar characteristics o- the
constr"ction in"str. an its changing operating environment wi''
%e a%'e to ta7e avantage o- the -avora%'e conitions an to avoi
the pit-a''s. 4evera' -actors are partic"'ar'. noteworth. %eca"se o-
their signi=cant impacts on the )"a'it.& cost an time o-
constr"ction.
9ew echnologies
/n recent .ears& techno'ogica' innovation in esign& materia's an
constr"ction methos have res"'te in signi=cant changes in
constr"ction costs. !omp"ter;ais have improve capa%i'ities -or
generating )"a'it. esigns as we'' as re"cing the time re)"ire to
pro"ce a'ternative esigns. :ew materia's not on'. have enhance
the )"a'it. o- constr"ction %"t a'so have shortene the time -or
shop -a%rication an =e' erection. !onstr"ction methos have gone
thro"gh vario"s stages o- mechanization an a"tomation& inc'"ing
the 'atest eve'opment o- constr"ction ro%otics.
The most ramatic new techno'og. app'ie to constr"ction has %een
the /nternet an its private& corporate /ntranet versions. The /nternet
is wie'. "se as a means to -oster co''a%oration among
pro-essiona's on a project& to comm"nicate -or %is an res"'ts& an
to proc"re necessar. goos an services. <ea' time vieo -rom
speci=c constr"ction sites is wie'. "se to i''"strate constr"ction
progress to intereste parties. The res"'t has %een more eAective
co''a%oration& comm"nication an proc"rement.
The eAects o- man. new techno'ogies on constr"ction costs have
%een miCe %eca"se o- the high eve'opment costs -or new
techno'ogies. 6owever& it is "nmista7a%'e that esign pro-essiona's
an constr"ction contractors who have not aapte to changing
techno'ogies have %een -orce o"t o- the mainstream o- esign an
constr"ction activities. *'timate'.& constr"ction )"a'it. an cost can
%e improve with the aoption o- new techno'ogies which are
prove to %e eKcient -rom %oth the viewpoints o- per-ormance an
econom..
%a6or Producti"it&
The term productivity is genera''. e=ne as a ratio o- the
pro"ction o"tp"t vo'"me to the inp"t vo'"me o- reso"rces. 4ince
%oth o"tp"t an inp"t can %e )"anti=e in a n"m%er o- wa.s& there
is no sing'e meas"re o- pro"ctivit. that is "niversa''. app'ica%'e&
partic"'ar'. in the constr"ction in"str. where the pro"cts are
o-ten "ni)"e an there is no stanar -or speci-.ing the 'eve's -or
aggregation o- ata. 6owever& since 'a%or constit"tes a 'arge part o-
the cost o- constr"ction& 'a%or pro"ctivit. in terms o- o"tp"t
vo'"me Econstant o''ar va'"e or -"nctiona' "nitsF per person;ho"r is
a "se-"' meas"re. $a%or pro"ctivit. meas"re in this wa. oes not
necessari'. inicate the eKcienc. o- 'a%or a'one %"t rather
meas"res the com%ine eAects o- 'a%or& e)"ipment an other
-actors contri%"ting to the o"tp"t.
Dhi'e aggregate constr"ction in"str. pro"ctivit. is important as a
meas"re o- nationa' econom.& owners are more concerne a%o"t
the 'a%or pro"ctivit. o- %asic "nits o- wor7 pro"ce %. vario"s
cra-ts on site. Th"s& an owner can compare the 'a%or per-ormance at
iAerent geographic 'ocations& "ner iAerent wor7ing conitions&
an -or iAerent t.pes an sizes o- projects.
!onstr"ction costs "s"a''. r"n para''e' to materia' prices an 'a%or
wages. Act"a''.& over the .ears& 'a%or pro"ctivit. has increase in
some traitiona' t.pes o- constr"ction an th"s provies a 'eve'ing
or compensating eAect when ho"r'. rates -or 'a%or increase -aster
than other costs in constr"ction. 6owever& 'a%or pro"ctivit. has
%een stagnant or even ec'ine in "nconventiona' or 'arge sca'e
projects.
Pu6lic ,crutin&
*ner the present 'itigio"s c'imate in the *nite 4tates& the p"%'ic is
increasing'. voca' in the scr"tin. o- constr"ction project activities.
4ometimes it ma. res"'t in consiera%'e iKc"'t. in siting new
-aci'ities as we'' as aitiona' eCpenses "ring the constr"ction
process itse'-. Owners m"st %e prepare to manage s"ch crises
%e-ore the. get o"t o- contro'.
Fig"re 1;1 can serve to inicate p"%'ic attit"es towars the siting o-
new -aci'ities. /t represents the c"m"'ative percentage o- inivi"a's
who wo"' %e wi''ing to accept a new in"stria' -aci'it. at vario"s
istances -rom their homes. For eCamp'e& over =-t. percent o- the
peop'e s"rve.e wo"' accept a ten;stor. oKce %"i'ing within =ve
mi'es o- their home& %"t on'. twent.;=ve percent wo"' accept a
'arge -actor. or coa' =re power p'ant at a simi'ar istance. An even
'ower percentage wo"' accept a hazaro"s waste isposa' site or a
n"c'ear power p'ant. (ven at a istance o- one h"nre mi'es& a
signi=cant -raction o- the p"%'ic wo"' %e "nwi''ing to accept
hazaro"s waste -aci'ities or n"c'ear power p'ants.
Figure 1'8( P"%'ic Acceptance Towars :ew Faci'ities E<eprinte
-rom Environmental Quality - 198&
the ('eventh Ann"a' <eport o- the !o"nci' on (nvironmenta' 5"a'it.&
*.4. Jovernment Printing OKce& Dashington& D!& Decem%er 1213.F
This o%jection to new -aci'ities is a wiesprea p"%'ic attit"e&
representing consiera%'e s7epticism a%o"t the eCterna' %ene=ts
an costs which new -aci'ities wi'' impose. /t is this p"%'ic attit"e
which is 'i7e'. to ma7e p"%'ic scr"tin. an reg"'ation a contin"ing
concern -or the constr"ction in"str..
#nternational Competition
A =na' tren which eserves note is the increasing 'eve' o-
internationa' competition in the constr"ction in"str.. Owners are
'i7e'. to =n non;traitiona' =rms %iing -or constr"ction wor7&
partic"'ar'. on 'arge projects. 4eparate %is -rom n"mero"s
("ropean& :orth American& an Asian constr"ction =rms are not
"n"s"a'. /n the *nite 4tates& overseas =rms are %ecoming
increasing'. visi%'e an important. /n this environment o-
heightene competition& goo project management an improve
pro"ctivit. are more an more important.
A %iing competition -or a major new oAshore ri''ing p'at-orm
i''"strates the competitive environment in constr"ction. As
escri%e in the Da'' 4treet 8o"rna'> L+M
Thro"gh most o- the postwar .ears& the nation's %iggest
%"i'ers o- oAshore oi' p'at-orms enjo.e an "n"s"a''.
coz. re'ationship with the 9ig Oi' !ompanies the.
serve. Their top oKcia's eve'ope persona'
-rienships with oi' eCec"tives& entertaine them at
op"'ent h"nting camps; an won contracts to %"i'
near'. ever. major oAshore oi' p'at-orm in the
wor'....9"t this s"mmer& the goo;o' %o. networ7 -e''
apart. 4he'' LOi' !o.M aware the main contract -or La
newM p'at-orm ; ta''er than !hicago's 4ears Tower& -o"r
times heavier than the 9roo7'.n 9rige ; to a tin.
"pstart.
The winning %ier arrange overseas -a%rication o- the rig& 7ept
overhea costs 'ow& an propose a nove' assem%'. proce"re %.
which constr"ction e)"ipment was mo"nte on comp'ete sections
o- the p'at-orm in orer to spee the comp'etion o- the entire
str"ct"re. The res"'t was 'ower costs than those estimate an %i
%. traitiona' =rms.
O- co"rse& *.4. =rms inc'"ing AP( =rms& contractors an
constr"ction managers are a'so competing in -oreign co"ntries.
Their s"ccess or -ai'"re in the internationa' arena ma. a'so aAect
their capacities an vita'it. to provie services in the omestic *.4.
mar7et.
Contractor Financed Projects
/ncreasing'.& some owners 'oo7 to contractors or joint vent"res as a
reso"rce to esign& to %"i' an to =nance a constr"cte -aci'it.. For
eCamp'e& a "ti'it. compan. ma. see7 a consorti"m consisting o- a
esignPconstr"ct =rm an a =nancia' investment =rm to ass"me
tota' 'ia%i'it. "ring constr"ction an there%. e'iminate the ris7s o-
cost esca'ation to ratepa.ers& stoc7ho'ers an the management.
On the other han& a 'oca' sanitation istrict ma. see7 s"ch a
consorti"m to provie private ownership -or a propose new sewage
treatment p'ant. /n the -ormer case& the owner ma. ta7e over the
comp'ete -aci'it. an service the e%t on constr"ction thro"gh
'ong;term =nancing arrangementsO in the 'atter case& the private
owner ma. operate the comp'ete -aci'it. an recover its
investment thro"gh "ser -ees. The activities o- joint vent"res among
esign& constr"ction an investment =rms are sometimes re-erre to
as !nancial engineering.
This t.pe o- joint vent"re has %ecome more important in the
internationa' constr"ction mar7et where aggressive contractors
o-ten win contracts %. oAering a more attractive =nancing pac7age
rather than s"perior techno'og.. Dith a eepening shaow o-
internationa' e%ts in recent .ears& man. eve'oping co"ntries are
not in a position to "nerta7e an. new project witho"t contractor;
%ac7e =nancing. Th"s& the contractors or joint vent"res in overseas
projects are -orce into ver. ris7. positions i- the. inten to sta. in
the competition.
9ac7 to top
1.: he *ole of Project Managers
/n the project 'i-e c.c'e& the most inG"entia' -actors aAecting the
o"tcome o- the project o-ten resie at the ear'. stages. At this point&
ecisions sho"' %e %ase on competent economic eva'"ation with
"e consieration -or ae)"ate =nancing& the preva'ent socia' an
reg"'ator. environment& an techno'ogica' consierations.
Architects an engineers might specia'ize in p'anning& in
constr"ction =e' management& or in operation& %"t as project
managers& the. m"st have some -ami'iarit. with a'' s"ch aspects in
orer to "nerstan proper'. their ro'e an %e a%'e to ma7e
competent ecisions.
4ince the 1203's& man. 'arge;sca'e projects have r"n into serio"s
pro%'ems o- management& s"ch as cost overr"ns an 'ong sche"'e
e'a.s. Act"a''.& the management o- megaprojects or superprojects
is not a practice pec"'iar to o"r time. Ditness the constr"ction o-
transcontinenta' rai'roas in the !ivi' Dar era an the constr"ction
o- the Panama !ana' at the t"rn o- this cent"r.. A'tho"gh the
megaprojects o- this generation ma. appear in greater -re)"enc.
an present a new set o- cha''enge& the pro%'ems are organizationa'
rather than technica'. As note %. 6ar. !ross> L,M
/t is c"stomar. to thin7 o- engineering as a part o- a
tri'og.& p"re science& app'ie science an engineering. /t
nees emphasis that this tri'og. is on'. one o- a tria o-
tri'ogies into which engineering =ts. This =rst is p"re
science& app'ie science an engineeringO the secon is
economic theor.& =nance an engineeringO an the thir
is socia' re'ations& in"stria' re'ations an engineering.
Man. engineering pro%'ems are as c'ose'. a''ie to
socia' pro%'ems as the. are to p"re science.
As engineers avance pro-essiona''.& the. o-ten spen as m"ch or
more time on p'anning& management an other economic or socia'
pro%'ems as on the traitiona' engineering esign an ana'.sis
pro%'ems which -orm the core o- most e"cationa' programs. /t is
"pon the a%i'it. o- engineers to tac7'e a'' s"ch pro%'ems that their
per-ormance wi'' "'timate'. %e j"ge.
The greatest st"m%'ing %'oc7 to eAective management in
constr"ction is the inertia an historic ivisions among p'anners&
esigners an constr"ctors. Dhi'e technica' competence in esign
an innovation remains the -o"nation o- engineering practice& the
socia'& economic an organizationa' -actors that are pervasive in
inG"encing the s"ccess an -ai'"re o- constr"ction projects m"st
a'so %e ea't with eAective'. %. esign an constr"ction
organizations. O- co"rse& engineers are not eCpecte to 7now ever.
etai' o- management techni)"es& %"t the. m"st %e 7now'egea%'e
eno"gh to anticipate the pro%'ems o- management so that the. can
wor7 harmonio"s'. with pro-essiona's in re'ate =e's to overcome
the inertia an historic ivisions.
ParaoCica''.& engineers who are creative in engineering esign are
o-ten innovative in p'anning an management since %oth t.pes o-
activities invo've pro%'em so'ving. /n -act& the. can rein-orce each
other i- %oth are inc'"e in the e"cation process& provie that
creativit. an innovation instea o- ro"tine practice are
emphasize. A project manager who is we'' e"cate in the
fundamental principles o- engineering esign an management can
"se-"''. app'. s"ch princip'es once he or she has ac)"ire %asic
"nerstaning o- a new application area. A project manager who
has %een traine %. rote 'earning -or a speci=c t.pe o- project ma.
mere'. gain one .ear o- eCperience repeate twent. times even i-
he or she has %een in the =e' -or twent. .ears. A %roa'. e"cate
project manager can reasona%'. hope to %ecome a 'eaer in the
pro-essionO a narrow'. traine project manager is o-ten re'egate to
the ro'e o- his or her =rst jo% 'eve' permanent'..
The owners have m"ch at sta7e in se'ecting a competent project
manager an in proviing her or him with the a"thorit. to ass"me
responsi%i'it. at vario"s stages o- the project regar'ess o- the t.pes
o- contract"a' agreements -or imp'ementing the project. O- co"rse&
the project manager m"st a'so possess the 'eaership )"a'it. an
the a%i'it. to han'e eAective'. intricate interpersona' re'ationships
within an organization. The "'timate test o- the e"cation an
eCperience o- a project manager -or constr"ction 'ies in her or his
a%i'it. to app'. -"namenta' princip'es to so'ving pro%'ems in the
new an "n-ami'iar sit"ations which have %ecome the ha''mar7s o-
the changing environment in the constr"ction in"str..
9ac7 to top
1.1; *eferences
1. A"& T. an !. 6enric7son& B("cation in (ngineering P'anning
an Management&B "roceedings of the #$%E %onference on
%ivil Engineering Education& !o'"m%"s& Ohio& 121+.
2. 9arrie& D.4. EeitorF& 'irections in (anaging %onstruction& 8ohn
Di'e. an 4ons& :ew Ior7& 1211.
3. 9onn.& 8.9. an 8.P. Frein& )and*ook of %onstruction
(anagement and +rgani,ation& 2n (ition& Nan :ostran
<einho' !o.& :ew Ior7& 1213.
#. 6asagawa& F"mio et.a'.& B9"i't %. 8apan&B 8ohn Di'e. R 4ons&
1211.
+. $ang& 8.(. an D.5. Mi''s& -he %onstruction .ndustry& $eCington
9oo7s& $eCington& MA& 1202.
,. Da'7er& :.& (.:. Da'7er an T.H. <ohen%"rg& /egal "itfalls in
#rchitecture& Engineering and 0uilding %onstruction& 2n
(ition& McJraw;6i'' 9oo7 !o.& :ew Ior7& 1202.
9ac7 to top
1.11 Footnotes
1. The 9"siness <o"nta%'e& (ore %onstruction for the (oney&
4"mmar. <eport o- the !onstr"ction /n"str. !ost
(Aectiveness Project& 8an"ar. 1213& p. 11. 9ac7
2. B6ot :ew Mar7et $"res A;( P'a.ers to !"tting (ges&B
Engineering News-Record& Apri' #& 121+& pp. 33;30. 9ac7
3. 4ee 6enric7son& !.& BFinancing !ivi' Dor7s with *ser Fees&B
%ivil Engineering& No'. +3& :o. 2& Fe%r"ar. 1213& pp. 01;02.
9ac7
#. The graph is erive -rom ata in BNa'"e o- :ew !onstr"ction
P"t in P'ace& 12,3;1213B& $tatistical #*stract of the 1nited
$tates& 13+th (ition& *.4. Department o- !ommerce& 9"rea"
o- !ens"s& 121+& pp. 022;023& as we'' as the in-ormation in
ear'ier eitions. 9ac7
+. 4ee Petzinger& Thomas 8r.& B*pstart's Dinning 9i -or OAshore
P'at-orm 4t"ns its O'er <iva's&B 2all $treet 3ournal& p. 1& c. ,&
:ov. 23& 121+. 9ac7
,. 4ee 6. !ross& Engineers and .vory -owers& McJraw;6i'' 9oo7
!o.& /nc.& :ew Ior7& 12+2. 9ac7
Ta%'e o-
!ontents
S
:eCt
!hapter
$. Organi-ing for Project Management
$.1 <hat is Project Management=
The management o- constr"ction projects re)"ires 7now'ege o-
moern management as we'' as an "nerstaning o- the esign an
constr"ction process. !onstr"ction projects have a speci=c set o-
o%jectives an constraints s"ch as a re)"ire time -rame -or
comp'etion. Dhi'e the re'evant techno'og.& instit"tiona'
arrangements or processes wi'' iAer& the management o- s"ch
projects has m"ch in common with the management o- simi'ar t.pes
o- projects in other specia't. or techno'og. omains s"ch as
aerospace& pharmace"tica' an energ. eve'opments.
Jenera''.& project management is isting"ishe -rom the genera'
management o- corporations %. the mission;oriente nat"re o- a
project. A project organization wi'' genera''. %e terminate when the
mission is accomp'ishe. Accoring to the Project Management
/nstit"te& the iscip'ine o- project management can %e e=ne as
-o''ows> L1M
Project management is the art o- irecting an
coorinating h"man an materia' reso"rces thro"gho"t
the 'i-e o- a project %. "sing moern management
techni)"es to achieve preetermine o%jectives o-
scope& cost& time& )"a'it. an participation satis-action.
9. contrast& the genera' management o- %"siness an in"stria'
corporations ass"mes a %roaer o"t'oo7 with greater contin"it. o-
operations. :everthe'ess& there are s"Kcient simi'arities as we'' as
iAerences %etween the two so that moern management
techni)"es eve'ope -or genera' management ma. %e aapte -or
project management.
The %asic ingreients -or a project management -ramewor7 L2M ma.
%e represente schematica''. in Fig"re 2;1. A wor7ing 7now'ege o-
genera' management an -ami'iarit. with the specia' 7now'ege
omain re'ate to the project are inispensa%'e. 4"pporting
iscip'ines s"ch as comp"ter science an ecision science ma. a'so
p'a. an important ro'e. /n -act& moern management practices an
vario"s specia' 7now'ege omains have a%sor%e vario"s
techni)"es or too's which were once ienti=e on'. with the
s"pporting iscip'ines. For eCamp'e& comp"ter;%ase in-ormation
s.stems an ecision s"pport s.stems are now common;p'ace too's
-or genera' management. 4imi'ar'.& man. operations research
techni)"es s"ch as 'inear programming an networ7 ana'.sis are
now wie'. "se in man. 7now'ege or app'ication omains. 6ence&
the representation in Fig"re 2;1 reGects on'. the so"rces -rom which
the project management -ramewor7 evo'ves.
Figure $'1( 9asic /ngreients in Project Management
4peci=ca''.& project management in constr"ction encompasses a set
o- o%jectives which ma. %e accomp'ishe %. imp'ementing a series
o- operations s"%ject to reso"rce constraints. There are potentia'
conGicts %etween the state o%jectives with regar to scope& cost&
time an )"a'it.& an the constraints impose on h"man materia'
an =nancia' reso"rces. These conGicts sho"' %e reso've at the
onset o- a project %. ma7ing the necessar. traeoAs or creating
new a'ternatives. 4"%se)"ent'.& the -"nctions o- project
management -or constr"ction genera''. inc'"e the -o''owing>
1. 4peci=cation o- project o%jectives an p'ans inc'"ing
e'ineation o- scope& %"geting& sche"'ing& setting
per-ormance re)"irements& an se'ecting project participants.
2. MaCimization o- eKcient reso"rce "ti'ization thro"gh
proc"rement o- 'a%or& materia's an e)"ipment accoring to
the prescri%e sche"'e an p'an.
3. /mp'ementation o- vario"s operations thro"gh proper
coorination an contro' o- p'anning& esign& estimating&
contracting an constr"ction in the entire process.
#. Deve'opment o- eAective comm"nications an mechanisms
-or reso'ving conGicts among the vario"s participants.
9ac7 to top
$.$ rends in Modern Management
/n recent .ears& major eve'opments in management reGect the
acceptance to vario"s egrees o- the -o''owing e'ements> E1F the
management process approach& E2F the management science an
ecision s"pport approach& an E3F the %ehaviora' science approach
-or h"man reso"rce eve'opment. These three approaches
comp'ement each other in c"rrent practice& an provie a "se-"'
gro"nwor7 -or project management.
The management process approach emphasizes the s.stematic
st". o- management %. ienti-.ing management -"nctions in an
organization an then eCamining each in etai'. There is genera'
agreement regaring the -"nctions o- p'anning& organizing an
contro''ing. A major tenet is that %. ana'.zing management a'ong
-"nctiona' 'ines& a -ramewor7 can %e constr"cte into which a'' new
management activities can %e p'ace. Th"s& the manager's jo% is
regare as coorinating a process o- interre'ate -"nctions& which
are neither tota''. ranom nor rigi'. preetermine& %"t are
.namic as the process evo'ves. Another tenet is that management
princip'es can %e erive -rom an inte''ect"a' ana'.sis o-
management -"nctions. 9. iviing the manager's jo% into
-"nctiona' components& princip'es %ase "pon each -"nction can %e
eCtracte. 6ence& management -"nctions can %e organize into a
hierarchica' str"ct"re esigne to improve operationa' eKcienc.&
s"ch as the eCamp'e o- the organization -or a man"-act"ring
compan. shown in Fig"re 2;2. The %asic management -"nctions are
per-orme %. a'' managers& regar'ess o- enterprise& activit. or
hierarchica' 'eve's. Fina''.& the eve'opment o- a management
phi'osoph. res"'ts in he'ping the manager to esta%'ish re'ationships
%etween h"man an materia' reso"rces. The o"tcome o- -o''owing
an esta%'ishe phi'osoph. o- operation he'ps the manager win the
s"pport o- the s"%orinates in achieving organizationa' o%jectives.
Figure $'$( /''"strative 6ierarchica' 4tr"ct"re o- Management
F"nctions
The management science an ecision s"pport approach
contri%"tes to the eve'opment o- a %o. o- )"antitative methos
esigne to ai managers in ma7ing comp'eC ecisions re'ate to
operations an pro"ction. /n ecision s"pport s.stems& emphasis is
p'ace on proviing managers with re'evant in-ormation. /n
management science& a great ea' o- attention is given to e=ning
o%jectives an constraints& an to constr"cting mathematica'
ana'.sis moe's in so'ving comp'eC pro%'ems o- inventor.& materia's
an pro"ction contro'& among others. A topic o- major interest in
management science is the maCimization o- pro=t& or in the a%sence
o- a wor7a%'e moe' -or the operation o- the entire s.stem& the
s"%optimization o- the operations o- its components. The
optimization or s"%optimization is o-ten achieve %. the "se o-
operations research techni)"es& s"ch as 'inear programming&
)"aratic programming& graph theor.& )"e"ing theor. an Monte
!ar'o sim"'ation. /n aition to the increasing "se o- comp"ters
accompanie %. the eve'opment o- sophisticate mathematica'
moe's an in-ormation s.stems& management science an ecision
s"pport s.stems have p'a.e an important ro'e %. 'oo7ing more
care-"''. at pro%'em inp"ts an re'ationships an %. promoting goa'
-orm"'ation an meas"rement o- per-ormance. Arti=cia' inte''igence
has a'so %eg"n to %e app'ie to provie ecision s"pport s.stems
-or so'ving i'';str"ct"re pro%'ems in management.
The %ehaviora' science approach -or h"man reso"rce eve'opment
is important %eca"se management entai's getting things one
thro"gh the actions o- peop'e. An eAective manager m"st
"nerstan the importance o- h"man -actors s"ch as nees& rives&
motivation& 'eaership& persona'it.& %ehavior& an wor7 gro"ps.
Dithin this conteCt& some p'ace more emphasis on interpersona'
%ehavior which -oc"ses on the inivi"a' an hisPher motivations as
a socio;ps.cho'ogica' %eingO others emphasize more gro"p %ehavior
in recognition o- the organize enterprise as a socia' organism&
s"%ject to a'' the attit"es& ha%its& press"res an conGicts o- the
c"'t"ra' environment o- peop'e. The major contri%"tions mae %.
the %ehaviora' scientists to the =e' o- management inc'"e> E1F the
-orm"'ation o- concepts an eCp'anations a%o"t inivi"a' an gro"p
%ehavior in the organization& E2F the empirica' testing o- these
concepts methoica''. in man. iAerent eCperimenta' an =e'
settings& an E3F the esta%'ishment o- act"a' manageria' po'icies an
ecisions -or operation %ase on the concept"a' an methoica'
-ramewor7s.
9ac7 to top
$.) ,trategic Planning and Project Programming
The programming o- capita' projects is shape %. the strategic p'an
o- an organization& which is inG"ence %. mar7et emans an
reso"rces constraints. The programming process associate with
p'anning an -easi%i'it. st"ies sets the priorities an timing -or
initiating vario"s projects to meet the overa'' o%jectives o- the
organizations. 6owever& once this ecision is mae to initiate a
project& mar7et press"re ma. ictate ear'. an time'. comp'etion o-
the -aci'it..
Among vario"s t.pes o- constr"ction& the inG"ence o- mar7et
press"re on the timing o- initiating a -aci'it. is most o%vio"s in
in"stria' constr"ction. L3M Deman -or an in"stria' pro"ct ma. %e
short;'ive& an i- a compan. oes not hit the mar7et =rst& there
ma. not %e eman -or its pro"ct 'ater. Dith intensive competition
-or nationa' an internationa' mar7ets& the tren o- in"stria'
constr"ction moves towar shorter project 'i-e c.c'es& partic"'ar'. in
techno'og. intensive in"stries.
/n orer to gain time& some owners are wi''ing to -orego thoro"gh
p'anning an -easi%i'it. st". so as to procee on a project with
inae)"ate e=nition o- the project scope. /nvaria%'.& s"%se)"ent
changes in project scope wi'' increase constr"ction costsO however&
pro=ts erive -rom ear'ier -aci'it. operation o-ten j"sti-. the
increase in constr"ction costs. Jenera''.& i- the owner can erive
reasona%'e pro=ts -rom the operation o- a comp'ete -aci'it.& the
project is consiere a s"ccess even i- constr"ction costs -ar eCcee
the estimate %ase on an inae)"ate scope e=nition. This attit"e
ma. %e attri%"te in 'arge part to the "ncertainties inherent in
constr"ction projects. /t is iKc"'t to arg"e that pro=ts might %e
even higher i- constr"ction costs co"' %e re"ce witho"t
increasing the project "ration. 6owever& some projects& nota%'.
some n"c'ear power p'ants& are c'ear'. "ns"ccess-"' an a%anone
%e-ore comp'etion& an their emise m"st %e attri%"te at 'east in
part to inae)"ate p'anning an poor -easi%i'it. st"ies.
The owner or -aci'it. sponsor ho's the 7e. to inG"ence the
constr"ction costs o- a project %eca"se an. ecision mae at the
%eginning stage o- a project 'i-e c.c'e has -ar greater inG"ence than
those mae at 'ater stages& as shown schematica''. in Fig"re 2;3.
There-ore& an owner sho"' o%tain the eCpertise o- pro-essiona's to
provie ae)"ate p'anning an -easi%i'it. st"ies. Man. owners o
not maintain an in;ho"se engineering an constr"ction management
capa%i'it.& an the. sho"' consier the esta%'ishment o- an
ongoing re'ationship with o"tsie cons"'tants in orer to respon
)"ic7'. to re)"ests. (ven among those owners who maintain
engineering an constr"ction ivisions& man. treat these ivisions
as reim%"rsa%'e& inepenent organizations. 4"ch an arrangement
sho"' not isco"rage their 'egitimate "se as -a'se economies in
reim%"rsa%'e costs -rom s"ch ivisions can inee %e ver. cost'. to
the overa'' organization.
Figure $')( A%i'it. to /nG"ence !onstr"ction !ost Over Time
Fina''.& the initiation an eCec"tion o- capita' projects p'aces
emans on the reso"rces o- the owner an the pro-essiona's an
contractors to %e engage %. the owner. For ver. 'arge projects& it
ma. %i "p the price o- engineering services as we'' as the costs o-
materia's an e)"ipment an the contract prices o- a'' t.pes.
!onse)"ent'.& s"ch -actors sho"' %e ta7en into consieration in
etermining the timing o- a project.
E>ample $'1( ,etting priorities for projects
A epartment store p'anne to eCpan its operation %.
ac)"iring 23 acres o- 'an in the so"theast o- a
metropo'itan area which consists o- we'' esta%'ishe
s"%"r%s -or mi'e income -ami'ies. An
architect"ra'Pengineering EAP(F =rm was engage to
esign a shopping center on the 23;acre p'ot with the
epartment store as its Gagship p'"s a 'arge n"m%er o-
store-ronts -or tenants. One .ear 'ater& the epartment
store owner p"rchase 2&333 acres o- -arm 'an in the
northwest o"ts7irts o- the same metropo'itan area an
esignate 23 acres o- this 'an -or a shopping center.
The AP( =rm was again engage to esign a shopping
center at this new 'ocation.
The AP( =rm was 7ept comp'ete'. in the ar7 whi'e the
assem%'age o- the 2&333 acres o- 'an in the northwest
)"iet'. too7 p'ace. Dhen the p'ans an speci=cations -or
the so"theast shopping center were comp'ete& the
owner in-orme the AP( =rm that it wo"' not procee
with the constr"ction o- the so"theast shopping center
-or the time %eing. /nstea& the owner "rge the AP( =rm
to pro"ce a new set o- simi'ar p'ans an speci=cations
-or the northwest shopping center as soon as possi%'e&
even at the sacri=ce o- cost saving meas"res. Dhen the
p'ans an speci=cations -or the northwest shopping
center were rea.& the owner immeiate'. a"thorize its
constr"ction. 6owever& it too7 another three .ears
%e-ore the so"theast shopping center was =na''. %"i't.
The reason %ehin the change o- p'an was that the
owner iscovere the avai'a%i'it. o- the -arm 'an in the
northwest which co"' %e eve'ope into resientia' rea'
estate properties -or "pper mi'e income -ami'ies. The
immeiate constr"ction o- the northwest shopping
center wo"' ma7e the 'an eve'opment parce's more
attractive to home %".ers. Th"s& the owner was a%'e to
reco"p eno"gh cash Gow in three .ears to constr"ct the
so"theast shopping center in aition to =nancing the
constr"ction o- the northeast shopping center& as we'' as
the 'an eve'opment in its vicinit..
Dhi'e the owner i not want the constr"ction cost o-
the northwest shopping center to r"n wi'& it apparent'.
was satis=e with the cost estimate %ase on the
etai'e p'ans o- the so"theast shopping center. Th"s&
the owner ha a genera' iea o- what the constr"ction
cost o- the northwest shopping center wo"' %e& an i
not wish to wait -or a more re=ne cost estimate "nti'
the etai'e p'ans -or that center were rea.. To the
owner& the time'iness o- comp'eting the constr"ction o-
the northwest shopping center was -ar more important
than re"cing the constr"ction cost in -"'=''ing its
investment o%jectives.
E>ample $'$( *esource Constraints for Mega Projects
A major pro%'em with mega projects is the severe strain
p'ace on the environment& partic"'ar'. on the reso"rces
in the immeiate area o- a constr"ction project. BMegaB
or BmacroB projects invo've constr"ction o- ver. 'arge
-aci'ities s"ch as the A'as7a pipe'ine constr"cte in the
1203's or the Panama !ana' constr"cte in the 1233's.
The 'imitations in some or a'' o- the %asic e'ements
re)"ire -or the s"ccess-"' comp'etion o- a mega project
inc'"e>
engineering esign pro-essiona's to provie
s"Kcient manpower to comp'ete the esign within
a reasona%'e time 'imit.
constr"ction s"pervisors with capacit. an
eCperience to irect 'arge projects.
the n"m%er o- constr"ction wor7ers with proper
s7i''s to o the wor7.
the mar7et to s"pp'. materia's in s"Kcient
)"antities an o- re)"ire )"a'it. on time.
the a%i'it. o- the 'oca' in-rastr"ct"re to s"pport the
'arge n"m%er o- wor7ers over an eCtene perio
o- time& inc'"ing ho"sing& transportation an
other services.
To compo"n the pro%'em& mega projects are o-ten
constr"cte in remote environments awa. -rom major
pop"'ation centers an s"%ject to severe c'imate
conitions. !onse)"ent'.& specia' -eat"res o- each mega
project m"st %e eva'"ate care-"''..
9ac7 to top
$.. E?ects of Project *is@s on Organi-ation
The "ncertaint. in "nerta7ing a constr"ction project comes -rom
man. so"rces an o-ten invo'ves man. participants in the project.
4ince each participant tries to minimize its own ris7& the conGicts
among vario"s participants can %e etrimenta' to the project. On'.
the owner has the power to moerate s"ch conGicts as it a'one
ho's the 7e. to ris7 assignment thro"gh proper contract"a'
re'ations with other participants. Fai'"re to recognize this
responsi%i'it. %. the owner o-ten 'eas to "nesira%'e res"'ts. /n
recent .ears& the concept o- Bris7 sharingPris7 assignmentB contracts
has gaine acceptance %. the -eera' government. L#M 4ince this
t.pe o- contract ac7now'eges the responsi%i'ities o- the owners&
the contract prices are eCpecte to %e 'ower than those in which a''
ris7s are assigne to contractors.
/n approaching the pro%'em o- "ncertaint.& it is important to
recognize that incentives m"st %e provie i- an. o- the participants
is eCpecte to ta7e a greater ris7. The wi''ingness o- a participant to
accept ris7s o-ten reGects the pro-essiona' competence o- that
participant as we'' as its propensit. to ris7. 6owever& societ.'s
perception o- the potentia' 'ia%i'ities o- the participant can aAect the
attit"e o- ris7;ta7ing -or a'' participants. Dhen a c'aim is mae
against one o- the participants& it is iKc"'t -or the p"%'ic to 7now
whether a -ra" has %een committe& or simp'. that an accient has
occ"rre.
<is7s in constr"ction projects ma. %e c'assi=e in a n"m%er o- wa.s.
L+M One -orm o- c'assi=cation is as -o''ows>
1. 4ocioeconomic -actors
o (nvironmenta' protection
o P"%'ic sa-et. reg"'ation
o (conomic insta%i'it.
o (Cchange rate G"ct"ation
2. Organizationa' re'ationships
o !ontract"a' re'ations
o Attit"es o- participants
o !omm"nication
3. Techno'ogica' pro%'ems
o Design ass"mptions
o 4ite conitions
o !onstr"ction proce"res
o !onstr"ction occ"pationa' sa-et.
The environmenta' protection movement has contri%"te to the
"ncertaint. -or constr"ction %eca"se o- the ina%i'it. to 7now what
wi'' %e re)"ire an how 'ong it wi'' ta7e to o%tain approva' -rom the
reg"'ator. agencies. The re)"irements o- contin"e re;eva'"ation o-
pro%'ems an the 'ac7 o- e=nitive criteria which are practica' have
a'so res"'te in ae costs. P"%'ic sa-et. reg"'ations have simi'ar
eAects& which have %een most noticea%'e in the energ. =e'
invo'ving n"c'ear power p'ants an coa' mining. The sit"ation has
create constant'. shi-ting g"ie'ines -or engineers& constr"ctors
an owners as projects move thro"gh the stages o- p'anning to
constr"ction. These moving targets a a signi=cant new imension
o- "ncertaint. which can ma7e it virt"a''. impossi%'e to sche"'e
an comp'ete wor7 at %"gete cost. (conomic conitions o- the
past ecae have -"rther rein-orce the c'imate o- "ncertaint. with
high inGation an interest rates. The ereg"'ation o- =nancia'
instit"tions has a'so generate "nanticipate pro%'ems re'ate to
the =nancing o- constr"ction.
*ncertaint. stemming -rom reg"'ator. agencies& environmenta'
iss"es an =nancia' aspects o- constr"ction sho"' %e at 'east
mitigate or iea''. e'iminate. Owners are 7een'. intereste in
achieving some -orm o- %rea7thro"gh that wi'' 'ower the costs o-
projects an mitigate or e'iminate 'ength. e'a.s. 4"ch
%rea7thro"ghs are se'om p'anne. Jenera''.& the. happen when
the right conitions eCist& s"ch as when innovation is permitte or
when a %asis -or incentive or rewar eCists. 6owever& there is a 'ong
wa. to go %e-ore a tr"e partnership o- a'' parties invo've can %e
-orge.
D"ring perios o- economic eCpansion& major capita' eCpenit"res
are mae %. in"stries an %i "p the cost o- constr"ction. /n orer
to contro' costs& some owners attempt to "se =Ce price contracts
so that the ris7s o- "n-oreseen contingencies re'ate to an
overheate econom. are passe on to contractors. 6owever&
contractors wi'' raise their prices to compensate -or the aitiona'
ris7s.
The ris7s re'ate to organizationa' re'ationships ma. appear to %e
"nnecessar. %"t are )"ite rea'. 4traine re'ationships ma. eve'op
%etween vario"s organizations invo've in the esignPconstr"ct
process. Dhen pro%'ems occ"r& isc"ssions o-ten center on
responsi%i'ities rather than project nees at a time when the -oc"s
sho"' %e on so'ving the pro%'ems. !ooperation an comm"nication
%etween the parties are isco"rage -or -ear o- the eAects o-
impening 'itigation. This %arrier to comm"nication res"'ts -rom the
i'';conceive notion that "ncertainties res"'ting -rom techno'ogica'
pro%'ems can %e e'iminate %. appropriate contract terms. The net
res"'t has %een an increase in the costs o- constr"cte -aci'ities.
The ris7s re'ate to techno'ogica' pro%'ems are -ami'iar to the
esignPconstr"ct pro-essions which have some egree o- contro'
over this categor.. 6owever& %eca"se o- rapi avances in new
techno'ogies which present new pro%'ems to esigners an
constr"ctors& techno'ogica' ris7 has %ecome greater in man.
instances. !ertain esign ass"mptions which have serve the
pro-essions we'' in the past ma. %ecome o%so'ete in ea'ing with
new t.pes o- -aci'ities which ma. have greater comp'eCit. or sca'e
or %oth. 4ite conitions& partic"'ar'. s"%s"r-ace conitions which
a'wa.s present some egree o- "ncertaint.& can create an even
greater egree o- "ncertaint. -or -aci'ities with hereto-ore "n7nown
characteristics "ring operation. 9eca"se constr"ction proce"res
ma. not have %een -"''. anticipate& the esign ma. have to %e
moi=e a-ter constr"ction has %eg"n. An eCamp'e o- -aci'ities
which have enco"ntere s"ch "ncertaint. is the n"c'ear power
p'ant& an man. owners& esigners an contractors have s"Aere
-or "nerta7ing s"ch projects.
/- each o- the pro%'ems cite a%ove can ca"se "ncertaint.& the
com%ination o- s"ch pro%'ems is o-ten regare %. a'' parties as
%eing o"t o- contro' an inherent'. ris7.. Th"s& the iss"e o- 'ia%i'it.
has ta7en on major proportions an has inG"ence the practices o-
engineers an constr"ctors& who in t"rn have inG"ence the actions
o- the owners.
Man. owners have %eg"n to "nerstan the pro%'ems o- ris7s an
are see7ing to aress some o- these pro%'ems. For eCamp'e& some
owners are t"rning to those organizations that oAer comp'ete
capa%i'ities in p'anning& esign& an constr"ction& an ten to avoi
%rea7ing the project into major components to %e "nerta7en
inivi"a''. %. specia't. participants. Proper coorination
thro"gho"t the project "ration an goo organizationa'
comm"nication can avoi e'a.s an costs res"'ting -rom
-ragmentation o- services& even tho"gh the components -rom
vario"s services are event"a''. integrate.
Attit"es o- cooperation can %e reai'. app'ie to the private sector&
%"t on'. in specia' circ"mstances can the. %e app'ie to the p"%'ic
sector. The a%i'it. to ea' with comp'eC iss"es is o-ten prec'"e in
the competitive %iing which is "s"a''. re)"ire in the p"%'ic
sector. The sit"ation %ecomes more iKc"'t with the pro'i-eration o-
reg"'ator. re)"irements an res"'ting e'a.s in esign an
constr"ction whi'e awaiting approva's -rom government oKcia's who
o not participate in the ris7s o- the project.
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$./ Organi-ation of Project Participants
The top management o- the owner sets the overa'' po'ic. an
se'ects the appropriate organization to ta7e charge o- a propose
project. /ts po'ic. wi'' ictate how the project 'i-e c.c'e is ivie
among organizations an which pro-essiona's sho"' %e engage.
Decisions %. the top management o- the owner wi'' a'so inG"ence
the organization to %e aopte -or project management. /n genera'&
there are man. wa.s to ecompose a project into stages. The most
t.pica' wa.s are>
4e)"entia' processing where%. the project is ivie into
separate stages an each stage is carrie o"t s"ccessive'. in
se)"ence.
Para''e' processing where%. the project is ivie into
inepenent parts s"ch that a'' stages are carrie o"t
sim"'taneo"s'..
4taggere processing where%. the stages ma. %e
over'apping& s"ch as the "se o- phase esign;constr"ct
proce"res -or -ast trac7 operation.
/t sho"' %e pointe o"t that some ecompositions ma. wor7 o"t
%etter than others& epening on the circ"mstances. /n an. case&
the preva'ence o- ecomposition ma7es the s"%se)"ent integration
partic"'ar'. important. The critica' iss"es invo've in organization -or
project management are>
6ow man. organizations are invo'veT
Dhat are the re'ationships among the organizationsT
Dhen are the vario"s organizations %ro"ght into the projectT
There are two %asic approaches to organize -or project
imp'ementation& even tho"gh man. variations ma. eCist as a res"'t
o- iAerent contract"a' re'ationships aopte %. the owner an
%"i'er. These %asic approaches are ivie a'ong the -o''owing
'ines>
1. ,eparation of organi-ations. :"mero"s organizations
serve as cons"'tants or contractors to the owner& with
iAerent organizations han'ing esign an constr"ction
-"nctions. T.pica' eCamp'es which invo've iAerent egrees o-
separation are>
o Traitiona' se)"ence o- esign an constr"ction
o Pro-essiona' constr"ction management
2. #ntegration of organi-ations. A sing'e or joint vent"re
consisting o- a n"m%er o- organizations with a sing'e
comman "nerta7es %oth esign an constr"ction -"nctions.
Two eCtremes ma. %e cite as eCamp'es>
o Owner;%"i'er operation in which a'' wor7 wi'' %e
han'e in ho"se %. -orce acco"nt.
o T"rn7e. operation in which a'' wor7 is contracte to a
venor which is responsi%'e -or e'ivering the comp'ete
project
4ince constr"ction projects ma. %e manage %. a spectr"m o-
participants in a variet. o- com%inations& the organization -or the
management o- s"ch projects ma. var. -rom case to case. On one
eCtreme& each project ma. %e staAe %. eCisting personne' in the
-"nctiona' ivisions o- the organization on an a;hoc %asis as shown
in Fig"re 2;# "nti' the project is comp'ete. This arrangement is
re-erre to as the matriC organization as each project manager m"st
negotiate a'' reso"rces -or the project -rom the eCisting
organizationa' -ramewor7. On the other han& the organization ma.
consist o- a sma'' centra' -"nctiona' staA -or the eCc'"sive p"rpose
o- s"pporting vario"s projects& each o- which has its -"nctiona'
ivisions as shown in Fig"re 2;+. This ecentra'ize set;"p is re-erre
to as the project oriente organization as each project manager has
a"tonom. in managing the project. There are man. variations o-
management st.'e %etween these two eCtremes& epening on the
o%jectives o- the organization an the nat"re o- the constr"ction
project. For eCamp'e& a 'arge chemica' compan. with in;ho"se staA
-or p'anning& esign an constr"ction o- -aci'ities -or new pro"ct
'ines wi'' nat"ra''. aopt the matriC organization. On the other han&
a constr"ction compan. whose eCistence epens entire'. on the
management o- certain t.pes o- constr"ction projects ma. =n the
project;oriente organization partic"'ar'. attractive. Dhi'e
organizations ma. iAer& the same %asic princip'es o- management
str"ct"re are app'ica%'e to most sit"ations.
Figure $'.( A MatriC Organization
Figure $'/( A Project;Oriente Organization
To i''"strate vario"s t.pes o- organizations -or project management&
we sha'' consier two eCamp'es& the =rst one representing an owner
organization whi'e the secon one representing the organization o- a
constr"ction management cons"'tant "ner the irect s"pervision o-
the owner.
E>ample $')( Matri> Organi-ation of an Engineering 0i"ision
The (ngineering Division o- an ('ectric Power an $ight
!ompan. has -"nctiona' epartments as shown in Fig"re
2;,. Dhen sma'' sca'e projects s"ch as the aition o- a
transmission tower or a s"%;station are a"thorize& a
matriC organization is "se to carr. o"t s"ch projects.
For eCamp'e& in the esign o- a transmission tower& the
pro-essiona' s7i'' o- a str"ct"ra' engineer is most
important. !onse)"ent'.& the 'eaer o- the project team
wi'' %e se'ecte -rom the 4tr"ct"ra' (ngineering
Department whi'e the remaining team mem%ers are
se'ecte -rom a'' epartments as ictate %. the
manpower re)"irements. On the other han& in the
esign o- a new s"%;station& the pro-essiona' s7i'' o- an
e'ectrica' engineer is most important. 6ence& the 'eaer
o- the project team wi'' %e se'ecte -rom the ('ectrica'
(ngineering Department.
Figure $'4( The MatriC Organization in an (ngineering Division
E>ample $'.( E>ample of Construction Management
Consultant Organi-ation
Dhen the same ('ectric Power an $ight !ompan. in the
previo"s eCamp'e ecie to %"i' a new n"c'ear power
p'ant& it engage a constr"ction management
cons"'tant to ta7e charge o- the esign an constr"ction
comp'ete'.. 6owever& the compan. a'so assigne a
project team to coorinate with the constr"ction
management cons"'tant as shown in Fig"re 2;0.
Figure $'5( !oorination %etween Owner an !ons"'tant
4ince the compan. event"a''. wi'' operate the power
p'ant "pon its comp'etion& it is high'. important -or its
staA to monitor the esign an constr"ction o- the p'ant.
4"ch coorination a''ows the owner not on'. to ass"re
the )"a'it. o- constr"ction %"t a'so to %e -ami'iar with
the esign to -aci'itate -"t"re operation an
maintenance. :ote the c'ose irect re'ationships o-
vario"s epartments o- the owner an the cons"'tant.
4ince the project wi'' 'ast -or man. .ears %e-ore its
comp'etion& the staA mem%ers assigne to the project
team are not eCpecte to rejoin the (ngineering
Department %"t wi'' pro%a%'. %e invo've in the -"t"re
operation o- the new p'ant. Th"s& the project team can
act inepenent'. towar its esignate mission.
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$.4 raditional 0esigner'Constructor ,e3uence
For orinar. projects o- moerate size an comp'eCit.& the owner
o-ten emp'o.s a esigner Ean architect"ra'Pengineering =rmF which
prepares the etai'e p'ans an speci=cations -or the constr"ctor Ea
genera' contractorF. The esigner a'so acts on %eha'- o- the owner to
oversee the project imp'ementation "ring constr"ction. The
genera' contractor is responsi%'e -or the constr"ction itse'- even
tho"gh the wor7 ma. act"a''. %e "nerta7en %. a n"m%er o-
specia't. s"%contractors.
The owner "s"a''. negotiates the -ee -or service with the
architect"ra'Pengineering EAP(F =rm. /n aition to the
responsi%i'ities o- esigning the -aci'it.& the AP( =rm a'so eCercises
to some egree s"pervision o- the constr"ction as stip"'ate %. the
owner. Traitiona''.& the AP( =rm regars itse'- as esign
pro-essiona's representing the owner who sho"' not comm"nicate
with potentia' contractors to avoi co''"sion or conGict o- interest.
Fie' inspectors wor7ing -or an AP( =rm "s"a''. -o''ow thro"gh the
imp'ementation o- a project a-ter the esign is comp'ete an
se'om have eCtensive inp"t in the esign itse'-. 9eca"se o- the
'itigation c'imate in the 'ast two ecaes& most AP( =rms on'.
provie o%servers rather than inspectors in the =e'. (ven the shop
rawings o- -a%rication or constr"ction schemes s"%mitte %. the
contractors -or approva' are reviewe with a isc'aimer o-
responsi%i'it. %. the AP( =rms.
The owner ma. se'ect a genera' constr"ctor either thro"gh
competitive %iing or thro"gh negotiation. P"%'ic agencies are
re)"ire to "se the competitive %iing moe& whi'e private
organizations ma. choose either moe o- operation. /n "sing
competitive %iing& the owner is -orce to "se the esigner;
constr"ctor se)"ence since etai'e p'ans an speci=cations m"st
%e rea. %e-ore inviting %iers to s"%mit their %is. /- the owner
chooses to "se a negotiate contract& it is -ree to "se phase
constr"ction i- it so esires.
The genera' contractor ma. choose to per-orm a'' or part o- the
constr"ction wor7& or act on'. as a manager %. s"%contracting a''
the constr"ction to s"%contractors. The genera' contractor ma. a'so
se'ect the s"%contractors thro"gh competitive %iing or negotiate
contracts. The genera' contractor ma. as7 a n"m%er o-
s"%contractors to )"ote prices -or the s"%contracts %e-ore
s"%mitting its %i to the owner. 6owever& the s"%contractors o-ten
cannot -orce the winning genera' contractor to "se them on the
project. This sit"ation ma. 'ea to practices 7nown as *id shopping
an *id peddling. 9i shopping re-ers to the sit"ation when the
genera' contractor approaches s"%contractors other than those
whose )"ote prices were "se in the winning contract in orer to
see7 'ower price s"%contracts. 9i pe'ing re-ers to the actions o-
s"%contractors who oAer 'ower price s"%contracts to the winning
genera' s"%contractors in orer to is'oge the s"%contractors who
origina''. )"ote prices to the genera' contractor prior to its %i
s"%mitta'. /n %oth cases& the )"a'it. o- constr"ction ma. %e
sacri=ce& an some state stat"tes -or%i these practices -or p"%'ic
projects.
A'tho"gh the esigner;constr"ctor se)"ence is sti'' wie'. "se
%eca"se o- the p"%'ic perception o- -airness in competitive %iing&
man. private owners recognize the isavantages o- "sing this
approach when the project is 'arge an comp'eC an when mar7et
press"res re)"ire a shorter project "ration than that which can %e
accomp'ishe %. "sing this traitiona' metho.
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$.5 Professional Construction Management
Pro-essiona' constr"ction management re-ers to a project
management team consisting o- a pro-essiona' constr"ction
manager an other participants who wi'' carr. o"t the tas7s o-
project p'anning& esign an constr"ction in an integrate manner.
!ontract"a' re'ationships among mem%ers o- the team are intene
to minimize aversaria' re'ationships an contri%"te to greater
response within the management gro"p. A pro-essiona' constr"ction
manager is a =rm specia'ize in the practice o- pro-essiona'
constr"ction management which inc'"es>
Dor7 with owner an the AP( =rms -rom the %eginning an
ma7e recommenations on esign improvements&
constr"ction techno'og.& sche"'es an constr"ction econom..
Propose esign an constr"ction a'ternatives i- appropriate&
an ana'.ze the eAects o- the a'ternatives on the project cost
an sche"'e.
Monitor s"%se)"ent eve'opment o- the project in orer that
these targets are not eCceee witho"t the 7now'ege o- the
owner.
!oorinate proc"rement o- materia' an e)"ipment an the
wor7 o- a'' constr"ction contractors& an month'. pa.ments to
contractors& changes& c'aims an inspection -or con-orming
esign re)"irements.
Per-orm other project re'ate services as re)"ire %. owners.
Pro-essiona' constr"ction management is "s"a''. "se when a
project is ver. 'arge or comp'eC. The organizationa' -eat"res that are
characteristics o- mega;projects can %e s"mmarize as -o''ows>L,M
The overa'' organizationa' approach -or the project wi'' change
as the project avances. The B-"nctiona'B organization ma.
change to a BmatriCB which ma. change to a BprojectB
organization Enot necessari'. in this orerF.
Dithin the overa'' organization& there wi'' pro%a%'. %e
-"nctiona'& project& an matriC s"%organizations a'' at the
same time. This -eat"re great'. comp'icates the theor. an
the practice o- management& .et is essentia' -or overa'' cost
eAectiveness.
4"ccess-"' giant& comp'eC organizations "s"a''. have a strong
matriC;t.pe s"%organization at the 'eve' where %asic cost an
sche"'e contro' responsi%i'it. is assigne. This
s"%organization is re-erre to as a Bcost centerB or as a
BprojectB an is heae %. a project manager. The cost center
matriC ma. have participants assigne -rom man. iAerent
-"nctiona' gro"ps. /n t"rn& these -"nctiona' gro"ps ma. have
technica' reporting responsi%i'ities to severa' iAerent an
higher tiers in the organization. The 7e. to a cost eAective
eAort is the eve'opment o- this project s"%organization into a
sing'e team "ner the 'eaership o- a strong project manager.
The eCtent to which ecision;ma7ing wi'' %e centra'ize or
ecentra'ize is cr"cia' to the organization o- the mega;
project.
!onse)"ent'.& it is important to recognize the changing nat"re o-
the organizationa' str"ct"re as a project is carrie o"t in vario"s
stages.
E>ample $'/( Managing of the Alas@a Pipeline Project
The A'as7a Pipe'ine Project was the 'argest& most
eCpensive private constr"ction project in the 1203's&
which encompasse 133 mi'es& tho"sans o- emp'o.ees&
an 13 %i''ion o''ars.
At the p'anning stage& the owner Ea consorti"mF
emp'o.e a !onstr"ction Management !ontractor E!M!F
to irect the pipe'ine portion& %"t retaine centra'ize
ecision ma7ing to ass"re sing'e irection an to
integrate the eAort o- the !M! with the p"mp stations
an the termina's per-orme %. another contractor. The
!M! a'so centra'ize its ecision ma7ing in irecting
over #33 s"%contractors an tho"sans o- venors.
9eca"se there were 12 iAerent constr"ction camps an
h"nres o- iAerent constr"ction sites& this
centra'ization ca"se e'a.s in ecision ma7ing.
At a%o"t the 1+Q point o- ph.sica' comp'etion& the
owner ecie to reorganize the ecision ma7ing
process an change the ro'e o- the !M!. The new
organization was a com%ination o- owner an !M!
personne' assigne within an integrate organization.
The o%jective was to eve'op a sing'e project team
responsi%'e -or contro''ing a'' s"%contractors. /nstea o-
having nine tiers o- organization -rom the Jenera'
Manager o- the !M! to the s"%contractors& the new
organization ha on'. -o"r tiers -rom the 4enior Project
Manager o- the owner to s"%contractors. 9esies "ni=e
irection an coorination& this re"ction in tiers o-
organization great'. improve comm"nications an the
a%i'it. to ma7e an imp'ement ecisions. The new
organization a'so a''owe ecentra'ization o- ecision
ma7ing %. treating =ve sections o- the pipe'ine at
iAerent geographic 'ocations as separate projects& with
a section manager responsi%'e -or a'' -"nctions o- the
section as a pro=t center.
At a%o"t 21Q point o- ph.sica' comp'etion& a'' remaining
activities were to %e conso'iate to ienti-. sing'e
%ottom;'ine responsi%i'it.& to re"ce "p'ication in
management staA& an to "ni-. coorination o-
remaining wor7. Th"s& the project was =rst han'e %.
separate organizations %"t 'ater was r"n %. an
integrate organization with ecentra'ize pro=t
centers. Fina''.& the organization in eAect %ecame sma''
an was rea. to %e phase o"t o- operation.
E>ample $'4( Managing the Channel unnel Construction
from Britain to France
The "nergro"n rai'roa t"nne' -rom 9ritain to France
is common'. ca''e the !hanne' T"nne' or !h"nne'. /t
was %"i't %. t"nne'ing -rom each sie. 4tarting in 1210&
the t"nne's ha a %rea7tho"gh in 1223.
Management t"rmoi' ogge the project -rom the start.
/n 1212& seven o- the eight top peop'e in the
constr"ction organization 'e-t. There was a %"i't in
conGict %etween the contractors an government
overseers> BThe -"namenta' thing wrong is that the
constractors own 'ess than ,Q o- ("rot"nne'. Their
interest is to %"i' an se'' the project at a pro=t.
E("rot"nne''sF interest is -or it to operate economica''.&
sa-e'. an re'ia%'. -or the neCt +3 .ears.B EA'astair
Morton& ("rot"nne' !(O& )"ote in (:<& 12P13P23& p.
+,F.
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$.8 Owner'Builder Operation
/n this approach an owner m"st have a stea. Gow o- on;going
projects in orer to maintain a 'arge wor7 -orce -or in;ho"se
operation. 6owever& the owner ma. choose to s"%contract a
s"%stantia' portion o- the project to o"tsie cons"'tants an
contractors -or %oth esign an constr"ction& even tho"gh it retains
centra'ize ecision ma7ing to integrate a'' eAorts in project
imp'ementation.
E>ample $'5( A.,. Arm& Corps of Engineers Organi-ation
The District (ngineer's OKce o- the *.4. Arm. !orps o-
(ngineers ma. %e viewe as a t.pica' eCamp'e o- an
owner;%"i'er approach as shown in Fig"re 2;1.
Figure $'8( Organization o- a District o- !orps o- (ngineers
/n the District (ngineer's OKce o- the *.4. !orps o-
(ngineers& there "s"a''. eCist an (ngineering Division
an an Operations Division& an& in a 'arge istrict& a
!onstr"ction Division. *ner each ivision& there are
severa' %ranches. 4ince the a"thorization o- a project is
"s"a''. initiate %. the *.4. !ongress& the p'anning an
esign -"nctions are separate in orer to -aci'itate
operations. 4ince the a"thorization o- the -easi%i'it.
st". o- a project ma. precee the a"thorization o- the
esign %. man. .ears& each stage can %est %e han'e
%. a iAerent %ranch in the (ngineering Division. /-
constr"ction is "'timate'. a"thorize& the wor7 ma. %e
han'e %. the !onstr"ction Division or %. o"tsie
contractors. The Operations Division han'es the
operation o- 'oc7s an other -aci'ities which re)"ire
ro"tine attention an maintenance.
Dhen a project is a"thorize& a project manager is
se'ecte -rom the most appropriate %ranch to hea the
project& together with a gro"p o- staA rawn -rom
vario"s %ranches to -orm the project team. Dhen the
project is comp'ete& a'' mem%ers o- the team inc'"ing
the project manager wi'' ret"rn to their reg"'ar posts in
vario"s %ranches an ivisions "nti' the neCt project
assignment. Th"s& a matriC organization is "se in
managing each project.
9ac7 to top
$.: urn@e& Operation
4ome owners wish to e'egate a'' responsi%i'ities o- esign an
constr"ction to o"tsie cons"'tants in a turnkey project
arrangement. A contractor agrees to provie the comp'ete -aci'it.
on the %asis o- per-ormance speci=cations set -orth %. the owner.
The contractor ma. even ass"me the responsi%i'it. o- operating the
project i- the owner so esires. /n orer -or a t"rn7e. operation to
s"ccee& the owner m"st %e a%'e to provie a set o- "nam%ig"o"s
per-ormance speci=cations to the contractor an m"st have
comp'ete con=ence in the capa%i'it. o- the contractor to carr. o"t
the mission.
This approach is the irect opposite o- the owner;%"i'er approach in
which the owner wishes to retain the maCim"m amo"nt o- contro'
-or the esign;constr"ction process.
E>ample $'8( An E>ample of a urn@e& Organi-ation
A 1+3;Mw power p'ant was propose in 121+ %. the
TeCas;:ew MeCico Power !ompan. o- Fort Dorth& TeCas&
which wo"' ma7e "se o- the t"rn7e. operation. L0M
*pon approva' %. the TeCas *ti'it. !ommission& a
consorti"m consisting o- 6.9. Uachr. !o.& Destingho"se
('ectric !o.& an !om%"stion (ngineering& /nc. wo"'
esign& %"i' an =nance the power p'ant -or comp'etion
in 1223 -or an estimate constr"ction cost o- @233
mi''ion in 1223 o''ars. The consorti"m wo"' ass"me
tota' 'ia%i'it. "ring constr"ction& inc'"ing e%t service
costs& an there%. e'iminate the ris7s o- cost esca'ation
to rate pa.ers& stoc7ho'ers an the "ti'it. compan.
management.
9ac7 to top
$.1; %eadership and Moti"ation for the Project eam
The project manager& in the %roaest sense o- the term& is the most
important person -or the s"ccess or -ai'"re o- a project. The project
manager is responsi%'e -or p'anning& organizing an contro''ing the
project. /n t"rn& the project manager receives a"thorit. -rom the
management o- the organization to mo%i'ize the necessar.
reso"rces to comp'ete a project.
The project manager m"st %e a%'e to eCert interpersona' inG"ence
in orer to 'ea the project team. The project manager o-ten gains
the s"pport o- hisPher team thro"gh a com%ination o- the -o''owing>
Forma' a"thorit. res"'ting -rom an oKcia' capacit. which is
empowere to iss"e orers.
<ewar anPor pena't. power res"'ting -rom hisPher capacit.
to ispense irect'. or inirect'. va'"e organization rewars
or pena'ties.
(Cpert power when the project manager is perceive as
possessing specia' 7now'ege or eCpertise -or the jo%.
Attractive power %eca"se the project manager has a
persona'it. or other characteristics to convince others.
/n a matriC organization& the mem%ers o- the -"nctiona' epartments
ma. %e acc"stome to a sing'e reporting 'ine in a hierarchica'
str"ct"re& %"t the project manager coorinates the activities o- the
team mem%ers rawn -rom -"nctiona' epartments. The -"nctiona'
str"ct"re within the matriC organization is responsi%'e -or priorities&
coorination& aministration an =na' ecisions pertaining to project
imp'ementation. Th"s& there are potentia' conGicts %etween
-"nctiona' ivisions an project teams. The project manager m"st %e
given the responsi%i'it. an a"thorit. to reso've vario"s conGicts
s"ch that the esta%'ishe project po'ic. an )"a'it. stanars wi''
not %e jeoparize. Dhen contening iss"es o- a more -"namenta'
nat"re are eve'ope& the. m"st %e %ro"ght to the attention o- a
high 'eve' in the management an %e reso've eCpeitio"s'..
/n genera'& the project manager's a"thorit. m"st %e c'ear'.
oc"mente as we'' as e=ne& partic"'ar'. in a matriC organization
where the -"nctiona' ivision managers o-ten retain certain
a"thorit. over the personne' temporari'. assigne to a project. The
-o''owing princip'es sho"' %e o%serve>
The inter-ace %etween the project manager an the -"nctiona'
ivision managers sho"' %e 7ept as simp'e as possi%'e.
The project manager m"st gain contro' over those e'ements o-
the project which ma. over'ap with -"nctiona' ivision
managers.
The project manager sho"' enco"rage pro%'em so'ving rather
than ro'e p'a.ing o- team mem%ers rawn -rom vario"s
-"nctiona' ivisions.
9ac7 to otp
$.11 #nterpersonal Beha"ior in Project Organi-ations
Dhi'e a s"ccess-"' project manager m"st %e a goo 'eaer& other
mem%ers o- the project team m"st a'so 'earn to wor7 together&
whether the. are assem%'e -rom iAerent ivisions o- the same
organization or even -rom iAerent organizations. 4ome pro%'ems o-
interaction ma. arise initia''. when the team mem%ers are
"n-ami'iar with their own ro'es in the project team& partic"'ar'. -or a
'arge an comp'eC project. These pro%'ems m"st %e reso've )"ic7'.
in orer to eve'op an eAective& -"nctioning team.
Man. o- the major iss"es in constr"ction projects re)"ire eAective
interventions %. inivi"a's& gro"ps an organizations. The
-"namenta' cha''enge is to enhance comm"nication among
inivi"a's& gro"ps an organizations so that o%stac'es in the wa. o-
improving interpersona' re'ations ma. %e remove. 4ome %ehavior
science concepts are he'p-"' in overcoming comm"nication
iKc"'ties that %'oc7 cooperation an coorination. /n ver. 'arge
projects& pro-essiona' %ehavior scientists ma. %e necessar. in
iagnosing the pro%'ems an avising the personne' wor7ing on the
project. The power o- the organization sho"' %e "se j"icio"s'. in
reso'ving conGicts.
The major s.mptoms o- interpersona' %ehavior pro%'ems can %e
etecte %. eCperience o%servers& an the. are o-ten the so"rces
o- serio"s comm"nication iKc"'ties among participants in a
project. For eCamp'e& mem%ers o- a project team ma. avoi each
other an withraw -rom active interactions a%o"t iAerences that
nee to %e ea't with. The. ma. attempt to criticize an %'ame
other inivi"a's or gro"ps when things go wrong. The. ma. resent
s"ggestions -or improvement& an %ecome e-ensive to minimize
c"'pa%i'it. rather than ta7e the initiative to maCimize achievements.
A'' these actions are etrimenta' to the project organization.
Dhi'e these s.mptoms can occ"r to inivi"a's at an. organization&
the. are compo"ne i- the project team consists o- inivi"a's who
are p"t together -rom iAerent organizations. /nvaria%'.& iAerent
organizations have iAerent c"'t"res or moes o- operation.
/nivi"a's -rom iAerent gro"ps ma. not have a common 'o.a't.
an ma. pre-er to eCpan their energ. in the irections most
avantageo"s to themse'ves instea o- the project team. There-ore&
no one sho"' ta7e it -or grante that a project team wi'' wor7
together harmonio"s'. j"st %eca"se its mem%ers are p'ace
ph.sica''. together in one 'ocation. On the contrar.& it m"st %e
ass"me that goo comm"nication can %e achieve on'. thro"gh
the e'i%erate eAort o- the top management o- each organization
contri%"ting to the joint vent"re.
9ac7 to top
$.1$ Perceptions of Owners and Contractors
A'tho"gh owners an contractors ma. have iAerent perceptions on
project management -or constr"ction& the. have a common interest
in creating an environment 'eaing to s"ccess-"' projects in which
per-ormance )"a'it.& comp'etion time an =na' costs are within
prescri%e 'imits an to'erances. /t is interesting there-ore to note
the opinions o- some 'eaing contractors an owners who were
interviewe in 121#. L1M
From the responses o- siC contractors& the 7e. -actors cite -or
s"ccess-"' projects are>
we'' e=ne scope
eCtensive ear'. p'anning
goo 'eaership& management an =rst 'ine s"pervision
positive c'ient re'ationship with c'ient invo'vement
proper project team chemistr.
)"ic7 response to changes
engineering managers concerne with the tota' project& not
j"st the engineering e'ements.
!onverse'.& the 7e. -actors cite -or "ns"ccess-"' projects are>
i'';e=ne scope
poor management
poor p'anning
%rea7own in comm"nication %etween engineering an
constr"ction
"nrea'istic scope& sche"'es an %"gets
man. changes at vario"s stages o- progress
'ac7 o- goo project contro'
The responses o- eight owners inicate that the. i not a'wa.s
"nerstan the concerns o- the contractors a'tho"gh the. genera''.
agree with some o- the 7e. -actors -or s"ccess-"' an "ns"ccess-"'
projects cite %. the contractors. The signi=cant =nings o- the
interviews with owners are s"mmarize as -o''ows>
A'' owners have the same perception o- their own ro'e& %"t
the. iAer signi=cant'. in ass"ming that ro'e in practice.
The owners a'so iAer ramatica''. in the amo"nt o- ear'.
p'anning an in proviing in-ormation in %i pac7ages.
There is a tren towar %rea7ing a project into severa' sma''er
projects as the projects %ecome 'arger an more comp'eC.
Most owners recognize the importance o- sche"'e& %"t the.
aopt iAerent re)"irements in contro''ing the sche"'e.
A'' agree that peop'e are the 7e. to project s"ccess.
From the res"'ts o- these interviews& it is o%vio"s that owners m"st
%e more aware an invo've in the process in orer to generate
-avora%'e conitions -or s"ccess-"' projects. Design pro-essiona's
an constr"ction contractors m"st provie %etter comm"nication
with each other an with the owner in project imp'ementation.
9ac7 to top
$.1) *eferences
1. 9arrie& Dona' 4. an 9o. !. Pa"'son& 8r.& "rofessional
%onstruction (anagement& McJraw;6i'' 9oo7 !ompan.& 2n
(.& 121#.
2. 6a'pin& Danie' D. an <ona' D. Doohea& %onstruction
(anagement& 8ohn Di'e. an 4ons& 1213.
3. 6ogetts& <.M.& (anagement4 -heory& "rocess and "ractice&
D.9. 4a"ners !o.& Phi'ae'phia& PA& 1202.
#. Herzner& 6. "roject (anagement4 # $ystems #pproach to
"lanning& $cheduling and %ontrolling5 2n. (.& Nan :ostran
<einho'& :ew Ior7& 121#.
+. $evitt& <.(.& <.D. $ogcher an :.6. 5"a"mi& B/mpact o-
Owner;(ngineer <is7 4haring on Design !onservatism&B #$%E
3ournal of "rofessional .ssues in Engineering& No'. 113& 121#&
pp. 1+0;1,0.
,. Moo'in& F.P.& 8r.& an F.A. Mc!o.> BManaging the A'as7a Pipe'ine
Project&B %ivil Engineering& :ovem%er 1211& pp. +1;+#.
0. M"rra.& $.& (. Ja''aro& 4. Aggarwa' an <. Da.wit7a&
BMar7eting !onstr"ction Management 4ervices&B #$%E 3ournal
of %onstruction 'ivision& No'. 130& 1211& pp. ,,+;,00.
9ac7 to top
$.1. Footnotes
1. 4ee <. M. Dieman& BThe PM9OH <eport ;; PM/ 9o. o-
Hnow'ege 4tanar&B "roject (anagement 3ournal& No'. 10&
:o. 3& A"g"st '21,& pp. '+;2#. 9ac7
2. 4ee $. !. 4t"c7en%r"c7& BProject Management Framewor7&B
"roject (anagement 3ournal& No'. 10& :o. 3& A"g"st 121,& pp.
2+;33. 9ac7
3. 4ee& -or eCamp'e& O'!onnor& 8.T.& an Nic7or.& !.J.& %ontrol of
%onstruction "roject $cope& A <eport to the !onstr"ction
/n"str. /nstit"te& The *niversit. o- TeCas at A"stin& Decem%er
121+. 9ac7
#. 4ee& -or eCamp'e& Feera' Form 23;A an (PA's AppeniC !;2
c'a"ses. 9ac7
+. 4ee (. D'Appo'onia& B!oping with *ncertaint. in Jeotechnica'
(ngineering an !onstr"ction&B $pecial "roceedings of the 9th
.nternational %onference on $oil (echanics and 6oundation
Engineering& To7.o& 8apan& No'. #& 1202& pp. 1;11. 9ac7
,. These -eat"res an the -o''owing eCamp'e are escri%e in F.P.
Moo'in& 8r. an F.A. Mc!o.& BManaging the A'as7a Pipe'ine
Project&B %ivil Engineering& :ovem%er 1211& pp. +1;+#. 9ac7
0. BPrivate Mone. Finances TeCas *ti'it.'s Power P'antB
Engineering News Record> 8"'. 2+& 121+& p. 13. 9ac7
1. 4ee 8.(. Die7mann an H.9. Thr"sh& "roject %ontrol in 'esign
Engineering& A <eport to the !onstr"ction /n"str. /nstit"te&
The *niversit. o- TeCas at A"stin& TeCas& Ma. 121,. 9ac7
Previo"s
!hapter
S
Ta%'e o-
!ontents
S
:eCt
!hapter
). he 0esign and Construction Process
).1 0esign and Construction as an #ntegrated ,&stem
/n the p'anning o- -aci'ities& it is important to recognize the c'ose
re'ationship %etween esign an constr"ction. These processes can
%est %e viewe as an integrate s.stem. 9roa'. spea7ing& esign is
a process o- creating the escription o- a new -aci'it.& "s"a''.
represente %. etai'e p'ans an speci=cationsO constr"ction
p'anning is a process o- ienti-.ing activities an reso"rces re)"ire
to ma7e the esign a ph.sica' rea'it.. 6ence& constr"ction is the
imp'ementation o- a esign envisione %. architects an engineers.
/n %oth esign an constr"ction& n"mero"s operationa' tas7s m"st
%e per-orme with a variet. o- preceence an other re'ationships
among the iAerent tas7s.
4evera' characteristics are "ni)"e to the p'anning o- constr"cte
-aci'ities an sho"' %e 7ept in min even at the ver. ear'. stage o-
the project 'i-e c.c'e. These inc'"e the -o''owing>
:ear'. ever. -aci'it. is c"stom esigne an constr"cte& an
o-ten re)"ires a 'ong time to comp'ete.
9oth the esign an constr"ction o- a -aci'it. m"st satis-. the
conitions pec"'iar to a speci=c site.
9eca"se each project is site speci=c& its eCec"tion is
inG"ence %. nat"ra'& socia' an other 'ocationa' conitions
s"ch as weather& 'a%or s"pp'.& 'oca' %"i'ing coes& etc.
4ince the service 'i-e o- a -aci'it. is 'ong& the anticipation o-
-"t"re re)"irements is inherent'. iKc"'t.
9eca"se o- techno'ogica' comp'eCit. an mar7et emans&
changes o- esign p'ans "ring constr"ction are not
"ncommon.
/n an integrate s.stem& the p'anning -or %oth esign an
constr"ction can procee a'most sim"'taneo"s'.& eCamining vario"s
a'ternatives which are esira%'e -rom %oth viewpoints an th"s
e'iminating the necessit. o- eCtensive revisions "ner the g"ise o-
va'"e engineering. F"rthermore& the review o- esigns with regar to
their constr"cti%i'it. can %e carrie o"t as the project progresses
-rom p'anning to esign. For eCamp'e& i- the se)"ence o- assem%'.
o- a str"ct"re an the critica' 'oaings on the partia''. assem%'e
str"ct"re "ring constr"ction are care-"''. consiere as a part o-
the overa'' str"ct"ra' esign& the impacts o- the esign on
constr"ction -a'sewor7 an on assem%'. etai's can %e anticipate.
6owever& i- the esign pro-essiona's are eCpecte to ass"me s"ch
responsi%i'ities& the. m"st %e reware -or sharing the ris7s as we''
as -or "nerta7ing these aitiona' tas7s. 4imi'ar'.& when
constr"ction contractors are eCpecte to ta7e over the
responsi%i'ities o- engineers& s"ch as evising a ver. e'a%orate
scheme to erect an "nconventiona' str"ct"re& the. too m"st %e
reware accoring'.. As 'ong as the owner oes not ass"me the
responsi%i'it. -or reso'ving this ris7;rewar i'emma& the concept o-
a tr"'. integrate s.stem -or esign an constr"ction cannot %e
rea'ize.
/t is interesting to note that ("ropean owners are genera''. more
open to new techno'ogies an to share ris7s with esigners an
contractors. /n partic"'ar& the. are more wi''ing to accept
responsi%i'ities -or the "n-oreseen s"%s"r-ace conitions in
geotechnica' engineering. !onse)"ent'.& the esigners an
contractors are a'so more wi''ing to intro"ce new techni)"es in
orer to re"ce the time an cost o- constr"ction. /n ("ropean
practice& owners t.pica''. present contractors with a concept"a'
esign& an contractors prepare etai'e esigns& which are chec7e
%. the owner's engineers. Those etai'e esigns ma. %e a'ternate
esigns& an specia't. contractors ma. a'so prepare etai'e
a'ternate esigns.
E>ample )'1( Responsibility for Shop Drawings
The wi''ingness to ass"me responsi%i'ities oes not
come easi'. -rom an. part. in the c"rrent 'itigio"s
c'imate o- the constr"ction in"str. in the *nite 4tates.
On the other han& i- owner& architect& engineer&
contractor an other gro"ps that represent parts o- the
in"str. o not joint'. =C the responsi%i'ities o- vario"s
tas7s to appropriate parties& the stanars o- practice
wi'' event"a''. %e set %. co"rt ecisions. /n an attempt
to provie a g"ie to the entire spectr"m o- participants
in a constr"ction project& the American 4ociet. o- !ivi'
(ngineers iss"e a Man"a' o- Pro-essiona' Practice
entit'e Quality in the %onstructed "roject in 1223. This
man"a' is intene to he'p %ring a t"rn aro"n o- the
-ragmentation o- activities in the esign an
constr"ction process.
4hop rawings represent the assem%'. etai's -or
erecting a str"ct"re which sho"' reGect the intent an
rationa'e o- the origina' str"ct"ra' esign. The. are
prepare %. the constr"ction contractor an reviewe
%. the esign pro-essiona'. 6owever& since the
responsi%i'it. -or preparing shop rawings was
traitiona''. assigne to constr"ction contractors& esign
pro-essiona's too7 the view that the review process was
avisor. an ass"me no responsi%i'it. -or their
acc"rac.. This j"sti=cation was r"'e "naccepta%'e %. a
co"rt in connection with the wa'7wa. -ai'"re at the 6.att
6ote' in Hansas !it. in 121+. /n preparing the A4!(
Man"a' o- Pro-essiona' Practice -or 5"a'it. in the
!onstr"cte Project& the responsi%i'ities -or preparation
o- shop rawings prove to %e the most iKc"'t to
eve'op. L1M The reason -or this sit"ation is not iKc"'t
to -athom since the responsi%i'ities -or the tas7 are
iA"se& an a'' parties m"st agree to the new
responsi%i'ities assigne to each in the recommene
ris7;rewar re'ations shown in Ta%'e 3;1.
Traitiona''.& the owner is not invo've in the
preparation an review o- shop rawings& an perhaps is
even "naware o- an. potentia' pro%'ems. /n the
recommene practice& the owner is re)"ire to ta7e
responsi%i'it. -or proviing ae)"ate time an -"ning&
inc'"ing approva' o- sche"'ing& in orer to a''ow the
esign pro-essiona's an constr"ction contractors to
per-orm satis-actori'..
a6le )'1 <ecommene <esponsi%i'it. -or 4hop Drawings
as@
*esponsi6le Part&
Own
er
0esign
Profession
al
Constructio
n
Contractor
Provie ae)"ate time an -"ning
-or shop rawing preparation an
review
Prime
Arrange -or str"ct"ra' esign Prime
Provie str"ct"ra' esign Prime
(sta%'ish overa'' responsi%i'it. -or
connection esign
Prime
Accomp'ish connection esign E%. Prime
esign pro-essiona'F
A'ternative'.& provie 'oaing
re)"irement an other in-ormation
necessar. -or shop rawing
preparation
Prime
A'ternative'.& accomp'ish some or a''
o- connection esign E%. const"ctor
with a 'icense P.(.F
Prime
4peci-. shop rawing re)"irements
an proce"res
<evie
w
Prime
Approve proper sche"'ing Prime Assisting Assisting
Provie shop rawing an s"%mit the
rawing on sche"'e
Prime
Ma7e time'. reviews an approva's Prime
Provie erection proce"res&
constr"ction %racing& shoring&
means& methos an techni)"es o-
constr"ction& an constr"ction sa-et.
Prime
E>ample )'$(Model Metro Project in Milan, #tal& B$C
*ner /ta'ian 'aw& "n-oreseen s"%s"r-ace conitions are
the owner's responsi%i'it.& not the contractor's. This is a
stri7ing iAerence -rom *.4. constr"ction practice where
change conitions c'a"ses an c'aims an the
ae)"ac. o- pre%i site investigations are points o-
contention. /n eAect& the /ta'ian 'aw means that the
owner ass"mes those ris7s. 9"t "ner the same 'aw& a
contractor ma. e'ect to ass"me the ris7s in orer to
'ower the %i price an there%. %eat the competition.
Accoring to the Technica' Director o- <oio& the Mi'an;
%ase contractor which is heavi'. invo've in the
gro"ting jo% -or t"nne'ing in the Moe' Metro project in
Mi'an& /ta'.& there are two t.pica' contract"a'
arrangements -or specia'ize s"%contractor =rms s"ch
as theirs. One is to wor7 on a "nit price %asis with no
responsi%i'it. -or the esign. The other is what he ca''s
the Bnominate s"%contractorB or t"rn7e. metho>
pre)"a'i=e s"%contractors oAer their own esigns an
g"arantee the price& )"a'it.& )"antities& an& i- the.
wish& the ris7s o- "n-oreseen conitions.
At the %eginning o- the Mi'an metro project& the <oio
contract ratio was +3P+3 "nit price an t"rn7e.. The =rm
convince the metro owners that the. wo"' save
mone. with the t"rn7e. approach& an the ratio %ecame
13Q t"rn7e.. Dhat's more& in the wor7 pac7ages where
<oio wor7e with other gro"ting specia'ists& those
s"%contractors pai <oio a -ee to ass"me a'' ris7s -or
"n-oreseen conitions.
*ner these circ"mstances& it was critica' that the =rm
sho"' 7now the s"%s"r-ace conitions as precise'. as
possi%'e& which was a major reason wh. the =rm
eve'ope a comp"terize e'ectronic sensing program
to preict stratigraph. an th"s contro' gro"t miCes&
press"res an& most important& )"antities.
).$ #nno"ation and echnological Feasi6ilit&
The p'anning -or a constr"ction project %egins with the generation o-
concepts -or a -aci'it. which wi'' meet mar7et emans an owner
nees. /nnovative concepts in esign are high'. va'"e not -or their
own sa7e %"t -or their contri%"tions to re"cing costs an to the
improvement o- aesthetics& com-ort or convenience as em%oie in
a we'';esigne -aci'it.. 6owever& the constr"ctor as we'' as the
esign pro-essiona's m"st have an appreciation an -"''
"nerstaning o- the techno'ogica' comp'eCities o-ten associate
with innovative esigns in orer to provie a sa-e an so"n -aci'it..
4ince these concepts are o-ten pre'iminar. or tentative& screening
st"ies are carrie o"t to etermine the overa'' techno'ogica'
via%i'it. an economic attractiveness witho"t p"rs"ing these
concepts in great etai'. 9eca"se o- the am%ig"it. o- the o%jectives
an the "ncertaint. o- eCterna' events& screening st"ies ca'' -or
"ninhi%ite innovation in creating new concepts an j"icio"s
j"gment in se'ecting the appropriate ones -or -"rther consieration.
One o- the most important aspects o- esign innovation is the
necessit. o- comm"nication in the esignPconstr"ction partnership.
/n the case o- %rige esign& it can %e i''"strate %. the -o''owing
)"otation -rom $in an Jerwic7 concerning %rige constr"ction> L3M
The great pioneering stee' %riges o- the *nite 4tates
were %"i't %. an open or covert a''iance %etween
esigners an constr"ctors. The t"rn7e. approach o-
esigner;constr"ctor has eve'ope an %"i't o"r
chemica' p'ants& re=neries& stee' p'ants& an n"c'ear
power p'ants. /t is time to as7& serio"s'.& whether we
ma. not have aopte a restrictive approach %.
ivorcing engineering an constr"ction in the =e' o-
%rige constr"ction.
/- a contractor;engineer& %. some stro7e o- geni"s& were
to present to esign engineers toa. a woner-"' new
scheme -or 'ong span prestresse concrete %riges that
mae them -ar cheaper& he wo"' have to ma7e these
ieas avai'a%'e to a'' other constr"ctors& even 'imiting or
watering them own so as to Bget a gro"p o- tr"'.
competitive %iers.B The engineer wo"' have to ma7e
s"re that he -o"n other contractors to %i against the
ingenio"s innovator.
/- an engineer sho"'& %. a simi'ar stro7e o- geni"s& hit
on s"ch a "ni)"e an %ri''iant scheme& he wo"' have to
worr.& wonering i- the 'ow %ier wo"' %e one who
ha an. concept o- what he was tr.ing to accomp'ish or
was in an. wa. )"a'i=e -or high c'ass technica' wor7.
/nnovative esign concepts m"st %e teste -or techno'ogica'
-easi%i'it.. Three 'eve's o- techno'og. are o- specia' concern>
techno'ogica' re)"irements -or operation or pro"ction& esign
reso"rces an constr"ction techno'og.. The =rst re-ers to the new
techno'ogies that ma. %e intro"ce in a -aci'it. which is "se -or a
certain t.pe o- pro"ction s"ch as chemica' processing or n"c'ear
power generation. The secon re-ers to the esign capa%i'ities that
are avai'a%'e to the esigners& s"ch as new comp"tationa' methos
or new materia's. The thir re-ers to new techno'ogies which can %e
aopte to constr"ct the -aci'it.& s"ch as new e)"ipment or new
constr"ction methos.
A new -aci'it. ma. invo've comp'eC new techno'og. -or operation in
hosti'e environments s"ch as severe c'imate or restricte
accessi%i'it.. $arge projects with "npreceente emans -or
reso"rces s"ch as 'a%or s"pp'.& materia' an in-rastr"ct"re ma. a'so
ca'' -or care-"' techno'ogica' -easi%i'it. st"ies. Major e'ements in a
-easi%i'it. st". on pro"ction techno'og. sho"' inc'"e& %"t are
not 'imite to& the -o''owing>
Project t.pe as characterize %. the techno'og. re)"ire& s"ch
as s.nthetic -"e's& petrochemica's& n"c'ear power p'ants& etc.
Project size in o''ars& esign engineer's ho"rs& constr"ction
'a%or ho"rs& etc.
Design& inc'"ing so"rces o- an. specia' techno'og. which
re)"ire 'icensing agreements.
Project 'ocation which ma. pose pro%'ems in environmenta'
protection& 'a%or pro"ctivit. an specia' ris7s.
An eCamp'e o- innovative esign -or operation an pro"ction is the
"se o- entrop. concepts -or the esign o- integrate chemica'
processes. 4imp'e ca'c"'ations can %e "se to inicate the minim"m
energ. re)"irements an the 'east n"m%er o- heat eCchange "nits
to achieve esire o%jectives. The res"'t is a new incentive an
criterion -or esigners to achieve more eAective esigns. :"mero"s
app'ications o- the new methoo'og. has shown its eKcac. in
re"cing %oth energ. costs an constr"ction eCpenit"res. L#M This
is a case in which innovative esign is not a matter o- traing;oA
operating an capita' costs& %"t %etter esigns can sim"'taneo"s'.
achieve improvements in %oth o%jectives.
The choice o- constr"ction techno'og. an metho invo'ves %oth
strategic an tactical ecisions a%o"t appropriate techno'ogies an
the %est se)"encing o- operations. For eCamp'e& the eCtent to which
pre-a%ricate -aci'it. components wi'' %e "se represents a strategic
constr"ction ecision. /n t"rn& pre-a%rication o- components might
%e accomp'ishe oA;site in eCisting man"-act"ring -aci'ities or a
temporar.& on;site -a%rication p'ant might %e "se. Another
eCamp'e o- a strategic ecision is whether to insta'' mechanica'
e)"ipment in p'ace ear'. in the constr"ction process or at an
intermeiate stage. 4trategic ecisions o- this sort sho"' %e
integrate with the process o- -aci'it. esign in man. cases. At the
tactica' 'eve'& etai'e ecisions a%o"t how to accomp'ish partic"'ar
tas7s are re)"ire& an s"ch ecisions can o-ten %e mae in the
=e'.
!onstr"ction p'anning sho"' %e a major concern in the
eve'opment o- -aci'it. esigns& in the preparation o- cost estimates&
an in -orming %is %. contractors. *n-ort"nate'.& p'anning -or the
constr"ction o- a -aci'it. is o-ten treate as an a-ter tho"ght %.
esign pro-essiona's. This contrasts with man"-act"ring practices in
which the assem*ly o- evices is a major concern in esign. Design
to ins"re ease o- assem%'. or constr"ction sho"' %e a major
concern o- engineers an architects. As the 9"siness <o"nta%'e
note& BA'' too o-ten chances to c"t sche"'e time an costs are 'ost
%eca"se constr"ction operates as a pro"ction process separate %.
a chasm -rom =nancia' p'anning& sche"'ing& an engineering or
architect"ra' esign. Too man. engineers& separate -rom =e'
eCperience& are not "p to ate a%o"t how to %"i' what the. esign&
or how to esign so str"ct"res an e)"ipment can %e erecte most
eKcient'..B L+M
E>ample )')( Innovative use of structural frames for
buildings B4C
The str"ct"ra' esign o- s7.scrapers oAers an eCamp'e
o- innovation in overcoming the %arrier o- high costs -or
ta'' %"i'ings %. ma7ing "se o- new esign capa%i'ities.
A revo'"tionar. concept in s7.scraper esign was
intro"ce in the 12,3's %. Faz'"r Hhan who arg"e
that& -or a %"i'ing o- a given height& there is an
appropriate str"ct"ra' s.stem which wo"' pro"ce the
most eKcient "se o- the materia'.
9e-ore 12,+& most s7.scrapers were stee' rigi -rames.
6owever& Faz'"r Hhan %e'ieve that it was "neconomica'
to constr"ct a'' oKce %"i'ings o- rigi -rames& an
propose an arra. o- appropriate str"ct"ra' s.stems -or
stee' %"i'ings o- speci=e heights as shown in Fig"re 3;
1. 9. choosing an appropriate str"ct"ra' s.stem& an
engineer can "se str"ct"ra' materia's more eKcient'..
For eCamp'e& the ,3;stor. !hase Manhattan 9"i'ing in
:ew Ior7 "se a%o"t ,3 po"ns per s)"are -oot o- stee'
in its rigi -rame str"ct"re& whi'e the 133;stor. 8ohn
6ancoc7 !enter in !hicago "se on'. 33 po"ns per
s)"are -oot -or a tr"ste t"%e s.stem. At the time the
!hase Manhattan 9"i'ing was constr"cte& no %racing
was "se to stiAen the core o- a rigi -rame %"i'ing
%eca"se esign engineers i not have the comp"ting
too's to o the comp'eC mathematica' ana'.sis
associate with core %racing.
Figure )'1( Propose 4tr"ct"ra' 4.stem =r 4tee' 9"i'ings
E<eprinte with permission -rom %ivil Engineering& Ma. 1213F
).) #nno"ation and Economic Feasi6ilit&
/nnovation is o-ten regare as the engine which can intro"ce
constr"ction economies an avance 'a%or pro"ctivit.. This is
o%vio"s'. tr"e -or certain t.pes o- innovations in in"stria'
pro"ction techno'ogies& esign capa%i'ities& an constr"ction
e)"ipment an methos. 6owever& there are a'so 'imitations "e to
the economic in-easi%i'it. o- s"ch innovations& partic"'ar'. in the
segments o- constr"ction in"str. which are more -ragmente an
permit ease o- entr.& as in the constr"ction o- resientia' ho"sing.
Mar7et eman an =rm size p'a. an important ro'e in this regar. /-
a %"i'er is to constr"ct a 'arger n"m%er o- simi'ar "nits o- %"i'ings&
the cost per "nit ma. %e re"ce. This re'ationship %etween the
mar7et eman an the tota' cost o- pro"ction ma. %e i''"strate
schematica''. as in Fig"re 3;2. An initia' thresho' or =Ce cost F is
inc"rre to a''ow an. pro"ction. 9e.on this thresho' cost& tota'
cost increases -aster than the "nits o- o"tp"t %"t at a ecreasing
rate. At each point on this tota' cost c"rve& the average cost is
represente %. the s'ope o- a 'ine -rom the origin to the point on the
c"rve. At a point 6& the average cost per "nit is at a minim"m.
9e.on 6 to the right& the tota' cost again increases -aster than the
"nits o- o"tp"t an at an increasing rate. Dhen the rate o- change
o- the average cost s'ope is ecreasing or constant as %etween 3
an 6 on the c"rve& the range %etween 3 an 6 is sai to %e
increasing return to scaleO when the rate o- change o- the average
cost s'ope is increasing as %e.on 6 to the right& the region is sai
to %e decreasing return to scale. Th"s& i- -ewer than h "nits are
constr"cte& the "nit price wi'' %e higher than that o- eCact'. h "nits.
On the other han& the "nit price wi'' increase again i- more than h
"nits are constr"cte.
Figure )'$( Mar7et Deman an Tota' !ost <e'ationship
:owhere is the eAect o- mar7et eman an tota' cost more evient
than in resientia' ho"sing. L0M The ho"sing segment in the 'ast -ew
ecaes accepte man. innovative technica' improvements in
%"i'ing materia's which were promote %. materia' s"pp'iers. 4ince
materia' s"pp'iers provie pro"cts to a 'arge n"m%er o-
home%"i'ers an others& the. are in a %etter position to eCp'oit
pro"ction economies o- sca'e an to s"pport new pro"ct
eve'opment. 6owever& home%"i'ers themse'ves have not %een as
s"ccess-"' in ma7ing the most -"namenta' -orm o- innovation
which encompasses changes in the techno'ogica' process o-
home%"i'ing %. shi-ting the miCt"re o- 'a%or an materia' inp"ts&
s"ch as s"%stit"ting 'arge sca'e oA;site pre-a%rication -or on;site
assem%'..
There are severa' major %arriers to innovation in the techno'ogica'
process o- home%"i'ing& inc'"ing eman insta%i'it.& in"stria'
-ragmentation& an %"i'ing coes. 4ince mar7et eman -or new
homes -o''ows emographic trens an other socio;economic
conitions& the variation in home %"i'ing has %een an.thing %"t
reg"'ar. The pro=ta%i'it. o- the home%"i'ing in"str. has c'ose'.
matche aggregate o"tp"t 'eve's. 4ince entr. an eCist -rom the
in"str. are re'ative'. eas.& it is not "ncommon "ring perios o-
s'ac7 eman to =n %"i'ers 'eaving the mar7et or s"spening
their operations "nti' %etter times. The inconsistent 'eve's o-
retaine earnings over a perio o- .ears& even among the more
esta%'ishe %"i'ers& are 'i7e'. to isco"rage s"pport -or research
an eve'opment eAorts which are re)"ire to n"rt"re innovation.
F"rthermore& %eca"se the home%"i'ing in"str. is -ragmente with
a vast majorit. o- home%"i'ers active on'. in 'oca' regions& the
t.pica' home%"i'er =ns it eCcessive'. eCpensive to eCperiment
with new esigns. The potentia' costs o- a -ai'"re or even a
moerate'. s"ccess-"' innovation wo"' o"tweigh the eCpecte
%ene=ts o- a'' %"t the most s"ccess-"' innovations. Nariation in 'oca'
%"i'ing coes has a'so ca"se ineKciencies a'tho"gh repeate
attempts have %een mae to stanarize %"i'ing coes.
/n aition to the sca'e economies visi%'e within a sector o- the
constr"ction mar7et& there are a'so possi%i'ities -or sca'e economies
in inivi"a' -aci'it.. For eCamp'e& the re'ationship %etween the size
o- a %"i'ing EeCpresse in s)"are -eetF an the inp"t 'a%or
EeCpresse in 'a%orho"rs per s)"are -ootF varies -or iAerent t.pes
an sizes o- %"i'ings. As shown in Fig"re 3;3& these re'ationships -or
severa' t.pes o- %"i'ings eChi%it iAerent characteristics. L1M The
'a%or ho"rs per s)"are -oot ec'ine as the size o- -aci'it. increases
-or ho"ses& p"%'ic ho"sing an p"%'ic %"i'ings. 6owever& the 'a%or
ho"rs per s)"are -oot a'most remains constant -or a'' sizes o- schoo'
%"i'ings an increases as the size o- a hospita' -aci'it. increases.
Figure )')( /''"strative <e'ationships %etween 9"i'ing 4ize an
/np"t $a%or %. T.pes o- 9"i'ing
E<eprinte with permission -rom P.8. !assimatis& Economics of the
%onstruction .ndustry&
The :ationa' /n"str. !on-erence 9oar& 4(9& :o. 111& 12,2& p.+3F
E>ample )'.( Use of new materials B:C
/n recent .ears& an a'most entire'. new set o- materia's
is emerging -or constr"ction& 'arge'. -rom the aerospace
an e'ectronics in"stries. These materia's were
eve'ope -rom new 7now'ege a%o"t the str"ct"re an
properties o- materia's as we'' as new techni)"es -or
a'tering eCisting materia's. Aitives to traitiona'
materia's s"ch as concrete an stee' are partic"'ar'.
prominent. For eCamp'e& it has %een 7nown -or some
time that po'.mers wo"' increase concrete strength&
water resistance an a%i'it. to ins"'ate when the. are
ae to the cement. 6owever& their "se has %een
'imite %. their costs since the. have ha to rep'ace as
m"ch as 13 percent o- the cement to %e eAective.
6owever& 4weish researchers have he'pe re"ce costs
%. "sing po'.mer microspheres 1 mi''ionths o- an inch
across& which occ"p. 'ess than 1 percent o- the cement.
!oncretes mae with these microspheres meet even the
strict stanars -or oAshore str"ct"res in the :orth 4ea.
<esearch on micro;aitives wi'' pro%a%'. pro"ce
"se-"' concretes -or repairing roa an %riges as we''.
E>ample )'/( HabitatB1;C
6a%itat was an eCperimenta' resientia' comp'eC
esigne %. Moshe 4a-ie an constr"cte in mo"'es
with an on;site -actor. -or the 12,0 (Cposition in
Montrea'& !anaa. The origina' proposa' ca''e -or a se'-;
containe comm"nit. with 1333 to 2333 apartments&
%"t was sca'e own to a sing'e 13;stor. comp'eC with
1+1 "nits %"i't on !ite' " 6avre& a 'an='' penins"'a in
Montrea''s inner har%or. The project was %"gete -or
@11.+ mi''ion& an a'most ha'- o- that was spent %"i'ing
the -actories an ac)"iring specia' cranes. This start;"p
cost was a%s"r'. high -or a sing'e 13;stor. apartment
comp'eC& %"t might have %een j"sti=e in the origina'
proposa' -or a who'e comm"nit.. As a res"'t o- the sma''
sca'e& eve'opment costs amo"nte to @1+&+33 -or an
apartment at a time when average Montrea' apartments
were se''ing -or @13&333 to @1,&333. 6owever& even i-
mass pro"ction was possi%'e& steep increases in "r%an
'an costs an interest rates in recent .ears wo"' have
overshaowe the projecte savings -rom pro"ction.
Th"s& an innovation which was hai'e at one time as the
so'"tion -or "r%an ho"sing has not materia'ize "e to a
com%ination o- economic -actors.
).. 0esign Methodolog&
Dhi'e the concept"a' esign process ma. %e -orma' or in-orma'& it
can %e characterize %. a series o- actions> -orm"'ation& ana'.sis&
search& ecision& speci=cation& an moi=cation. 6owever& at the
ear'. stage in the eve'opment o- a new project& these actions are
high'. interactive as i''"strate in Fig"re 3;#. L11M Man. iterations o-
reesign are eCpecte to re=ne the -"nctiona' re)"irements& esign
concepts an =nancia' constraints& even tho"gh the ana'.tic too's
app'ie to the so'"tion o- the pro%'em at this stage ma. %e ver.
cr"e.
Figure )'.( !oncept"a' Design Process
EAapte with permission -rom <.D. 8ensen an !.!. Tonies&
$oftware Engineering&
Prentice 6a''& (ng'ewoo !'iAs& :8& 1202& p.22F
The series o- actions ta7en in the concept"a' esign process ma. %e
escri%e as -o''ows>
Form"'ation re-ers to the e=nition or escription o- a esign
pro%'em in %roa terms thro"gh the s.nthesis o- ieas
escri%ing a'ternative -aci'ities.
Ana'.sis re=nes the pro%'em e=nition or escription %.
separating important -rom periphera' in-ormation an %.
p"''ing together the essentia' etai'. /nterpretation an
preiction are "s"a''. re)"ire as part o- the ana'.sis.
4earch invo'ves gathering a set o- potentia' so'"tions -or
per-orming the speci=e -"nctions an satis-.ing the "ser
re)"irements.
Decision means that each o- the potentia' so'"tions is
eva'"ate an compare to the a'ternatives "nti' the %est
so'"tion is o%taine.
4peci=cation is to escri%e the chosen so'"tion in a -orm which
contains eno"gh etai' -or imp'ementation.
Moi=cation re-ers to the change in the so'"tion or re;esign i-
the so'"tion is -o"n to %e wanting or i- new in-ormation is
iscovere in the process o- esign.
As the project moves -rom concept"a' p'anning to etai'e esign&
the esign process %ecomes more -orma'. /n genera'& the actions o-
-orm"'ation& ana'.sis& search& ecision& speci=cation an
moi=cation sti'' ho'& %"t the. represent speci=c steps with 'ess
ranom interactions in etai'e esign. The esign methoo'og.
th"s -orma'ize can %e app'ie to a variet. o- esign pro%'ems. For
eCamp'e& the ana'og. o- the schematic iagrams o- the str"ct"ra'
esign process an o- the comp"ter program eve'opment process
is shown in Fig"re 3;+ L12M.
Figure )'/( An Ana'og. 9etween 4tr"ct"ra' Design an !omp"ter
Program Deve'opment Process
E<eprinte with permission -rom (.6. Ja.'or an !. :. Ja.'or&
es.& $tructural Engineering )and*ook&
2n (.& McJraw;6i'' 9oo7 !ompan.& :ew Ior7& 1202.F
The %asic approach to esign re'ies on ecomposition an
integration. 4ince esign pro%'ems are 'arge an comp'eC& the.
have to %e ecompose to .ie' s"%pro%'ems that are sma'' eno"gh
to so've. There are n"mero"s a'ternative wa.s to ecompose esign
pro%'ems& s"ch as ecomposition %. -"nctions o- the -aci'it.& %.
spatia' 'ocations o- its parts& or %. 'in7s o- vario"s -"nctions or parts.
4o'"tions to s"%pro%'ems m"st %e integrate into an overa''
so'"tion. The integration o-ten creates concept"a' conGicts which
m"st %e ienti=e an correcte. A hierarchica' str"ct"re with an
appropriate n"m%er o- 'eve's ma. %e "se -or the ecomposition o-
a esign pro%'em to s"%pro%'ems. For eCamp'e& in the str"ct"ra'
esign o- a m"'tistor. %"i'ing& the %"i'ing ma. %e ecompose
into Goors& an each Goor ma. in t"rn %e ecompose into separate
areas. Th"s& a hierarch. representing the 'eve's o- %"i'ing& Goor
an area is -orme.
DiAerent esign st.'es ma. %e "se. The aoption o- a partic"'ar
st.'e o-ten epens on -actors s"ch as time press"re or avai'a%'e
esign too's& as we'' as the nat"re o- the esign pro%'em. (Camp'es
o- iAerent st.'es are>
op'down design. 9egin with a %ehavior escription o- the
-aci'it. an wor7 towars escriptions o- its components an
their interconnections.
Bottom'up design. 9egin with a set o- components& an see
i- the. can %e arrange to meet the %ehavior escription o-
the -aci'it..
The esign o- a new -aci'it. o-ten %egins with the search o- the ='es
-or a esign that comes as c'ose as possi%'e to the one neee. The
esign process is g"ie %. acc"m"'ate eCperience an int"ition in
the -orm o- he"ristic r"'es to =n accepta%'e so'"tions. As more
eCperience is gaine -or this partic"'ar t.pe o- -aci'it.& it o-ten
%ecomes evient that parts o- the esign pro%'em are amena%'e to
rigoro"s e=nition an a'gorithmic so'"tion. (ven -orma'
optimization methos ma. %e app'ie to some parts o- the pro%'em.
)./ Functional 0esign
The o%jective o- -"nctiona' esign -or a propose -aci'it. is to treat
the -aci'it. as a comp'eC s.stem o- interre'ate spaces which are
organize s.stematica''. accoring to the -"nctions to %e per-orme
in these spaces in orer to serve a co''ection o- nees. The
arrangement o- ph.sica' spaces can %e viewe as an iterative
esign process to =n a s"ita%'e Goor p'an to -aci'itate the
movement o- peop'e an goos associate with the operations
intene.
A esigner o-ten re'ies on a he"ristic approach& i.e.& app'.ing
se'ecte r"'es or strategies serving to stim"'ate the investigation in
search -or a so'"tion. The he"ristic approach "se in arranging
spatia' 'a.o"ts -or -aci'ities is %ase genera''. on the -o''owing
consierations>
1. ienti=cation o- the goa's an constraints -or speci=e tas7s&
2. etermination o- the c"rrent state o- each tas7 in the iterative
esign process&
3. eva'"ation o- the iAerences %etween the c"rrent state an
the goa's&
#. means o- irecting the eAorts o- search towars the goa's on
the %asis o- past eCperience.
6ence& the proce"re -or see7ing the goa's can %e rec.c'e
iterative'. in orer to ma7e traeoAs an th"s improve the so'"tion
o- spatia' 'a.o"ts.
!onsier& -or eCamp'e& an integrate -"nctiona' esign -or a
propose hospita'. L13M 4ince the responsi%i'ities -or satis-.ing
vario"s nees in a hospita' are ivie among iAerent gro"ps o-
personne' within the hospita' aministrative str"ct"re& a hierarch. o-
-"nctions corresponing to iAerent 'eve's o- responsi%i'ities is
propose in the s.stematic organization o- hospita' -"nctions. /n this
moe'& the -"nctions o- a hospita' s.stem are ecompose into a
hierarch. o- severa' 'eve's>
1. +ospital;;cong'omerate o- a'' hospita' services res"'ting -rom
top po'ic. ecisions&
2. 0i"ision;;%roa'. re'ate activities assigne to the same
genera' area %. aministrative ecisions&
3. 0epartment;;com%ination o- services e'ivere %. a service
or treatment gro"p&
4. ,uite;;speci=c st.'e o- common services or treatments
per-orme in the same s"ite o- rooms&
5. *oom;;a'' activities that can %e carrie o"t in the same
interna' environment s"rro"ne %. ph.sica' %arriers&
6. Done;;severa' c'ose'. re'ate activities that are "nerta7en %.
inivi"a's&
7. O6ject;;a sing'e activit. associate with an inivi"a'.
/n the integrate -"nctiona' esign o- hospita's& the connection
%etween ph.sica' spaces an -"nctions is most easi'. mae at the
'owest 'eve' o- the hierarch.& an then eCtene "pwar to the neCt
higher 'eve'. For eCamp'e& a %e is a ph.sica' o%ject immeiate'.
re'ate to the activit. o- a patient. A set o- -"rnit"re consisting o- a
%e& a night ta%'e an an armchair arrange com-orta%'. in a zone
inicates the sphere o- private activities -or a patient in a room with
m"'tip'e occ"panc.. Th"s& the spatia' representation o- a hospita'
can %e organize in stages starting -rom the 'owest 'eve' an
moving to the top. /n each step o- the organization process& an
e'ement Espace or -"nctionF "ner consieration can %e re'ate
irect'. to the e'ements at the 'eve's a%ove it& to those at the 'eve's
%e'ow it& an to those within the same 'eve'.
4ince the primar. -actor re'ating spaces is the movement o- peop'e
an s"pp'ies& the o%jective o- arranging spaces is the minimization
o- movement within the hospita'. On the other han& the interna'
environmenta' -actors s"ch as atmospheric conitions Epress"re&
temperat"re& re'ative h"miit.& oor an partic'e po''"tionF& so"n&
'ight an =re protection pro"ce constraining eAects on the
arrangement o- spaces since certain spaces cannot %e p'ace
ajacent to other spaces %eca"se o- iAerent re)"irements in
environmenta' conitions. The consieration o- 'ogistics is important
at a'' 'eve's o- the hospita' s.stem. For eCamp'e& the trave' patterns
%etween o%jects in a zone or those %etween zones in a room are
-re)"ent'. e)"a''. important -or evising an eAective esign. On the
other han& the ajacenc. esira%i'it. matriC %ase "pon
environmenta' conitions wi'' not %e important -or organization o-
-"nctiona' e'ements %e'ow the room 'eve' since a room is the 'owest
'eve' that can provie a ph.sica' %arrier to contain esira%'e
environmenta' conitions. 6ence& the organization o- -"nctions -or a
new hospita' can %e carrie o"t thro"gh an interactive process&
starting -rom the -"nctiona' e'ements at the 'owest 'eve' that is
regare as sta%'e %. the esigner& an moving step %. step "p to
the top 'eve' o- the hierarch.. D"e to the strong corre'ation %etween
-"nctions an the ph.sica' spaces in which the. are per-orme& the
arrangement o- ph.sica' spaces -or accommoating the -"nctions
wi'' a'so -o''ow the same iterative process. Once a satis-actor.
spatia' arrangement is achieve& the hospita' esign is comp'ete
%. the se'ection o- s"ita%'e %"i'ing components which comp'ement
the spatia' arrangement.
E>ample )'4( Top-down design style
/n the -"nctiona' esign o- a hospita'& the esigner ma.
%egin with a Bre-erence moe'B& i.e. the spatia' 'a.o"ts
o- eCisting hospita's o- simi'ar size an service
re)"irements. On the %asis o- past eCperience& spaces
are a''ocate to vario"s ivisions as shown
schematica''. in Fig"re 3;,. The space in each ivision is
then ivie -"rther -or vario"s epartments in the
ivision& an a'' the wa. own the 'ine o- the hierarch..
/n ever. step a'ong the wa.& the pertinent in-ormation o-
the e'ements immeiate'. %e'ow the 'eve' "ner
consieration wi'' %e assesse in orer to provie inp"t
-or ma7ing necessar. aj"stments at the c"rrent 'eve' i-
necessar.. The major raw%ac7 o- the top;own esign
st.'e is that the connection %etween ph.sica' spaces
an -"nctions at 'ower 'eve's cannot %e easi'.
anticipate. !onse)"ent'.& the new esign is essentia''.
%ase on the int"ition an eCperience o- the esigner
rather than an o%jective ana'.sis o- the -"nctions an
space nees o- the -aci'it.. /ts greatest attraction is its
simp'icit. which 7eeps the time an cost o- esign
re'ative'. 'ow.
Figure )'4( A Moe' -or Top;Down Design o- a 6ospita'
E>ample )'5( Bottom-up design style
A m"'ti;p"rpose eCamination s"ite in a hospita' is "se
as an i''"stration o- %ottom;"p esign st.'e. /n Fig"re 3;
0& the most %asic e'ements E-"rnit"reF are =rst organize
into zones which ma7e "p the room. Th"s the size o- the
room is etermine %. spatia' 'a.o"t re)"ire to per-orm
the esire services. Fina''.& the s"ite is e=ne %. the
rooms which are parts o- the m"'ti;p"rpose eCamination
s"ite.
Figure )'5( A Moe' -or 9ottom;"p esign o- an (Camination 4"ite
).4 Ph&sical ,tructures
The str"ct"ra' esign o- comp'eC engineering s.stems genera''.
invo'ves %oth s.nthesis an ana'.sis. 4.nthesis is an in"ctive
process whi'e ana'.sis is a e"ctive process. The activities in
s.nthesis are o-ten escri%e as an art rather than a science& an
are regare more a7in to creativit. than to 7now'ege. The
conception o- a new str"ct"ra' s.stem is %. an 'arge a matter o-
s"%jective ecision since there is no esta%'ishe proce"re -or
generating innovative an high'. s"ccess-"' a'ternatives. The initia'
se'ection o- a wor7a%'e s.stem -rom n"mero"s possi%'e a'ternatives
re'ies heavi'. on the j"icio"s j"gment o- the esigner. Once a
str"ct"ra' s.stem is se'ecte& it m"st %e s"%jecte to vigoro"s
ana'.sis to ins"re that it can s"stain the emans in its
environment. /n aition& compati%i'it. o- the str"ct"ra' s.stem with
mechanica' e)"ipment an piping m"st %e ass"re.
For traitiona' t.pes o- str"ct"res s"ch as oKce %"i'ings& there are
stanar s.stems erive -rom the past eCperience o- man.
esigners. 6owever& in man. sit"ations& specia' s.stems m"st %e
eve'ope to meet the speci=e re)"irements. The choice o-
materia's -or a str"ct"re epens not on'. on the s"ita%i'it. o-
materia's an their inG"ence on the -orm o- the str"ct"re. For
eCamp'e& in the esign o- an airp'ane hangar& a stee' s7e'eton -rame
ma. %e se'ecte %eca"se a simi'ar -rame in rein-orce concrete wi''
'imit the span o- the str"ct"re owing to its "n-avora%'e ratio or
resistance to weight. 6owever& i- a thin;she''e roo- is aopte&
rein-orce concrete ma. prove to %e more s"ita%'e than stee'. Th"s&
the interp'a. o- the str"ct"ra' -orms an materia's aAects the
se'ection o- a str"ct"ra' s.stem& which in t"rn ma. inG"ence the
metho o- constr"ction inc'"ing the "se o- -a'sewor7.
E>ample )'8( Steel frame supporting a turbo-blower B1.C
The esign o- a str"ct"ra' -rame s"pporting a t"r%o;
%'ower s"pp'.ing press"rize air to a %'ast -"rnace in a
stee' mi'' can %e "se to i''"strate the str"ct"ra' esign
process. As shown in Fig"re 3;1& the t"r%o;%'ower
consists o- a t"r%ine an a %'ower 'in7e to an air in'et
stac7. 4ince the vi%ration o- the t"r%o;%'ower is a major
concern to its operation& a pre'iminar. investigation ca''s
-or a s"pporting -rame which is separate -rom the
str"ct"ra' -rame o- the %"i'ing. An ana'.sis o- the
vi%ration characteristics o- the t"r%o;%'ower inicates
that the 'owest moe o- vi%ration consists o-
inepenent vi%ration o- the t"r%ine sha-t an the
%'ower sha-t& with higher moes -or the co"p'e t"r%o;
%'ower s.stem when %oth sha-ts vi%rate either in;phase
or o"t;o-;phase. !onse)"ent'.& a stee' -rame with
separate "nits -or the %'ower sie an the t"r%ine sie is
se'ecte. The co'"mns o- the stee' -rame are mo"nte
on pi'e -o"nation an a'' joints o- the stee' -rame are
we'e to re"ce the vi%ration 'eve's.
4ince the str"ct"ra' stee' -rame a'so s"pports a
conenser& an air in'et an eCha"st& an a steam in'et
an eCha"st in aition to the t"r%o;%'ower& a static
ana'.sis is mae to size its mem%ers to s"pport a''
app'ie 'oas. Then& a .namic ana'.sis is con"cte to
etermine the vi%ration characteristics o- the s.stem
incorporating the str"ct"ra' stee' -rame an the t"r%o;
%'ower. Dhen the 'imiting conitions -or static 'oas an
nat"ra' -re)"encies o- vi%ration are met& the esign is
accepte as satis-actor..
Figure )'8( 4tee' Frame 4"pporting a T"r%o;9'ower
E>ample )':( ultiple hierarchy descriptions of pro!ects
/n the previo"s section& a hierarch. o- -"nctiona' spaces
was s"ggeste -or escri%ing a -aci'it.. This escription
is appropriate -or -"nctiona' esign o- spaces an
processes within a %"i'ing& %"t ma. %e inae)"ate as a
view o- the -aci'it.'s str"ct"ra' s.stems. A hierarch.
s"ita%'e -or this p"rpose might ivie e'ements into
structural functions s"ch as s'a%s& wa''s& -rames&
-ootings& pi'es or mats. $ower 'eve's o- the hierarch.
wo"' escri%e inivi"a' esign e'ements. For eCamp'e&
-rames wo"' %e mae "p o- co'"mn& %eam an
iagona' gro"ps which& in t"rn& are compose o-
inivi"a' str"ct"ra' e'ements. These inivi"a'
str"ct"ra' e'ements comprise the 'imits on -"nctiona'
spaces s"ch as rooms in a iAerent hierarchica'
perspective. Designers t.pica''. wi'' initiate a view
appropriate -or their own concerns& an these iAerent
hierarchica' views m"st %e s.nthesize to ins"re
consistenc. an ae)"ac. o- the overa'' esign.
).5 2eotechnical Engineering #n"estigation
4ince constr"ction is site speci=c& it is ver. important to investigate
the s"%s"r-ace conitions which o-ten inG"ence the esign o- a
-aci'it. as we'' as its -o"nation. The "ncertaint. in the esign is
partic"'ar'. ac"te in geotechnica' engineering so that the
assignment o- ris7s in this area sho"' %e a major concern. 4ince the
egree o- "ncertaint. in a project is perceive iAerent'. %.
iAerent parties invo've in a project& the assignment o-
"n)"anti=a%'e ris7s arising -rom n"mero"s "n7nowns to the owner&
engineer an contractor is inherent'. iKc"'t. /t is no woner that
co"rts or ar%itrators are o-ten as7e to istri%"te e)"ita%'. a ris7 to
parties who o not perceive the same ris7s an o not want to
ass"me a isproportionate share o- s"ch ris7s.
E>ample )'1;( Design of a tie-bac" retaining wall B1/C
This eCamp'e escri%es the "se o- a tie;%ac7 retaining
wa'' %"i't in the 12,3's when s"ch constr"ction was
"ncommon an pose a consiera%'e ris7. The engineer
esigning it an the owner were aware o- the ris7
%eca"se o- potentia''. eCtreme =nancia' 'osses -rom
%oth remeia' an 'itigation costs in the event that the
retaining wa'' -ai'e an permitte a -ai'"re o- the s'ope.
9"t the %ene=ts were perceive as %eing worth the ris7;;
%ene=ts to the owner in terms o- %oth 'ower cost an
shorter sche"'e& an %ene=ts to the engineer in terms
o- pro-essiona' satis-action in meeting the owner's nees
an so'ving what appeare to %e an ins"rmo"nta%'e
technica' pro%'em.
The tie;%ac7 retaining wa'' was esigne to permit a c"t
in a hi''sie to provie aitiona' space -or the
eCpansion o- a stee';ma7ing -aci'it.. Fig"re 3;2 shows a
cross section o- the origina' hi''sie 'ocate in an "r%an
area. :"mero"s resientia' we''ings were 'ocate on
top o- the hi'' which wo"' have %een prohi%itive'. cost'.
or perhaps impossi%'e to remove to permit regraing o-
the hi''sie to p"sh %ac7 the toe o- the s'ope. The on'.
rea'istic wa. o- accomp'ishing the esire goa' was to
attempt to remove the toe o- the eCisting s'ope an "se
a tie;%ac7 retaining wa'' to sta%i'ize the s'ope as shown
in Fig"re 3;13.
Figure )':( T.pica' !ross 4ection o- 6i''sie Ajoining 4ite
Figure )'1;( 4chematic 4ection o- Anchore 4tee' 4heet Pi'e
<etaining Da''
A commitment was mae %. %oth the owner an the
engineer to accomp'ish what was a common goa'. The
engineer mae a commitment to esign an constr"ct
the wa'' in a manner which permitte a rea';time
eva'"ation o- pro%'ems an the a%i'it. to ta7e mitigating
meas"res thro"gho"t the constr"ction o- the wa''. The
owner mae a commitment to give the engineer %oth
the pro-essiona' 'atit"e an reso"rces re)"ire to
per-orm his wor7. A esign;constr"ct contract was
negotiate where%. the esign co"' %e moi=e as
act"a' conitions were enco"ntere "ring constr"ction.
9"t even with a'' o- the p'anning& investigation an
esign eAorts& there sti'' remaine a siza%'e ris7 o-
-ai'"re.
The wa'' was s"ccess-"''. %"i't;;not accoring to a pre;
evise p'an which went smooth'.& an not witho"t
n"mero"s pro%'ems to %e reso've as "neCpecte
gro"nwater an geo'ogica' conitions were
enco"ntere. (stimate costs were eCceee as each
"neCpecte conition was aresse. 9"t there were no
constr"ction e'a.s an their attenant costs as
isp"tes over change conitions an contract terms
were reconci'e. There were no costs -or 'ega' -ees
arising -rom 'itigation nor increase interest costs as
constr"ction stoppe whi'e isp"tes were 'itigate. The
owner pai more than was estimate& %"t not more than
was necessar. an not as m"ch as i- he ha to ac)"ire
the propert. at the top o- the hi'' to regrae the s'ope. /n
aition& the owner was a%'e to attain the esire
-aci'it. eCpansion in -ar 'ess time than %. an. other
metho.
As a res"'t o- the s"ccess o- this eCperience an others&
the "se o- tie;%ac7 retaining wa''s has %ecome a ro"tine
practice.
).8 Construction ,ite En"ironment
Dhi'e the genera' in-ormation a%o"t the constr"ction site is "s"a''.
avai'a%'e at the p'anning stage o- a project& it is important -or the
esign pro-essiona's an constr"ction manager as we'' as the
contractor to visit the site. (ach gro"p wi'' %e %ene=te %. =rst;han
7now'ege ac)"ire in the =e'.
For esign pro-essiona's& an eCamination o- the topograph. ma.
-oc"s their attention to the 'a.o"t o- a -aci'it. on the site -or
maCim"m "se o- space in comp'iance with vario"s reg"'ator.
restrictions. /n the case o- in"stria' p'ants& the pro"ction or
processing esign an operation o-ten ictate the site 'a.o"t. A poor
'a.o"t can ca"se constr"ction pro%'ems s"ch as inae)"ate space
-or staging& 'imite access -or materia's an personne'& an
restrictions on the "se o- certain constr"ction methos. Th"s& esign
an constr"ction inp"ts are important in the 'a.o"t o- a -aci'it..
The constr"ction manager an the contractor m"st visit the site to
gain some insight in preparing or eva'"ating the %i pac7age -or the
project. The. can veri-. access roas an water& e'ectrica' an other
service "ti'ities in the immeiate vicinit.& with the view o- =ning
s"ita%'e 'ocations -or erecting temporar. -aci'ities an the =e'
oKce. The. can a'so o%serve an. inter-erences o- eCisting -aci'ities
with constr"ction an eve'op a p'an -or site sec"rit. "ring
constr"ction.
/n eCamining site conitions& partic"'ar attention m"st %e pai to
environmenta' -actors s"ch as rainage& gro"nwater an the
possi%i'it. o- Goos. O- partic"'ar concern is the possi%'e presence o-
hazaro"s waste materia's -rom previo"s "ses. !'eaning "p or
contro''ing hazaro"s wastes can %e eCtreme'. eCpensive.
E>ample )'11( #roundwater $ollution from a %and&ll B14C
The presence o- waste eposits on a potentia'
constr"ction site can have s"%stantia' impacts on the
s"rro"ning area. *ner eCisting environmenta'
reg"'ations in the *nite 4tates& the responsi%i'it. -or
c'eaning "p or otherwise contro''ing wastes genera''.
resies with the owner o- a -aci'it. in conj"nction with
an. o"tstaning ins"rance coverage.
A t.pica' eCamp'e o- a waste pro%'em is i''"strate in
Fig"re 3;11. /n this =g"re& a sma'' p"shover %"rning
"mp was 'ocate in a epression on a s'ope. The
'an='' consiste o- genera' re-"se an was covere %. a
ver. san. materia'. The inevita%'e in='tration o- water
-rom the s"r-ace or -rom the gro"nwater into the
'an='' wi'' res"'t in vertica' or horizonta' perco'ation o-
'eacha%'e ions an organic contamination. This 'eachate
wo"' %e ooro"s an potentia''. hazaro"s in water.
The po''"tant wo"' show "p as seepage ownhi''& as
po''"tion in s"r-ace streams& or as po''"tion entering the
regiona' gro"nwater.
Figure )'11( !ross;4ection /''"stration o- a $an=''
9e-ore new constr"ction co"' procee& this 'an='' site wo"' have
to %e contro''e or remove. T.pica' contro' methos might invo've>
4"r-ace water contro' meas"res& s"ch as conto"r graing or
s"r-ace sea'ing.
Passive gro"nwater contro' techni)"es s"ch as "nergro"n
%arriers %etween the gro"nwater an the 'an=''.
P'"me management proce"res s"ch as p"mping water -rom
s"rro"ning we''s.
!hemica' immo%i'ization techni)"es s"ch as app'.ing s"r-ace
sea's or chemica' injections.
(Ccavation an re%"ria' o- the 'an='' re)"iring the avai'a%i'it.
o- an engineere an environmenta''. so"n 'an=''.
The eCcavation an re%"ria' o- even a sma'' 'an='' site can %e ver.
eCpensive. For eCamp'e& the estimate re%"ria' cost -or a 'an='' 'i7e
that shown in Fig"re 3;11 was in eCcess o- @ # mi''ion in 1201.
).: Ealue Engineering
Na'"e engineering ma. %e %roa'. e=ne as an organize approach
in ienti-.ing "nnecessar. costs in esign an constr"ction an in
so'iciting or proposing a'ternative esign or constr"ction techno'og.
to re"ce costs witho"t sacri=cing )"a'it. or per-ormance
re)"irements. /t "s"a''. invo'ves the steps o- gathering pertinent
in-ormation& searching -or creative ieas& eva'"ating the promising
a'ternatives& an proposing a more cost eAective a'ternative. This
approach is "s"a''. app'ie at the %eginning o- the constr"ction
phase o- the project 'i-e c.c'e.
The "se o- va'"e engineering in the p"%'ic sector o- constr"ction has
%een -ostere %. 'egis'ation an government reg"'ation& %"t the
approach has not %een wie'. aopte in the private sector o-
constr"ction. One eCp'anation ma. 'ie in the iAerence in practice o-
engineering esign services in the p"%'ic an private sectors. /n the
p"%'ic sector& the -ee -or esign services is tight'. monitore against
the Bmar7et price&B or ma. even %e %ase on the 'owest %i -or
service. 4"ch a practice in setting pro-essiona' -ees enco"rages the
esign pro-essiona's to aopt 7nown an trie esigns an
constr"ction techno'ogies witho"t giving m"ch tho"ght to
a'ternatives that are innovative %"t ris7.. !ontractors are wi''ing to
eCamine s"ch a'ternatives when oAere incentives -or sharing the
savings %. owners. /n the private sector& the owner has the -reeom
to oAer s"ch incentives to esign pro-essiona's as we'' as the
contractors witho"t %eing concerne a%o"t the appearance o-
-avoritism in engaging pro-essiona' services.
Another so"rce o- cost savings -rom va'"e engineering is the a%i'it.
o- contractors to ta7e avantage o- proprietar. or "n"s"a'
techni)"es an 7now'ege speci=c to the contractor's =rm. For
eCamp'e& a contractor ma. have m"ch more eCperience with a
partic"'ar metho o- t"nne'ing that is not speci=e in the origina'
esign an& %eca"se o- this eCperience& the a'ternative metho ma.
%e 'ess eCpensive. /n avance o- a %iing competition& a esign
pro-essiona' oes not 7now which contractor wi'' "nerta7e the
constr"ction o- a -aci'it.. Once a partic"'ar contractor is chosen&
then moi=cations to the constr"ction techno'og. or esign ma.
ta7e avantage o- pec"'iar avantages o- the contractor's
organization.
As a =na' so"rce o- savings in va'"e engineering& the contractor ma.
oAer gen"ine new esign or constr"ction insights which have
escape the attention o- the esign pro-essiona' even i- the 'atter is
not restraine %. the -ee str"ct"re to eCp'ore more a'ternatives. /-
the eCpertise o- the contractor can %e "ti'ize& o- co"rse& the %est
time to emp'o. it is "ring the p'anning an esign phase o- the
project 'i-e c.c'e. That is wh. pro-essiona' constr"ction management
or integrate esignPconstr"ction are o-ten pre-erre %. private
owners.
).1; Construction Planning
The eve'opment o- a constr"ction p'an is ver. m"ch ana'ogo"s to
the eve'opment o- a goo -aci'it. esign. The p'anner m"st weigh
the costs an re'ia%i'it. o- iAerent options whi'e at the same time
ins"ring technica' -easi%i'it.. !onstr"ction p'anning is more iKc"'t
in some wa.s since the %"i'ing process is .namic as the site an
the ph.sica' -aci'it. change over time as constr"ction procees. On
the other han& constr"ction operations ten to %e -air'. stanar
-rom one project to another& whereas str"ct"ra' or -o"nation etai's
might iAer consiera%'. -rom one -aci'it. to another.
Forming a goo constr"ction p'an is an eCceptiona''. cha''enging
pro%'em. There are n"mero"s possi%'e p'ans avai'a%'e -or an. given
project. Dhi'e past eCperience is a goo g"ie to constr"ction
p'anning& each project is 'i7e'. to have specia' pro%'ems or
opport"nities that ma. re)"ire consiera%'e ingen"it. an creativit.
to overcome or eCp'oit. *n-ort"nate'.& it is )"ite iKc"'t to provie
irect g"iance concerning genera' proce"res or strategies to -orm
goo p'ans in a'' circ"mstances. There are some recommenations
or iss"es that can %e aresse to escri%e the characteristics o-
goo p'ans& %"t this oes not necessari'. te'' a p'anner how to
iscover a goo p'an. 6owever& as in the esign process& strategies
o- decomposition in which p'anning is ivie into s"%pro%'ems an
hierarchical planning in which genera' activities are repeata%'.
s"%ivie into more speci=c tas7s can %e reai'. aopte in man.
cases.
From the stanpoint o- construction contractors or the constr"ction
ivisions o- 'arge =rms& the p'anning process -or constr"ction
projects consists o- three stages that ta7e p'ace %etween the
moment in which a p'anner starts the p'an -or the constr"ction o- a
-aci'it. to the moment in which the eva'"ation o- the =na' o"tp"t o-
the constr"ction process is =nishe.
The estimate stage invo'ves the eve'opment o- a cost an "ration
estimate -or the constr"ction o- a -aci'it. as part o- the proposa' o- a
contractor to an owner. /t is the stage in which ass"mptions o-
reso"rce commitment to the necessar. activities to %"i' the -aci'it.
are mae %. a p'anner. A care-"' an thoro"gh ana'.sis o- iAerent
conitions impose %. the constr"ction project esign an %. site
characteristics are ta7en into consieration to etermine the %est
estimate. The s"ccess o- a contractor epens "pon this estimate&
not on'. to o%tain a jo% %"t a'so to constr"ct the -aci'it. with the
highest pro=t. The p'anner has to 'oo7 -or the time;cost com%ination
that wi'' a''ow the contractor to %e s"ccess-"' in his commitment.
The res"'t o- a high estimate wo"' %e to 'ose the jo%& an the res"'t
o- a 'ow estimate co"' %e to win the jo%& %"t to 'ose mone. in the
constr"ction process. Dhen changes are one& the. sho"' improve
the estimate& ta7ing into acco"nt not on'. present eAects& %"t a'so
-"t"re o"tcomes o- s"cceeing activities. /t is ver. se'om the case
in which the o"tp"t o- the constr"ction process eCact'. echoes the
estimate oAere to the owner.
/n the monitoring and control stage o- the constr"ction process& the
constr"ction manager has to 7eep constant trac7 o- %oth activities'
"rations an ongoing costs. /t is mis'eaing to thin7 that i- the
constr"ction o- the -aci'it. is on sche"'e or ahea o- sche"'e& the
cost wi'' a'so %e on the estimate or %e'ow the estimate& especia''. i-
severa' changes are mae. !onstant eva'"ation is necessar. "nti'
the constr"ction o- the -aci'it. is comp'ete. Dhen wor7 is =nishe in
the constr"ction process& an in-ormation a%o"t it is provie to the
p'anner& the thir stage o- the p'anning process can %egin.
The evaluation stage is the one in which res"'ts o- the constr"ction
process are matche against the estimate. A p'anner ea's with this
"ncertaint. "ring the estimate stage. On'. when the o"tcome o-
the constr"ction process is 7nown is hePshe a%'e to eva'"ate the
va'iit. o- the estimate. /t is in this 'ast stage o- the p'anning
process that he or she etermines i- the ass"mptions were correct. /-
the. were not or i- new constraints emerge& hePshe sho"' intro"ce
corresponing aj"stments in -"t"re p'anning.
).11 #ndustriali-ed Construction and Pre'fa6rication
Another approach to constr"ction innovation is to app'. the
princip'es an organizationa' so'"tions aopte -or man"-act"ring.
/n"stria'ize constr"ction an pre;-a%rication wo"' invo've
trans-erring a signi=cant portion o- constr"ction operations -rom the
constr"ction site to more or 'ess remote sites where inivi"a'
components o- %"i'ings an str"ct"res are pro"ce. ('ements o-
-aci'ities co"' %e pre-a%ricate oA the erection site an assem%'e
%. cranes an other 'i-ting machiner..
There are a wie variet. an egrees o- intro"cing greater
in"stria'ization to the constr"ction process. Man. components o-
constr"cte -aci'ities have a'wa.s %een man"-act"re& s"ch as air
conitioning "nits. $"m%er& piping an other inivi"a' components
are man"-act"re to stanar sizes. (ven temporar. items s"ch as
-orms -or concrete can %e assem%'e oA;site an transporte -or
"se. <ein-orcing %ars -or concrete can a'so %e pre;c"t an shape to
the esire con=g"ration in a man"-act"ring p'ant or in an
a"tomate p'ant 'ocate proCimate to a constr"ction site.
A major pro%'em in eCtening the "se o- pre;-a%ricate "nits is the
'ac7 o- stanarization -or s.stems an %"i'ing reg"'ations.L10M
Dhi'e esigners have 'ong aopte stanar sizes -or inivi"a'
components in esigns& the aoption o- stanarize s"%;
assem%'ies is rarer. Ditho"t stanarization& the achievement o- a
'arge mar7et an sca'e economies o- pro"ction in man"-act"ring
ma. %e impossi%'e. An innovative an more thoro"gh
in"stria'ization o- the entire %"i'ing process ma. %e a primar.
so"rce o- constr"ction cost savings in the -"t"re.
E>ample )'1$( $lanning of pre-fabrication
Dhen might pre;-a%ricate components %e "se in
pre-erence to components assem%'e on a constr"ction
siteT A straight-orwar answer is to "se pre;-a%ricate
components whenever their cost& inc'"ing
transportation& is 'ess than the cost o- assem%'. on site.
As an eCamp'e& -orms -or concrete pane's might %e
transporte to a constr"ction site with rein-orcing %ars
a'rea. %"i't in& necessar. coatings app'ie to the -orms&
an even specia' -eat"res s"ch as e'ectrica' con"it
a'rea. insta''e in the -orm. /n some cases& it might %e
'ess eCpensive to pre;-a%ricate an transport the entire
concrete pane' to a man"-act"ring site. /n contrast&
traitiona' constr"ction practice wo"' %e to assem%'e
a'' the iAerent -eat"res o- the pane' on;site. The
re'evant costs o- these a'ternatives co"' %e assesse
"ring constr"ction p'anning to etermine the 'owest
cost a'ternative.
/n aition to the consieration o- irect costs& a
constr"ction p'anner sho"' a'so consier some other
aspects o- this techno'og. choice. First& the p'anner
m"st ins"re that pre;-a%ricate components wi'' satis-.
the relevant *uilding codes an regulations. 4econ& the
relative 7uality o- traitiona' vers"s pre;-a%ricate
components as eCperience in the =na' -aci'it. sho"'
%e consiere. Fina''.& the availa*ility of components at
the re)"ire time "ring the constr"ction process sho"'
a'so %e consiere.
E>ample )'1)( Impacts of building codesB18C
9"i'ing coes originate as a part o- the %"i'ing
reg"'ator. process -or the sa-et. an genera' we'-are o-
the p"%'ic. The so"rce o- a'' a"thorit. to enact %"i'ing
coes is %ase on the po'ice power o- the state which
ma. %e e'egate %. the state 'egis'at"re to 'oca'
government "nits. !onse)"ent'.& a%o"t 1&333 'oca'ities
having their own %"i'ing coes& either %. -o''owing a
nationa' moe' coe or eve'oping a 'oca' coe. The 'ac7
o- "ni-ormit. o- %"i'ing coes ma. %e attri%"te to a
variet. o- reasons>
:eigh%oring m"nicipa'ities ma. aopt iAerent
nationa' moe's as the %asis -or 'oca' reg"'ation.
Perioic revisions o- nationa' coes ma. not %e
aopte %. 'oca' a"thorities %e-ore the 'apse o-
severa' .ears.
M"nicipa'ities ma. eCp'icit'. ec'ine to aopt
speci=c provisions o- nationa' moe' coes or ma.
"se their own variants o- 7e. provisions.
$oca' a"thorities ma. iAer in interpretation o- the
same 'ang"age in nationa' moe' coes.
The 'ac7 o- "ni-ormit. in %"i'ing coes has serio"s
impact on esign an constr"ction as we'' as the
reg"'ator. process -or %"i'ings. Among the signi=cant
-actors are>
De'a. in the iA"sion o- new %"i'ing innovations
which ma. ta7e a 'ong time to =n their wa.s to
%e incorporate in %"i'ing coes.
Disco"ragement to new pro"ction organizations&
s"ch as in"stria'ize constr"ction an
pre-a%rication.
D"p'ication o- aministrative cost o- p"%'ic
agencies an comp'iance cost inc"rre %. private
=rms.
).1$ Computer'Aided Engineering
/n the past twent. .ears& the comp"ter has %ecome an essentia' too'
in engineering& esign& an acco"nting. The innovative esigns o-
comp'icate -aci'ities cite in the previo"s sections wo"' %e
impossi%'e witho"t the ai o- comp"ter %ase ana'.sis too's. 9.
"sing genera' p"rpose ana'.sis programs to test a'ternative esigns
o- comp'eC str"ct"res s"ch as petrochemica' p'ants& engineers are
a%'e to great'. improve initia' esigns. Jenera' p"rpose acco"nting
s.stems are a'so avai'a%'e an aopte in organizations to per-orm
ro"tine %oo77eeping an =nancia' acco"nting chores. These
app'ications eCp'oit the capa%i'it. -or comp"ters to per-orm
n"merica' ca'c"'ations in a pre;programme -ashion rapi'.&
ineCpensive'. an acc"rate'..
Despite these avances& the comp"ter is o-ten "se as on'. an
incienta' too' in the esign& constr"ction an project management
processes. 6owever& new capa%i'ities& s.stems an app'ication
programs are rapi'. %eing aopte. These are motivate in part %.
the remar7a%'e improvement in comp"ter harware capa%i'it.& the
intro"ction o- the /nternet& an an eCtraorinar. ec'ine in cost.
:ew concepts in comp"ter esign an in so-tware are a'so
contri%"ting. For eCamp'e& the intro"ction o- persona' comp"ters
"sing microcirc"itr. has enco"rage the aoption o- interactive
programs %eca"se o- the 'ow cost an consiera%'e capa%i'it. o- the
comp"ter harware. Persona' comp"ters avai'a%'e -or a tho"san
o''ars in 122+ have essentia''. the same capa%i'it. as eCpensive
main-rame comp"ter s.stems o- =-teen .ears ear'ier.
!omp"ter graphics provie another pertinent eCamp'e o- a
potentia''. revo'"tionar. mechanism -or esign an comm"nication.
Jraphica' representations o- %oth the ph.sica' an wor7 activities on
projects have %een essentia' too's in the constr"ction in"str. -or
ecaes. 6owever& man"a' ra-ting o- %'"eprints& p'ans an other
iagrams is 'a%orio"s an eCpensive. 4tan a'one& comp"ter aie
ra-ting e)"ipment has prove to %e 'ess eCpensive an -"''.
capa%'e o- pro"cing the re)"iring rawings. More signi=cant'.& the
geometric in-ormation re)"ire -or pro"cing esire rawings
might a'so %e "se as a ata%ase -or comp"ter aie esign an
comp"ter integrate constr"ction. !omponents o- -aci'ities can %e
represente as three imensiona' comp"ter %ase solid models -or
this p"rpose. Jeometric in-ormation -orms on'. one component o-
integrate esign ata%ases in which the comp"ter can ass"re
consistenc.& comp'eteness an comp'iance with re'evant
speci=cations an constraints. 4evera' approaches to integrate
comp"ter aie engineering environments o- this t.pe have a'rea.
%een attempte. L12M
!omp"ters are a'so %eing app'ie more an more eCtensive'. to
non;ana'.tica' an non;n"merica' tas7s. For eCamp'e& comp"ter
%ase speci=cation writing assistants are "se to rapi'. assem%'e
sets o- stanar speci=cations or to insert specia' c'a"ses in the
oc"mentation o- -aci'it. esigns. As another eCamp'e&
comp"terize trans-er o- in-ormation provies a means to avoi
'a%orio"s an error;prone transcription o- project in-ormation. Dhi'e
most o- the traitiona' app'ications an research in comp"ter ais
have emphasize n"merica' ca'c"'ations& the "se o- comp"ters wi''
rapi'. shi-t towars the more preva'ent an iKc"'t pro%'ems o-
p'anning& comm"nication& esign an management.
Hnow'ege %ase s.stems represent a prominent eCamp'e o- new
so-tware approaches app'ica%'e to project management. These
s.stems origina''. emerge -rom research in arti=cia' inte''igence in
which h"man cognitive processes were moe'e. /n 'imite pro%'em
omains s"ch as e)"ipment con=g"ration or process contro'&
7now'ege %ase s.stems have %een emonstrate to approach or
s"rpass the per-ormance o- h"man eCperts. The programs are
mar7e %. a separation %etween the reasoning or Bin-erenceB
engine program an the representation o- omain speci=c
7now'ege. As a res"'t& s.stem eve'opers nee not speci-.
comp'ete pro%'em so'ving strategies Eor a'gorithmsF -or partic"'ar
pro%'ems. This characteristic o- 7now'ege %ase s.stems ma7e
them partic"'ar'. "se-"' in the i'';str"ct"re omains o- esign an
project management. !hapter 1+ wi'' isc"ss 7now'ege %ase
s.stems in greater etai'.
!omp"ter program assistants wi'' soon %ecome "%i)"ito"s in
virt"a''. a'' project management organizations. The cha''enge -or
managers is to "se the new too's in an eAective -ashion. !omp"ter
intensive wor7 environments sho"' %e str"ct"re to ai an to
amp'i-. the capa%i'ities o- managers rather than to ivert attention
-rom rea' pro%'ems s"ch as wor7er motivation.
).1) *eferences
1. A"& T. an P. !hristiano& $tructural #nalysis& Prentice;6a''& /nc.&
(ng'ewoo !'iAs& :8& 1210.
2. 9"i'ing <esearch Avisor. 9oar& E8ploratory $tudy on
Responsi*ility& /ia*ility and #ccounta*ility for Risks in
%onstruction& :ationa' Acaem. o- 4ciences& Dashington&
D.!.& 1201.
3. Dr"c7er& P.F.& .nnovation and Entrepreneurship4 "ractice and
"rinciples& 6arper an <ow& :ew Ior7& 121+.
#. Ja.'or& (.& an !. Ja.'or E(itorsF& $tructural Engineering
)and*ook& McJraw;6i'' 9oo7 !o.& :ew Ior7& 1202.
+. $evitt& <.(.& <.D. $ogcher an :.6. 5"a"mi& B/mpact o-
Owner;(ngineer <is7 4haring on Design !onservatism&B #$%E
3ournal of "rofessional .ssues in Engineering& No'. 113& 121#&
pp. 1+0;1,0.
,. 4imon& 6.A.& -he $cience of the #rti!cial& 4econ (ition& M/T
Press& !am%rige& MA& 1211.
0. Tat"m& !.9.& B/nnovation on the !onstr"ction Project> A Process
Niew&B "roject (anagement 3ournal& No'. 11& :o. +& 1210& pp.
+0;,0.
).1. Footnotes
1. 4ee BA4!( *nvei's 5"a'it. Man"a'B& ENR& :ovem%er +& 1210&
p. 1#F 9ac7
2. 4ee N. Fairweather& BMi'an's Moe' MetroB& %ivil Engineering&
Decem%er 1210& pp. #3;#3.9ac7
3. 4ee T.I. $in an 9.J. Jerwic7& 8r. BDesign o- $ong 4pan
!oncrete 9riges with 4pecia' <e-erences to Prestressing&
Precasting& 4tr"ct"ra' 9ehavior an (conomics&B A!/
P"%'ication 4P;23& First /nternationa' 4.mposi"m& 12,2& pp.
,23;03# 9ac7
#. 4ee $innhoA& 9.& D.D. Townsen& D. 9o'an& J.F. 6ewitt& 9.(.A.
Thomas& A.<. J".& an <.6. Mars'an& 1ser 9uide on "rocess
.ntegration for the E:cient 1se of Energy& /nstit"tion o-
!hemica' (ngineers& <"g%.& Dar7s.& (ng'an& 1212. 9ac7
+. BMore !onstr"ction -or the Mone.&B $ummary Report of the
%onstruction .ndustry %ost E;ectiveness "roject& The 9"siness
<o"nta%'e& :ew Ior7& 1213& pg. 33. 9ac7
,. 4ee BThe 5"iet <evo'"tion in 47.scraper Design& B %ivil
Engineering& Ma. 1213& pp. +#;+2. 9ac7
0. 4ee 8. $anis& BDh. 6ome%"i'ers Don't /nnovate&B 0uilt
Environment& No'. 1& :o. 1& 1212& pp. #,;+3. 9ac7
1. 4ee P.8. !assimates& Economics of the %onstruction .ndustry&
:ationa' /n"str. !on-erence 9oar E49( :o. 111F& 12,2. 9ac7
2. 4ee F. Moavenzaeh& B!onstr"ction's 6igh Techno'og.
<evo'"tion&B -echnology Review& Octo%er& 121+& pp. 32;32.
9ac7
13. This eCamp'e is %ase on a review o- the project 23
.ears a-ter its comp'etion. 4ee -he New <ork -imes& 8"'. 2,&
1210& 4ec. 1& pg. 1. 9ac7
11. 4ee <.D. 8ensen an !.!. Tonies E(itorsF& $oftware
Engineering& Prentice;6a''& /nc.& (ng'ewoo !'iAs& :8& 1202& p.
22. 9ac7
12. 4ee 4.8. Fenves& B!omp"ter App'ications&B in $tructural
Engineering )and*ook& EJa.'or& (. an !. Ja.'or& (itorsF&
McJraw;6i'' 9oo7 !o.& :ew Ior7& :I& 1202. 9ac7
13. 4ee T. A"& (.D. Parti an A.H.!. Dong& B!omp"ter
App'ications -or 6ea'th !are Faci'it. Design&B %omputers in
0iology and (edicine& No'. 1& :o. #& 1201& pp. 222;31,. 9ac7
1#. The a"thors are ine%te to (. D'Appo'onia -or
s"ggesting this eCamp'e. 9ac7
1+. 4ee (. D'Appo'onia& <. A'perstein an D.8. D'Appo'onia&
B9ehavior o- !o''"via' 4'opeB& #$%E 3ournal of $oil (echanics
and 6oundations 'ivision& No'. 23& :o. 4M#& 12,0& pp. ##0;
#03. 9ac7
1,. The materia' in this eCamp'e is aapte -rom A.$.
To'man& A. P. 9a''estero& D.D. 9ec7& J.6. (mrich& BJ"iance
Man"a' -or Minimizing Po''"tion -rom Daste Disposa' 4ites&B
<eport to the M"nicipa' (nvironmenta' <esearch $a%orator.&
*.4. (nvironmenta' Protection Agenc.& (PA;,33P2;01;1#2&
A"g"st 1201. 9ac7
10. For isc"ssions o- in"stria'ize %"i'ing& see 9ener&
<ichar& # %rack in the Rear =iew (irror - # =iew of
.ndustriali,ed 0uilding& Non :ostran <einho' !o.& 1213O :"tt;
Powe''& Thomas& (.& (anufactured )omes4 (aking $ense of a
)ousing +pportunity& A"%"rn 6o"se& 1212O or Darzaws7i& A.&
M. Avraham& an D. !arme'& B*ti'ization o- Precast !oncrete
('ements in 9"i'ing&B #$%E 3ournal of %onstruction
Engineering and (anagement& No'. 113& :o. !O#& 121#& pp.
#0,;#1+. 9ac7
11. 4ee !.J. Fie' an 4.<. <iv7in& -he 0uilding %ode
0urden& $eCington 9oo7s& D.!. 6eath an !o.& $eCington& MA&
120+. 9ac7
12. 4ee <eha7& Danie' <. an $.A. $opez& %omputer #ided
Engineering "ro*lems and "rospects& Dept. o- !ivi'
(ngineering& *niversit. o- /''inois& 1211. 9ac7
Previo"s
!hapter
S
Ta%'e o-
!ontents
S
:eCt
!hapter
.. %a6or, Material and E3uipment Atili-ation
..1 +istorical Perspecti"e
Joo project management in constr"ction m"st vigoro"s'. p"rs"e
the eKcient "ti'ization o- 'a%or& materia' an e)"ipment.
/mprovement o- 'a%or pro"ctivit. sho"' %e a major an contin"a'
concern o- those who are responsi%'e -or cost contro' o- constr"cte
-aci'ities. Materia' han'ing& which inc'"es proc"rement& inventor.&
shop -a%rication an =e' servicing& re)"ires specia' attention -or
cost re"ction. The "se o- new e)"ipment an innovative methos
has mae possi%'e who'esa'e changes in constr"ction techno'ogies
in recent ecaes. Organizations which o not recognize the impact
o- vario"s innovations an have not aapte to changing
environments have j"sti=a%'. %een -orce o"t o- the mainstream o-
constr"ction activities.
O%serving the trens in constr"ction techno'og. presents a ver.
miCe an am%ig"o"s pict"re. On the one han& man. o- the
techni)"es an materia's "se -or constr"ction are essentia''.
"nchange since the intro"ction o- mechanization in the ear'. part
o- the twentieth cent"r.. For eCamp'e& a histor. o- the Panama !ana'
constr"ction -rom 123# to 121# arg"es that>
LTMhe wor7 co"' not have one an. -aster or more
eKcient'. in o"r a.& espite a'' techno'ogica' an
mechanica' avances in the time since& the reason %eing
that no present s.stem co"' possi%'. carr. the spoi'
awa. an. -aster or more eKcient'. than the s.stem
emp'o.e. :o motor tr"c7s were "se in the igging o-
the cana'O ever.thing ran on rai's. An %eca"se o- the
m" an rain& no other metho wo"' have wor7e ha'-
so we''. L1M
/n contrast to this view o- one 'arge project& one ma. a'so point to
the contin"a' change an improvements occ"rring in traitiona'
materia's an techni)"es. 9ric7'a.ing provies a goo eCamp'e o-
s"ch changes>
9ric7'a.ing...is sai not to have change in tho"sans o-
.earsO perhaps in the 'itera' p'acing o- %ric7 on %ric7 it
has not. 9"t masonr. techno'og. has change a great
ea'. Motorize whee'%arrows an mortar miCers&
sophisticate scaAo'ing s.stems& an -or7'i-t tr"c7s
now assist the %ric7'a.er. :ew epoC. mortars give
stronger ahesion %etween %ric7s. Mortar aitives an
co';weather protection e'iminate winter sh"towns. L2M
A to this 'ist o- eCisting innovations the possi%i'it. o- ro%otic
%ric7'a.ingO a"tomate protot.pes -or masonr. constr"ction a'rea.
eCist. Technica' change is certain'. occ"rring in constr"ction&
a'tho"gh it ma. occ"r at a s'ower rate than in other sectors o- the
econom..
The *nite 4tates constr"ction in"str. o-ten points to -actors which
cannot %e contro''e %. the in"str. as a major eCp'anator. -actor in
cost increases an 'ac7 o- technica' innovation. These inc'"e the
imposition o- restrictions -or protection o- the environment an
historica' istricts& re)"irements -or comm"nit. participation in
major constr"ction projects& 'a%or 'aws which a''ow "nion stri7es to
%ecome a so"rce o- isr"ption& reg"'ator. po'icies inc'"ing %"i'ing
coes an zoning orinances& an taC 'aws which inhi%it
constr"ction a%roa. 6owever& the constr"ction in"str. sho"' %ear
a 'arge share o- %'ame -or not rea'izing ear'ier that the techno'ogica'
ege he' %. the 'arge *.4. constr"ction =rms has eroe in -ace o-
stiA -oreign competition. Man. past practices& which were to'erate
when *.4. contractors ha a techno'ogica' 'ea& m"st now %e
change in the -ace o- stiA competition. Otherwise& the *.4.
constr"ction in"str. wi'' contin"e to =n itse'- in tro"%'e.
Dith a strong techno'ogica' %ase& there is no reason wh. the
constr"ction in"str. cannot catch "p an reassert itse'- to meet
competition wherever it ma. %e. /nivi"a' esign anPor
constr"ction =rms m"st eCp'ore new wa.s to improve pro"ctivit.
-or the -"t"re. O- co"rse& operationa' p'anning -or constr"ction
projects is sti'' important& %"t s"ch tactica' p'anning has 'imitations
an ma. soon reach the point o- iminishing ret"rn %eca"se m"ch
that can %e wr"ng o"t o- the eCisting practices have a'rea. %een
trie. Dhat is neee the most is strategic p'anning to "sher in a
revo'"tion which can improve pro"ctivit. %. an orer o- magnit"e
or more. 4trategic p'anning sho"' 'oo7 at opport"nities an as7
whether there are potentia' options a'ong which new goa's ma. %e
so"ght on the %asis o- eCisting reso"rces. :o one can %e certain
a%o"t the s"ccess o- vario"s eve'opment options -or the esign
pro-essions an the constr"ction in"str.. 6owever& with the
avai'a%i'it. o- toa.'s high techno'og.& some options have goo
potentia' o- s"ccess %eca"se o- the socia' an economic necessit.
which wi'' event"a''. p"sh %arriers asie. *'timate'.& ecisions -or
action& not p'ans& wi'' ictate -"t"re o"tcomes.
9ac7 to top
..$ %a6or Producti"it&
Pro"ctivit. in constr"ction is o-ten %roa'. e=ne as o"tp"t per
'a%or ho"r. 4ince 'a%or constit"tes a 'arge part o- the constr"ction
cost an the )"antit. o- 'a%or ho"rs in per-orming a tas7 in
constr"ction is more s"scepti%'e to the inG"ence o- management
than are materia's or capita'& this pro"ctivit. meas"re is o-ten
re-erre to as la*or productivity. 6owever& it is important to note
that 'a%or pro"ctivit. is a meas"re o- the overa'' eAectiveness o-
an operating s.stem in "ti'izing 'a%or& e)"ipment an capita' to
convert 'a%or eAorts into "se-"' o"tp"t& an is not a meas"re o- the
capa%i'ities o- 'a%or a'one. For eCamp'e& %. investing in a piece o-
new e)"ipment to per-orm certain tas7s in constr"ction& o"tp"t ma.
%e increase -or the same n"m%er o- 'a%or ho"rs& th"s res"'ting in
higher 'a%or pro"ctivit..
!onstr"ction o"tp"t ma. %e eCpresse in terms o- -"nctiona' "nits
or constant o''ars. /n the -ormer case& 'a%or pro"ctivit. is
associate with "nits o- pro"ct per 'a%or ho"r& s"ch as c"%ic .ars
o- concrete p'ace per ho"r or mi'es o- highwa. pave per ho"r. /n
the 'atter case& 'a%or pro"ctivit. is ienti=e with va'"e o-
constr"ction in constant o''ars per 'a%or ho"r.
Producti"it& at the Fo6 ,ite
!ontractors an owners are o-ten concerne with the 'a%or activit.
at jo% sites. For this p"rpose& it is convenient to eCpress 'a%or
pro"ctivit. as -"nctiona' "nits per 'a%or ho"r -or each t.pe o-
constr"ction tas7. 6owever& even -or s"ch speci=c p"rposes&
iAerent 'eve's o- meas"re ma. %e "se. For eCamp'e& c"%ic .ars
o- concrete p'ace per ho"r is a 'ower 'eve' o- meas"re than mi'es o-
highwa. pave per ho"r. $ower;'eve' meas"res are more "se-"' -or
monitoring inivi"a' activities& whi'e higher;'eve' meas"res ma. %e
more convenient -or eve'oping in"str.;wie stanars o-
per-ormance.
Dhi'e each contractor or owner is -ree to "se its own s.stem to
meas"re 'a%or pro"ctivit. at a site& it is a goo practice to set "p a
s.stem which can %e "se to trac7 pro"ctivit. trens over time an
in varie 'ocations. !onsiera%'e eAorts are re)"ire to co''ect
in-ormation regiona''. or nationa''. over a n"m%er o- .ears to
pro"ce s"ch res"'ts. The pro"ctivit. inices compi'e -rom
statistica' ata sho"' inc'"e parameters s"ch as the per-ormance
o- major cra-ts& eAects o- project size& t.pe an 'ocation& an other
major project inG"ences.
/n orer to eve'op in"str.;wie stanars o- per-ormance& there
m"st %e a genera' agreement on the meas"res to %e "se-"' -or
compi'ing ata. Then& the jo% site pro"ctivit. ata co''ecte %.
vario"s contractors an owners can %e corre'ate an ana'.ze to
eve'op certain meas"res -or each o- the major segment o- the
constr"ction in"str.. Th"s& a contractor or owner can compare its
per-ormance with that o- the in"str. average.
Producti"it& in the Construction #ndustr&
9eca"se o- the iversit. o- the constr"ction in"str.& a sing'e ineC
-or the entire in"str. is neither meaning-"' nor re'ia%'e. Pro"ctivit.
inices ma. %e eve'ope -or major segments o- the constr"ction
in"str. nationwie i- re'ia%'e statistica' ata can %e o%taine -or
separate in"stria' segments. For this genera' t.pe o- pro"ctivit.
meas"re& it is more convenient to eCpress 'a%or pro"ctivit. as
constant o''ars per 'a%or ho"rs since o''ar va'"es are more easi'.
aggregate -rom a 'arge amo"nt o- ata co''ecte -rom iAerent
so"rces. The "se o- constant o''ars a''ows meaning-"'
approCimations o- the changes in constr"ction o"tp"t -rom one .ear
to another when price eGators are app'ie to c"rrent o''ars to
o%tain the corresponing va'"es in constant o''ars. 6owever& since
most constr"ction price eGators are o%taine -rom a com%ination
o- price inices -or materia' an 'a%or inp"ts& the. reGect on'. the
change o- price 'eve's an o not capt"re an. savings arising -rom
improve 'a%or pro"ctivit.. 4"ch eGators ten to overstate
increases in constr"ction costs over a 'ong perio o- time& an
conse)"ent'. "nerstate the ph.sica' vo'"me or va'"e o-
constr"ction wor7 in .ears s"%se)"ent to the %ase .ear -or the
inices.
9ac7 to top
..) Factors A?ecting Fo6',ite Producti"it&
8o%;site pro"ctivit. is inG"ence %. man. -actors which can %e
characterize either as 'a%or characteristics& project wor7 conitions
or as non;pro"ctive activities. The 'a%or characteristics inc'"e>
age an eCperience o- wor7-orce
'eaership an motivation o- wor7-orce
The project wor7 conitions inc'"e among other -actors>
8o% size an comp'eCit..
8o% site accessi%i'it..
$a%or avai'a%i'it..
()"ipment "ti'ization.
!ontract"a' agreements.
$oca' c'imate.
$oca' c"'t"ra' characteristics& partic"'ar'. in -oreign
operations.
The non;pro"ctive activities associate with a project ma. or ma.
not %e pai %. the owner& %"t the. neverthe'ess ta7e "p potentia'
'a%or reso"rces which can otherwise %e irecte to the project. The
non;pro"ctive activities inc'"e among other -actors>
/nirect 'a%or re)"ire to maintain the progress o- the project
<ewor7 -or correcting "nsatis-actor. wor7
Temporar. wor7 stoppage "e to inc'ement weather or
materia' shortage
Time oA -or "nion activities
A%sentee time& inc'"ing 'ate start an ear'. )"its
:on;wor7ing ho'ia.s
4tri7es
(ach categor. o- -actors aAects the pro"ctive 'a%or avai'a%'e to a
project as we'' as the on;site 'a%or eKcienc..
%a6or Characteristics
Per-ormance ana'.sis is a common too' -or assessing wor7er )"a'it.
an contri%"tion. Factors that might %e eva'"ate inc'"e>
5"a'it. o- Dor7 ; ca'i%er o- wor7 pro"ce or accomp'ishe.
5"antit. o- Dor7 ; vo'"me o- accepta%'e wor7
8o% Hnow'ege ; emonstrate 7now'ege o- re)"irements&
methos& techni)"es an s7i''s invo've in oing the jo% an
in app'.ing these to increase pro"ctivit..
<e'ate Dor7 Hnow'ege ; 7now'ege o- eAects o- wor7 "pon
other areas an 7now'ege o- re'ate areas which have
inG"ence on assigne wor7.
8"gment ; so"nness o- conc'"sions& ecisions an actions.
/nitiative ; a%i'it. to ta7e eAective action witho"t %eing to'.
<eso"rce *ti'ization ; a%i'it. to e'ineate project nees an
'ocate& p'an an eAective'. "se a'' reso"rces avai'a%'e.
Depena%i'it. ; re'ia%i'it. in ass"ming an carr.ing o"t
commitments an o%'igations.
Ana'.tica' A%i'it. ; eAectiveness in thin7ing thro"gh a pro%'em
an reaching so"n conc'"sions.
!omm"nicative A%i'it. ; eAectiveness in "sing orga' an
written comm"nications an in 7eeping s"%orinates&
associates& s"periors an others ae)"ate'. in-orme.
/nterpersona' 47i''s ; eAectiveness in re'ating in an appropriate
an pro"ctive manner to others.
A%i'it. to Dor7 *ner Press"re ; a%i'it. to meet tight ea'ines
an aapt to changes.
4ec"rit. 4ensitivit. ; a%i'it. to han'e con=entia' in-ormation
appropriate'. an to eCercise care in sa-eg"aring sensitive
in-ormation.
4a-et. !onscio"sness ; has 7now'ege o- goo sa-et.
practices an emonstrates awareness o- own persona' sa-et.
an the sa-et. o- others.
Pro=t an !ost 4ensitivit. ; a%i'it. to see7 o"t& generate an
imp'ement pro=t;ma7ing ieas.
P'anning (Aectiveness ; a%i'it. to anticipate nees& -orecast
conitions& set goa's an stanars& p'an an sche"'e wor7
an meas"re res"'ts.
$eaership ; a%i'it. to eve'op in others the wi''ingenss an
esire to wor7 towars common o%jectives.
De'egating ; eAectiveness in e'egating wor7 appropriate'..
Deve'opment Peop'e ; a%i'it. to se'ect& train an appraise
personne'& set stanars o- per-ormance& an provie
motivation to grow in their capacit.. V 'iWDiversit. E()"a'
(mp'o.ment Opport"nit.F ; a%i'it. to %e senstive to the nees
o- minorities& -ema'es an other protecte gro"ps an to
emonstrate aKrmative action in responing to these nees.
These iAerent -actors co"' each %e assesse on a three point
sca'e> E1F recognize strength& E2F meets eCpectations& E3F area
neeing improvement. (Camp'es o- wor7 per-ormance in these
areas might a'so %e provie.
Project <or@ Conditions
8o%;site 'a%or pro"ctivit. can %e estimate either -or each cra-t
Ecarpenter& %ric7'a.er& etc.F or each t.pe o- constr"ction Eresientia'
ho"sing& processing p'ant& etc.F "ner a speci=c set o- wor7
conitions. A *ase la*or productivity ma. %e e=ne -or a set o-
wor7 conitions speci=e %. the owner or contractor who wishes to
o%serve an meas"re the 'a%or per-ormance over a perio o- time
"ner s"ch conitions. A la*or productivity inde8 ma. then %e
e=ne as the ratio o- the jo%;site 'a%or pro"ctivit. "ner a
iAerent set o- wor7 conitions to the %ase 'a%or pro"ctivit.& an is
a meas"re o- the re'ative 'a%or eKcienc. o- a project "ner this new
set o- wor7 conitions.
The eAects o- vario"s -actors re'ate to wor7 conitions on a new
project can %e estimate in avance& some more acc"rate'. than
others. For eCamp'e& -or ver. 'arge constr"ction projects& the 'a%or
pro"ctivit. ineC tens to ecrease as the project size anPor
comp'eCit. increase %eca"se o- 'ogistic pro%'ems an the B'earningB
that the wor7 -orce m"st "nergo %e-ore aj"sting to the new
environment. 8o%;site accessi%i'it. o-ten ma. re"ce the 'a%or
pro"ctivit. ineC i- the wor7ers m"st per-orm their jo%s in ro"n
a%o"t wa.s& s"ch as avoiing traKc in repaving the highwa. s"r-ace
or maintaining the operation o- a p'ant "ring renovation. $a%or
avai'a%i'it. in the 'oca' mar7et is another -actor. 4hortage o- 'oca'
'a%or wi'' -orce the contractor to %ring in non;'oca' 'a%or or sche"'e
overtime wor7 or %oth. /n either case& the 'a%or eKcienc. wi'' %e
re"ce in aition to inc"rring aitiona' eCpenses. The egree o-
e)"ipment "ti'ization an mechanization o- a constr"ction project
c'ear'. wi'' have irect %earing on jo%;site 'a%or pro"ctivit.. The
contract"a' agreements p'a. an important ro'e in the "ti'ization o-
"nion or non;"nion 'a%or& the "se o- s"%contractors an the egree
o- =e' s"pervision& a'' o- which wi'' impact jo%;site 'a%or
pro"ctivit.. 4ince on;site constr"ction essentia''. invo'ves o"toor
activities& the 'oca' c'imate wi'' inG"ence the eKcienc. o- wor7ers
irect'.. /n -oreign operations& the c"'t"ra' characteristics o- the host
co"ntr. sho"' %e o%serve in assessing the 'a%or eKcienc..
9on'Producti"e Acti"ities
The non;pro"ctive activities associate with a project sho"' a'so
%e eCamine in orer to eCamine the productive la*or yield& which is
e=ne as the ratio o- irect 'a%or ho"rs evote to the comp'etion
o- a project to the potentia' 'a%or ho"rs. The irect 'a%or ho"rs are
estimate on the %asis o- the %est possi%'e conitions at a jo% site
%. eCc'"ing a'' -actors which ma. re"ce the pro"ctive 'a%or .ie'.
For eCamp'e& in the repaving o- highwa. s"r-ace& the Gagmen
re)"ire to ivert traKc represent inirect 'a%or which oes not
contri%"te to the 'a%or eKcienc. o- the paving crew i- the highwa. is
c'ose to the traKc. 4imi'ar'.& -or 'arge projects in remote areas&
inirect 'a%or ma. %e "se to provie ho"sing an in-rastr"ct"re -or
the wor7ers hire to s"pp'. the irect 'a%or -or a project. The 'a%or
ho"rs spent on rewor7 to correct "nsatis-actor. origina' wor7
represent eCtra time ta7en awa. -rom potentia' 'a%or ho"rs. The
'a%or ho"rs re'ate to s"ch activities m"st %e e"cte -rom the
potentia' 'a%or ho"rs in orer to o%tain the act"a' pro"ctive 'a%or
.ie'.
E>ample .'1( E?ects of jo6 si-e on producti"it&
A contractor has esta%'ishe that "ner a set o-
BstanarB wor7 conitions -or %"i'ing constr"ction& a
jo% re)"iring +33&333 'a%or ho"rs is consiere stanar
in etermining the %ase 'a%or pro"ctivit.. A'' other
-actors %eing the same& the 'a%or pro"ctivit. ineC wi''
increase to 1.1 or 113Q -or a jo% re)"iring on'. #33&333
'a%or;ho"rs. Ass"ming that a 'inear re'ation eCists -or the
range %etween jo%s re)"iring 333&333 to 033&333 'a%or
ho"rs as shown in Fig"re #;1& etermine the 'a%or
pro"ctivit. ineC -or a new jo% re)"iring ,+3&333 'a%or
ho"rs "ner otherwise the same set o- wor7 conitions.
Figure .'1( /''"strative <e'ationship %etween Pro"ctivit. /neC an
8o% 4ize
The 'a%or pro"ctivit. ineC / -or the new jo% can %e
o%taine %. 'inear interpo'ation o- the avai'a%'e ata as
-o''ows>
This imp'ies that 'a%or is 1+Q 'ess pro"ctive on the
'arge jo% than on the stanar project.
E>ample .'$( Producti"e la6or &ield L3M
/n the constr"ction o- an oA;shore oi' ri''ing p'at-orm&
the potentia' 'a%or ho"rs were -o"n to %e $ X 0.+
mi''ion ho"rs. O- this tota'& the non;pro"ctive activities
eCpresse in tho"san 'a%or ho"rs were as -o''ows>
A X #10 -or ho'ia.s an stri7es
9 X 1&#1+ -or a%sentees Ei.e. vacation& sic7 time&
etc.F
! X 1&1#1 -or temporar. stoppage Ei.e. weather&
waiting& "nion activities& etc.F
D X 1&#31 -or inirect 'a%or Ei.e. %"i'ing
temporar. -aci'ities& c'eaning "p the site& rewor7
to correct errors& etc.F
Determine the pro"ctive 'a%or .ie' a-ter the a%ove
-actors are ta7en into consieration.
The percentages o- time a''ocate to vario"s non;
pro"ctive activities& A& 9& ! an D are>
The tota' percentage o- time Y -or a'' non;pro"ctive
activities is>
The pro"ctive 'a%or .ie'& I& when the given -actors -or
A& 9& ! an D are consiere& is as -o''ows>
As a res"'t& on'. #1Q o- the %"gete 'a%or time was
evote irect'. to wor7 on the -aci'it..
E>ample .')( Atili-ation of on'site wor@er!s time
An eCamp'e i''"strating the eAects o- inirect 'a%or
re)"irements which 'imit pro"ctive 'a%or %. a t.pica'
cra-tsman on the jo% site was given %. <. T"c7er with
the -o''owing percentages o- time a''ocation> L#M
Pro"ctive time
*npro"ctive time
Aministrative e'a.s
/neKcient wor7 methos
$a%or j"risictions an
other wor7 restrictions
Persona' time
#3
Q
23
Q
23
Q
1+
Q
+Q
/n this estimate& as m"ch time is spent on pro"ctive
wor7 as on e'a.s "e to management an ineKciencies
"e to anti)"ate wor7 methos.
9ac7 to top
... %a6or *elations in Construction
The mar7et eman in constr"ction G"ct"ates great'.& o-ten within
short perios an with "neven istri%"tions among geographica'
regions. (ven when the vo'"me o- constr"ction is re'ative'. stea.&
some t.pes o- wor7 ma. ec'ine in importance whi'e other t.pes
gain. *ner an "nsta%'e economic environment& emp'o.ers in the
constr"ction in"str. p'ace great va'"e on GeCi%i'it. in hiring an
'a.ing oA wor7ers as their vo'"mes o- wor7 waC an wane. On the
other han& constr"ction wor7ers sense their insec"rit. "ner s"ch
circ"mstances an attempt to 'imit the impacts o- changing
economic conitions thro"gh 'a%or organizations.
There are man. cra-ts in the constr"ction 'a%or -orces& %"t most
contractors hire -rom on'. a -ew o- these cra-ts to satis-. their
specia'ize nees. 9eca"se o- the pec"'iar characteristics o-
emp'o.ment conitions& emp'o.ers an wor7ers are p'ace in a
more intimate re'ationship than in man. other in"stries. $a%or an
management arrangements in the constr"ction in"str. inc'"e
%oth "nionize an non;"nionize operations which compete -or
-"t"re ominance. Most in"stria' an "ti'it. constr"ction is "nion. /n
the commercia' %"i'ing sector& non;"nion contractors have mae
inroas& whi'e in the ho"sing sector& most contractors are non;"nion.
The heav. constr"ction sector is primari'. non;"nion.
Anioni-ed Construction
The cra-t "nions wor7 with constr"ction contractors "sing "nionize
'a%or thro"gh vario"s mar7et instit"tions s"ch as j"risiction r"'es&
apprenticeship programs& an the re-erra' s.stem. !ra-t "nions with
speci=c j"risiction r"'es -or iAerent traes set "ni-orm ho"r'.
wage rates -or jo"rne.men an oAer -orma' apprenticeship training
to provie common an e)"iva'ent s7i'' -or each trae. !ontractors&
thro"gh the contractors' associations& enter into 'ega''. %ining
co''ective %argaining agreements with one or more o- the cra-t
"nions in the constr"ction traes. The s.stem which %in %oth
parties to a co''ective %argaining agreement is re-erre to as the
B"nion shopB. These agreements o%'igate a contractor to o%serve
the wor7 j"risictions o- vario"s "nions an to hire emp'o.ees
thro"gh a "nion operate re-erra' s.stem common'. 7nown as the
hiring ha''.
The re-erra' s.stems operate %. "nion organizations are re)"ire
to o%serve severa' conitions>
1. A'' )"a'i=e wor7ers reporte to the re-erra' s.stem m"st %e
mae avai'a%'e to the contractor witho"t iscrimination on the
%asis o- "nion mem%ership or other re'ationship to the "nion.
The Bc'ose shopB which 'imits re-erra' to "nion mem%ers on'.
is now i''ega'.
2. The contractor reserves the right to hire or re-"se to hire an.
wor7er re-erre %. the "nion on the %asis o- his or her
)"a'i=cations.
3. The re-erra' p'an m"st %e poste in p"%'ic& inc'"ing an.
priorities o- re-erra's or re)"ire )"a'i=cations.
Dhi'e these princip'es m"st prevai'& re-erra' s.stems operate %.
'a%or organizations iAer wie'. in the constr"ction in"str..
!ontractors an cra-t "nions m"st negotiate not on'. wage rates
an wor7ing conitions& %"t a'so hiring an apprentice training
practices. The p"rpose o- trae j"risiction is to enco"rage
consiera%'e investment in apprentice training on the part o- the
"nion so that the contractor wi'' %e protecte %. having on'.
)"a'i=e wor7ers per-orm the jo% even tho"gh s"ch wor7ers are not
permanent'. attache to the contractor an th"s ma. have no
sense o- sec"rit. or 'o.a't.. The re-erra' s.stem is o-ten a rapi an
epena%'e so"rce o- wor7ers& partic"'ar'. -or a contractor who
moves into a new geographica' 'ocation or starts a new project
which has high G"ct"ations in eman -or 'a%or. 9. an 'arge& the
re-erra' s.stem has -"nctione smooth'. in proviing )"a'i=e
wor7ers to contractors& even tho"gh some other aspects o- "nion
operations are not as we'' accepte %. contractors.
9on'Anioni-ed Construction
/n recent .ears& non;"nion contractors have entere an prospere
in an in"str. which has a 'ong traition o- "nionization. :on;"nion
operations in constr"ction are re-erre to as Bopen shops.B 6owever&
in the a%sence o- co''ective %argaining agreements& man.
contractors operate "ner po'icies aopte %. non;"nion
contractors' associations. This practice is re-erre to as Bmerit
shopB& which -o''ows s"%stantia''. the same po'icies an proce"res
as co''ective %argaining a'tho"gh "ner the contro' o- a non;"nion
contractors' association witho"t "nion participation. Other
contractors ma. choose to %e tota''. B"norganizeB %. not -o''owing
either "nion shop or merit shop practices.
The operations o- the merit shop are nationa' in scope& eCcept -or
the 'oca' or state apprenticeship an training p'ans. The
comprehensive p'ans o- the contractors' association app'. to a''
emp'o.ees an cra-ts o- a contractor regar'ess o- their traes.
*ner s"ch operations& wor7ers have -"'' rights to move thro"gh the
nation among mem%er contractors o- the association. Th"s& the non;
"nion segment o- the in"str. is organize %. contractors'
associations into an integra' part o- the constr"ction in"str..
6owever& since merit shop wor7ers are emp'o.e irect'. %. the
constr"ction =rms& the. have a greater 'o.a't. to the =rm& an
recognize that their own interest wi'' %e aAecte %. the =nancia'
hea'th o- the =rm.
P'a.ing a signi=cant ro'e in the ear'. growth an contin"e
eCpansion o- merit shop constr"ction is the Associate 9"i'ers an
!ontractors association. 9. 1210& it ha a mem%ership o- near'.
23&333 contractors an a networ7 o- 0+ chapters thro"gh the nation.
Among the merit shop contractors are 'arge constr"ction =rms s"ch
as F'"or Danie'& 9'o"nt /nternationa'& an 9rown R <oot
!onstr"ction. The avantages o- merit shops as c'aime %. its
avocates are>
the a%i'it. to manage their own wor7 -orce
GeCi%i'it. in ma7ing time'. management ecisions
the emphasis on ma7ing maCim"m "sage o- 'oca' 'a%or -orce
the emphasis on enco"raging inivi"a' wor7 avancement
thro"gh contin"e eve'opment o- s7i''s
the share interest that management an wor7ers have in
seeing an inivi"a' =rm prosper.
9. sho"'ering the training responsi%i'it. -or pro"cing s7i'' wor7ers&
the merit shop contractors have eGecte the most serio"s
comp'aints o- "sers an 'a%or that "se to %e raise against the
open shop. On the other han& the "se o- miCe crews o- s7i''e
wor7ers at a jo% site %. merit shop contractors ena%'es them to
remove a major so"rce o- ineKciencies ca"se %. the eCc'"sive
j"risiction practice in the "nion shop& name'. the iea that on'.
mem%ers o- a partic"'ar "nion sho"' %e permitte to per-orm an.
given tas7 in constr"ction. As a res"'t& merit shop contractors are
a%'e to eCert a %ene=cia' inG"ence on pro"ctivit. an cost;
eAectiveness o- constr"ction projects.
The "norganize -orm o- open shop is -o"n primari'. in ho"sing
constr"ction where a 'arge percentage o- wor7ers are characterize
as "ns7i''e he'pers. The s7i''e wor7ers in vario"s cra-ts are
eve'ope gra"a''. thro"gh in-orma' apprenticeships whi'e serving
as he'pers. This -orm o- open shop is not eCpecte to eCpan
%e.on the t.pe o- constr"ction projects in which high'. specia'ize
s7i''s are not re)"ire.
9ac7 to top
../ Pro6lems in Collecti"e Bargaining
/n the organize %"i'ing traes in :orth American constr"ction& the
primar. "nit is the internationa' "nion& which is an association o-
'oca' "nions in the *nite 4tates an !anaa. A'tho"gh on'. the
internationa' "nions have the power to iss"e or remove charters an
to organize or com%ine 'oca' "nions& each 'oca' "nion has
consiera%'e egrees o- a"tonom. in the con"ct o- its aAairs&
inc'"ing the negotiation o- co''ective %argaining agreements. The
%"siness agent o- a 'oca' "nion is an e'ecte oKcia' who is the most
important person in han'ing the a. to a. operations on %eha'- o-
the "nion. The contractors' associations representing the emp'o.ers
var. wie'. in composition an str"ct"re& partic"'ar'. in iAerent
geographica' regions. /n genera'& 'oca' contractors' associations are
consiera%'. 'ess we'' organize than the "nion with which the.
ea'& %"t the. tr. to strengthen themse'ves thro"gh aK'iation with
state an nationa' organizations. T.pica''.& co''ective %argaining
agreements in constr"ction are negotiate %etween a 'oca' "nion in
a sing'e cra-t an the emp'o.ers o- that cra-t as represente %. a
contractors' association& %"t there are man. eCceptions to this
pattern. For eCamp'e& a contractor ma. remain o"tsie the
association an negotiate inepenent'. o- the "nion& %"t it "s"a''.
cannot o%tain a %etter agreement than the association.
9eca"se o- the great variet. o- %argaining str"ct"res in which the
"nion an contractors' organization ma. choose to stage
negotiations& there are man. pro%'ems arising -rom j"risictiona'
isp"tes an other ca"ses. Jiven the traitiona' riva'ries among
vario"s cra-ts an the ineAective organization o- some o-
contractors' associations& co"p'e with the 'ac7 o- ae)"ate
mechanisms -or sett'ing isp"tes& some possi%'e so'"tions to these
pro%'ems eserve serio"s attention> L+M
*egional Bargaining
!"rrent'.& the geographica' area in a co''ective %argaining
agreement oes not necessari'. coincie with the territor. o- the
"nion an contractors' associations in the negotiations. There are
over'apping o- j"risictions as we'' as territories& which ma. create
s"ccessions o- contract termination ates -or iAerent cra-ts. Most
co''ective %argaining agreements are negotiate 'oca''.& %"t regiona'
agreements with more comprehensive coverage em%racing a
n"m%er o- states have %een esta%'ishe. The ro'e o- nationa' "nion
negotiators an contractors' representatives in 'oca' co''ective
%argaining is 'imite. The nationa' agreement %etween internationa'
"nions an a nationa' contractor norma''. %ins the contractors'
association an its %argaining "nit. !onse)"ent'.& the most
promising re-orm 'ies in the %roaening o- the geographic region o-
an agreement in a sing'e trae witho"t over'apping territories or
j"risictions.
Multicraft Bargaining
The treatment o- interre'ationships among vario"s cra-t traes in
constr"ction presents one o- the most comp'eC iss"es in the
co''ective %argaining process. Past eCperience on project
agreements has ea't with s"ch iss"es s"ccess-"''. in that co''ective
%argaining agreements are signe %. a gro"p o- cra-t trae "nions
an a contractor -or the "ration o- a project. Project agreements
ma. re-erence other agreements on partic"'ar points& s"ch as wage
rates an -ringe %ene=ts& %"t ma. set their own wor7ing conitions
an proce"res -or sett'ing isp"tes inc'"ing a commitment o- no;
stri7e an no;'oc7o"t. This t.pe o- agreement ma. serve as a
starting point -or m"'ticra-t %argaining on a regiona'& non;project
%asis.
#mpro"ement of Bargaining Performance
A'tho"gh %oth sies o- the %argaining ta%'e are to some egree
responsi%'e -or the s"ccess or -ai'"re o- negotiation& contractors
have o-ten %een responsi%'e -or the poor per-ormance o- co''ective
%argaining in constr"ction in recent .ears %eca"se 'oca' contractors'
associations are genera''. 'ess we'' organize an 'ess pro-essiona''.
staAe than the "nions with which the. ea'. $egis'ation proviing
-or contractors' association accreitation as an eCc'"sive %argaining
agent has now %een provie in severa' provinces in !anaa. /t
provies a government %oar that co"' ho' hearings an esta%'ish
an appropriate %argaining "nit %. geographic region or sector o- the
in"str.& on a sing'e;trae or m"'ti;trae %asis.
9ac7 to top
..4 Materials Management
Materia's management is an important e'ement in project p'anning
an contro'. Materia's represent a major eCpense in constr"ction& so
minimizing procurement or purchase costs presents important
opport"nities -or re"cing costs. Poor materia's management can
a'so res"'t in 'arge an avoia%'e costs "ring constr"ction. First& i-
materia's are p"rchase ear'.& capita' ma. %e tie "p an interest
charges inc"rre on the eCcess inventory o- materia's. (ven worse&
materia's ma. eteriorate "ring storage or %e sto'en "n'ess specia'
care is ta7en. For eCamp'e& e'ectrica' e)"ipment o-ten m"st %e
store in waterproo- 'ocations. 4econ& e'a.s an eCtra eCpenses
ma. %e inc"rre i- materia's re)"ire -or partic"'ar activities are not
avai'a%'e. Accoring'.& ins"ring a time'. Gow o- materia' is an
important concern o- project managers.
Materia's management is not j"st a concern "ring the monitoring
stage in which constr"ction is ta7ing p'ace. Decisions a%o"t materia'
proc"rement ma. a'so %e re)"ire "ring the initia' p'anning an
sche"'ing stages. For eCamp'e& activities can %e inserte in the
project sche"'e to represent p"rchasing o- major items s"ch as
e'evators -or %"i'ings. The avai'a%i'it. o- materia's ma. great'.
inG"ence the sche"'e in projects with a fast track or ver. tight time
sche"'e> s"Kcient time -or o%taining the necessar. materia's m"st
%e a''owe. /n some case& more eCpensive s"pp'iers or shippers ma.
%e emp'o.e to save time.
Materia's management is a'so a pro%'em at the organization 'eve' i-
centra' p"rchasing an inventor. contro' is "se -or stanar items.
/n this case& the vario"s projects "nerta7en %. the organization
wo"' present re)"ests to the centra' p"rchasing gro"p. /n t"rn& this
gro"p wo"' maintain inventories o- stanar items to re"ce the
e'a. in proviing materia' or to o%tain 'ower costs "e to %"'7
p"rchasing. This organizationa' materia's management pro%'em is
ana'ogo"s to inventor. contro' in an. organization -acing contin"ing
eman -or partic"'ar items.
Materia's orering pro%'ems 'en themse'ves partic"'ar'. we'' to
comp"ter %ase s.stems to ins"re the consistenc. an
comp'eteness o- the p"rchasing process. /n the man"-act"ring
rea'm& the "se o- a"tomate materials re7uirements planning
s.stems is common. /n these s.stems& the master pro"ction
sche"'e& inventor. recors an pro"ct component 'ists are
merge to etermine what items m"st %e orere& when the.
sho"' %e orere& an how m"ch o- each item sho"' %e orere in
each time perio. The heart o- these ca'c"'ations is simp'e
arithmetic> the projecte eman -or each materia' item in each
perio is s"%tracte -rom the avai'a%'e inventor.. Dhen the
inventor. %ecomes too 'ow& a new orer is recommene. For items
that are non;stanar or not 7ept in inventor.& the ca'c"'ation is
even simp'er since no inventor. m"st %e consiere. Dith a
materia's re)"irement s.stem& m"ch o- the etai'e recor 7eeping
is a"tomate an project managers are a'erte to p"rchasing
re)"irements.
E>ample .'.( E>amples of 6eneGts for materials
management s&stems.L,M
From a st". o- twent. heav. constr"ction sites& the
-o''owing %ene=ts -rom the intro"ction o- materia's
management s.stems were note>
/n one project& a ,Q re"ction in cra-t 'a%or costs
occ"rre "e to the improve avai'a%i'it. o-
materia's as neee on site. On other projects& an
1Q savings "e to re"ce e'a. -or materia's
was estimate.
A comparison o- two projects with an witho"t a
materia's management s.stem revea'e a change
in pro"ctivit. -rom 1.22 man;ho"rs per "nit
witho"t a s.stem to 1.1# man;ho"rs per "nit with
a new s.stem. Again& m"ch o- this iAerence can
%e attri%"te to the time'. avai'a%i'it. o-
materia's.
Dareho"se costs were -o"n to ecrease +3Q on
one project with the intro"ction o- improve
inventor. management& representing a savings o-
@ 22&333. /nterest charges -or inventor. a'so
ec'ine& with one project reporting a cash Gow
savings o- @ 1+&333 -rom improve materia's
management.
Against these vario"s %ene=ts& the costs o- ac)"iring
an maintaining a materia's management s.stem has to
%e compare. 6owever& management st"ies s"ggest
that investment in s"ch s.stems can %e )"ite %ene=cia'.
9ac7 to top
..5 Material Procurement and 0eli"er&
The main so"rces o- in-ormation -or -ee%ac7 an contro' o- materia'
proc"rement are re)"isitions& %is an )"otations& p"rchase orers
an s"%contracts& shipping an receiving oc"ments& an invoices.
For projects invo'ving the 'arge sca'e "se o- critica' reso"rces& the
owner ma. initiate the proc"rement proce"re even %e-ore the
se'ection o- a constr"ctor in orer to avoi shortages an e'a.s.
*ner orinar. circ"mstances& the constr"ctor wi'' han'e the
proc"rement to shop -or materia's with the %est pricePper-ormance
characteristics speci=e %. the esigner. 4ome over'apping an
rehan'ing in the proc"rement process is "navoia%'e& %"t it sho"'
%e minimize to ins"re time'. e'iver. o- the materia's in goo
conition.
The materia's -or e'iver. to an -rom a constr"ction site ma. %e
%roa'. c'assi=e as > E1F %"'7 materia's& E2F stanar oA;the;she'-
materia's& an E3F -a%ricate mem%ers or "nits. The process o-
e'iver.& inc'"ing transportation& =e' storage an insta''ation wi''
%e iAerent -or these c'asses o- materia's. The e)"ipment neee to
han'e an ha"' these c'asses o- materia's wi'' a'so %e iAerent.
9"'7 materia's re-er to materia's in their nat"ra' or semi;processe
state& s"ch as earthwor7 to %e eCcavate& wet concrete miC& etc.
which are "s"a''. enco"ntere in 'arge )"antities in constr"ction.
4ome %"'7 materia's s"ch as earthwor7 or grave's ma. %e meas"re
in %an7 Eso'i in sit"F vo'"me. O%vio"s'.& the )"antities o- materia's
-or e'iver. ma. %e s"%stantia''. iAerent when eCpresse in
iAerent meas"res o- vo'"me& epening on the characteristics o-
s"ch materia's.
4tanar piping an va'ves are t.pica' eCamp'es o- stanar oA;the;
she'- materia's which are "se eCtensive'. in the chemica'
processing in"str.. 4ince stanar oA;the;she'- materia's can easi'.
%e stoc7pi'e& the e'iver. process is re'ative'. simp'e.
Fa%ricate mem%ers s"ch as stee' %eams an co'"mns -or %"i'ings
are pre;processe in a shop to simp'i-. the =e' erection proce"res.
De'e or %o'te connections are attache partia''. to the mem%ers
which are c"t to precise imensions -or ae)"ate =t. 4imi'ar'.& stee'
tan7s an press"re vesse's are o-ten part'. or -"''. -a%ricate %e-ore
shipping to the =e'. /n genera'& i- the wor7 can %e one in the shop
where wor7ing conitions can %etter %e contro''e& it is avisa%'e to
o so& provie that the -a%ricate mem%ers or "nits can %e shippe
to the constr"ction site in a satis-actor. manner at a reasona%'e
cost.
As a -"rther step to simp'i-. =e' assem%'.& an entire wa'' pane'
inc'"ing p'"m%ing an wiring or even an entire room ma. %e
pre-a%ricate an shippe to the site. Dhi'e the =e' 'a%or is great'.
re"ce in s"ch cases& Bmateria'sB -or e'iver. are in -act
man"-act"re pro"cts with va'"e ae %. another t.pe o- 'a%or.
Dith moern means o- transporting constr"ction materia's an
-a%ricate "nits& the percentages o- costs on irect 'a%or an
materia's -or a project ma. change i- more pre-a%ricate "nits are
intro"ce in the constr"ction process.
/n the constr"ction in"str.& materia's "se %. a speci=c cra-t are
genera''. han'e %. cra-tsmen& not %. genera' 'a%or. Th"s&
e'ectricians han'e e'ectrica' materia's& pipe=tters han'e pipe
materia's& etc. This m"'tip'e han'ing iverts scarce s7i''e
cra-tsmen an contractor s"pervision into activities which o not
irect'. contri%"te to constr"ction. 4ince contractors are not
norma''. in the -reight %"siness& the. o not per-orm the tas7s o-
-reight e'iver. eKcient'.. A'' these -actors ten to eCacer%ate the
pro%'ems o- -reight e'iver. -or ver. 'arge projects.
E>ample .'/( Freight deli"er& for the Alas@a Pipeline Project
L0M
The -reight e'iver. s.stem -or the A'as7a pipe'ine
project was set "p to han'e ,33&333 tons o- materia's
an s"pp'ies. This tonnage i not inc'"e the pipes
which comprise another +33&333 tons an were
shippe thro"gh a iAerent ro"ting s.stem.
The comp'eCit. o- this e'iver. s.stem is i''"strate in
Fig"re #;2. The rectang"'ar %oCes enote geographica'
'ocations. The points o- origin represent p'ants an
-actories thro"gho"t the *4 an e'sewhere. 4ome o- the
materia's went to a primar. staging point in 4eatt'e an
some went irect'. to A'as7a. There were =ve ports o-
entr.> Na'ez& Anchorage& Dhittier& 4ewar an Pr"hoe
9a.. There was a seconar. staging area in Fair%an7s
an the pipe'ine itse'- was ivie into siC sections.
9e.on the I"7on <iver& there was nothing avai'a%'e %"t
a irt roa -or ha"'ing. The amo"nts o- -reight in
tho"sans o- tons shippe to an -rom vario"s 'ocations
are inicate %. the n"m%ers near the networ7
%ranches Ewith arrows showing the irections o- materia'
GowsF an the moes o- transportation are note a%ove
the %ranches. /n each o- the 'ocations& the contractor
ha s"pervision an constr"ction 'a%or to ienti-.
materia's& "n'oa -rom transport& etermine where the
materia' was going& repac7age i- re)"ire to sp'it
shipments& an then re;'oa materia' on o"tgoing
transport.
Figure .'$( Freight De'iver. -or the A'as7a Pipe'ine Project
E>ample .'4( Process plant e3uipment procurement L1M
The proc"rement an e'iver. o- %"'7 materia's items
s"ch as piping e'ectrica' an str"ct"ra' e'ements
invo'ves a series o- activities i- s"ch items are not
stanar anPor in stoc7. The times re)"ire -or vario"s
activities in the proc"rement o- s"ch items might %e
estimate to %e as -o''ows>
Acti"ities
0uration
Hda&sI
Cumulati"e
0uration
<e)"isition rea.
%. esigner
Owner approva'
/n)"ir. iss"e to
venors
Nenor
)"otations
receive
!omp'ete %i
eva'"ation %.
esigner
Owner approva'
P'ace p"rchase
orer
<eceive
pre'iminar. shop
rawings
<eceive =na'
esign rawings
Fa%rication an
e'iver.
3
+
3
1+
0
+
+
13
13
,3;
233
3
+
1
23
33
3+
#3
+3
,3
123;
2,3
As a res"'t& this t.pe o- e)"ipment proc"rement wi''
t.pica''. re)"ire -o"r to nine months. 4'ippage or
contraction in this stanar sche"'e is a'so possi%'e&
%ase on s"ch -actors as the eCtent to which a
-a%ricator is %"s..
9ac7 to top
..8 #n"entor& Control
Once goos are p"rchase& the. represent an inventory "se "ring
the constr"ction process. The genera' o%jective o- inventor. contro'
is to minimize the tota' cost o- 7eeping the inventor. whi'e ma7ing
traeoAs among the major categories o- costs> E1F p"rchase costs&
E2F orer cost& E3F ho'ing costs& an E#F "navai'a%'e cost. These cost
categories are interre'ate since re"cing cost in one categor. ma.
increase cost in others. The costs in a'' categories genera''. are
s"%ject to consiera%'e "ncertaint..
Purchase Costs
The purchase cost o- an item is the "nit p"rchase price -rom an
eCterna' so"rce inc'"ing transportation an -reight costs. For
constr"ction materia's& it is common to receive isco"nts -or %"'7
p"rchases& so the "nit p"rchase cost ec'ines as )"antit. increases.
These re"ctions ma. reGect man"-act"rers' mar7eting po'icies&
economies o- sca'e in the materia' pro"ction& or sca'e economies in
transportation. There are a'so avantages in having homogeneo"s
materia's. For eCamp'e& a %"'7 orer to ins"re the same co'or or size
o- items s"ch as %ric7s ma. %e esira%'e. Accoring'.& it is "s"a''.
esira%'e to ma7e a 'imite n"m%er o- 'arge p"rchases -or materia's.
/n some cases& organizations ma. conso'iate sma'' orers -rom a
n"m%er o- iAerent projects to capt"re s"ch %"'7 isco"ntsO this is a
%asic saving to %e erive -rom a centra' p"rchasing oKce.
The cost o- materia's is %ase on prices o%taine thro"gh eAective
%argaining. *nit prices o- materia's epen on %argaining 'everage&
)"antities an e'iver. time. Organizations with potentia' -or 'ong;
term p"rchase vo'"me can comman %etter %argaining 'everage.
Dhi'e orers in 'arge )"antities ma. res"'t in 'ower "nit prices& the.
ma. a'so increase ho'ing costs an th"s ca"se pro%'ems in cash
Gow. <e)"irements o- short e'iver. time can a'so averse'. aAect
"nit prices. F"rthermore& esign characteristics which inc'"e items
o- o sizes or shapes sho"' %e avoie. 4ince s"ch items norma''.
are not avai'a%'e in the stanar stoc7pi'e& p"rchasing them ca"ses
higher prices.
The transportation costs are aAecte %. shipment sizes an other
-actors. 4hipment %. the -"'' 'oa o- a carrier o-ten re"ces prices
an ass"res )"ic7er e'iver.& as the carrier can trave' -rom the
origin to the estination o- the -"'' 'oa witho"t having to stop -or
e'ivering part o- the cargo at other stations. Avoiing
transshipment is another consieration in re"cing shipping cost.
Dhi'e the re"ction in shipping costs is a major o%jective& the
re)"irements o- e'icate han'ing o- some items ma. -avor a more
eCpensive moe o- transportation to avoi %rea7age an
rep'acement costs.
Order Cost
The order cost reGects the aministrative eCpense o- iss"ing a
p"rchase orer to an o"tsie s"pp'ier. Orer costs inc'"e eCpenses
o- ma7ing re)"isitions& ana'.zing a'ternative venors& writing
p"rchase orers& receiving materia's& inspecting materia's& chec7ing
on orers& an maintaining recors o- the entire process. Orer
costs are "s"a''. on'. a sma'' portion o- tota' costs -or materia'
management in constr"ction projects& a'tho"gh orering ma.
re)"ire s"%stantia' time.
+olding Costs
The holding costs or carrying costs are primari'. the res"'t o- capita'
costs& han'ing& storage& o%so'escence& shrin7age an eterioration.
!apita' cost res"'ts -rom the opport"nit. cost or =nancia' eCpense o-
capita' tie "p in inventor.. Once pa.ment -or goos is mae&
%orrowing costs are inc"rre or capita' m"st %e iverte -rom other
pro"ctive "ses. !onse)"ent'.& a capita' carr.ing cost is inc"rre
e)"a' to the va'"e o- the inventor. "ring a perio m"'tip'ie %. the
interest rate o%taina%'e or pai "ring that perio. :ote that capita'
costs on'. acc"m"'ate when pa.ment -or materia's act"a''. occ"rsO
man. organizations attempt to e'a. pa.ments as 'ong as possi%'e
to minimize s"ch costs. 6an'ing an storage represent the
movement an protection charges inc"rre -or materia's. 4torage
costs a'so inc'"e the isr"ption ca"se to other project activities %.
'arge inventories o- materia's that get in the wa.. O%so'escence is
the ris7 that an item wi'' 'ose va'"e %eca"se o- changes in
speci=cations. 4hrin7age is the ecrease in inventor. over time "e
to the-t or 'oss. Deterioration reGects a change in materia' )"a'it.
"e to age or environmenta' egraation. Man. o- these holding
cost components are iKc"'t to preict in avanceO a project
manager 7nows on'. that there is some chance that speci=c
categories o- cost wi'' occ"r. /n aition to these major categories o-
cost& there ma. %e anci''ar. costs o- aitiona' ins"rance& taCes
Eman. states treat inventories as taCa%'e propert.F& or aitiona' =re
hazars. As a genera' r"'e& ho'ing costs wi'' t.pica''. represent 23
to #3Q o- the average inventor. va'"e over the co"rse o- a .earO
th"s i- the average materia' inventor. on a project is @ 1 mi''ion over
a .ear& the ho'ing cost might %e eCpecte to %e @233&333 to
@#33&333.
Ana"aila6ilit& Cost
The unavaila*ility cost is inc"rre when a esire materia' is not
avai'a%'e at the esire time. /n man"-act"ring in"stries& this cost
is o-ten ca''e the stockout or depletion cost. 4hortages ma. e'a.
wor7& there%. wasting 'a%or reso"rces or e'a.ing the comp'etion o-
the entire project. Again& it ma. %e iKc"'t to -orecast in avance
eCact'. when an item ma. %e re)"ire or when an shipment wi'' %e
receive. Dhi'e the project sche"'e gives one estimate& eviations
-rom the sche"'e ma. occ"r "ring constr"ction. Moreover& the
cost associate with a shortage ma. a'so %e iKc"'t to assessO i- the
materia' "se -or one activit. is not avai'a%'e& it ma. %e possi%'e to
assign wor7ers to other activities an& epening "pon which
activities are critica'& the project ma. not %e e'a.e.
9ac7 to top
..: radeo?s of Costs in Materials Management.
To i''"strate the t.pe o- trae;oAs enco"ntere in materia's
management& s"ppose that a partic"'ar item is to %e orere -or a
project. The amo"nt o- time re)"ire -or processing the orer an
shipping the item is "ncertain. !onse)"ent'.& the project manager
m"st ecie how m"ch 'ea time to provie in orering the item.
Orering ear'. an there%. proviing a 'ong 'ea time wi'' increase
the chance that the item is avai'a%'e when neee& %"t it increases
the costs o- inventor. an the chance o- spoi'age on site.
$et T %e the time -or the e'iver. o- a partic"'ar item& < %e the time
re)"ire -or process the orer& an 4 %e the shipping time. Then& the
minim"m amo"nt o- time -or the e'iver. o- the item is T X < Z 4. /n
genera'& %oth < an 4 are ranom varia%'esO hence T is a'so a
ranom varia%'e. For the sa7e o- simp'icit.& we sha'' consier on'.
the case o- instant processing -or an orer& i.e. < X 3. Then& the
e'iver. time T e)"a's the shipping time 4.
4ince T is a ranom varia%'e& the chance that an item wi'' %e
e'ivere on a. t is represente %. the pro%a%i'it. pEtF. Then& the
pro%a%i'it. that the item wi'' %e e'ivere on or %e-ore t a. is given
%.>
#.1
/- a an % are the 'ower an "pper %o"ns o- possi%'e e'iver. ates&
the eCpecte e'iver. time is then given %.>
#.2
The 'ea time $ -or orering an item is the time perio ahea o- the
e'iver. time& an wi'' epen on the traeoA %etween ho'ing costs
an "navai'a%i'it. costs. A project manager ma. want to avoi the
"navai'a%'e cost %. re)"iring e'iver. on the sche"'e ate o- "se&
or ma. %e to 'ower the ho'ing cost %. aopting a more GeCi%'e 'ea
time %ase on the eCpecte e'iver. time. For eCamp'e& the
manager ma. ma7e the traeoA %. speci-.ing the 'ea time to %e D
a.s more than the eCpecte e'iver. time& i.e.&
#.3
where D ma. var. -rom 3 to the n"m%er o- aitiona' a.s re)"ire
to pro"ce certain e'iver. on the esire ate.
/n a more rea'istic sit"ation& the project manager wo"' a'so conten
with the "ncertaint. o- eCact'. when the item might %e re)"ire.
(ven i- the item is scheduled -or "se on a partic"'ar ate& the wor7
progress might var. so that the esire ate wo"' iAer. /n man.
cases& greater than eCpecte wor7 progress ma. res"'t in no savings
%eca"se materia's -or -"t"re activities are "navai'a%'e.
E>ample .'5( ( %ead time for ordering with no processing
time.
Ta%'e #;1 s"mmarizes the pro%a%i'it. o- iAerent
e'iver. times -or an item. /n this ta%'e& the =rst co'"mn
'ists the possi%'e shipping times Eranging -rom 13 to 1,
a.sF& the secon co'"mn 'ists the pro%a%i'it. or chance
that this shipping time wi'' occ"r an the thir co'"mn
s"mmarizes the chance that the item arrives on or
%e-ore a partic"'ar ate. This ta%'e can %e "se to
inicate the chance that the item wi'' arrive on a esire
ate -or iAerent 'ea times. For eCamp'e& i- the orer is
p'ace 12 a.s in avance o- the esire ate Eso the
'ea time is 12 a.sF& then there is a 1+Q chance that
the item wi'' arrive eCact'. on the esire a. an a
3+Q chance that the item wi'' arrive on or %e-ore the
esire ate. :ote that this imp'ies that there is a 1 ;
3.3+ X 3.,+ or ,+Q chance that the item wi'' not arrive
%. the esire ate with a 'ea time o- 12 a.s. Jiven
the in-ormation in Ta%'e #;1& when sho"' the item orer
%e p'aceT
a6le .'1 De'iver. Date on Orers an
Pro%a%i'it. o- De'iver. -or an (Camp'e
0eli"er
&
0ate
t
Pro6a6ilit&
of
deli"er& on
date t
pHtI
Cummulati"e
pro6a6ilit&
of deli"er& 6&
da& t
PrJ tK
13 3.13 3.13
11 3.13 3.23
12
3.1+ 3.3+
13 3.23 3.++
1# 3.33 3.1+
1+ 3.13 3.2+
1,
3.3+
1.33
4"ppose that the sche"'e ate o- "se -or the item is in
1, a.s. To %e comp'ete'. certain to have e'iver. %.
the esire a.& the orer sho"' %e p'ace 1, a.s in
avance. 6owever& the eCpecte e'iver. ate with a 1,
a. 'ea time wo"' %e>
X E13FE3.1F Z E11FE3.1F Z E12FE3.1+F Z E13F
E3.23F Z E1#FE3.33F Z E1+FE3.13F Z E1,F
E3.3+F X 13.3
Th"s& the act"a' e'iver. ate ma. %e 1,;13 X 3 a.s
ear'.& an this ear'. e'iver. might invo've signi=cant
ho'ing costs. A project manager might then ecie to
provie a 'ea time so that the e8pected e'iver. ate
was e)"a' to the esire assem%'. ate as 'ong as the
avai'a%i'it. o- the item was not critica'. A'ternative'.& the
project manager might negotiate a more certain e'iver.
ate -rom the s"pp'ier.
9ac7 to top
..1; Construction E3uipment
The se'ection o- the appropriate t.pe an size o- constr"ction
e)"ipment o-ten aAects the re)"ire amo"nt o- time an eAort an
th"s the jo%;site pro"ctivit. o- a project. /t is there-ore important
-or site managers an constr"ction p'anners to %e -ami'iar with the
characteristics o- the major t.pes o- e)"ipment most common'.
"se in constr"ction. L2M
E>ca"ation and %oading
One -ami'. o- constr"ction machines "se -or eCcavation is %roa'.
c'assi=e as a crane-shovel as inicate %. the variet. o- machines
in Fig"re #;3. The crane;shove' consists o- three major components>
a carrier or mo"nting which provies mo%i'it. an sta%i'it. -or
the machine.
a revo'ving ec7 or t"rnta%'e which contains the power an
contro' "nits.
a -ront en attachment which serves the specia' -"nctions in
an operation.
The t.pe o- mo"nting -or a'' machines in Fig"re #;3 is re-erre to as
crawler mounting& which is partic"'ar'. s"ita%'e -or craw'ing over
re'ative'. r"gge s"r-aces at a jo% site. Other t.pes o- mo"nting
inc'"e truck mounting an wheel mounting which provie greater
mo%i'it. %etween jo% sites& %"t re)"ire %etter s"r-aces -or their
operation. The revo'ving ec7 inc'"es a ca% to ho"se the person
operating the mo"nting anPor the revo'ving ec7. The t.pes o- -ront
en attachments in Fig"re #;3 might inc'"e a crane with hoo7&
c'aim she''& rag'ine& %ac7hoe& shove' an pi'eriver.
Figure .') T.pica' Machines in the !rane;4hove' Fami'.
A tractor consists o- a craw'er mo"nting an a non;revo'ving ca%.
Dhen an earth moving %'ae is attache to the -ront en o- a
tractor& the assem%'. is ca''e a %"''ozer. Dhen a %"c7et is
attache to its -ront en& the assem%'. is 7nown as a 'oaer or
%"c7et 'oaer. There are iAerent t.pes o- 'oaers esigne to
han'e most eKcient'. materia's o- iAerent weights an moist"re
contents.
4crapers are m"'tip'e;"nits o- tractor;tr"c7 an %'ae;%"c7et
assem%'ies with vario"s com%inations to -aci'itate the 'oaing an
ha"'ing o- earthwor7. Major t.pes o- scrapers inc'"e sing'e engine
two;aC'e or three aC'e scrapers& twin;engine a'';whee';rive
scrapers& e'evating scrapers& an p"sh;p"'' scrapers. (ach t.pe has
iAerent characteristics o- ro''ing resistance& mane"vera%i'it.
sta%i'it.& an spee in operation.
Compaction and 2rading
The -"nction o- compaction e)"ipment is to pro"ce higher ensit.
in soi' mechanica''.. The %asic -orces "se in compaction are static
weight& 7neaing& impact an vi%ration. The egree o- compaction
that ma. %e achieve epens on the properties o- soi'& its moist"re
content& the thic7ness o- the soi' 'a.er -or compaction an the
metho o- compaction. 4ome major t.pes o- compaction e)"ipment
are shown in Fig"re #;#& which inc'"es ro''ers with iAerent
operating characteristics.
The -"nction o- graing e)"ipment is to %ring the earthwor7 to the
esire shape an e'evation. Major t.pes o- graing e)"ipment
inc'"e motor graers an grae trimmers. The -ormer is an a'';
p"rpose machine -or graing an s"r-ace =nishing& whi'e the 'atter
is "se -or heav. constr"ction %eca"se o- its higher operating
spee.
Figure .'. 4ome Major T.pes o- !ompaction ()"ipment
0rilling and Blasting
<oc7 eCcavation is an a"acio"s tas7 re)"iring specia' e)"ipment
an methos. The egree o- iKc"'t. epens on ph.sica'
characteristics o- the roc7 t.pe to %e eCcavate& s"ch as grain size&
p'anes o- wea7ness& weathering& %ritt'eness an harness. The tas7
o- roc7 eCcavation inc'"es 'oosening& 'oaing& ha"'ing an
compacting. The 'oosening operation is specia'ize -or roc7
eCcavation an is per-orme %. ri''ing& %'asting or ripping.
Major t.pes o- ri''ing e)"ipment are perc"ssion ri''s& rotar. ri''s&
an rotar.;perc"ssion ri''s. A perc"ssion ri'' penetrates an c"ts
roc7 %. impact whi'e it rotates witho"t c"tting on the "pstro7e.
!ommon t.pes o- perc"ssion ri''s inc'"e a jac7hammer which is
han;he' an others which are mo"nte on a =Ce -rame or on a
wagon or craw' -or mo%i'it.. A rotar. ri'' c"ts %. t"rning a %it
against the roc7 s"r-ace. A rotar.;perc"ssion ri'' com%ines the two
c"tting movements to provie a -aster penetration in roc7.
9'asting re)"ires the "se o- eCp'osives& the most common o- which
is .namite. Jenera''.& e'ectric %'asting caps are connecte in a
circ"it with ins"'ate wires. Power so"rces ma. %e power 'ines or
%'asting machines esigne -or =ring e'ectric cap circ"its. A'so
avai'a%'e are non;e'ectrica' %'asting s.stems which com%ine the
precise timing an GeCi%i'it. o- e'ectric %'asting an the sa-et. o-
non;e'ectrica' etonation.
Tractor;mo"nte rippers are capa%'e o- penetrating an pr.ing 'oose
most roc7 t.pes. The %'ae or ripper is connecte to an aj"sta%'e
shan7 which contro's the ang'e at the tip o- the %'ae as it is raise
or 'owere. A"tomate ripper contro' ma. %e insta''e to contro'
ripping epth an tip ang'e.
/n roc7 t"nne'ing& specia' t"nne' machines e)"ippe with m"'tip'e
c"tter heas an capa%'e o- eCcavating -"'' iameter o- the t"nne'
are now avai'a%'e. Their "se has increasing'. rep'ace the traitiona'
methos o- ri''ing an %'asting.
%ifting and Erecting
Derric7s are common'. "se to 'i-t e)"ipment o- materia's in
in"stria' or %"i'ing constr"ction. A erric7 consists o- a vertica'
mast an an inc'ine %oom spro"ting -rom the -oot o- the mast. The
mast is he' in position %. g".s or sti[egs connecte to a %ase
whi'e a topping 'i-t 'in7s the top o- the mast an the top o- the
inc'ine %oom. A hoo7 in the roa 'ine hanging -rom the top o- the
inc'ine %oom is "se to 'i-t 'oas. J". erric7s ma. easi'. %e
move -rom one Goor to the neCt in a %"i'ing "ner constr"ction
whi'e sti[eg erric7s ma. %e mo"nte on trac7s -or movement
within a wor7 area.
Tower cranes are "se to 'i-t 'oas to great heights an to -aci'itate
the erection o- stee' %"i'ing -rames. 6orizon %oom t.pe tower
cranes are most common in highrise %"i'ing constr"ction. /nc'ine
%oom t.pe tower cranes are a'so "se -or erecting stee' str"ct"res.
Mi>ing and Pa"ing
9asic t.pes o- e)"ipment -or paving inc'"e machines -or ispensing
concrete an %it"mino"s materia's -or pavement s"r-aces. !oncrete
miCers ma. a'so %e "se to miC port'an cement& san& grave' an
water in %atches -or other t.pes o- constr"ction other than paving.
A tr"c7 miCer re-ers to a concrete miCer mo"nte on a tr"c7 which is
capa%'e o- transporting rea. miCe concrete -rom a centra' %atch
p'ant to constr"ction sites. A paving miCer is a se'- prope''e
concrete miCer e)"ippe with a %oom an a %"c7et to p'ace
concrete at an. esire point within a roawa.. /t can %e "se as a
stationar. miCer or "se to s"pp'. s'ip-orm pavers that are capa%'e
o- spreaing& conso'iating an =nishing a concrete s'a% witho"t the
"se o- -orms.
A %it"mino"s istri%"tor is a tr"c7;mo"nte p'ant -or generating
'i)"i %it"mino"s materia's an app'.ing them to roa s"r-aces
thro"gh a spra. %ar connecte to the en o- the tr"c7. 9it"mino"s
materia's inc'"e %oth aspha't an tar which have simi'ar properties
eCcept that tar is not so'"%'e in petro'e"m pro"cts. Dhi'e aspha't is
most -re)"ent'. "se -or roa s"r-acing& tar is "se when the
pavement is 'i7e'. to %e heavi'. eCpose to petro'e"m spi''s.
Construction ools and Other E3uipment
Air compressors an p"mps are wie'. "se as the power so"rces
-or constr"ction too's an e)"ipment. !ommon pne"matic
constr"ction too's inc'"e ri''s& hammers& griners& saws& wrenches&
stap'e g"ns& san%'asting g"ns& an concrete vi%rators. P"mps are
"se to s"pp'. water or to ewater at constr"ction sites an to
provie water jets -or some t.pes o- constr"ction.
Automation of E3uipment
The intro"ction o- new mechanize e)"ipment in constr"ction has
ha a pro-o"n eAect on the cost an pro"ctivit. o- constr"ction as
we'' as the methos "se -or constr"ction itse'-. An eCciting eCamp'e
o- innovation in this regar is the intro"ction o- comp"ter
microprocessors on too's an e)"ipment. As a res"'t& the
per-ormance an activit. o- e)"ipment can %e contin"a''. monitore
an aj"ste -or improvement. /n man. cases& a"tomation o- at
'east part o- the constr"ction process is possi%'e an esira%'e. For
eCamp'e& wrenches that a"tomatica''. monitor the e'ongation o-
%o'ts an the app'ie tor)"e can %e programme to achieve the
%est %o't tightness. On graing projects& 'aser contro''e scrapers
can pro"ce esire c"ts -aster an more precise'. than who''.
man"a' methos. L13M Possi%i'ities -or a"tomation an ro%otics in
constr"ction are eCp'ore more -"''. in !hapter 1,.
E>ample .'8( unneling E3uipment L11M
/n the mi;1213's& some 8apanese =rms were s"ccess-"'
in o%taining constr"ction contracts -or t"nne'ing in the
*nite 4tates %. "sing new e)"ipment an methos. For
eCamp'e& the 8apanese =rm o- Oh%a.ashi won the sewer
contract in 4an Francisco %eca"se o- its avance
t"nne'ing techno'og.. Dhen a t"nne' is "g thro"gh so-t
earth& as in 4an Francisco& it m"st %e maintaine at a
-ew atmospheres o- press"re to 7eep it -rom caving in.
Dor7ers m"st spen severa' ho"rs in a press"re
cham%er %e-ore entering the t"nne' an severa' more in
ecompression a-terwars. The. can sta. insie -or on'.
three or -o"r ho"rs& a'wa.s at consiera%'e ris7 -rom
cave;ins an asph.Ciation. Oh%a.ashi "se the new
8apanese Bearth;press"re;%a'anceB metho& which
e'iminates these pro%'ems. Dhir'ing %'aes avance
s'ow'.& c"tting the t"nne'. The 'oose earth temporari'.
remains %ehin to %a'ance the press"re o- the compact
earth on a'' sies. Meanwhi'e& pre-a%ricate concrete
segments are inserte an joine with waterproo- sea's
to 'ine the t"nne'. Then the 'oose earth is conve.e
awa.. This new t"nne'ing metho ena%'e Oh%a.ashi to
%i @+ mi''ion %e'ow the engineer's estimate -or a 4an
Francisco sewer. The =rm comp'ete the t"nne' three
months ahea o- sche"'e. /n eAect& an innovation
invo'ving new techno'og. an metho 'e to
consiera%'e cost an time savings.
9ac7 to top
..11 Choice of E3uipment and ,tandard Production *ates
T.pica''.& constr"ction e)"ipment is "se to per-orm essentia''.
repetitive operations& an can %e %roa'. c'assi=e accoring to two
%asic -"nctions> E1F operators s"ch as cranes& graers& etc. which
sta. within the con=nes o- the constr"ction site& an E2F ha"'ers
s"ch as "mp tr"c7s& rea. miCe concrete tr"c7& etc. which
transport materia's to an -rom the site. /n %oth cases& the c.c'e o- a
piece o- e)"ipment is a se)"ence o- tas7s which is repeate to
pro"ce a "nit o- o"tp"t. For eCamp'e& the se)"ence o- tas7s -or a
crane might %e to =t an insta'' a wa'' pane' Eor a pac7age o- eight
wa'' pane'sF on the sie o- a %"i'ingO simi'ar'.& the se)"ence o-
tas7s o- a rea. miCe concrete tr"c7 might %e to 'oa& ha"' an
"n'oa two c"%ic .ars Eor one tr"c7 'oaF o- -resh concrete.
/n orer to increase jo%;site pro"ctivit.& it is %ene=cia' to se'ect
e)"ipment with proper characteristics an a size most s"ita%'e -or
the wor7 conitions at a constr"ction site. /n eCcavation -or %"i'ing
constr"ction& -or eCamp'es& -actors that co"' aAect the se'ection o-
eCcavators inc'"e>
1. ,i-e of the jo6( $arger vo'"mes o- eCcavation wi'' re)"ire
'arger eCcavators& or sma''er eCcavators in greater n"m%er.
2. Acti"it& time constraints( 4hortage o- time -or eCcavation
ma. -orce contractors to increase the size or n"m%ers o-
e)"ipment -or activities re'ate to eCcavation.
3. A"aila6ilit& of e3uipment( Pro"ctivit. o- eCcavation
activities wi'' iminish i- the e)"ipment "se to per-orm them
is avai'a%'e %"t not the most ae)"ate.
4. Cost of transportation of e3uipment( This cost epens
on the size o- the jo%& the istance o- transportation& an the
means o- transportation.
5. &pe of e>ca"ation( Principa' t.pes o- eCcavation in %"i'ing
projects are c"t anPor =''& eCcavation massive& an
eCcavation -or the e'ements o- -o"nation. The most ae)"ate
e)"ipment to per-orm one o- these activities is not the most
ae)"ate to per-orm the others.
6. ,oil characteristics( The t.pe an conition o- the soi' is
important when choosing the most ae)"ate e)"ipment since
each piece o- e)"ipment has iAerent o"tp"ts -or iAerent
soi's. Moreover& one eCcavation pit co"' have iAerent soi's
at iAerent strat"ms.
7. 2eometric characteristics of elements to 6e e>ca"ated(
F"nctiona' characteristics o- iAerent t.pes o- e)"ipment
ma7es s"ch consierations necessar..
8. ,pace constraints( The per-ormance o- e)"ipment is
inG"ence %. the spatia' 'imitations -or the movement o-
eCcavators.
9. Characteristics of haul units( The size o- an eCcavator wi''
epen on the ha"' "nits i- there is a constraint on the size
anPor n"m%er o- these "nits.
10. %ocation of dumping areas( The istance %etween the
constr"ction site an "mping areas co"' %e re'evant not
on'. -or se'ecting the t.pe an n"m%er o- ha"'ers& %"t a'so the
t.pe o- eCcavators.
11. <eather and temperature( <ain& snow an severe
temperat"re conitions aAect the jo%;site pro"ctivit. o- 'a%or
an e)"ipment.
9. comparing vario"s t.pes o- machines -or eCcavation& -or
eCamp'e& power shove's are genera''. -o"n to %e the most s"ita%'e
-or eCcavating -rom a 'eve' s"r-ace an -or attac7ing an eCisting
igging s"r-ace or one create %. the power shove'O -"rthermore&
the. have the capa%i'it. o- p'acing the eCcavate materia' irect'.
onto the ha"'ers. Another a'ternative is to "se %"''ozers -or
eCcavation.
The choice o- the t.pe an size o- ha"'ers is %ase on the
consieration that the n"m%er o- ha"'ers se'ecte m"st %e capa%'e
o- isposing o- the eCcavate materia's eCpeitio"s'.. Factors which
aAect this se'ection inc'"e>
1. Output of e>ca"ators( The size an characteristics o- the
eCcavators se'ecte wi'' etermine the o"tp"t vo'"me
eCcavate per a..
2. 0istance to dump site( 4ometimes part o- the eCcavate
materia's ma. %e pi'e "p in a corner at the jo%;site -or "se as
%ac7=''.
3. Pro6a6le a"erage speed( The average spee o- the ha"'ers
to an -rom the "mping site wi'' etermine the c.c'e time -or
each ha"'ing trip.
4. Eolume of e>ca"ated materials( The vo'"me o- eCcavate
materia's inc'"ing the part to %e pi'e "p sho"' %e ha"'e
awa. as soon as possi%'e.
5. ,patial and weight constraints( The size an weight o- the
ha"'ers m"st %e -easi%'e at the jo% site an over the ro"te
-rom the constr"ction site to the "mping area.
D"mp tr"c7s are "s"a''. "se as ha"'ers -or eCcavate materia's as
the. can move -ree'. with re'ative'. high spees on cit. streets as
we'' as on highwa.s.
The c.c'e capacit. ! o- a piece o- e)"ipment is e=ne as the
n"m%er o- o"tp"t "nits per c.c'e o- operation "ner stanar wor7
conitions. The capacit. is a -"nction o- the o"tp"t "nits "se in the
meas"rement as we'' as the size o- the e)"ipment an the materia'
to %e processe. The c.c'e time T re-ers to "nits o- time per c.c'e o-
operation. The stanar pro"ction rate < o- a piece o- constr"ction
e)"ipment is e=ne as the n"m%er o- o"tp"t "nits per "nit time.
6ence>
#.#
or
#.+
The ai'. stanar pro"ction rate P
e
o- an eCcavator can %e
o%taine %. m"'tip'.ing its stanar pro"ction rate <
e
%. the
n"m%er o- operating ho"rs 6
e
per a.. Th"s>
#.,
where !
e
an T
e
are c.c'e capacit. Ein "nits o- vo'"meF an c.c'e
time Ein ho"rsF o- the eCcavator respective'..
/n etermining the ai'. stanar pro"ction rate o- a ha"'er& it is
necessar. to etermine =rst the c.c'e time -rom the istance D to a
"mp site an the average spee 4 o- the ha"'er. $et T
t
%e the trave'
time -or the ro"n trip to the "mp site& T
o
%e the 'oaing time an
T

%e the "mping time. Then the trave' time -or the ro"n trip is
given %.>
#.0
The 'oaing time is re'ate to the c.c'e time o- the eCcavator T
e
an
the re'ative capacities !
h
an !
e
o- the ha"'er an the eCcavator
respective'.. /n the optim"m or stanar case>
#.1
For a given "mping time T

& the c.c'e time T

h
o- the ha"'er is given
%.>
#.2
The ai'. stanar pro"ction rate P
h
o- a ha"'er can %e o%taine %.
m"'tip'.ing its stanar pro"ction rate <
h
%. the n"m%er o-
operating ho"rs 6
h
per a.. 6ence>
#.13
This eCpression ass"mes that ha"'ers %egin 'oaing as soon as the.
ret"rn -rom the "mp site.
The n"m%er o- ha"'ers re)"ire is a'so o- interest. $et w enote the
swe'' -actor o- the soi' s"ch that wP
e
enotes the ai'. vo'"me o-
'oose eCcavate materia's res"'ting -rom the eCcavation vo'"me P
e
.
Then the approCimate n"m%er o- ha"'ers re)"ire to ispose o- the
eCcavate materia's is given %.>
#.11
Dhi'e the stanar pro"ction rate o- a piece o- e)"ipment is %ase
on BstanarB or iea' conitions& e)"ipment pro"ctivities at jo%
sites are inG"ence %. act"a' wor7 conitions an a variet. o-
ineKciencies an wor7 stoppages. As one eCamp'e& vario"s -actor
aj"stments can %e "se to acco"nt in a approCimate -ashion -or
act"a' site conitions. /- the conitions that 'ower the stanar
pro"ction rate are enote %. n -actors F
1
& F
2
& ...& F
n
& each o- which
is sma''er than 1& then the act"a' e)"ipment pro"ctivit. <' at the
jo% site can %e re'ate to the stanar pro"ction rate < as -o''ows>
#.12
On the other han& the c.c'e time ! at the jo% site wi'' %e increase
%. these -actors& reGecting act"a' wor7 conitions. /- on'. these
-actors are invo've& ! is re'ate to the stanar c.c'e time T as>
#.13
(ach o- these vario"s aj"stment -actors m"st %e etermine -rom
eCperience or o%servation o- jo% sites. For eCamp'e& a %"'7
composition -actor is erive -or %"'7 eCcavation in %"i'ing
constr"ction %eca"se the stanar pro"ction rate -or genera' %"'7
eCcavation is re"ce when an eCcavator is "se to create a ramp
to reach the %ottom o- the %"'7 an to open "p a space in the %"'7
to accommoate the ha"'er.
/n aition to the pro%'em o- estimating the vario"s -actors& F
1
&
F
2
& ...& F
n
& it ma. a'so %e important to acco"nt -or interactions among
the -actors an the eCact inG"ence o- partic"'ar site characteristics.
E>ample .':( 0ail& standard production rate of a power
sho"el L12M
A power shove' with a ipper o- one c"%ic .ar capacit.
has a stanar operating c.c'e time o- 33 secons. Fin
the ai'. stanar pro"ction rate o- the shove'.
For !
e
X 1 c". ..& T
e
X 33 sec. an 6
e
X 1 ho"rs& the
ai'. stanar pro"ction rate is -o"n -rom (). E#.,F as
-o''ows>
/n practice& o- co"rse& this stanar rate wo"' %e
moi=e to reGect vario"s pro"ction ineKciencies& as
escri%e in (Camp'e #;11.
E>ample .'1;( 0ail& standard production rate of a dump
truc@
A "mp tr"c7 with a capacit. o- , c"%ic .ars is "se to
ispose o- eCcavate materia's at a "mp site # mi'es
awa.. The average spee o- the "mp tr"c7 is 33 mph
an the "mping time is 33 secons. Fin the ai'.
stanar pro"ction rate o- the tr"c7. /- a Geet o- "mp
tr"c7s o- this capacit. is "se to ispose o- the
eCcavate materia's in (Camp'e #;2 -or 1 ho"rs per a.&
etermine the n"m%er o- tr"c7s neee ai'.& ass"ming
a swe'' -actor o- 1.1 -or the soi'.
The ai'. stanar pro"ction rate o- a "mp tr"c7 can
%e o%taine %. "sing ()"ations E#.0F thro"gh E#.13F>
6ence& the ai'. ha"'er pro"ctivit. is>
Fina''.& -rom ()"ation E#.12F& the n"m%er o- tr"c7s
re)"ire is>
imp'.ing that 1 tr"c7s sho"' %e "se.
E>ample .'11( Fo6 site producti"it& of a power sho"el
A power shove' with a ipper o- one c"%ic .ar capacit.
Ein (Camp'e #;2F has a stanar pro"ction rate o- 2,3
c"%ic .ars -or an 1;ho"r a.. Determine the jo% site
pro"ctivit. an the act"a' c.c'e time o- this shove'
"ner the wor7 conitions at the site that aAects its
pro"ctivit. as shown %e'ow>
<or@ Conditions at the ,ite

Fact
ors
9"'7 composition 3.2+#
4oi' properties an water
content
3.213
()"ipment i'e time -or wor7er
%rea7s
3.1
Management eKcienc. 3.0
*sing ()"ation E#.11F& the jo% site pro"ctivit. o- the
power shove' per a. is given %.>
The act"a' c.c'e time can %e etermine as -o''ows>
:oting ()"ation E#.,F& the act"a' c.c'e time can a'so %e
o%taine -rom the re'ation T'
e
X E!
e
6
e
FPP'
e
. Th"s>
E>ample .'1$( Fo6 site producti"it& of a dump truc@
A "mp tr"c7 with a capacit. o- , c"%ic .ars Ein
(Camp'e #;13F is "se to ispose o- eCcavate
materia's. The istance -rom the "mp site is # mi'es
an the average spee o- the "mp tr"c7 is 33 mph.
The jo% site pro"ctivit. o- the power shove' per a. Ein
(Camp'e #;11F is +3# c"%ic .ars& which wi'' %e moi=e
%. a swe'' -actor o- 1.1. The on'. -actors aAecting the
jo% site pro"ctivit. o- the "mp tr"c7 in aition to
those aAecting the power shove' are 3.13 -or e)"ipment
i'e time an 3.03 -or management eKcienc..
Determine the jo% site pro"ctivit. o- the "mp tr"c7. /-
a Geet o- s"ch tr"c7s is "se to ha"' the eCcavate
materia'& =n the n"m%er o- tr"c7s neee ai'..
The act"a' c.c'e time T'
h
o- the "mp tr"c7 can %e
o%taine %. s"mming the act"a' times -or trave'ing&
'oaing an "mping>
6ence& the act"a' c.c'e time is>
The jo%site pro"ctivit. P'
h
o- the "mp tr"c7 per a. is>
The n"m%er o- tr"c7s neee ai'. is>
so 1 tr"c7s are re)"ire.
9ac7 to top
..1$ Construction Processes
The previo"s sections escri%e the primar. inp"ts o- 'a%or&
materia' an e)"ipment to the constr"ction process. At var.ing
'eve's o- etai'& a project manager m"st ins"re that these inp"ts are
eAective'. coorinate to achieve an eKcient constr"ction process.
This coorination invo'ves %oth strategic ecisions an tactica'
management in the =e'. For eCamp'e& strategic ecisions a%o"t
appropriate techno'ogies or site 'a.o"t are o-ten mae "ring the
process o- constr"ction p'anning. D"ring the co"rse o- constr"ction&
-oremen an site managers wi'' ma7e ecisions a%o"t wor7 to %e
"nerta7en at partic"'ar times o- the a. %ase "pon the avai'a%i'it.
o- the necessar. reso"rces o- 'a%or& materia's an e)"ipment.
Ditho"t coorination among these necessar. inp"ts& the
constr"ction process wi'' %e ineKcient or stop a'together.
E>ample .'1)( ,teel erection
(rection o- str"ct"ra' stee' -or %"i'ings& %riges or other
-aci'ities is an eCamp'e o- a constr"ction process
re)"iring consiera%'e coorination. Fa%ricate stee'
pieces m"st arrive on site in the correct orer an
)"antit. -or the p'anne eAort "ring a a.. !rews o-
stee'wor7ers m"st %e avai'a%'e to =t pieces together&
%o't joints& an per-orm an. necessar. we'ing. !ranes
an crane operators ma. %e re)"ire to 'i-t -a%ricate
components into p'aceO other activities on a jo% site ma.
a'so %e competing -or "se o- partic"'ar cranes. De'ing
e)"ipment& wrenches an other han too's m"st %e
reai'. avai'a%'e. Fina''.& anci''ar. materia's s"ch as
%o'ts o- the correct size m"st %e provie.
/n coorinating a process s"ch as stee' erection& it is
common to assign iAerent tas7s to speci=c crews. For
eCamp'e& one crew ma. p'ace mem%ers in p'ace an
insert a -ew %o'ts in joints in a speci=c area. A -o''owing
crew wo"' %e assigne to =nish %o'ting& an a thir
crew might per-orm necessar. we's or attachment o-
%rac7ets -or items s"ch as c"rtain wa''s.
Dith the re)"ire coorination among these reso"rces&
it is eas. to see how poor management or other
pro%'ems can res"'t in consiera%'e ineKcienc.. For
eCamp'e& i- a shipment o- -a%ricate stee' is improper'.
prepare& the crews an e)"ipment on site ma. have to
wait -or new e'iveries.
E>ample .'1.( Construction process simulation models
!omp"ter %ase sim"'ation o- constr"ction operations
can %e a "se-"' a'tho"gh 'a%orio"s too' in ana'.zing the
eKcienc. o- partic"'ar processes or techno'ogies. These
too's ten to %e either oriente towar moe'ing
reso"rce processes or towars representation o- spatia'
constraints an reso"rce movements. $ater chapters wi''
escri%e sim"'ation in more etai'& %"t a sma'' eCamp'e
o- a constr"ction operation moe' can %e escri%e
here. L13M The process invo've p'acing concrete within
eCisting -ormwor7 -or the co'"mns o- a new str"ct"re. A
crane;an;%"c7et com%ination with one c"%ic .ar
capacit. an a GeCi%'e Be'ephant tr"n7B was ass"me
-or p'acement. !oncrete was e'ivere in tr"c7s with a
capacit. o- eight c"%ic .ars. 9eca"se o- site
constraints& on'. one tr"c7 co"' %e move into the
e'iver. position at a time. !onstr"ction wor7ers an
e'ectric immersion;t.pe concrete vi%rators were a'so
ass"me -or the process.
The sim"'ation moe' o- this process is i''"strate in
Fig"re #;+. :oe 2 signa's the avai'a%i'it. o- a concrete
tr"c7 arriving -rom the %atch p'ant. As with other
circ"'ar noes in Fig"re #;3& the avai'a%i'it. o- a tr"c7
ma. res"'t in a reso"rce waiting or 7ueueing -or "se. /- a
tr"c7 Enoe 2F an the crane Enoe 3F are %oth
avai'a%'e& then the crane can 'oa an hoist a %"c7et o-
concrete Enoe #F. As with other rectang"'ar noes in
the moe'& this operation wi'' re)"ire an apprecia%'e
perio o- time. On the comp'etion o- the 'oa an hoist
operations& the %"c7et Enoe +F is avai'a%'e -or concrete
p'acement. P'acement is accomp'ishe %. having a
wor7er g"ie the %"c7et's e'ephant tr"n7 %etween the
concrete -orms an having a secon wor7er operate the
%"c7et re'ease 'ever. A thir 'a%orer operates a vi%rator
in the concrete whi'e the %"c7et Enoe 1F moves %ac7 to
receive a new 'oa. Once the concrete p'acement is
comp'ete& the crew %ecomes avai'a%'e to p'ace a new
%"c7et 'oa Enoe 0F. A-ter two %"c7ets are p'ace& then
the co'"mn is comp'ete Enoe 2F an the e)"ipment an
crew can move to the neCt co'"mn Enoe 13F. A-ter the
movement to the new co'"mn is comp'ete& p'acement in
the new co'"mn can %egin Enoe 11F. Fina''.& a-ter a
tr"c7 is emptie Enoes 12 an 13F& the tr"c7 eparts
an a new tr"c7 can enter the e'iver. sta'' Enoe 1#F i-
one is waiting.
Figure .'/( /''"stration o- a !oncrete;P'acing 4im"'ation Moe'
App'ication o- the sim"'ation moe' consists o- tracing
thro"gh the time re)"ire -or these vario"s operations.
(vents are a'so sim"'ate s"ch as the arriva' times o-
concrete tr"c7s. /- ranom e'ements are intro"ce&
n"mero"s sim"'ations are re)"ire to estimate the
act"a' pro"ctivit. an reso"rce re)"irements o- the
process. For eCamp'e& one sim"'ation o- this process
"sing -o"r concrete tr"c7s -o"n that a tr"c7 was
waiting 13Q o- the time with an average wait at the site
o- 1# min"tes. This t.pe o- sim"'ation can %e "se to
estimate the vario"s pro"ctivit. aj"stment -actors
escri%e in the previo"s section.
9ac7 to top
..1) Lueues and *esource Bottlenec@s
A project manager nees to ins"re that reso"rces re)"ire -or anPor
share %. n"mero"s activities are ae)"ate. Pro%'ems in this area
can %e inicate in part %. the eCistence o- )"e"es o- reso"rce
emans "ring constr"ction operations. A 7ueue can %e a waiting
line -or service. One can imagine a )"e"e as an orer'. 'ine o-
c"stomers waiting -or a stationar. server s"ch as a tic7et se''er.
6owever& the emans -or service might not %e so neat'. arrange.
For eCamp'e& we can spea7 o- the 7ueue o- we's on a %"i'ing site
waiting -or inspection. /n this case& emans o not come to the
server& %"t a roving inspector trave's among the waiting service
points. Daiting -or reso"rces s"ch as a partic"'ar piece o- e)"ipment
or a partic"'ar inivi"a' is an enemic pro%'em on constr"ction
sites. /- wor7ers spen apprecia%'e portions o- time waiting -or
partic"'ar too's& materia's or an inspector& costs increase an
pro"ctivit. ec'ines. /ns"ring ae)"ate reso"rces to serve
eCpecte emans is an important pro%'em "ring constr"ction
p'anning an =e' management.
/n genera'& there is a trae;oA %etween waiting times an "ti'ization
o- reso"rces. *ti'ization is the proportion o- time a partic"'ar
reso"rce is in pro"ctive "se. 6igher amo"nts o- reso"rce "ti'ization
wi'' %e %ene=cia' as 'ong as it oes not impose "n"e costs on the
entire operation. For eCamp'e& a we'ing inspector might have one
h"nre percent "ti'ization& %"t wor7ers thro"gho"t the jo%site
might %e wasting inorinate time waiting -or inspections. Proviing
aitiona' inspectors ma. %e cost eAective& even i- the. are not
"ti'ize at a'' times.
A -ew concept"a' moe's o- )"e"eing s.stems ma. %e he'p-"' to
constr"ction p'anners in consiering the 'eve' o- ae)"ate reso"rces
to provie. First& we sha'' consier the case o- time;var.ing emans
an a server with a constant service rate. This might %e the
sit"ation -or an e'evator in which 'arge emans -or transportation
occ"r "ring the morning or at a shi-t change. 4econ& we sha''
consier the sit"ation o- ranom'. arriving emans -or service an
constant service rates. Fina''.& we sha'' consier %rieG. the
pro%'ems invo'ving m"'tip'e serving stations.
,ingle',er"er with 0eterministic Arri"als and ,er"ices
4"ppose that the c"m"'ative n"m%er o- emans -or service or
Bc"stomersB at an. time t is 7nown an e)"a' to the va'"e o- the
-"nction AEtF. These Bc"stomersB might %e crane 'oas& we'
inspections& or an. other e=ne gro"p o- items to %e service.
4"ppose -"rther that a sing'e server is avai'a%'e to han'e these
emans& s"ch as a sing'e crane or a sing'e inspector. For this moe'
o- )"e"eing& we ass"me that the server can han'e c"stomers at
some constant& maCim"m rate enote as C Bc"stomersB per "nit o-
time. This is a maCim"m rate since the server ma. %e i'e -or
perios o- time i- no c"stomers are waiting. This s.stem is
deterministic in the sense that %oth the arriva' -"nction an the
service process are ass"me to have no ranom or "n7nown
component.
Figure .'4( !"m"'ative Arriva's an Depart"res in a Deterministic
5"e"e
A c"m"'ative arriva' -"nction o- c"stomers& AEtF& is shown in Fig"re
#;, in which the vertica' aCis represents the c"m"'ative n"m%er o-
c"stomers& whi'e the horizonta' aCis represents the passage o- time.
The arriva' o- inivi"a' c"stomers to the )"e"e wo"' act"a''.
represent a "nit step in the arriva' -"nction AEtF& %"t these sma''
steps are approCimate %. a contin"o"s c"rve in the =g"re. The rate
o- arriva's -or a "nit time interva' t -rom t;1 to t is given %.>
#.1#
Dhi'e an ho"r or a min"te is a nat"ra' choice as a "nit time interva'&
other time perios ma. a'so %e "se as 'ong as the passage o- time
is eCpresse as m"'tip'es o- s"ch time perios. For instance& i- ha'-
an ho"r is "se as "nit time interva' -or a process invo'ving ten
ho"rs& then the arriva's sho"' %e represente %. 23 steps o- ha'-
ho"r each. 6ence& the "nit time interva' %etween t;1 an t is t X
t ; Et;1F X 1& an the s'ope o- the c"m"'ative arriva' -"nction in the
interva' is given %.>
#.1+
The c"m"'ative n"m%er o- c"stomers serve over time is
represente %. the c"m"'ative epart"re -"nction DEtF. Dhi'e the
maCim"m service rate is C per "nit time& the act"a' service rate -or
a "nit time interva' t -rom t;1 to t is>
#.1,
The s'ope o- the c"m"'ative epart"re -"nction is>
#.10
An. time that the rate o- arriva's to the )"e"e eCcees the
maCim"m service rate& then a )"e"e %egins to -orm an the
c"m"'ative epart"res wi'' occ"r at the maCim"m service rate. The
c"m"'ative epart"res -rom the )"e"e wi'' procee at the maCim"m
service rate o- C Bc"stomersB per "nit o- time& so that the s'ope o-
DEtF is C "ring this perio. The c"m"'ative epart"re -"nction DEtF
can %e reai'. constr"cte graphica''. %. r"nning a r"'er with a
s'ope o- C a'ong the c"m"'ative arriva' -"nction AEtF. As soon as the
-"nction AEtF c'im%s a%ove the r"'er& a )"e"e %egins to -orm. The
maCim"m service rate wi'' contin"e "nti' the )"e"e isappears&
which is represente %. the convergence o- the c"m"'ative arriva'
an epart"re -"nctions AEtF an DEtF.
Dith the c"m"'ative arriva's an c"m"'ative epart"re -"nctions
represente graphica''.& a variet. o- service inicators can %e
reai'. o%taine as shown in Fig"re #;,. $et A'EtF an D'EtF enote
the erivatives o- AEtF an DEtF with respect to t& respective'.. For 3
t t
i
in which A'EtF C& there is no )"e"e. At t X t
i
& when
A'EtF W D'EtF& a )"e"e is -orme. Then D'EtF X C in the interva' t
i
t
t
7
. As A'EtF contin"es to increase with increasing t& the )"e"e
%ecomes 'onger since the service rate D'EtF X C cannot catch "p with
the arriva's. 6owever& when again A'EtF D'EtF as t increases& the
)"e"e %ecomes shorter "nti' it reaches 3 at t X t
7
. At an. given time
t& the )"e"e 'ength is
#.11
For eCamp'e& s"ppose a )"e"e %egins to -orm at time t
i
an is
isperse %. time t
7
. The maCim"m n"m%er o- c"stomers waiting or
)"e"e 'ength is represente %. the maCim"m iAerence %etween
the c"m"'ative arriva' an c"m"'ative epart"re -"nctions %etween
t
i
an t
7
& i.e. the maCim"m va'"e o- 5EtF. The tota' waiting time -or
service is inicate %. the tota' area %etween the c"m"'ative arriva'
an c"m"'ative epart"re -"nctions.
Jenera''.& the arriva' rates A
t
X 1& 2& . . .& n perios o- a process
as we'' as the maCim"m service rate C are 7nown. Then the
c"m"'ative arriva' -"nction an the c"m"'ative epart"re -"nction
can %e constr"cte s.stematica''. together with other pertinent
)"antities as -o''ows>
1. 4tarting with the initia' conitions DEt;1FX3 an 5Et;1FX3 at tX1&
=n the act"a' service rate at tX1>
#.12
2. 4tarting with AEt;1FX3 at tX1& =n the c"m"'ative arriva' -"nction
-or tX2&3&. . .&n accoring'.>
#.23
3. !omp"te the )"e"e 'ength -or tX1&2& . . .&n.
#.21
#. !omp"te D
t
-or tX2&3&. . .&n a-ter 5Et;1F is -o"n =rst -or each
t>
#.22
+. /- A'EtF W C& =n the c"m"'ative epart"re -"nction in the time
perio %etween t
i
where a )"e"e is -orme an t
7
where the )"e"e
issipates>
#.23
,. !omp"te the waiting time w -or the arriva's which are waiting
-or service in interva' t>
#.2#
0. !omp"te the tota' waiting time D over the time perio %etween t
i
an t
7
.
#.2+
1. !omp"te the average waiting time w -or arriva's which are
waiting -or service in the process.
#.2,
This simp'e& eterministic moe' has a n"m%er o- imp'ications -or
operations p'anning. First& an increase in the maCim"m service rate
wi'' res"'t in re"ctions in waiting time an the maCim"m )"e"e
'ength. 4"ch increases might %e o%taine %. speeing "p the
service rate s"ch as intro"cing shorter inspection proce"res or
insta''ing -aster cranes on a site. 4econ& a'tering the pattern o-
c"m"'ative arriva's can res"'t in changes in tota' waiting time an in
the maCim"m )"e"e 'ength. /n partic"'ar& i- the maCim"m arriva'
rate never eCcees the maCim"m service rate& no )"e"e wi'' -orm&
or i- the arriva' rate a'wa.s eCcees the maCim"m service rate& the
%ott'enec7 cannot %e isperse. 9oth cases are shown in Fig"re #;0.
Figure .'5( !ases o- :o 5"e"e an Permanent 9ott'enec7
A practica' means to a'ter the arriva' -"nction an o%tain these
%ene=ts is to ina"g"rate a reservation s.stem -or c"stomers. (ven
witho"t rawing a graph s"ch as Fig"re #;,& goo operations
p'anners sho"' consier the eAects o- iAerent operation or service
rates on the Gow o- wor7. !'ear'.& service rates 'ess than the
eCpecte arriva' rate o- wor7 wi'' res"'t in reso"rce %ott'enec7s on a
jo%.
,ingle',er"er with *andom Arri"als and Constant ,er"ice
*ate
4"ppose that arriva's o- Bc"stomersB to a )"e"e are not
eterministic or 7nown as in Fig"re #;,. /n partic"'ar& s"ppose that
Bc"stomersB s"ch as joints are comp'ete or crane 'oas arrive at
ranom interva's. Dhat are the imp'ications -or the smooth Gow o-
wor7T *n-ort"nate'.& %ott'enec7s an )"e"es ma. arise in this
sit"ation even i- the maCim"m service rate is 'arger than the
average or eCpecte arriva' rate o- c"stomers. This occ"rs %eca"se
ranom arriva's wi'' o-ten %"nch together& there%. temporari'.
eCceeing the capacit. o- the s.stem. Dhi'e the average arriva' rate
ma. not change over time& temporar. reso"rce shortages can occ"r
in this circ"mstance.
$et w %e the average waiting time& a %e the average arriva' rate o-
c"stomers& an C %e the eterministic constant service rate Ein
c"stomers per "nit o- timeF. Then& the eCpecte average time -or a
c"stomer in this sit"ation is given %.> L1#M
#.20
/- the average "ti'ization rate o- the service is e=ne as the ratio o-
the average arriva' rate an the constant service rate& i.e.&
#.21
Then& (). E#.20F %ecomes>
#.22
/n this e)"ation& the ratio " o- arriva' rate to service rate is ver.
important> i- the average arriva' rate approaches the service rate&
the waiting time can %e ver. 'ong. /- a C& then the )"e"e
eCpans ine=nite'.. <eso"rce %ott'enec7s wi'' occ"r with ranom
arriva's "n'ess a meas"re o- eCtra service capacit. is avai'a%'e to
accommoate s"en %"nches in the arriva' stream. Fig"re #;1
i''"strates the waiting time res"'ting -rom iAerent com%inations o-
arriva' rates an service times.
Figure .'8( /''"strative Daiting Times -or DiAerent Average Arriva'
<ates an 4ervice Times
Multiple ,er"ers
9oth o- the simp'e moe's o- service per-ormance escri%e a%ove
are 'imite to sing'e servers. /n operations p'anning& it is common'.
the case that n"mero"s operators are avai'a%'e an n"mero"s
stages o- operations eCist. /n these circ"mstances& a p'anner
t.pica''. attempts to match the service rates occ"rring at iAerent
stages in the process. For eCamp'e& constr"ction o- a high rise
%"i'ing invo'ves a series o- operations on each Goor& inc'"ing
erection o- str"ct"ra' e'ements& po"ring or assem%'ing a Goor&
constr"ction o- wa''s& insta''ation o- 6NA! E6eating& venti'ating an
air conitioningF e)"ipment& insta''ation o- p'"m%ing an e'ectric
wiring& etc. A smooth constr"ction process wo"' have each o- these
vario"s activities occ"rring at iAerent Goors at the same time
witho"t 'arge time gaps %etween activities on an. partic"'ar Goor.
Th"s& Goors wo"' %e insta''e soon a-ter erection o- str"ct"ra'
e'ements& wa''s wo"' -o''ow s"%se)"ent'.& an so on. From the
stanpoint o- a )"e"eing s.stem& the p'anning pro%'em is to ins"re
that the pro"ctivit. or service rate per Goor o- these iAerent
activities are approCimate'. e)"a'& so that one crew is not
contin"a''. waiting on the comp'etion o- a preceing activit. or
inter-ering with a -o''owing activit.. /n the rea'm o- man"-act"ring
s.stems& creating this %a'ance among operations is ca''e assem*ly
line %a'ancing.
Figure .':( Arriva's an 4ervices o- !rane $oas with a !rane
9rea7own
E>ample .'1/( E?ect of a crane 6rea@down
4"ppose that 'oas -or a crane are arriving at a stea.
rate o- one ever. ten min"tes. The crane has the
capacit. to han'e one 'oa ever. =ve min"tes. 4"ppose
-"rther that the crane %rea7s own -or ninet. min"tes.
6ow man. 'oas are e'a.e& what is the tota' e'a.&
an how 'ong wi'' %e re)"ire %e-ore the crane can catch
"p with the %ac7'og o- 'oasT
The c"m"'ative arriva' an service -"nctions are
graphe in Fig"re #;2. 4tarting with the %rea7own at
time zero& nine 'oas arrive "ring the ninet. min"te
repair time. From Fig"re #;2& an aitiona' nine 'oas
arrive %e-ore the entire )"e"e is serve. A'ge%raica''.&
the re)"ire time -or service& t& can %e ca'c"'ate %.
note that the n"m%er o- arriva's m"st e)"a' the
n"m%er o- 'oas serve. Th"s>
A )"e"e is -orme at t X 3 %eca"se o- the %rea7own&
%"t it issipates at AEtF X D
2
EtF. $et
-rom which we o%tain t X 113 min. 6ence
The tota' waiting time D can %e ca'c"'ate as the area
%etween the c"m"'ative arriva' an service -"nctions in
Fig"re #;2. A'ge%raica''.& this is convenient'. ca'c"'ate
as the iAerence in the areas o- two triang'es>
so the average e'a. per 'oa is w X 113P11 X #+
min"tes.
E>ample .'14( <aiting time with random arri"als
4"ppose that materia' 'oas to %e inspecte arrive
ranom'. %"t with an average o- + arriva's per ho"r.
(ach 'oa re)"ires ten min"tes -or an inspection& so an
inspector can han'e siC 'oas per ho"r. /nspections
m"st %e comp'ete %e-ore the materia' can %e "n'oae
-rom a tr"c7. The cost per ho"r o- ho'ing a materia'
'oa in waiting is @33& representing the cost o- a river
an a tr"c7. /n this eCamp'e& the arriva' rate& a& e)"a's +
arriva's per ho"r an the service rate& C& e)"a's ,
materia' 'oas per ho"r. Then& the average waiting time
o- an. materia' 'oa -or " X +P, is>
At a reso"rce cost o- @33.33 per ho"r& this waiting wo"'
represent a cost o- E33FE3.#FE+F X @,3.33 per ho"r on
the project.
/n contrast& i- the possi%'e service rate is C X 13 materia'
'oas per ho"r& then the eCpecte waiting time o- an.
materia' 'oa -or " X +P13 X 3.+ is>
which has on'. a cost o- E33FE3.3+FE+F X @0.+3 per ho"r.
E>ample .'15( 0ela& of lift loads on a 6uilding site
4"ppose that a sing'e crane is avai'a%'e on a %"i'ing
site an that each 'i-t re)"ires three min"tes inc'"ing
the time -or attaching 'oas. 4"ppose -"rther that the
c"m"'ative arriva's o- 'i-t 'oas at iAerent time perios
are as -o''ows>
,>33;0>33
A.M.
# per
ho"r
12>33;#>33
P.M.
1 per
ho"r
0>33;1>33
A.M.
1+ per
ho"r
#>33;,>33
P.M.
# per
ho"r
1>33;11>33
A.M.
2+ per
ho"r
,>33P.M.;,>33
A.M.
3 per
ho"r
11>33;
12>33 A.M.
+ per
ho"r
*sing the a%ove in-ormation o- arriva' an service rates
1. Fin the c"m"'ative arriva's an c"m"'ative
n"m%er o- 'oas serve as a -"nction o- time&
%eginning with ,>33 AM.
2. (stimate the maCim"m )"e"e 'ength o- 'oas
waiting -or service. Dhat time oes the maCim"m
)"e"e occ"rT
3. (stimate the tota' waiting time -or 'oas.
#. Jraph the c"m"'ative arriva' an epart"re
-"nctions.
The maCim"m service rate C X ,3 minP3 min per 'i-t X
23 'i-ts per min"te. The etai'e comp"tation can %e
carrie o"t in the Ta%'e #;2& an the graph o- AEtF an
DEtF is given in Fig"re #;13.
a6le .'$ Computation of 3ueue length and waiting
time
Perio
Arriva
'
rate
!"m"'ativ
e
arriva's
#>-?
5"e"
e
Depart"r
e
rate
!"m"'ativ
e
epart"re
s
'>-?
Daitin
g
time
,;0>33 # # 3 # # 3
0;1>33 1+ 12 3 1+ 12 3
1;2>33 2+ ## + 23 32 +
2;13>33 2+ ,2 13 23 +2 13
13;
11>33
2+ 2# 1+ 23 02 1+
11;
12>33
+ 22 3 23 22 3
12;1>33 1 130 3 1 130 3
1;2>33 1 11+ 3 1 11+ 3
2;3>33 1 123 3 1 123 3
3;#>33 1 131 3 1 131 3
#;+>33 # 13+ 3 # 13+ 3
+;,>33 # 132 3 # 132 3
,;0>33 3 132 3 3 132 3
0;1>33 3 132 3 3 132 3
Tota' waiting time X 33
MaCim"m )"e"e X 1+
Figure .'1;( De'a. o- $i-t $oas on a 9"i'ing 4ite
9ac7 to top
..1. *eferences
1. 9o"ron& !.!.& an <.D. $evitt& 1nion and +pen $hop
%onstruction& $eCington 9oo7s& D.!. 6eath an !o.& $eCington&
MA& 1213.
2. %aterpillar "erformance )and*ook& 11?ZEthF (ition&
!aterpi''ar& /nc.& Peoria& /$& 1210.
3. !ore''& <.6.& B!onstr"ction Pro"ctivit. Management&B %ost
Engineering& No'. 21& :o. 2& Fe%r"ar. 121,& pp. 1#;23.
#. $ange& 8.(.& an D.5. Mi''s& -he %onstruction .ndustry&
$eCington 9oo7s& D.!. 6eath an !o.& $eCington& MA& 1202.
+. :"nna''.& 4.D.& %onstruction (ethods and (anagement&
Prentice;6a''& (ng'ewooo !'iAs& :8& 2n (.& 1210.
,. Pe"ri-o.& <.$.& %onstruction "lanning& E7uipment and (ethods&
2n (ition& McJraw;6i''& :ew Ior7& 1203.
0. Tersine& <.8.& "rinciples of .nventory and (aterials
(anagement& :orth 6o''an& :ew Ior7& 1212.
9ac7 to top
..1/ Pro6lems
1. *sing the re'ationship %etween the pro"ctivit. ineC an jo%
size in (Camp'e #;1& etermine the 'a%or pro"ctivit. -or a
new jo% re)"iring 3+3&333 'a%or ho"rs "ner otherwise the
same set o- wor7 conitions.
2. The potentia' 'a%or ho"rs avai'a%'e -or a 'arge energ. comp'eC
were -o"n to %e +.# mi''ion ho"rs. The non;pro"ctive
activities eCpresse in tho"sans o- 'a%or ho"rs were>
1. 3,3 -or ho'ia.s an stri7es
2. 1&1+2 -or a%sentees
3. 01+ -or temporar. stoppage
#. 1&31# -or inirect 'a%or
Determine the pro"ctive 'a%or .ie' a-ter the a%ove -actors
are ta7en into consieration.
3. $a%or pro"ctivit. at jo% site is 7nown to ecrease with
overtime wor7. $et C %e the percentage o- overtime over
norma' wor7 wee7. /- C is eCpresse in ecima's& the
pro"ctivit. ineC / as a -"nction o- the percentage o-
overtime is -o"n to %e>
#. Fin the va'"e o- the ineC / -or C X 3& 3.1& 3.2& 3.3& 3.# an
3.+ an p'ot the re'ationship in a graph.
+. $a%or pro"ctivit. -or a comp'eC project is 7nown to increase
gra"a''. in the =rst +33&333 'a%or ho"rs %eca"se o- the
'earning eAects. $et C %e the n"m%er o- 133&333 'a%or ho"rs.
The 'a%or pro"ctivit. ineC / is -o"n to %e a -"nction o- C as
-o''ows>
,. Fin the va'"e o- the ineC / -or C X 3& 1& 2& 3& # an + an p'ot
the re'ationship in a graph.
0. The pro%a%i'ities -or iAerent e'iver. times o- an item are
given in the ta%'e %e'ow. Fin the eCpecte e'iver. ate o-
the item. A'so =n the 'ea time re)"ire to provie an
eCpecte e'iver. ate one a. 'ess than the esire e'iver.
ate.
t p>t?
"r\- t]
12 3.3+ 3.3+
13 3.13 3.1+
1# 3.2+ 3.#3
1+ 3.3+ 3.0+
1, 3.1+ 3.23
10 3.13 1.33
1. A power shove' with a ipper o- two c"%ic .ar capacit. has a
stanar operating c.c'e time o- 13 secons. The eCcavate
materia' which has a swe'' -actor o- 1.3+ wi'' %e ispose %. a
"mp tr"c7 with an 1 c"%ic .ar capacit. at a "mp site ,
mi'es awa.. The average spee o- the "mp tr"c7 is 33 mph
an the "mping time is #3 secons. Fin the ai'. stanar
pro"ction rates o- the power shove' an the "mp tr"c7 i-
%oth are operate 1 ho"rs per a.. Determine a'so the n"m%er
o- tr"c7s neee ai'. to ispose o- the eCcavate materia'.
2. The power shove' in Pro%'em P, has a ai'. stanar
pro"ction rate o- 023 c"%ic .ars. Determine the jo% site
pro"ctivit. an the act"a' c.c'e time o- this shove' "ner the
wor7 conitions at the site that aAect the pro"ctivit. as
shown %e'ow>
<or@ conditions at site
Factor
s
9"'7 composition 3.202
4oi' properties an water content 3.2,3
()"ipment i'e time -or %rea7s 3.0+3
Management ineKcienc. 3.0+3
13. 9ase on the in-ormation given -or Pro%'ems P#;, an
P#;0& =n the jo% site pro"ctivit. o- a "mp tr"c7& ass"ming
that the on'. -actors aAecting wor7 conitions are 3.1+ -or
e)"ipment i'e time an 3.13 -or management eKcienc.. A'so
=n the n"m%er o- "mp tr"c7s re)"ire.
11. A Power shove' with a ipper o- 1.+ c"%ic .ar capacit.
has a stanar operating c.c'e time o- ,3 secons. The
eCcavate materia' which has a swe'' -actor o- 1.31 wi'' %e
ispose %. a "mp tr"c7 with a 0.+ c"%ic .ar capacit. at a
"mpsite + mi'es awa.. The average spee o- a "mp tr"c7 is
2+ mph an the "mping time is 0+ secons. 9oth the power
shove' an the "mp tr"c7 are operate 1 ho"rs per a..
1. Fin the ai'. stanar pro"ction rate o- the power
shove'.
2. Fin the ai'. stanar pro"ction rate o- the "mp
tr"c7 an n"m%er o- tr"c7s re)"ire.
3. /- the wor7 conitions at the site that aAect the
pro"ctivit. o- the shove' can %e represente %. -o"r
-actors F
1
X 3.2#3& F
3
X 3.1+3 an F
#
X 3.0+3& etermine
the jo%;site pro"ctivit. an the act"a' c.c'e time.
#. /- the wor7 conitions at the site aAect the pro"ctivit.
o- the "mp tr"c7 can %e represente %. three -actors F
1
X 3.2+2& F
2
X 3.033 an F
3
X 3.0+3& etermine the jo%
site pro"ctivit. o- the "mp tr"c7& an the n"m%er o-
"mp tr"c7s re)"ire.
12. 4"ppose that a sing'e piece o- e)"ipment is avai'a%'e on
a site -or testing joints. F"rther& s"ppose that each joint has to
%e teste an certi=e %e-ore wor7 can procee. 8oints are
comp'ete an rea. -or testing at ranom interva's "ring a
shi-t. (ach test re)"ires an average o- ten min"tes. Dhat is
the average "ti'ization o- the testing e)"ipment an the
average wait o- a comp'ete joint -or testing i- the n"m%er o-
joints comp'ete is EaF =ve per ho"r or E%F three per ho"r.
13. 4"ppose that the stee' p'ates to %e inspecte are
arriving steai'. at a rate o- one ever. twe've min"tes. (ach
inspection re)"ires siCteen min"tes& %"t two inspectors are
avai'a%'e so the inspection service rate is one ever. eight
min"tes. 4"ppose one inspector ta7es a %rea7 -or siCt.
min"tes. Dhat is the res"'ting e'a. in the arriving piecesT
Dhat is the average e'a. among the pieces that have to
waitT
1#. 4"ppose that three machines are avai'a%'e in a
-a%rication ship -or testing we'e joints o- str"ct"ra'
mem%ers so that the testing service rate o- the three
machines is one in ever. 23 min"tes. 6owever& one o- the
three machines is sh"t own -or 23 min"tes when the we'e
joints to %e teste arrive at a rate o- one in ever. 2+ min"tes.
Dhat is the tota' e'a. -or the testing service o- the arriving
jointsT Dhat is the average e'a.T 47etch the c"m"'ative
arriva's an services vers"s time.
1+. 4o've (Camp'e #;10 i- each 'i-t re)"ires + min"tes
instea o- 3 min"tes.
1,. 4o've (Camp'e #;10 i- each 'i-t re)"ires , min"tes
instea o- 3 min"tes
10. 4"ppose that "p to 12 c"stomers can %e serve per
ho"r in an a"tomate inspection process. Dhat is the tota'
waiting time an maCim"m )"e"e with arriva' rates -or %oth
cases EaF an E%F %e'ow>
HaI H6I
,;0>33 am 3 3
0;1>33 2+ 13
1;2>33 2+ 13
2;13>33 am 2+ 1+
13;11>33 am 2+ 1+
11;12>33 am 13 13
12;1>33 pm 1 1+
1;2>33 pm 3 1+
2;3>33 pm 3 13
3;#>33 pm 3 13
#;+>33 pm 3 13
A-ter + pm 3 3
Tota' n"m%er o- arriva's 111 123
11. For the 'ist o- 'a%or characteristic )"a'ities in 4ection #.3
E%eginning with 5"a'it. o- Dor7 an ening with Diversit.F&
rate .o"r own jo% per-ormance on the three point sca'e given.
9ac7 to top
..14 Footnotes
1. Mc!"''o"gh& Davi& -he "ath 0etween the $eas& 4imon an
4ch"ster& 1200& pg. +31. E9ac7F
2. <ose=e'e& 4teven an Danie' 5"inn Mi''s& B/s !onstr"ction
Techno'ogica''. 4tagnantTB& in $ange& 8"'ian (. an Danie' 5"inn
Mi''s& -he %onstruction .ndustry& $eCington 9oo7s& 1202& pg. 13.
E9ac7F
3. This eCamp'e was aapte with permission -rom an "np"%'ishe
paper BManaging Mega ProjectsB presente %. J.<. Desno.ers at the
Project Management 4.mposi"m sponsore %. the (CCon <esearch
an (ngineering !ompan.& F'orham Par7& :8& :ovem%er 12& 1213.
E9ac7F
#. 4ee <.$. T"c7er& BPer-ection o- the 9"gg. Dhip&B The !onstr"ction
Avancement Aress& A4!(& 9oston& MA& Oct. 22& 121,. E9ac7F
+. For more etai'e isc"ssion& see D.J. Mi''s> B$a%or <e'ations an
!o''ective 9argainingB E!hapter #F in -he %onstruction .ndustry E%.
8.(. $ang an D.5. Mi''sF& $eCington 9oo7s& D.!. 6eath an !o.&
$eCington& MA& 1202. E9ac7F
,. This eCamp'e was aapte -rom 4t"7hart& J. an 9e''& $.!. B!osts
an 9ene=ts o- Materia's Management 4.stems&B& #$%E 3ournal of
%onstruction Engineering and (anagement& No'. 113& :o. 2& 8"ne
1210& pp. 222;23#. E9ac7F
0. The in-ormation -or this eCamp'e was provie %. (CCon Pipe'ine
!ompan.& 6o"ston& TeCas& with permission -rom the A'.es7a Pipe'ine
4ervice !o.& Anchorage& A'as7a. E9ac7F
1. This eCamp'e was aapte -rom A.(. Herrige& B6ow to Deve'op a
Project 4che"'e&B in A.(. Herrige an !. 6. Nerva'in Ees.F&
Engineering and %onstruction "roject (anagement& J"'- P"%'ishing
!ompan.& 6o"ston& 121,. E9ac7F
2. For -"rther etai's on e)"ipment characteristics& see& -or eCamp'e&
4.D. :"nna''.& %onstruction (ethods and (anagement& 4econ
(ition& Prentice;6a''& 121, E9ac7F
13. 4ee Pa"'son& !.& BA"tomation an <o%otics -or !onstr"ction&B
#$%E 3ournal of %onstruction Engineering and (anagement& No'.
111& :o. !O;3& 121+& pp. 123;230. E9ac7F
11. This eCamp'e is aapte -rom Fre Moavenzaeh&
B!onstr"ction's 6igh;Techno'og. <evo'"tion&B -echnology Review&
Octo%er& 121+& pg. 32. E9ac7F
12. This an the -o''owing eCamp'es in this section have %een
aapte -rom (. 9aracco;Mi''er an !.T. 6enric7son& "lanning for
%onstruction& Technica' <eport :o. <;10;1,2& Department o- !ivi'
(ngineering& !arnegie Me''on *niversit.& Pitts%"rgh& PA 1210. E9ac7F
13. This moe' "se the /:4/J6T sim"'ation 'ang"age an was
escri%e in 9.!. Pa"'son& D.T. !han& an !.!. Hoo& B!onstr"ction
Operations 4im"'ation %. Microcomp"ter&B #$%E 3ournal of
%onstruction Engineering and (anagement& No'. 113& :o. !O;2& 8"ne
1210& pp. 332;31#. E9ac7F
1#. /n the 'iterat"re o- )"e"eing theor.& this -orm"'a represents an
MPDP1 )"e"e& meaning that the arriva' process is Mar7ovian or
ranom& the service time is =Ce& on'. one server eCists& an the
s.stem is in Bstea. state&B imp'.ing that the service time an
average arriva' rate are constant. A'tering these ass"mptions wo"'
re)"ire changes in the waiting time -orm"'aO -or eCamp'e& i- service
times were a'so ranom& the waiting time -orm"'a wo"' not have
the 2 shown in the enominator o- (). E#.20F. For more etai's on
)"e"eing s.stems& see :ewe''& J.F. #pplications of Queueing
-heory& !hapman an 6a''& $onon& 1212. E9ac7F
Previo"s
!hapter
S
Ta%'e o-
!ontents
S
:eCt
!hapter
/. Cost Estimation
/.1 Costs Associated with Constructed Facilities
The costs o- a constr"cte -aci'it. to the owner inc'"e %oth the
initia' capita' cost an the s"%se)"ent operation an maintenance
costs. (ach o- these major cost categories consists o- a n"m%er o-
cost components.
The capita' cost -or a constr"ction project inc'"es the eCpenses
re'ate to the inita' esta%'ishment o- the -aci'it.>
$an ac)"isition& inc'"ing assem%'.& ho'ing an
improvement
P'anning an -easi%i'it. st"ies
Architect"ra' an engineering esign
!onstr"ction& inc'"ing materia's& e)"ipment an 'a%or
Fie' s"pervision o- constr"ction
!onstr"ction =nancing
/ns"rance an taCes "ring constr"ction
Owner's genera' oKce overhea
()"ipment an -"rnishings not inc'"e in constr"ction
/nspection an testing
The operation an maintenance cost in s"%se)"ent .ears over the
project 'i-e c.c'e inc'"es the -o''owing eCpenses>
$an rent& i- app'ica%'e
Operating staA
$a%or an materia' -or maintenance an repairs
Perioic renovations
/ns"rance an taCes
Financing costs
*ti'ities
Owner's other eCpenses
The magnit"e o- each o- these cost components epens on the
nat"re& size an 'ocation o- the project as we'' as the management
organization& among man. consierations. The owner is intereste
in achieving the 'owest possi%'e overa'' project cost that is
consistent with its investment o%jectives.
/t is important -or esign pro-essiona's an constr"ction managers
to rea'ize that whi'e the constr"ction cost ma. %e the sing'e 'argest
component o- the capita' cost& other cost components are not
insigni=cant. For eCamp'e& 'an ac)"isition costs are a major
eCpenit"re -or %"i'ing constr"ction in high;ensit. "r%an areas&
an constr"ction =nancing costs can reach the same orer o-
magnit"e as the constr"ction cost in 'arge projects s"ch as the
constr"ction o- n"c'ear power p'ants.
From the owner's perspective& it is e)"a''. important to estimate the
corresponing operation an maintenance cost o- each a'ternative
-or a propose -aci'it. in orer to ana'.ze the 'i-e c.c'e costs. The
'arge eCpenit"res neee -or -aci'it. maintenance& especia''. -or
p"%'ic'. owne in-rastr"ct"re& are reminers o- the neg'ect in the
past to consier -"''. the imp'ications o- operation an maintenance
cost in the esign stage.
/n this chapter& we sha'' -oc"s on the estimation o- constr"ction
cost& with on'. occasiona' re-erence to other cost components. /n
!hapter ,& we sha'' ea' with the economic eva'"ation o- a
constr"cte -aci'it. on the %asis o- %oth the capita' cost an the
operation an maintenance cost in the 'i-e c.c'e o- the -aci'it.. /t is
at this stage that traeoAs %etween operating an capita' costs can
%e ana'.ze.
E>ample /'1( Energ& project resource demands L1M
The reso"rces emans -or three t.pes o- major energ.
projects investigate "ring the energ. crisis in the
1203's are shown in Ta%'e +;1. These projects are> E1F an
oi' sha'e project with a capacit. o- +3&333 %arre's o- oi'
pro"ct per a.O E2F a coa' gasi=cation project that
ma7es gas with a heating va'"e o- 323 %i''ions o- 9ritish
therma' "nits per a.& or e)"iva'ent to a%o"t +3&333
%arre's o- oi' pro"ct per a.O an E3F a tar san project
with a capacit. o- 1+3&333 %arre's o- oi' pro"ct per a..
For each project& the cost in %i''ions o- o''ars& the
engineering manpower re)"irement -or %asic esign in
tho"sans o- ho"rs& the engineering manpower
re)"irement -or etai'e engineering in mi''ions o-
ho"rs& the s7i''e 'a%or re)"irement -or constr"ction in
mi''ions o- ho"rs an the materia' re)"irement in %i''ions
o- o''ars are shown in Ta%'e +;1. To %"i' severa'
projects o- s"ch an orer o- magnit"e conc"rrent'.
co"' rive "p the costs an strain the avai'a%i'it. o- a''
reso"rces re)"ire to comp'ete the projects.
!onse)"ent'.& cost estimation o-ten represents an
eCercise in pro-essiona' j"gment instea o- mere'.
compi'ing a %i'' o- )"antities an co''ecting cost ata to
reach a tota' estimate mechanica''..
AB%E /'1 <eso"rce <e)"irements o- 4ome Major
(nerg. Projects
Oi' sha'e
E+3&333
%arre'sPa.F
!oa'
gasi=cation
E323 %i''ions
9T*Pa.F
Tar 4ans
E1+3&333
%arre'sPa.F
!ost
E@ %i''ionF
2.+ # 1 to 13
9asic esign
ETho"sans
o- ho"rsF
13 233 133
Detai'e
engineering
EMi''ions o-
ho"rsF
3 to # # to + , to 1
!onstr"ction
EMi''ions o-
ho"rsF
23 33 #3
Materia's
E@ %i''ionF
1 2 2.+
4o"rce> (CCon <esearch an (ngineering !ompan.&
F'orham Par7& :8
9ac7 to top
/.$ Approaches to Cost Estimation
!ost estimating is one o- the most important steps in project
management. A cost estimate esta%'ishes the %ase 'ine o- the
project cost at iAerent stages o- eve'opment o- the project. A cost
estimate at a given stage o- project eve'opment represents a
preiction provie %. the cost engineer or estimator on the %asis o-
avai'a%'e ata. Accoring to the American Association o- !ost
(ngineers& cost engineering is e=ne as that area o- engineering
practice where engineering j"gment an eCperience are "ti'ize in
the app'ication o- scienti=c princip'es an techni)"es to the pro%'em
o- cost estimation& cost contro' an pro=ta%i'it..
Nirt"a''. a'' cost estimation is per-orme accoring to one or some
com%ination o- the -o''owing %asic approaches>
Production function. /n microeconomics& the re'ationship %etween
the o"tp"t o- a process an the necessar. reso"rces is re-erre to as
the pro"ction -"nction. /n constr"ction& the pro"ction -"nction
ma. %e eCpresse %. the re'ationship %etween the vo'"me o-
constr"ction an a -actor o- pro"ction s"ch as 'a%or or capita'. A
pro"ction -"nction re'ates the amo"nt or vo'"me o- o"tp"t to the
vario"s inp"ts o- 'a%or& materia' an e)"ipment. For eCamp'e& the
amo"nt o- o"tp"t 5 ma. %e erive as a -"nction o- vario"s inp"t
-actors C
1
& C
2
& ...& C
n
%. means o- mathematica' anPor statistica'
methos. Th"s& -or a speci=e 'eve' o- o"tp"t& we ma. attempt to
=n a set o- va'"es -or the inp"t -actors so as to minimize the
pro"ction cost. The re'ationship %etween the size o- a %"i'ing
project EeCpresse in s)"are -eetF to the inp"t 'a%or EeCpresse in
'a%or ho"rs per s)"are -ootF is an eCamp'e o- a pro"ction -"nction
-or constr"ction. 4evera' s"ch pro"ction -"nctions are shown in
Fig"re 3;3 o- !hapter 3.
Empirical cost inference. (mpirica' estimation o- cost -"nctions
re)"ires statistica' techni)"es which re'ate the cost o- constr"cting
or operating a -aci'it. to a -ew important characteristics or attri%"tes
o- the s.stem. The ro'e o- statistica' in-erence is to estimate the %est
parameter va'"es or constants in an ass"me cost -"nction. *s"a''.&
this is accomp'ishe %. means o- regression ana'.sis techni)"es.
Anit costs for 6ill of 3uantities. A "nit cost is assigne to each o-
the -aci'it. components or tas7s as represente %. the %i'' o-
)"antities. The tota' cost is the s"mmation o- the pro"cts o- the
)"antities m"'tip'ie %. the corresponing "nit costs. The "nit cost
metho is straight-orwar in princip'e %"t )"ite 'a%orio"s in
app'ication. The initia' step is to %rea7 own or isaggregate a
process into a n"m%er o- tas7s. !o''ective'.& these tas7s m"st %e
comp'ete -or the constr"ction o- a -aci'it.. Once these tas7s are
e=ne an )"antities representing these tas7s are assesse& a "nit
cost is assigne to each an then the tota' cost is etermine %.
s"mming the costs inc"rre in each tas7. The 'eve' o- etai' in
ecomposing into tas7s wi'' var. consiera%'. -rom one estimate to
another.
Allocation of joint costs. A''ocations o- cost -rom eCisting
acco"nts ma. %e "se to eve'op a cost -"nction o- an operation.
The %asic iea in this metho is that each eCpenit"re item can %e
assigne to partic"'ar characteristics o- the operation. /ea''.& the
a''ocation o- joint costs sho"' %e ca"sa''. re'ate to the categor. o-
%asic costs in an a''ocation process. /n man. instances& however& a
ca"sa' re'ationship %etween the a''ocation -actor an the cost item
cannot %e ienti=e or ma. not eCist. For eCamp'e& in constr"ction
projects& the acco"nts -or %asic costs ma. %e c'assi=e accoring to
E1F 'a%or& E2F materia'& E3F constr"ction e)"ipment& E#F constr"ction
s"pervision& an E+F genera' oKce overhea. These %asic costs ma.
then %e a''ocate proportiona''. to vario"s tas7s which are
s"%ivisions o- a project.
9ac7 to top
/.) &pes of Construction Cost Estimates
!onstr"ction cost constit"tes on'. a -raction& tho"gh a s"%stantia'
-raction& o- the tota' project cost. 6owever& it is the part o- the cost
"ner the contro' o- the constr"ction project manager. The re)"ire
'eve's o- acc"rac. o- constr"ction cost estimates var. at iAerent
stages o- project eve'opment& ranging -rom %a'' par7 =g"res in the
ear'. stage to -air'. re'ia%'e =g"res -or %"get contro' prior to
constr"ction. 4ince esign ecisions mae at the %eginning stage o-
a project 'i-e c.c'e are more tentative than those mae at a 'ater
stage& the cost estimates mae at the ear'ier stage are eCpecte to
%e 'ess acc"rate. Jenera''.& the acc"rac. o- a cost estimate wi''
reGect the in-ormation avai'a%'e at the time o- estimation.
!onstr"ction cost estimates ma. %e viewe -rom iAerent
perspectives %eca"se o- iAerent instit"tiona' re)"irements. /n spite
o- the man. t.pes o- cost estimates "se at iAerent stages o- a
project& cost estimates can %est %e c'assi=e into three major
categories accoring to their -"nctions. A constr"ction cost estimate
serves one o- the three %asic -"nctions> esign& %i an contro'. For
esta%'ishing the =nancing o- a project& either a esign estimate or a
%i estimate is "se.
1. 0esign Estimates. For the owner or its esignate esign
pro-essiona's& the t.pes o- cost estimates enco"ntere r"n
para''e' with the p'anning an esign as -o''ows>
o 4creening estimates Eor orer o- magnit"e estimatesF
o Pre'iminar. estimates Eor concept"a' estimatesF
o Detai'e estimates Eor e=nitive estimatesF
o (ngineer's estimates %ase on p'ans an speci=cations
For each o- these iAerent estimates& the amo"nt o- esign
in-ormation avai'a%'e t.pica''. increases.
2. Bid Estimates. For the contractor& a %i estimate s"%mitte
to the owner either -or competitive %iing or negotiation
consists o- irect constr"ction cost inc'"ing =e' s"pervision&
p'"s a mar7"p to cover genera' overhea an pro=ts. The
irect cost o- constr"ction -or %i estimates is "s"a''. erive
-rom a com%ination o- the -o''owing approaches.
o 4"%contractor )"otations
o 5"antit. ta7eoAs
o !onstr"ction proce"res.
3. ). Control Estimates. For monitoring the project "ring
constr"ction& a contro' estimate is erive -rom avai'a%'e
in-ormation to esta%'ish>
o 9"get estimate -or =nancing
o 9"gete cost a-ter contracting %"t prior to constr"ction
o (stimate cost to comp'etion "ring the progress o-
constr"ction.
0esign Estimates
/n the p'anning an esign stages o- a project& vario"s esign
estimates reGect the progress o- the esign. At the ver. ear'. stage&
the screening estimate or order of magnitude estimate is "s"a''.
mae %e-ore the -aci'it. is esigne& an m"st there-ore re'. on the
cost ata o- simi'ar -aci'ities %"i't in the past. A preliminary estimate
or conceptual estimate is %ase on the concept"a' esign o- the
-aci'it. at the state when the %asic techno'ogies -or the esign are
7nown. The detailed estimate or de!nitive estimate is mae when
the scope o- wor7 is c'ear'. e=ne an the etai'e esign is in
progress so that the essentia' -eat"res o- the -aci'it. are ienti=a%'e.
The engineer@s estimate is %ase on the comp'ete p'ans an
speci=cations when the. are rea. -or the owner to so'icit %is -rom
constr"ction contractors. /n preparing these estimates& the esign
pro-essiona' wi'' inc'"e eCpecte amo"nts -or contractors'
overhea an pro=ts.
The costs associate with a -aci'it. ma. %e ecompose into a
hierarch. o- 'eve's that are appropriate -or the p"rpose o- cost
estimation. The 'eve' o- etai' in ecomposing the -aci'it. into tas7s
epens on the t.pe o- cost estimate to %e prepare. For concept"a'
estimates& -or eCamp'e& the 'eve' o- etai' in e=ning tas7s is )"ite
coarseO -or etai'e estimates& the 'eve' o- etai' can %e )"ite =ne.
As an eCamp'e& consier the cost estimates -or a propose %rige
across a river. A screening estimate is mae -or each o- the potentia'
a'ternatives& s"ch as a tie arch %rige or a canti'ever tr"ss %rige.
As the %rige t.pe is se'ecte& e.g. the techno'og. is chosen to %e a
tie arch %rige instea o- some new %rige -orm& a pre'iminar.
estimate is mae on the %asis o- the 'a.o"t o- the se'ecte %rige
-orm on the %asis o- the pre'iminar. or concept"a' esign. Dhen the
etai'e esign has progresse to a point when the essentia' etai's
are 7nown& a etai'e estimate is mae on the %asis o- the we''
e=ne scope o- the project. Dhen the etai'e p'ans an
speci=cations are comp'ete& an engineer's estimate can %e mae
on the %asis o- items an )"antities o- wor7.
Bid Estimates
The contractor's %i estimates o-ten reGect the esire o- the
contractor to sec"re the jo% as we'' as the estimating too's at its
isposa'. 4ome contractors have we'' esta%'ishe cost estimating
proce"res whi'e others o not. 4ince on'. the 'owest %ier wi'' %e
the winner o- the contract in most %iing contests& an. eAort
evote to cost estimating is a 'oss to the contractor who is not a
s"ccess-"' %ier. !onse)"ent'.& the contractor ma. p"t in the 'east
amo"nt o- possi%'e eAort -or ma7ing a cost estimate i- it %e'ieves
that its chance o- s"ccess is not high.
/- a genera' contractor intens to "se s"%contractors in the
constr"ction o- a -aci'it.& it ma. so'icit price )"otations -or vario"s
tas7s to %e s"%contracte to specia't. s"%contractors. Th"s& the
genera' s"%contractor wi'' shi-t the %"ren o- cost estimating to
s"%contractors. /- a'' or part o- the constr"ction is to %e "nerta7en
%. the genera' contractor& a %i estimate ma. %e prepare on the
%asis o- the )"antit. ta7eoAs -rom the p'ans provie %. the owner
or on the %asis o- the constr"ction proce"res evise %. the
contractor -or imp'ementing the project. For eCamp'e& the cost o- a
-ooting o- a certain t.pe an size ma. %e -o"n in commercia'
p"%'ications on cost ata which can %e "se to -aci'itate cost
estimates -rom )"antit. ta7eoAs. 6owever& the contractor ma. want
to assess the act"a' cost o- constr"ction %. consiering the act"a'
constr"ction proce"res to %e "se an the associate costs i- the
project is eeme to %e iAerent -rom t.pica' esigns. 6ence& items
s"ch as 'a%or& materia' an e)"ipment neee to per-orm vario"s
tas7s ma. %e "se as parameters -or the cost estimates.
Control Estimates
9oth the owner an the contractor m"st aopt some %ase 'ine -or
cost contro' "ring the constr"ction. For the owner& a *udget
estimate m"st %e aopte ear'. eno"gh -or p'anning 'ong term
=nancing o- the -aci'it.. !onse)"ent'.& the etai'e estimate is o-ten
"se as the %"get estimate since it is s"Kcient e=nitive to reGect
the project scope an is avai'a%'e 'ong %e-ore the engineer's
estimate. As the wor7 progresses& the %"gete cost m"st %e
revise perioica''. to reGect the estimate cost to comp'etion. A
revise estimate cost is necessar. either %eca"se o- change orers
initiate %. the owner or "e to "neCpecte cost overr"ns or
savings.
For the contractor& the %i estimate is "s"a''. regare as the
%"get estimate& which wi'' %e "se -or contro' p"rposes as we'' as
-or p'anning constr"ction =nancing. The %"gete cost sho"' a'so
%e "pate perioica''. to reGect the estimate cost to comp'etion
as we'' as to ins"re ae)"ate cash Gows -or the comp'etion o- the
project.
E>ample /'$( ,creening estimate of a grouting seal 6eneath
a landGll L2M
One o- the methos o- iso'ating a 'an='' -rom
gro"nwater is to create a %ow';shape %ottom sea'
%eneath the site as shown in Fig"re +;3. The sea' is
constr"cte %. p"mping or press"re;injecting gro"t
"ner the eCisting 'an=''. 6o'es are %ore at reg"'ar
interva's thro"gho"t the 'an='' -or this p"rpose an the
gro"t t"%es are eCtene -rom the s"r-ace to the %ottom
o- the 'an=''. A 'a.er o- soi' at a minim"m o- + -t. thic7
is 'e-t %etween the gro"te materia' an the 'an=''
contents to a''ow -or irreg"'arities in the %ottom o- the
'an=''. The gro"t 'iner can %e %etween # an , -eet
thic7. A t.pica' materia' wo"' %e Port'an cement gro"t
p"mpe "ner press"re thro"gh t"%es to ='' vois in the
soi'. This gro"t wo"' then haren into a permanent&
impermea%'e 'iner.
Figure /'1( Jro"t 9ottom 4ea' $iner at a $an=''
The wor7 items in this project inc'"e E1F ri''ing
eCp'orator. %ore ho'es at +3 -t interva's -or gro"t t"%es&
an E2F p"mping gro"t into the vois o- a soi' 'a.er
%etween # an , -t thic7. The )"antities -or these two
items are estimate on the %asis o- the 'an='' area>
1 acres X E1FE#3&+,3 -t
2
PacreF X 3#1&#13 -t
2
EAs an approCimation& "se 3,3&333 -t
2
to acco"nt -or the
%ow' shapeF
The n"m%er o- %ore ho'es in a +3 -t %. +3 -t gri pattern
covering 3,3&333 -t
2
is given %.>
The average epth o- the %ore ho'es is estimate to %e
23 -t. 6ence& the tota' amo"nt o- ri''ing is E1##FE23F X
2&113 -t.
The vo'"me o- the soi' 'a.er -or gro"ting is estimate to
%e>
-or a # -t 'a.er& vo'"me X E# -tFE3,3&333 -t
2
F
X 1&##3&333 -t
3

-or a , -t 'a.er& vo'"me X E, -tFE3,3&333 -t
2
F
X 2&1,3&333 -t
3
/t is estimate -rom soi' tests that the vois in the soi'
'a.er are %etween 23Q an 33Q o- the tota' vo'"me.
Th"s& -or a # -t soi' 'a.er>
gro"ting in 23Q vois X E23QFE1&##3&333F X
211&333 -t
3

gro"ting in 33 Q vois X E33QFE1&##3&333F
X #32&333 -t
3
an -or a , -t soi' 'a.er>
gro"ting in 23Q vois X E23QFE2&1,3&333F X
#32&333 -t
3

gro"ting in 33Q vois X E33QFE2&1,3&333F X
,#1&333 -t
3
The "nit cost -or ri''ing eCp'orator. %ore ho'es is
estimate to %e %etween @3 an @13 per -oot Ein 1201
o''arsF inc'"ing a'' eCpenses. Th"s& the tota' cost o-
%oring wi'' %e %etween E2&113FE3F X @ 1&,#3 an E2&113F
E13F X @21&133. The "nit cost o- Port'an cement gro"t
p"mpe into p'ace is %etween @# an @13 per c"%ic -oot
inc'"ing overhea an pro=t. /n aition to the
variation in the "nit cost& the tota' cost o- the %ottom
sea' wi'' epen "pon the thic7ness o- the soi' 'a.er
gro"te an the proportion o- vois in the soi'. That is>
-or a # -t 'a.er with 23Q vois& gro"ting cost
X @1&1+2&333 to @2&113&333
-or a # -t 'a.er with 33Q vois& gro"ting cost
X @1&021&333 to @#&323&333
-or a , -t 'a.er with 23Q vois& gro"ting cost
X @1&021&333 to @#&323&333
-or a , -t 'a.er with 33Q vois& gro"ting cost
X @2&+22&333 to @,&#13&333
The tota' cost o- ri''ing %ore ho'es is so sma'' in
comparison with the cost o- gro"ting that the -ormer can
%e omitte in the screening estimate. F"rthermore& the
range o- "nit cost varies great'. with soi' characteristics&
an the engineer m"st eCercise j"gment in narrowing
the range o- the tota' cost. A'ternative'.& aitiona' soi'
tests can %e "se to %etter estimate the "nit cost o-
p"mping gro"t an the proportion o- vois in the soi'.
4"ppose that& in aition to ignoring the cost o- %ore
ho'es& an average va'"e o- a + -t soi' 'a.er with 2+Q
vois is "se together with a "nit cost o- @ 0 per c"%ic
-oot o- Port'an cement gro"ting. /n this case& the tota'
project cost is estimate to %e>
E+ -tFE3,3&333 -t
2
FE2+QFE@0P-t
3
F X @3&1+3&333
An important point to note is that this screening
estimate is %ase to a 'arge egree on engineering
j"gment o- the soi' characteristics& an the range o-
the act"a' cost ma. var. -rom @ 1&1+2&333 to @
,&#13&333 even tho"gh the pro%a%i'ities o- having act"a'
costs at the eCtremes are not ver. high.
E>ample /')( E>ample of engineer!s estimate and
contractors! 6idsL3M
The engineer's estimate -or a project invo'ving 1# mi'es
o- /nterstate 03 roawa. in *tah was @23&2+3&1+2. 9is
were s"%mitte on March 13& 1210& -or comp'eting the
project within 323 wor7ing a.s. The three 'ow %iers
were>

1. 9a''& 9a'' R 9rosame& /nc.&
Danvi''e !A
@1#&122&0
21
2. :ationa' Projects& /nc.&
PhoeniC& A<
@1+&311&0
12
3. Hiewit Destern !o.& M"rra.&
*tah
@11&1#,&0
1#
/t was asto"ning that the winning %i was 32Q %e'ow
the engineer's estimate. (ven the thir 'owest %ier
was 13Q %e'ow the engineer's estimate -or this project.
The isparit. in pricing can %e attri%"te either to the
ver. conservative estimate o- the engineer in the *tah
Department o- Transportation or to area contractors who
are h"ngrier than "s"a' to win jo%s.
The "nit prices -or iAerent items o- wor7 s"%mitte -or
this project %. E1F 9a''& 9a'' R 9rosame& /nc. an E2F
:ationa' Projects& /nc. are shown in Ta%'e +;2. The
simi'arit. o- their "nit prices -or some items an the
isparit. in others s"%mitte %. the two contractors can
%e note.
AB%E /'$( *nit Prices in Two !ontractors' 9is -or <oawa.
!onstr"ction
/tems *nit 5"antit.
*nit price
1 2
Mo%i'ization 's 1
11+&33
3
+,2&++
#
<emova'& %erm '- 1&323 1.33 1.+3
Finish s"%grae s.
1&230&+3
3
3.+3 3.33
4"r-ace itches '- +2+ 2.33 1.33
(Ccavation str"ct"res c. 0&333 3.33 +.33
9ase co"rse& "ntreate& 3P#'' ton 3,2&233 #.+3 +.33
$ean concrete& #'' thic7 s. 123&313 3.13 3.33
P!!& pavement& 13'' thic7 s. 0,&313 13.23 12.33
!oncrete& ci AA EA(F 's 1
233&33
3
123&33
3
4ma'' str"ct"re c. +3 +33 #0+
9arrier& precast '- 0&223 1+.33 1,.33
F'atwor7& #'' thic7 s. 0&#13 13.33 1.33
13'' thic7 s. #&2#1 23.33 20.33
4'ope protection s. 2&13# 2+.33 33.33
Meta'& en section& 1+'' ea 32 133 12+
11'' ea 3 1+3 233
Post& right;o-;wa.&
moi=cation
'- #&033 3.33 2.+3
4a'vage an re'a. pipe '- 1&,13 +.33 12.33
$oose riprap c. 32 #3.33 33.33
9race posts ea +# 133 113
De'ineators& t.pe / '% 1&333 12.33 12.33
t.pe // ea 1#3 1+.33 12.33
!onstr"ctive signs =Ce s- +2&,33 3.13 3.#3
9arricaes& t.pe /// '- 22&+33 3.23 3.23
AB%E /'$( *nit Prices in Two !ontractors' 9is -or <oawa.
!onstr"ction
/tems *nit 5"antit.
*nit price
Darning 'ights a. ,&333 3.13 3.+3
Pavement mar7ing& epoC.
materia'

9'ac7 ga' #0+ 23.33 133
Ie''ow ga' 0#3 23.33 13.33
Dhite ga' 21+ 23.33 03.33
P'owa%'e& one;wa. white ea 3#2 +3.33 23.33
Topsoi'& contractor -"rnishe c. 2,3 13.33 ,.33
4ee'ing& metho A acr 133 1+3 233
(Cce'sior %'an7et s. +33 2.33 2.33
!orr"gate& meta' pipe& 11'' '- +13 23.33 11.33
Po'.eth.'ene pipe& 12'' '- 2&2+3 1+.33 13.33
!atch %asin grate an -rame ea 3+ 3+3 213
()"a' opport"nit. training hr 11&333 3.13 3.13
Jran"'ar %ac7='' %orrow c. 20# 13.33 1,.33
Dri'' caisson& 2'C,'' '- 022 133 13.33
F'agging hr 23&333 1.2+ 12.+3
Prestresse concrete mem%er
t.pe /N& 1#1'C#'' ea 0 12&333 1,.33
132'C#'' ea , 11&333 1#.33
<ein-orce stee' '% ,&333 3.,3 3.+3
(poC. coate '% 122&2#1 3.++ 3.+3
4tr"ct"ra' stee' 's 1 +&333 1&,33
4ign& covering s- 1, 13.33 #.33
t.pe !;2 woo post s- 21 1+.33 10.33
2#'' ea 3 133 #33
33'' ea 2 133 1,3
#1'' ea 11 233 333
A"Ci'iar. s- ,1 1+.33 12.33
4tee' post& #1''C,3'' ea 11 +33 033
t.pe 3& woo post s- ,,2 1+.33 12.33
2#'' ea 23 133 12+
33'' ea 1 133 1+3
AB%E /'$( *nit Prices in Two !ontractors' 9is -or <oawa.
!onstr"ction
/tems *nit 5"antit.
*nit price
3,'' ea 12 1+3 113
#2''C,3'' ea 1 1+3 223
#1'' ea 0 233 203
A"Ci'iar. s- 13+ 1+.33 13.33
4tee' post s- 1&,13 #3.33 3+.33
12''C3,'' ea 21 133 1+3
Fo"nation& concrete ea ,3 333 ,+3
9arricae& #1''C#2'' ea #3 133 133
Doo post& roa c'ose '- 133 33.33 3,.33
9ac7 to top
/.. E?ects of ,cale on Construction Cost
4creening cost estimates are o-ten %ase on a sing'e varia%'e
representing the capacit. or some ph.sica' meas"re o- the esign
s"ch as Goor area in %"i'ings& 'ength o- highwa.s& vo'"me o-
storage %ins an pro"ction vo'"mes o- processing p'ants. !osts o
not a'wa.s var. 'inear'. with respect to iAerent -aci'it. sizes.
T.pica''.& sca'e economies or iseconomies eCist. /- the average cost
per "nit o- capacit. is ec'ining& then sca'e economies eCist.
!onverse'.& sca'e iseconomies eCist i- average costs increase with
greater size. (mpirica' ata are so"ght to esta%'ish the economies o-
sca'e -or vario"s t.pes o- -aci'it.& i- the. eCist& in orer to ta7e
avantage o- 'ower costs per "nit o- capacit..
$et C %e a varia%'e representing the -aci'it. capacit.& an . %e the
res"'ting constr"ction cost. Then& a 'inear cost re'ationship can %e
eCpresse in the -orm>
E+.1F
where a an % are positive constants to %e etermine on the %asis
o- historica' ata. :ote that in ()"ation E+.1F& a =Ce cost o- . X a
at C X 3 is imp'ie as shown in Fig"re +;2. /n genera'& this
re'ationship is app'ica%'e on'. in a certain range o- the varia%'e C&
s"ch as %etween C X c an C X . /- the va'"es o- . corresponing to
C X c an C X are 7nown& then the cost o- a -aci'it. corresponing
to an. C within the speci=e range ma. %e o%taine %. 'inear
interpo'ation. For eCamp'e& the constr"ction cost o- a schoo' %"i'ing
can %e estimate on the %asis o- a 'inear re'ationship %etween cost
an Goor area i- the "nit cost per s)"are -oot o- Goor area is 7nown
-or schoo' %"i'ings within certain 'imits o- size.
Figure /'$( $inear !ost <e'ationship with (conomies o- 4ca'e
A non'inear cost re'ationship %etween the -aci'it. capacit. C an
constr"ction cost . can o-ten %e represente in the -orm>

E+.2F
where a an % are positive constants to %e etermine on the %asis
o- historica' ata. For 3 V % V 1& ()"ation E+.2F represents the case
o- increasing ret"rns to sca'e& an -or % Ogt 1& the re'ationship
%ecomes the case o- ecreasing ret"rns to sca'e& as shown in Fig"re
+;3. Ta7ing the 'ogarithm o- %oth sies this e)"ation& a 'inear
re'ationship can %e o%taine as -o''ows>
Figure /')( :on'inear !ost <e'ationship with increasing or
Decreasing (conomies o- 4ca'e
E+.3F
A'tho"gh no =Ce cost is imp'ie in ().E+.2F& the e)"ation is "s"a''.
app'ica%'e on'. -or a certain range o- C. The same 'imitation app'ies
to ().E+.3F. A non'inear cost re'ationship o-ten "se in estimating
the cost o- a new in"stria' processing p'ant -rom the 7nown cost o-
an eCisting -aci'it. o- a iAerent size is 7nown as the e8ponential
rule. $et .
n
%e the 7nown cost o- an eCisting -aci'it. with capacit. 5
n
&
an . %e the estimate cost o- the new -aci'it. which has a capacit.
5. Then& -rom the empirica' ata& it can %e ass"me that>
E+.#F
where m "s"a''. varies -rom 3.+ to 3.2& epening on a speci=c t.pe
o- -aci'it.. A va'"e o- m X 3., is o-ten "se -or chemica' processing
p'ants. The eCponentia' r"'e can %e re"ce to a 'inear re'ationship
i- the 'ogarithm o- ()"ation E+.#F is "se>
E+.+F
or
E+.,F
The eCponentia' r"'e can %e app'ie to estimate the tota' cost o- a
comp'ete -aci'it. or the cost o- some partic"'ar component o- a
-aci'it..
E>ample /'.( 0etermination of m for the e>ponential rule
Figure /'.( $og;$og 4ca'e Jraph o- (Cponentia' <"'e (Camp'e
The empirica' cost ata -rom a n"m%er o- sewage
treatment p'ants are p'otte on a 'og;'og sca'e -or
'nE5P5
n
F an 'nE.P.
n
F an a 'inear re'ationship %etween
these 'ogarithmic ratios is shown in Fig"re +;#. For
E5P5
n
F X 1 or 'nE5P5
n
F X 3& 'nE.P.
n
F X 3O an -or 5P5
n
X 2
or 'nE5P5
n
F X 3.331& 'nE.P.
n
F X 3.10,+. 4ince m is the
s'ope o- the 'ine in the =g"re& it can %e etermine -rom
the geometric re'ation as -o''ows>
For 'nE.P.
n
F X 3.10,+& .P.
n
X 1.+& whi'e the
corresponing va'"e o- 5P5
n
is 2. /n wors& -or m X
3.+1+& the cost o- a p'ant increases on'. 1.+ times when
the capacit. is o"%'e.
E>ample /'/( Cost e>ponents for water and wastewater
treatment plantsL#M
The magnit"e o- the cost eCponent m in the
eCponentia' r"'e provies a simp'e meas"re o- the
econom. o- sca'e associate with %"i'ing eCtra
capacit. -or -"t"re growth an s.stem re'ia%i'it. -or the
present in the esign o- treatment p'ants. Dhen m is
sma''& there is consiera%'e incentive to provie eCtra
capacit. since sca'e economies eCist as i''"strate in
Fig"re +;3. Dhen m is c'ose to 1& the cost is irect'.
proportiona' to the esign capacit.. The va'"e o- m
tens to increase as the n"m%er o- "p'icate "nits in a
s.stem increases. The va'"es o- m -or severa' t.pes o-
treatment p'ants with iAerent p'ant components
erive -rom statistica' corre'ation o- act"a' constr"ction
costs are shown in Ta%'e +;3.
AB%E /') (stimate Na'"es o- !ost (Cponents -or Dater Treatment
P'ants
Treatment p'ant
t.pe
(Cponent
m
!apacit. range
Emi''ions o- ga''ons per
a.F
1. Dater treatment 3.,0 1;133
2. Daste treatment
Primar. with igestion
Esma''F
3.++ 3.1;13
Primar. with igestion
E'argeF
3.0+ 3.0;133
Tric7'ing ='ter 3.,3 3.1;23
Activate s'"ge 3.00 3.1;133
4ta%i'ization pons 3.+0 3.1;133
4o"rce> Data are co''ecte -rom vario"s so"rces %. P.M. 9ertho"eC.
4ee the re-erences in his artic'e -or the primar. so"rces.
E>ample /'4( Cost data for the e>ponential rule
The eCponentia' r"'e as represente %. ()"ation E+.#F
can %e eCpresse in a iAerent -orm as>
where
/- m an H are 7nown -or a given t.pe o- -aci'it.& then
the cost . -or a propose new -aci'it. o- speci=e
capacit. 5 can %e reai'. comp"te.
AB%E /'. !ost Factors o- Processing *nits -or Treatment P'ants
Processing
"nit
*nit o-
capacit.
H Na'"e
E12,1 @F
m
va'"e
1. $i)"i processing
Oi' separation mg +1&333 3.1#
6.roc'one egritter mg 3&123 3.3+
Primar. seimentation -t
2
322 3.,3
F"ria' c'ari=er -t
2
033 3.+0
4'"ge aeration %asin mi'. ga'. 103&333 3.+3
Tic7'ing ='ter -t
2
21&333 3.01
Aerate 'agoon %asin mi'. ga'. #,&333 3.,0
()"a'ization mi'. ga'. 02&333 3.+2
:e"tra'ization mg ,3&333 3.03
2. 4'"ge han'ing
Digestion -t
3
,0&+33 3.+2
Nac""m ='ter -t
2
2&3,3 3.1#
!entri-"ge
'% r.
so'isPhr
311 3.11
4o"rce> Data are co''ecte -rom vario"s so"rces %. P.M. 9ertho"eC.
4ee the re-erences in his artic'e -or the primar. so"rces.
The estimate va'"es o- H an m -or vario"s water an sewage
treatment p'ant components are shown in Ta%'e +;#. The H va'"es
are %ase on 12,1 o''ars. The range o- ata -rom which the H an
m va'"es are erive in the primar. so"rces sho"' %e o%serve in
orer to "se them in ma7ing cost estimates.
As an eCamp'e& ta7e H X @322 an m X 3.,3 -or a primar.
seimentation component in Ta%'e +;#. For a propose new p'ant
with the primar. seimentation process having a capacit. o- 1+&333
s). -t.& the estimate cost Ein 12,1 o''arsF is>
. X E@322FE1+&333F
3.,3
X @121&333.
9ac7 to top
/./ Anit Cost Method of Estimation
/- the esign techno'og. -or a -aci'it. has %een speci=e& the project
can %e ecompose into e'ements at vario"s 'eve's o- etai' -or the
p"rpose o- cost estimation. The "nit cost -or each e'ement in the %i''
o- )"antities m"st %e assesse in orer to comp"te the tota'
constr"ction cost. This concept is app'ica%'e to %oth esign
estimates an %i estimates& a'tho"gh iAerent e'ements ma. %e
se'ecte in the ecomposition.
For esign estimates& the "nit cost metho is common'. "se when
the project is ecompose into e'ements at vario"s 'eve's o- a
hierarch. as -o''ows>
1. Preliminar& Estimates. The project is ecompose into
major str"ct"ra' s.stems or pro"ction e)"ipment items& e.g.
the entire Goor o- a %"i'ing or a coo'ing s.stem -or a
processing p'ant.
2. 0etailed Estimates. The project is ecompose into
components o- vario"s major s.stems& i.e.& a sing'e Goor pane'
-or a %"i'ing or a heat eCchanger -or a coo'ing s.stem.
3. Engineer!s Estimates. The project is ecompose into
etai'e items o- vario"s components as warrante %. the
avai'a%'e cost ata. (Camp'es o- etai'e items are s'a%s an
%eams in a Goor pane'& or the piping an connections -or a
heat eCchanger.
For %i estimates& the "nit cost metho can a'so %e app'ie even
tho"gh the contractor ma. choose to ecompose the project into
iAerent 'eve's in a hierarch. as -o''ows>
1. ,u6contractor Luotations. The ecomposition o- a project
into s"%contractor items -or )"otation invo'ves a minim"m
amo"nt o- wor7 -or the genera' contractor. 6owever& the
acc"rac. o- the res"'ting estimate epens on the re'ia%i'it. o-
the s"%contractors since the genera' contractor se'ects one
among severa' contractor )"otations s"%mitte -or each item
o- s"%contracte wor7.
2. Luantit& a@eo?s. The ecomposition o- a project into items
o- )"antities that are meas"re Eor taken o;F -rom the
engineer's p'an wi'' res"'t in a proce"re simi'ar to that
aopte -or a etai'e estimate or an engineer's estimate %.
the esign pro-essiona'. The 'eve's o- etai' ma. var.
accoring to the esire o- the genera' contractor an the
avai'a%i'it. o- cost ata.
3. Construction Procedures. /- the constr"ction proce"re o- a
propose project is "se as the %asis o- a cost estimate& the
project ma. %e ecompose into items s"ch as 'a%or& materia'
an e)"ipment neee to per-orm vario"s tas7s in the
projects.
,imple Anit Cost Formula
4"ppose that a project is ecompose into n e'ements -or cost
estimation. $et 5
i
%e the )"antit. o- the i
th
e'ement an "
i
%e the
corresponing "nit cost. Then& the tota' cost o- the project is given
%.>
E+.0F
where n is the n"m%er o- "nits. 9ase on characteristics o- the
constr"ction site& the techno'og. emp'o.e& or the management o-
the constr"ction process& the estimate "nit cost& "
i
-or each
e'ement ma. %e aj"ste.
Factored Estimate Formula
A specia' app'ication o- the "nit cost metho is the B-actore
estimateB common'. "se in process in"stries. *s"a''.& an
in"stria' process re)"ires severa' major e)"ipment components
s"ch as -"rnaces& towers r"ms an p"mp in a chemica' processing
p'ant& p'"s anci''ar. items s"ch as piping& va'ves an e'ectrica'
e'ements. The tota' cost o- a project is ominate %. the costs o-
p"rchasing an insta''ing the major e)"ipment components an
their anci''ar. items. $et !
i
%e the p"rchase cost o- a major
e)"ipment component i an -
i
%e a -actor acco"nting -or the cost o-
anci''ar. items neee -or the insta''ation o- this e)"ipment
component i. Then& the tota' cost o- a project is estimate %.>
E+.1F
where n is the n"m%er o- major e)"ipment components inc'"e in
the project. The -actore metho is essentia''. %ase on the
princip'e o- comp"ting the cost o- anci''ar. items s"ch as piping an
va'ves as a -raction or a m"'tip'e o- the costs o- the major
e)"ipment items. The va'"e o- !
i
ma. %e o%taine %. app'.ing the
eCponentia' r"'e so the "se o- ()"ation E+.1F ma. invo've a
com%ination o- cost estimation methos.
Formula Based on %a6or, Material and E3uipment
!onsier the simp'e case -or which costs o- 'a%or& materia' an
e)"ipment are assigne to a'' tas7s. 4"ppose that a project is
ecompose into n tas7s. $et 5
i
%e the )"antit. o- wor7 -or tas7 i& M
i
%e the "nit materia' cost o- tas7 i& (
i
%e the "nit e)"ipment rate -or
tas7 i& $
i
%e the "nits o- 'a%or re)"ire per "nit o- 5
i
& an D
i
%e the
wage rate associate with $
i
. /n this case& the tota' cost . is>
E+.2F
:ote that D
i
$
i
.ie's the 'a%or cost per "nit o- 5
i
& or the 'a%or "nit
cost o- tas7 i. !onse)"ent'.& the "nits -or a'' terms in ()"ation E+.2F
are consistent.
E>ample /'5( 0ecomposition of a 6uilding foundation into
design and construction elements.
The concept o- ecomposition is i''"strate %. the
eCamp'e o- estimating the costs o- a %"i'ing -o"nation
eCc'"ing eCcavation as shown in Ta%'e +;+ in which the
ecompose esign e'ements are shown on horizonta'
'ines an the ecompose contract e'ements are shown
in vertica' co'"mns. For a esign estimate& the
ecomposition o- the project into -ootings& -o"nation
wa''s an e'evator pit is pre-erre since the esigner can
easi'. 7eep trac7 o- these esign e'ementsO however& -or
a %i estimate& the ecomposition o- the project into
-ormwor7& rein-orcing %ars an concrete ma. %e
pre-erre since the contractor can get )"otations o-
s"ch contract items more convenient'. -rom specia't.
s"%contractors.
AB%E /'/ /''"strative Decomposition o-
9"i'ing Fo"nation !osts
Design
e'ements
!ontract e'ements
Formwor7 <e%ars !oncrete Tota' cost
Footings @+&333 @13&333@13&333 @21&333
Footings 1+&333 11&333 21&333 ,1&333
Footings 2&333 1+&333 1,&333 #3&333
Tota' cost @22&333 @#3&333@+0&333 @122&333
E>ample /'8( Cost estimate using la6or, material and
e3uipment rates.
For the given )"antities o- wor7 5
i
-or the concrete
-o"nation o- a %"i'ing an the 'a%or& materia' an
e)"ipment rates in Ta%'e +;,& the cost estimate is
comp"te on the %asis o- ()"ation E+.2F. The res"'t is
ta%"'ate in the 'ast co'"mn o- the same ta%'e.
AB%E /'4 /''"strative !ost (stimate *sing $a%or& Materia' an
()"ipment <ates
Descripti
on
5"antit
.
5
i
Materi
a'
"nit
cost
M
i
()"ipme
nt
"nit cost
(
i
Dage
rate
D
i
$a%or
inp"t
$
i
$a%or
"nit
cost
D
i
$
i
Direct
cost
I
i
Formwor7
12&333
-t
2
@3.#P-t
2
@3.1P-t
2
@1+Ph
r
3.2
hrP-t
2
@3.3P-t
2
@+3&#3
3
<e%ars #&333 '% 3.2P'% 3.3P'% 1+Phr
3.3#
hrP'%
3.,P'% #&##3
!oncrete +33 .
3
+.3P.
3
+3P.
3
1+Phr
3.1
hrP.
3
12.3P.

3
33&+3
3
Tota'
@11&33
3
9ac7 to top
/.4 Methods for Allocation of Foint Costs
The princip'e o- a''ocating joint costs to vario"s e'ements in a
project is o-ten "se in cost estimating. 9eca"se o- the iKc"'t. in
esta%'ishing cas"a' re'ationship %etween each e'ement an its
associate cost& the joint costs are o-ten prorate in proportion to
the %asic costs -or vario"s e'ements.
One common app'ication is -o"n in the a''ocation o- =e'
s"pervision cost among the %asic costs o- vario"s e'ements %ase
on 'a%or& materia' an e)"ipment costs& an the a''ocation o- the
genera' overhea cost to vario"s e'ements accoring to the %asic
an =e' s"pervision cost. 4"ppose that a project is ecompose
into n tas7s. $et . %e the tota' %asic cost -or the project an .
i
%e the
tota' %asic cost -or tas7 i. /- F is the tota' =e' s"pervision cost an F
i
is the proration o- that cost to tas7 i& then a t.pica' proportiona'
a''ocation is>
E+.13F
4imi'ar'.& 'et z %e the tota' irect =e' cost which inc'"es the tota'
%asic cost an the =e' s"pervision cost o- the project& an z
i
%e the
irect =e' cost -or tas7 i. /- J is the genera' oKce overhea -or
proration to a'' tas7s& an J
i
is the share -or tas7 i& then
E+.11F
Fina''.& 'et w %e the gran tota' cost o- the project which inc'"es
the irect =e' cost an the genera' oKce overhea cost charge to
the project an w
i
%e that attri%"ta%'e tas7 i. Then&
E+.12F
an
E+.13F
E>ample /':( Prorated costs for Geld super"ision and oMce
o"erhead
/- the =e' s"pervision cost is @13&2#+ -or the project in
Ta%'e +;, E(Camp'e +;1F with a tota' irect cost o-
@11&333& =n the prorate =e' s"pervision costs -or
vario"s e'ements o- the project. F"rthermore& i- the
genera' oKce overhea charge to the project is #Q o-
the irect =e' cost which is the s"m o- %asic costs an
=e' s"pervision cost& =n the prorate genera' oKce
overhea costs -or vario"s e'ements o- the project.
For the project& . X @11&333 an F X @13&2#+. 6ence>
z X 13&2#+ Z 11&333 X @131&+#+
J X E3.3#FE131&+#+F X @#&3,2
w X 131&+#+ Z #&3,2 X @13+&,30
The res"'ts o- the proration o- costs to vario"s e'ements
are shown in Ta%'e +;0.
AB%E /'5 Proration o- Fie' 4"pervision an OKce
Overhea !osts
Descripti
on
9asic
cost
.
i
A''ocate
=e'
s"pervision
cost
F
i
Tota'
=e'
cost
z
i
A''ocate
overhea
cost
J
i
Tota'
cost
$
i
Formwor
7
@+3&#3
3
@0&+,3
@+0&2,
3
@2&312
@,3&20
2
<e%ars #&#33 ,,3 +&3,3 232 +&2,2
!oncrete 33&+33 +&32+ 31&+2+ 1&+#1 #3&3,,
Tota'
@11&33
3
@13&2#+
@131&+
#+
@#&3,2
@13+&,
30
E>ample /'1;( A standard cost report for allocating
o"erhead
The re'iance on 'a%or eCpenses as a means o- a''ocating
overhea %"rens in t.pica' management acco"nting
s.stems can %e i''"strate %. the eCamp'e o- a
partic"'ar pro"ct's stanar cost sheet. L+M Ta%'e +;1 is
an act"a' pro"ct's stanar cost sheet o- a compan.
-o''owing the proce"re o- "sing overhea %"ren rates
assesse per irect 'a%or ho"r. The materia' an 'a%or
costs -or man"-act"ring a t.pe o- va've were estimate
-rom engineering st"ies an -rom c"rrent materia' an
'a%or prices. These amo"nts are s"mmarize in !o'"mns
2 an 3 o- Ta%'e +;1. The overhea costs shown in
!o'"mn # o- Ta%'e +;1 were o%taine %. a''ocating the
eCpenses o- severa' epartments to the vario"s
pro"cts man"-act"re in these epartments in
proportion to the 'a%or cost. As shown in the 'ast 'ine o-
the ta%'e& the materia' cost represents 22Q o- the tota'
cost& whi'e 'a%or costs are 11Q o- the tota' cost. The
a''ocate overhea cost constit"tes ,3Q o- the tota'
cost. (ven tho"gh materia' costs eCcee 'a%or costs&
on'. the 'a%or costs are "se in a''ocating overhea.
A'tho"gh this t.pe o- a''ocation metho is common in
in"str.& the ar%itrar. a''ocation o- joint costs intro"ces
"nintene cross s"%siies among pro"cts an ma.
pro"ce averse conse)"ences on sa'es an pro=ts. For
eCamp'e& a partic"'ar t.pe o- part ma. inc"r -ew
overhea eCpenses in practice& %"t this phenomenon
wo"' not %e reGecte in the stanar cost report.
AB%E /'8 4tanar !ost <eport -or a T.pe o- Na've
E1F
Materia'
cost
E2F $a%or
cost
E3F
Overhea
cost
E#F Tota'
cost
P"rchase part @1.1213 @1.1213
Operation
Dri''& -ace& tap
E2F
@3.3#31 @3.2#3# @3.21#2
Degrease 3.3331 3.3330 3.33,1
<emove %"rs 3.3+00 3.32#1 3.3111
Tota' cost& this
item
1.1213 3.13#, 3.+212 1.2331
Other
s"%assem%'ies
3.3+23 3.222# 1.1+12 2.#0,,
Tota' cost&
s"%assem%'ies
1.+233 3.#3#3 2.#+31 #.3003
Assem%'e an
test
3.1#,2 3.#210 3.,#+,
Pac7 witho"t
paper
3.323# 3.13#2 3.1+13
Tota' cost& this
item
@1.+233 @3.+0#3 @3.3130 @+.1113
!ost component&
Q
22Q 11Q ,3Q 133Q
4o"rce> 6. T. 8ohnson an <. 4. Hap'an& Relevance lost4 -he
Rise and 6all of (anagement #ccounting& 6arvar 9"siness
4choo' Press& 9oston. <eprinte with permission.
9ac7 to top
/.5 +istorical Cost 0ata
Preparing cost estimates norma''. re)"ires the "se o- historica' ata
on constr"ction costs. 6istorica' cost ata wi'' %e "se-"' -or cost
estimation on'. i- the. are co''ecte an organize in a wa. that is
compati%'e with -"t"re app'ications. Organizations which are
engage in cost estimation contin"a''. sho"' 7eep a ='e -or their
own "se. The in-ormation m"st %e "pate with respect to changes
that wi'' inevita%'. occ"r. The -ormat o- cost ata& s"ch as "nit costs
-or vario"s items& sho"' %e organize accoring to the c"rrent
stanar o- "sage in the organization.
!onstr"ction cost ata are p"%'ishe in vario"s -orms %. a n"m%er
o- organizations. These p"%'ications are "se-"' as re-erences -or
comparison. 9asica''.& the -o''owing t.pes o- in-ormation are
avai'a%'e>
!ata'ogs o- venors' ata on important -eat"res an
speci=cations re'ating to their pro"cts -or which cost
)"otations are either p"%'ishe or can %e o%taine. A major
so"rce o- venors' in-ormation -or %"i'ing pro"cts is $weets@
%atalog p"%'ishe %. McJraw;6i'' /n-ormation 4.stems
!ompan..
Perioica's containing constr"ction cost ata an inices. One
so"rce o- s"ch in-ormation is ENR& the McJraw;6i''
!onstr"ction Dee7'.& which contains eCtensive cost ata
inc'"ing )"arter'. cost reports. %ost Engineering& a jo"rna' o-
the American 4ociet. o- !ost (ngineers& a'so p"%'ishes "se-"'
cost ata perioica''..
!ommercia' cost re-erence man"a's -or estimating g"ies. An
eCamp'e is the 0uilding %onstruction %ost 'ata p"%'ishe
ann"a''. %. <.4. Means !ompan.& /nc.& which contains "nit
prices on %"i'ing constr"ction items. 'odge (anual for
0uilding %onstruction& p"%'ishe %. McJraw;6i''& provies
simi'ar in-ormation.
Digests o- act"a' project costs. The 'odge 'igest of 0uilding
%osts and $peci!cations provies escriptions o- esign
-eat"res an costs o- act"a' projects %. %"i'ing t.pe. Once a
wee7& ENR p"%'ishes the %i prices o- a project chosen -rom a''
t.pes o- constr"ction projects.
6istorica' cost ata m"st %e "se ca"tio"s'.. !hanges in re'ative
prices ma. have s"%stantia' impacts on constr"ction costs which
have increase in re'ative price. *n-ort"nate'.& s.stematic changes
over a 'ong perio o- time -or s"ch -actors are iKc"'t to preict.
(rrors in ana'.sis a'so serve to intro"ce "ncertaint. into cost
estimates. /t is iKc"'t& o- co"rse& to -oresee a'' the pro%'ems which
ma. occ"r in constr"ction an operation o- -aci'ities. There is some
evience that estimates o- constr"ction an operating costs have
tene to persistent'. "nerstate the act"a' costs. This is "e to the
eAects o- greater than anticipate increases in costs& changes in
esign "ring the constr"ction process& or overoptimism.
4ince the -"t"re prices o- constr"cte -aci'ities are inG"ence %.
man. "ncertain -actors& it is important to recognize that this ris7
m"st %e %orne to some egree %. a'' parties invo've& i.e.& the
owner& the esign pro-essiona's& the constr"ction contractors& an
the =nancing instit"tion. /t is to the %est interest o- a'' parties that
the ris7 sharing scheme imp'icit in the esignPconstr"ct process
aopte %. the owner is -"''. "nerstoo %. a''. Dhen inGation
aj"stment provisions have ver. iAerent ris7 imp'ications to
vario"s parties& the price 'eve' changes wi'' a'so %e treate
iAerent'. -or vario"s sit"ations. 9ac7 to top
/.8 Cost #ndices
4ince historica' cost ata are o-ten "se in ma7ing cost estimates& it
is important to note the price 'eve' changes over time. Trens in
price changes can a'so serve as a %asis -or -orecasting -"t"re costs.
The inp"t price inices o- 'a%or anPor materia' reGect the price 'eve'
changes o- s"ch inp"t components o- constr"ctionO the o"tp"t price
inices& where avai'a%'e& reGect the price 'eve' changes o- the
comp'ete -aci'ities& th"s to some egree a'so meas"ring the
pro"ctivit. o- constr"ction.
A price ineC is a weighte aggregate meas"re o- constant
)"antities o- goos an services se'ecte -or the pac7age. The price
ineC at a s"%se)"ent .ear represents a proportionate change in the
same weighte aggregate meas"re %eca"se o- changes in prices.
$et '
t
%e the price ineC in .ear t& an '
tZ1
%e the price ineC in the
-o''owing .ear tZ1. Then& the percent change in price ineC -or .ear
tZ1 is>
E+.1#F
or
E+.1+F
/- the price ineC at the %ase .ear tX3 is set at a va'"e o- 133& then
the price inices '
1
& '
2
...'
n
-or the s"%se)"ent .ears tX1&2...n can %e
comp"te s"ccessive'. -rom changes in the tota' price charge -or
the pac7age o- goos meas"re in the ineC.
The %est;7nown inicators o- genera' price changes are the Jross
Domestic Pro"ct EJDPF eGators compi'e perioica''. %. the *.4.
Department o- !ommerce& an the cons"mer price ineC E!P/F
compi'e perioica''. %. the *.4. Department o- $a%or. The. are
wie'. "se as %roa ga"ges o- the changes in pro"ction costs an
in cons"mer prices -or essentia' goos an services. 4pecia' price
inices re'ate to constr"ction are a'so co''ecte %. in"str. so"rces
since some inp"t -actors -or constr"ction an the o"tp"ts -rom
constr"ction ma. isproportionate'. o"tpace or -a'' %ehin the
genera' price inices. (Camp'es o- specia' price inices -or
constr"ction inp"t -actors are the who'esa'e 9"i'ing Materia' Price
an 9"i'ing Traes *nion Dages& %oth compi'e %. the *.4.
Department o- $a%or. /n aition& the constr"ction cost ineC an
the %"i'ing cost ineC are reporte perioica''. in the Engineering
News-Record >ENR?. 9oth (:< cost inices meas"re the eAects o-
wage rate an materia' price trens& %"t the. are not aj"ste -or
pro"ctivit.& eKcienc.& competitive conitions& or techno'og.
changes. !onse)"ent'.& a'' these inices meas"re on'. the price
changes o- respective constr"ction input factors as represente %.
constant )"antities o- materia' anPor 'a%or. On the other han& the
price inices o- vario"s t.pes o- comp'ete -aci'ities reGect the price
changes o- constr"ction o"tp"t inc'"ing a'' pertinent -actors in the
constr"ction process. The %"i'ing constr"ction o"tp"t inices
compi'e %. T"rner !onstr"ction !ompan. an 6an.;Dhitman
*ti'ities are compi'e in the *.4. $tatistical #*stracts p"%'ishe each
.ear.
Fig"re +;0 an Ta%'e +;2 show a variet. o- *nite 4tates inices&
inc'"ing the Jross :ationa' Pro"ct EJ:PF price eGator& the (:<
%"i'ing ineC& the 6an. Dhitman *ti'ities 9"i'ings& an the
T"rner !onstr"ction !ompan. 9"i'ing !ost /neC -rom 1203 to
1221& "sing 1222 as the %ase .ear with an ineC o- 133.
AB%E /': 4"mmar. o- /np"t an O"tp"t Price /nices& 1203;1221
Iear
120
3
120
+
121
3
121
+
122
3
122
3
122
#
122
+
122
,
122
0 1221
T"rner
!onstr"ction ;
9"i'ings 21 ## ,1 13 21 132 13+ 132 112 110 122
(:< ;
9"i'ings 21 ## ,1.+1+.02+.#
13+.
0
132.
1
132.
1 113
111.
0
112.
0
*4 !ens"s ;
!omposite 21 ## ,1.,12.221.+
133.
0 131
112.
+ 11+
111.
0 122
6an.;
Dhitman
P"%'ic *ti'it. 31 +# 01 23 131 13+ 112 11+ 111 122 123
J:P DeGator 3+ #2 03 22 2# 133 13+ 131 113 113 11#
:ote> /neC X 133 in %ase .ear o- 1222.


Figure /'5 Trens -or *4 price inices.
Figure /'8 Price an cost inices -or constr"ction.
4ince constr"ction costs var. in iAerent regions o- the *nite
4tates an in a'' parts o- the wor'& locational indices showing the
constr"ction cost at a speci=c 'ocation re'ative to the nationa' tren
are "se-"' -or cost estimation. (:< p"%'ishes perioica''. the inices
o- 'oca' constr"ction costs at the major cities in iAerent regions o-
the *nite 4tates as percentages o- 'oca' to nationa' costs.
Dhen the inGation rate is re'ative'. sma''& i.e.& 'ess than 13Q& it is
convenient to se'ect a sing'e price ineC to meas"re the inGationar.
conitions in constr"ction an th"s to ea' on'. with a sing'e set o-
price change rates in -orecasting. $et j
t
%e the price change rate in
.ear tZ1 over the price in .ear t. /- the %ase .ear is enote as .ear
3 EtX3F& then the price change rates at .ears 1&2&...t are j
1
&j
2
&...j
t
&
respective'.. $et A
t
%e the cost in .ear t eCpresse in %ase;.ear
o''ars an A
t
' %e the cost in .ear t eCpresse in then;c"rrent
o''ars. Then>
E+.1,F
!onverse'.
E+.10F
/- the prices o- certain 7e. items aAecting the estimates o- -"t"re
%ene=ts an costs are eCpecte to esca'ate -aster than the genera'
price 'eve's& it ma. %ecome necessar. to consier the iAerentia'
price changes over an a%ove the genera' inGation rate. For
eCamp'e& "ring the perio %etween 1203 thro"gh 1202& it was
c"stomar. to ass"me that -"e' costs wo"' esca'ate -aster than the
genera' price 'eve's. Dith hinsight in 1213& the ass"mption -or
estimating costs over man. .ears wo"' have %een iAerent.
9eca"se o- the "ncertaint. in the -"t"re& the "se o- iAerentia'
inGation rates -or specia' items sho"' %e j"icio"s.
F"t"re -orecasts o- costs wi'' %e "ncertain> the act"a' eCpenses ma.
%e m"ch 'ower or m"ch higher than those -orecaste. This
"ncertaint. arises -rom techno'ogica' changes& changes in re'ative
prices& inacc"rate -orecasts o- "ner'.ing socioeconomic conitions&
ana'.tica' errors& an other -actors. For the p"rpose o- -orecasting& it
is o-ten s"Kcient to project the tren o- -"t"re prices %. "sing a
constant rate j -or price changes in each .ear over a perio o- t
.ears& then
E+.11F
an
E+.12F
(stimation o- the -"t"re rate increase j is not at a'' straight-orwar.
A simp'e eCpeient is to ass"me that -"t"re inGation wi'' contin"e at
the rate o- the previo"s perio>
E+.23F
A 'onger term perspective might "se the average increase over a
horizon o- n past perios>
E+.21F
More sophisticate -orecasting moe's to preict -"t"re cost
increases inc'"e corrections -or items s"ch as economic c.c'es an
techno'og. changes.
E>ample /'1$( Changes in highwa& and 6uilding costs
Ta%'e +;13 shows the change o- stanar highwa. costs
-rom 12#3 to 1213& an Ta%'e +;11 shows the change o-
resientia' %"i'ing costs -rom 1203 to 1213. For these
series& the )"a'it. o- the =nishe pro"ct was he'
ro"gh'. e)"iva'ent. /n each case& the rate o- cost
increase was s"%stantia''. a%ove the rate o- inGation
a-ter 1203. /nee& the rea' cost increase %etween 1203
an 1213 was in eCcess o- three percent per .ear in
%oth cases. 6owever& these ata a'so show some ca"se
-or optimism. For the case o- the stanar highwa.& rea'
cost decreases too7 p'ace in the perio -rom '2#3 to
'213. *n-ort"nate'.& compara%'e inices o- o"tp"ts are
not %eing compi'e on a nationwie %asis -or other t.pes
o- constr"ction.
AB%E /'1; !omparison o- 4tanar 6ighwa. !osts& 12#3;1213
Iear
4tanar
highwa. cost
E1202X133F
Price eGator
E1202X133F
4tanar highwa.
rea' cost
E1202X133F
Percentage
change
per .ear
12#3 2, 22 23
12+3 #1 +# 12 ;3.1Q
12,3 +1 ,2 1# ;3.,Q
1203 21 22 22 Z1.1Q
1213 2++ 102 1#3 Z#.#Q
4o"rce> $tatistical #*stract of the 1nited $tates5 J:P eGator is "se
-or the price eGator ineC.

AB%E /'11 !omparison o- <esientia' 9"i'ing !osts& 1203;1213
.ear
4tanar
resience cost
E1202X133F
Price eGator
E1202X133F
4tanar resience
rea' cost
E1202X133F
Percentage
change
per .ear
1203 00 22 0#
1213 233 102 22 Z3.#Q
4o"rce> $tatistical #*stract of the 1nited $tates5 J:P eGator is "se
-or the price eGator ineC.
9ac7 to top
/.: Applications of Cost #ndices to Estimating
/n the screening estimate o- a new -aci'it.& a sing'e parameter is
o-ten "se to escri%e a cost -"nction. For eCamp'e& the cost o- a
power p'ant is a -"nction o- e'ectricit. generating capacit.
eCpresse in megawatts& or the cost o- a sewage treatment p'ant as
a -"nction o- waste Gow eCpresse in mi''ion ga''ons per a..
The genera' conitions -or the app'ication o- the sing'e parameter
cost -"nction -or screening estimates are>
1. (Cc'"e specia' 'oca' conitions in historica' ata
2. Determine new -aci'it. cost on %asis o- speci=e size or
capacit. E"sing the methos escri%e in 4ections +.3 to +.,F
3. Aj"st -or inGation ineC
#. Aj"st -or 'oca' ineC o- constr"ction costs
+. Aj"st -or iAerent reg"'ator. constraints
,. Aj"st -or 'oca' -actors -or the new -aci'it.
4ome o- these aj"stments ma. %e one "sing compi'e inices&
whereas others ma. re)"ire =e' investigation an consiera%'e
pro-essiona' j"gment to reGect iAerences %etween a given project
an stanar projects per-orme in the past.
E>ample /'1)( ,creening estimate for a reGner&
The tota' constr"ction cost o- a re=ner. with a
pro"ction capacit. o- 233&333 %%'Pa. in Jar.& /niana&
comp'ete in 1211 was @133 mi''ion. /t is propose that
a simi'ar re=ner. with a pro"ction capacit. o- 333&333
%%'Pa. %e %"i't in $os Ange'es& !a'i-ornia& -or
comp'etion in 1213. For the aitiona' in-ormation given
%e'ow& ma7e an orer o- magnit"e estimate o- the cost
o- the propose p'ant.
1. /n the tota' constr"ction cost -or the Jar.& /niana&
p'ant& there was an item o- @+ mi''ion -or site
preparation which is not t.pica' -or other p'ants.
2. The variation o- sizes o- the re=neries can %e
approCimate %. the eCponentia' r"'e& ()"ation
E+.#F& with m X 3.,.
3. The inGation rate is eCpecte to %e 1Q per .ear
-rom 1202 to 1213.
#. The 'ocation ineC was 3.22 -or Jar.& /niana an
1.1# -or $os Ange'es in 1202. These inices are
eeme to %e appropriate -or aj"sting the costs
%etween these two cities.
+. :ew air po''"tion e)"ipment -or the $A p'ant costs
@0 mi''ion in 1213 o''ars Enot re)"ire in the Jar.
p'antF.
,. The contingenc. cost "e to inc'ement weather
e'a. wi'' %e re"ce %. the amo"nt o- 1Q o- tota'
constr"ction cost %eca"se o- the -avora%'e c'imate
in $A Ecompare to Jar.F.
On the %asis o- the a%ove conitions& the estimate -or
the new project ma. %e o%taine as -o''ows>
1. T.pica' cost eCc'"ing specia' item at Jar.& /: is
@133 mi''ion ; @+ mi''ion X @ 2+ mi''ion
2. Aj"stment -or capacit. %ase on the eCponentia'
'aw .ie's
E@2+FE333&333P233&333F
3.,
X E2+F
E1.+F
3.,
X @121.2 mi''ion
3. Aj"stment -or inGation 'eas to the cost in 1213
o''ars as
[email protected]
#
X @1,#., mi''ion
#. Aj"stment -or 'ocation ineC gives
E@1,#.,FE1.1#P3.22F X @23#., mi''ion
+. Aj"stment -or new po''"tion e)"ipment at the $A
p'ant gives
@23#., Z @0 X @211., mi''ion
,. <e"ction in contingenc. cost .ie's
E@211.,FE1;3.31F X @232.+ mi''ion
4ince there is no aj"stment -or the cost o- constr"ction
=nancing& the orer o- magnit"e estimate -or the new
project is @232.+ mi''ion.
E>ample /'1.( Conceptual estimate for a chemical
processing plant
/n ma7ing a pre'iminar. estimate o- a chemica'
processing p'ant& severa' major t.pes o- e)"ipment are
the most signi=cant parameters in aAecting the
insta''ation cost. The cost o- piping an other anci''ar.
items -or each t.pe o- e)"ipment can o-ten %e
eCpresse as a percentage o- that t.pe o- e)"ipment -or
a given capacit.. The stanar costs -or the major
e)"ipment t.pes -or two p'ants with iAerent ai'.
pro"ction capacities in 1202 are as shown in Ta%'e +;
12. /t has %een esta%'ishe that the insta''ation cost o-
a'' e)"ipment -or a p'ant with ai'. pro"ction capacit.
%etween 133&333 %%' an #33&333 %%' can %est %e
estimate %. "sing 'inear interpo'ation o- the stanar
ata.
AB%E /'1$ !ost Data -or ()"ipment an Anci''ar.
/tems
()"ipme
nt
t.pe
()"ipment !ost
E@1333F
!ost o- anci''ar. items
as Q o- e)"ipment cost
E@1333F
133&333
%%'
#33&333
%%' 133&333 %%' #33&333 %%'
F"rnace 3&333 13&333 #3Q 33Q
Tower 2&333 ,&333 #+Q 3+Q
Dr"m 1&+33 +&333 +3Q #3Q
P"mp&
etc. 1&333 #&333 ,3Q +3Q
A new chemica' processing p'ant with a ai'. pro"ction
capacit. o- 233&333 %%' was constr"cte in Memphis& T:
in 120,. Determine the tota' pre'iminar. cost estimate
o- the p'ant inc'"ing the %"i'ing an the e)"ipment on
the -o''owing %asis>
1. The insta''ation cost -or e)"ipment was %ase on
'inear interpo'ation -rom Ta%'e +;12& an aj"ste
-or inGation -or the intervening -o"r .ears "sing
the (:< %"i'ing cost ineC.
2. The 'ocation ineC -or e)"ipment insta''ation is
3.2+ -or Memphis& T:& in comparison with the
stanar cost.
3. An aitiona' cost o- @+33&333 was re)"ire -or
the 'oca' conitions in Memphis& T:.
The so'"tion o- this pro%'em can %e carrie o"t
accoring to the steps as o"t'ine in the pro%'em
statement>
1. The costs o- the e)"ipment an anci''ar. items -or
a p'ant with a capacit. o- 233&333 %%' can %e
estimate in 1202 o''ars %. 'inear interpo'ation o-
the ata in Ta%'e +;12& an the res"'ts are shown
in Ta%'e +;13.

AB%E /'1) <es"'ts o- $inear /nterpo'ation -or an
(stimation (Camp'e
()"ipme
nt
t.pe
()"ipment !ost
Ein @1&333F
Percentage -or
anci''ar. items
F"rnace
@3&333 Z E1P3FE@13&333;
@3&333F X @+&333
#3Q ; E1P3FE#3Q;
33QF X 30Q
Tower
@2&333 Z E1P3FE@,&333;
@2&333F X @3&333
#+Q ; E1P3FE#+Q;
3+QF X #2Q
Dr"m
@1&+33 Z E1P3FE@+&333;
@1&+33F X @2&,,0
+3Q ; E1P3FE+3Q;
#3QF X #0Q
P"mps&
etc.
@1&333 Z E1P3FE@#&333;
@1&333F X @2&333
,3Q ; E1P3FE,3Q;
+3QF X +0Q
2. 6ence& the tota' project cost in tho"sans o- 1202
o''ars is given %. ()"ation E+.1F as>
3. E@+&333FE1.30F Z E@3&333FE1.#2F Z
E@2&,,0FE1.#0F Z E@2&333FE1.+0F X
X @2&330 Z @#&033 Z @3&223 Z @3&1#3
X @ 12&333
#. The corresponing cost in tho"sans o- 120,
o''ars accoring to the (:< %"i'ing cost ineC in
Ta%'e +;2 an "sing ()"ation E+.1,F is>
E@12&133FE,3P#0F X @2+&,33
+. The tota' cost o- the project a-ter aj"stment -or
'ocation is
E3.2+FE@2+&,33&333F Z @+33&333
@2#&133&333
9ac7 to top
/.1; Estimate Based on Engineer!s %ist of Luantities
The engineer's estimate is %ase on a 'ist o- items an the
associate )"antities -rom which the tota' constr"ction cost is
erive. This same 'ist is a'so mae avai'a%'e to the %iers i- "nit
prices o- the items on the 'ist are a'so so'icite -rom the %iers.
Th"s& the itemize costs s"%mitte %. the winning contractor ma.
%e "se as the starting point -or %"get contro'.
/n genera'& the progress pa.ments to the contractor are %ase on
the "nits o- wor7 comp'ete an the corresponing "nit prices o- the
wor7 items on the 'ist. 6ence& the estimate %ase on the engineers'
'ist o- )"anitities -or vario"s wor7 items essentia''. e=nes the 'eve'
o- etai' to which s"%se)"ent meas"res o- progress -or the project
wi'' %e mae.
E>ample /'1/( Bid estimate 6ased on engineer!s list of
3uantities
*sing the "nit prices in the %i o- contractor 1 -or the
)"antitites speci=e %. the engineer in Ta%'e +;2
E(Camp'e +;3F& we can comp"te the tota' %i price o-
contractor 1 -or the roawa. project. The itemize costs
-or vario"s wor7 items as we'' as the tota' %i price are
shown in Ta%'e +;1#.
AB%E /'1.( 9i Price o- !ontractor 1 in a 6ighwa. Project
/tems *nit 5"antit.
*nit
price
/tem
cost
Mo%i'ization 's 1 11+&333 11+&333
<emova'& %erm '- 1&323 1.33 1.323
AB%E /'1.( 9i Price o- !ontractor 1 in a 6ighwa. Project
/tems *nit 5"antit.
*nit
price
/tem
cost
Finish s"%grae s.
1&230&+3
3
3.+3 ,33&0+3
4"r-ace itches '- +2+ 2.33 1&3+3
(Ccavation str"ct"res c. 0&333 3.33 21&333
9ase co"rse& "ntreate& 3P#'' ton 3,2&233 #.+3
1&,22&23
3
$ean concrete& #'' thic7 s. 123&313 3.13
2&+#2&2,
1
P!!& pavement& 13'' thic7 s. 0,&313 13.23
0&,2+&+3
2
!oncrete& ci AA EA(F 's 1 233&333 233&333
4ma'' str"ct"re c. +3 +33 2+&333
9arrier& precast '- 0&223 1+.33 111&133
F'atwor7& #'' thic7 s. 0&#13 13.33 0#&133
13'' thic7 s. #&2#1 23.33 1#&123
4'ope protection s. 2&13# 2+.33 +2&,33
Meta'& en section& 1+'' ea 32 133 3&233
11'' ea 3 1+3 #+3
Post& right;o-;wa.&
moi=cation
'- #&033 3.33 1#&133
4a'vage an re'a. pipe '- 1&,13 +.33 1&#33
$oose riprap c. 32 #3.33 1&213
9race posts ea +# 133 +&#33
De'ineators& t.pe / '% 1&333 12.33 1+&2,3
t.pe // ea 1#3 1+.33 2&133
!onstr"ctive signs =Ce s- +2&,33 3.13 +&2,3
9arricaes& t.pe /// '- 22&+33 3.23 +&233
Darning 'ights a. ,&333 3.13 ,33
Pavement mar7ing& epoC.
materia'

9'ac7 ga' #0+ 23.33 #2&0+3
Ie''ow ga' 0#3 23.33 ,,&,33
Dhite ga' 21+ 23.33 11&,+3
P'owa%'e& one;wa. white ea 3#2 +3.33 10&133
Topsoi'& contractor -"rnishe c. 2,3 13.33 2&,33
AB%E /'1.( 9i Price o- !ontractor 1 in a 6ighwa. Project
/tems *nit 5"antit.
*nit
price
/tem
cost
4ee'ing& metho A acr 133 1+3 1+&#+3
(Cce'sior %'an7et s. +33 2.33 1&333
!orr"gate& meta' pipe& 11'' '- +13 23.33 11&,33
Po'.eth.'ene pipe& 12'' '- 2&2+3 1+.33 33&0+3
!atch %asin grate an -rame ea 3+ 3+3 12&2+3
()"a' opport"nit. training hr 11&333 3.13 1#&#33
Jran"'ar %ac7='' %orrow c. 20# 13.33 2&0#3
Dri'' caisson& 2'C,'' '- 022 133 02&233
F'agging hr 23&333 1.2+ 1,+&333
Prestresse concrete mem%er
t.pe /N& 1#1'C#'' ea 0 12&333 1#&333
132'C#'' ea , 11&333 ,,&333
<ein-orce stee' '% ,&333 3.,3 3&013
(poC. coate '% 122&2#1 3.++
,0&232.+
+
4tr"ct"ra' stee' 's 1 +&333 +&333
4ign& covering s- 1, 13.33 1,3
t.pe !;2 woo post s- 21 1+.33 1&#03
2#'' ea 3 133 333
33'' ea 2 133 233
#1'' ea 11 233 2&233
A"Ci'iar. s- ,1 1+.33 21+
4tee' post& #1''C,3'' ea 11 +33 +&+33
t.pe 3& woo post s- ,,2 1+.33 13&33+
2#'' ea 23 133 2&333
33'' ea 1 133 133
3,'' ea 12 1+3 1&133
#2''C,3'' ea 1 1+3 1&233
#1'' ea 0 233 1&#33
A"Ci'iar. s- 13+ 1+.33 2&32+
4tee' post s- 1&,13 #3.33 ,#&#33
12''C3,'' ea 21 133 2&133
Fo"nation& concrete ea ,3 333 11&333
AB%E /'1.( 9i Price o- !ontractor 1 in a 6ighwa. Project
/tems *nit 5"antit.
*nit
price
/tem
cost
9arricae& #1''C#2'' ea #3 133 #&333
Doo post& roa c'ose '- 133 33.33 3&333
otal N1.,1$:,5:5.//
9ac7 to top
/.11 Allocation of Construction Costs O"er ime
4ince constr"ction costs are inc"rre over the entire constr"ction
phase o- a project& it is o-ten necessar. to etermine the amo"nts to
%e spent in vario"s perios to erive the cash Gow pro='e& especia''.
-or 'arge projects with 'ong "rations. !onse)"ent'.& it is important
to eCamine the percentage o- wor7 eCpecte to %e comp'ete at
vario"s time perios to which the costs wo"' %e charge. More
acc"rate estimates ma. %e accomp'ishe once the project is
sche"'e as escri%e in !hapter 13& %"t some ro"gh estimate o-
the cash Gow ma. %e re)"ire prior to this time.
!onsier the %asic pro%'em in etermining the percentage o- wor7
comp'ete "ring constr"ction. One common metho o- estimating
percentage o- comp'etion is %ase on the amo"nt o- mone. spent
re'ative to the tota' amo"nt %"gete -or the entire project. This
metho has the o%vio"s raw%ac7 in ass"ming that the amo"nt o-
mone. spent has %een "se eKcient'. -or pro"ction. A more
re'ia%'e metho is %ase on the concept o- value of work completed
which is e=ne as the pro"ct o- the %"gete 'a%or ho"rs per "nit
o- pro"ction an the act"a' n"m%er o- pro"ction "nits comp'ete&
an is eCpresse in %"gete 'a%or ho"rs -or the wor7 comp'ete.
Then& the percentage o- comp'etion at an. stage is the ratio o- the
va'"e o- wor7 comp'ete to ate an the va'"e o- wor7 to %e
comp'ete -or the entire project. <egar'ess o- the metho o-
meas"rement& it is in-ormative to "nerstan the tren o- wor7
progress "ring constr"ction -or eva'"ation an contro'.
/n genera'& the wor7 on a constr"ction project progresses gra"a''.
-rom the time o- mo%i'ization "nti' it reaches a p'atea"O then the
wor7 s'ows own gra"a''. an =na''. stops at the time o-
comp'etion. The rate o- wor7 one "ring vario"s time perios
EeCpresse in the percentage o- project cost per "nit timeF is shown
schematica''. in Fig"re +;2 in which ten time perios have %een
ass"me. The so'i 'ine A represents the case in which the rate o-
wor7 is zero at time t X 3 an increases 'inear'. to 12.+Q o- project
cost at t X 2& whi'e the rate %egins to ecrease -rom 12.+Q at t X 1
to 3Q at t X 13. The otte 'ine 9 represents the case o- rapi
mo%i'ization %. reaching 12.+Q o- project cost at t X 1 whi'e
%eginning to ecrease -rom 12.+Q at t X 0 to 3Q at t X 13. The
ash 'ine ! represents the case o- s'ow mo%i'ization %. reaching
12.+Q o- project cost at t X 3 whi'e %eginning to ecrease -rom
12.+Q at t X 2 to 3Q at t X 13.
Figure /':( <ate o- Dor7 Progress over Project Time
The va'"e o- wor7 comp'ete at a given time EeCpresse as a
c"m"'ative percentage o- project costF is shown schematica''. in
Fig"re +;13. /n each case EA& 9 or !F& the va'"e o- wor7 comp'ete
can %e represente %. an B4;shapeB c"rve. The eAects o- rapi
mo%i'ization an s'ow mo%i'ization are inicate %. the positions o-
c"rves 9 an ! re'ative to c"rve A& respective'..
Figure /'1;( Na'"e o- Dor7 !omp'ete over Project Time
Dhi'e the c"rves shown in Fig"res +;2 an +;13 represent high'.
iea'ize cases& the. o s"ggest the 'atit"e -or aj"sting the
sche"'es -or vario"s activities in a project. Dhi'e the rate o- wor7
progress ma. %e change )"ite rastica''. within a sing'e perio&
s"ch as the change -rom rapi mo%i'ization to a s'ow mo%i'ization in
perios 1& 2 an 3 in Fig"re +;2& the eAect on the va'"e o- wor7
comp'ete over time wi'' iminish in signi=cance as inicate %. the
c"m"'ative percentages -or 'ater perios in Fig"re +;13. Th"s&
aj"stment o- the sche"'ing o- some activities ma. improve the
"ti'ization o- 'a%or& materia' an e)"ipment& an an. e'a. ca"se
%. s"ch aj"stments -or inivi"a' activities is not 'i7e'. to ca"se
pro%'ems -or the event"a' progress towar the comp'etion o- a
project.
/n aition to the spee o- reso"rce mo%i'ization& another important
consieration is the overa'' "ration o- a project an the amo"nt o-
reso"rces app'ie. Nario"s strategies ma. %e app'ie to shorten the
overa'' "ration o- a project s"ch as over'apping esign an
constr"ction activities Eas escri%e in !hapter 2F or increasing the
pea7 amo"nts o- 'a%or an e)"ipment wor7ing on a site. 6owever&
spatia'& manageria' an technica' -actors wi'' t.pica''. p'ace a
minim"m 'imit on the project "ration or ca"se costs to esca'ate
with shorter "rations.
E>ample /'14( Calculation of Ealue of <or@ Completed
From the area o- wor7 progress in Fig"re +;2& the va'"e
o- wor7 comp'ete at an. point in Fig"re +;13 can %e
erive %. noting the area "ner the c"rve "p to that
point in Fig"re +;2. The res"'t -or t X 3 thro"gh t X 13 is
shown in Ta%'e +;1+ an p'otte in Fig"re +;13.
AB%E /'1/ !a'c"'ation o- Na'"e o- Dor7
!omp'ete
Time !ase A !ase 9 !ase !
3 3 3 3
1 3.1Q ,.2Q 2.1Q
2 12.+ 11.0 1.3
3 2+.3 31.2 11.1
# 30.+ #3.0 31.3
+ +3.3 +,.2 #3.1
, ,2.+ ,1.0 +,.3
0 0+.3 11.2 ,1.1
1 10.+ 21.0 11.2
2 2,.2 20.2 23.1
13 133.3 133.3 133.3
9ac7 to top
/.1$ Computer Aided Cost Estimation
:"mero"s comp"ter aie cost estimation so-tware s.stems are
now avai'a%'e. These range in sophistication -rom simp'e
spreasheet ca'c"'ation so-tware to integrate s.stems invo'ving
esign an price negotiation over the /nternet. Dhi'e this so-tware
invo'ves costs -or p"rchase& maintenance& training an comp"ter
harware& some signi=cant eKciencies o-ten res"'t. /n partic"'ar&
cost estimates ma. %e prepare more rapi'. an with 'ess eAort.
4ome o- the common -eat"res o- comp"ter aie cost estimation
so-tware inc'"e>
Data%ases -or "nit cost items s"ch as wor7er wage rates&
e)"ipment renta' or materia' prices. These ata%ases can %e
"se -or an. cost estimate re)"ire. /- these rates change&
cost estimates can %e rapi'. re;comp"te a-ter the ata%ases
are "pate.
Data%ases o- eCpecte pro"ctivit. -or iAerent components
t.pes& e)"iptment an constr"ction processes.
/mport "ti'ities -rom comp"ter aie esign so-tware -or
a"tomatic )"antit.;ta7e;oA o- components. A'ternative'.&
specia' "ser inter-aces ma. eCist to enter geometric
escriptions o- components to a''ow a"tomatic )"antit.;ta7e;
oA.
(Cport "ti'ities to sen estimates to cost contro' an
sche"'ing so-tware. This is ver. he'p-"' to %egin the
management o- costs "ring constr"ction.
Nersion contro' to a''ow sim"'ation o- iAerent constr"ction
processes or esign changes -or the p"rpose o- trac7ing
changes in eCpecte costs.
Provisions -or man"a' review& over;rie an eiting o- an. cost
e'ement res"'ting -rom the cost estimation s.stem
F'eCi%'e reporting -ormats& inc'"ing provisions -or e'ectronic
reporting rather than simp'. printing cost estimates on paper.
Archives o- past projects to a''ow rapi cost;estimate "pating
or moi=cation -or simi'ar esigns.
A t.pica' process -or eve'oping a cost estimate "sing one o- these
s.stems wo"' inc'"e>
1. /- a simi'ar esign has a'rea. %een estimate or eCists in the
compan. archive& the o' project in-ormation is retreive.
2. A cost engineer moi=es& a or e'etes components in the
project in-ormation set. /- a simi'ar project eCists& man. o- the
components ma. have -ew or no "pates& there%. saving
time.
3. A cost estimate is ca'c"'ate "sing the "nit cost metho o-
estimation. Pro"ctivities an "nit prices are retrieve -rom
the s.stem ata%ases. Th"s& the 'atest price in-ormation is
"se -or the cost estimate.
#. The cost estimation is s"mmarize an reviewe -or an.
errors.
9ac7 to top
/.1) Estimation of Operating Costs
/n orer to ana'.ze the 'i-e c.c'e costs o- a propose -aci'it.& it is
necessar. to estimate the operation an maintenance costs over
time a-ter the start "p o- the -aci'it.. The stream o- operating costs
over the 'i-e o- the -aci'it. epens "pon s"%se)"ent maintenance
po'icies an -aci'it. "se. /n partic"'ar& the magnit"e o- ro"tine
maintenance costs wi'' %e re"ce i- the -aci'it. "nergoes perioic
repairs an reha%i'itation at perioic interva's.
4ince the traeoA %etween the capita' cost an the operating cost is
an essentia' part o- the economic eva'"ation o- a -aci'it.& the
operating cost is viewe not as a separate entit.& %"t as a part o-
the 'arger parce' o- 'i-e c.c'e cost at the p'anning an esign stage.
The techni)"es o- estimating 'i-e c.c'e costs are simi'ar to those
"se -or estimating capita' costs& inc'"ing empirica' cost -"nctions
an the "nit cost metho o- estimating the 'a%or& materia' an
e)"ipment costs. 6owever& it is the interaction o- the operating an
capita' costs which eserve specia' attention.
As s"ggeste ear'ier in the isc"ssion o- the eCponentia' r"'e -or
estimating& the va'"e o- the cost eCponent ma. inG"ence the
ecision whether eCtra capacit. sho"' %e %"i't to accommoate
-"t"re growth. 4imi'ar'.& the econom. o- sca'e ma. a'so inG"ence
the ecision on reha%i'itation at a given time. As the reha%i'itation
wor7 %ecomes eCtensive& it %ecomes a capita' project with a'' the
imp'ications o- its own 'i-e c.c'e. 6ence& the cost estimation o- a
reha%i'itation project ma. a'so invo've capita' an operating costs.
Dhi'e e-erring the isc"ssion o- the economic eva'"ation o-
constr"cte -aci'ities to !hapter ,& it is s"Kcient to point o"t that
the stream o- operating costs over time represents a series o- costs
at iAerent time perios which have iAerent va'"es with respect to
the present. !onse)"ent'.& the cost ata at iAerent time perios
m"st %e converte to a common %ase 'ine i- meaning-"' comparison
is esire.
E>ample /'15( Maintenance cost on a roadwa& L,M
Maintenance costs -or constr"cte roawa.s ten to increase with
%oth age an "se o- the -aci'it.. As an eCamp'e& the -o''owing
empirica' moe' was estimate -or maintenance eCpenit"res on
sections o- the Ohio T"rnpi7e>
! X +2, Z 3.3312 N Z 21.0 A
where ! is the ann"a' cost o- ro"tine maintenance per 'ane;mi'e Ein
12,0 o''arsF& N is the vo'"me o- traKc on the roawa. Emeas"re in
e)"iva'ent stanar aC'e 'oas& (4A$& so that a heav. tr"c7 is
represente as e)"iva'ent to man. a"tomo%i'esF& an A is the age o-
the pavement in .ears since the 'ast res"r-acing. Accoring to this
moe'& ro"tine maintenance costs wi'' increase each .ear as the
pavement service eteriorates. /n aition& maintenance costs
increase with aitiona' pavement stress "e to increase traKc or
to heavier aC'e 'oas& as reGecte in the varia%'e N.
For eCamp'e& -or N X +33&333 (4A$ an A X + .ears& the ann"a' cost
o- ro"tine maintenance per 'ane;mi'e is estimate to %e>
! X +2, Z E3.3312FE+33&333F Z E21.0FE+F
X +2, Z 2+3.+ Z 131.+ X 1&,++ Ein 12,0 o''arsF
E>ample /'18( ime stream of costs o"er the life of a
roadwa& L0M
The time stream o- costs over the 'i-e o- a roawa. epens "pon
the interva's at which reha%i'itation is carrie o"t. /- the
reha%i'itation strateg. an the traKc are 7nown& the time stream o-
costs can %e estimate.
*sing a 'i-e c.c'e moe' which preicts the economic 'i-e o- highwa.
pavement on the %asis o- the eAects o- traKc an other -actors& an
optima' sche"'e -or reha%i'itation can %e eve'ope. For eCamp'e& a
time stream o- costs an res"r-acing projects -or one pavement
section is shown in Fig"re +;11. As escri%e in the previo"s
eCamp'e& the ro"tine maintenance costs increase as the pavement
ages& %"t ec'ine a-ter each new res"r-acing. As the pavement
contin"es to age& res"r-acing %ecomes more -re)"ent "nti' the
roawa. is comp'ete'. reconstr"cte at the en o- 3+ .ears.
Figure /'11( Time 4tream o- !osts over the $i-e o- a 6ighwa.
Pavement
9ac7 to top
/.1. *eferences
1. Ah"ja& 6.:. an D.8. !amp%e''& Estimating4 6rom %oncept to
%ompletion& Prentice;6a''& /nc.& (ng'ewoo !'iAs& :8& 1210.
2. !'ar7& F.D.& an A.9. $orenzoni& #pplied %ost Engineering&
Marce' De77er& /nc.& :ew Ior7& 1201.
3. !'ar7& 8.(.& $tructural %oncrete %ost Estimating& McJraw;6i''&
/nc.& :ew Ior7& 1213.
#. Die7mann& 8.<.& BPro%a%i'istic (stimating> Mathematics an
App'ications&B #$%E 3ournal of %onstruction Engineering and
(anagement& No'. 132& 1213& pp. 220;331.
+. 6"mphre.s& H.H. Ee.F "roject and %ost Engineers@ )and*ook
Esponsore %. American Association o- !ost (ngineersF& 2n
(.& Marce' De77er& /nc.& :ew Ior7& 121#.
,. Maevis& A.!.& B!onstr"ction !ost !ontro' %. the Owners&B #$%E
3ournal of the %onstruction 'ivision& No'. 13,& 1213& pp. #3+;
##,.
0. Doh'& M. an !. 6enric7son& -ransportation .nvestment and
"ricing "rinciples& 8ohn Di'e. R 4ons& :ew Ior7& 121#.
9ac7 to top
/.1/ Pro6lems
1. 4"ppose that the gro"ting metho escri%e in (Camp'e +;2 is
"se to provie a gro"ting sea' %eneath another 'an='' o- 12
acres. The gro"t 'ine is eCpecte to %e %etween #.+ an +.+
-eet thic7ness. The vois in the soi' 'a.er are %etween 2+Q to
3+Q. *sing the same "nit cost ata Ein 1201 o''arsF& =n the
range o- costs in a screening estimate -or the gro"ting project.
2. To avoi s"%merging part o- *.4. <o"te #3 so"th an east o-
4a't $a7e !it. "e to the constr"ction o- the 8arina' Dam an
<eservoir& 22 mi'es o- highwa. were re'ocate to the west
aro"n the site o- the -"t"re reservoir. Three separate
contracts were 'et& inc'"ing one covering 13 mi'es o- the wor7
which ha an engineer's estimate o- @3#&32+&+#+. The %is
were s"%mitte on 8"'. 21& 1210 an the comp'etion ate o-
the project "ner the contract was A"g"st 1+& 1212. E4ee ENR&
Octo%er 1& 1210& p. 3#F. The three 'owest %is were>
1F D.D. !'.e R !o.&
4pringvi''e& *tah
2F 4'etten !onstr"ction
compan.& Jreat Fa''s&
Montana
3F Ji'%ert Destern
!orporation& 4a't $a7e cit.&
*tah
@21&31#&2
12
@2,&031&3
11
@33&12,&2
33
3. Fin the percentage o- each o- these %iers %e'ow the
engineer's cost estimate.
#. /n ma7ing a screening estimate o- an in"stria' p'ant -or the
pro"ction o- %atteries& an empirica' -orm"'a %ase on ata o-
a simi'ar %"i'ings comp'ete %e-ore 1210 was propose>
! X E1,&333FE5 Z +3&333F
1P2
where 5 is the ai'. pro"ction capacit. o- %atteries an ! is
the cost o- the %"i'ing in 1210 o''ars. /- a simi'ar p'ant is
p'anne -or a ai'. pro"ction capacit. o- 233&333 %atteries&
=n the screening estimate o- the %"i'ing in 1210 o''ars.
+. For the cost -actor H X @#,&333 Ein 12,1 o''arsF an m X 3.,0
-or an aerate 'agoon %asin o- a water treatment p'ant in Ta%'e
+;# E(Camp'e +;,F& =n the estimate cost o- a propose new
p'ant with a simi'ar treatment process having a capacit. o-
#13 mi''ion ga''ons Ein 12,1 o''arsF. /- another new p'ant was
estimate to cost @1,3&333 %. "sing the same eCponentia'
r"'e& what wo"' %e the propose capacit. o- that p'antT
,. *sing the cost ata in Fig"re +;+ E(Camp'e +;11F& =n the tota'
cost inc'"ing overhea an pro=t o- eCcavating 23&333 c"...
o- %"'7 materia' "sing a %ac7hoe o- 1.+ c"... capacit. -or a
etai'e estimate. Ass"me that the eCcavate materia' wi'' %e
'oae onto tr"c7s -or isposa'.
0. The %asic costs E'a%or& materia' an e)"ipmentF -or vario"s
e'ements o- a constr"ction project are given as -o''ows>
(Ccavation
4"%grae
9ase co"rse
!oncrete
pavement
Tota'
@2#3&33
3
@133&33
3
@#23&33
3
@,#3&33
3
@1&#33&3
33
1. Ass"ming that =e' s"pervision cost is 13Q o- the %asic cost&
an the genera' oKce overhea is +Q o- the irect costs Es"m
o- the %asic costs an =e' s"pervision costF& =n the prorate
=e' s"pervision costs& genera' oKce overhea costs an tota'
costs -or the vario"s e'ements o- the project.
2. /n ma7ing a pre'iminar. estimate o- a chemica' processing
p'ant& severa' major t.pes o- e)"ipment are the most
signi=cant components in aAecting the insta''ation cost. The
cost o- piping an other anci''ar. items -or each t.pe o-
e)"ipment can o-ten %e eCpresse as a percentage o- that
t.pe o- e)"ipment -or a given capacit.. The stanar costs -or
the major e)"ipment t.pes -or two p'ants with iAerent ai'.
pro"ction capacities are as shown in Ta%'e +;1,. /t has %een
esta%'ishe that the insta''ation cost o- a'' e)"ipment -or a
p'ant with ai'. pro"ction capacit. %etween 1+3&333 %%' an
,33&333 %%' can %est %e estimate %. "sing 'iner interpo'ation
o- the stanar ata. A new chemica' processing p'ant with a
ai'. pro"ction capacit. o- #33&333 %%' is %eing p'anne.
Ass"ming that a'' other -actors remain the same& estimate the
cost o- the new p'ant.
a6le /'14
()"ipment t.pe
()"ipment cost E@1&333F Factor -or anci''ar. items
1+3&333 %%' ,33&333 %%' 1+3&333 %%' ,33&333 %%'
F"rnac
e
@3&33
3
@13&33
3
3.3
2
3.2
#
Tower
Dr"m
P"mps
& etc.
2&333
1&+33
1&333
,&333
+&333
#&333
3.#
2
3.#
2
3.+
#
3.3
,
3.3
2
3.#
2
13. The tota' constr"ction cost o- a re=ner. with a
pro"ction capacit. o- 133&333 %%'Pa. in !aracas& Nenez"e'a&
comp'ete in 1200 was @#3 mi''ion. /t was propose that a
simi'ar re=ner. with a pro"ction capacit. o- @1,3&333 %%'Pa.
%e %"i't in :ew Or'eans& $A -or comp'etion in 1213. For the
aitiona' in-ormation given %e'ow& ma7e a screening
estimate o- the cost o- the propose p'ant.
1. /n the tota' constr"ction cost -or the !arac"s& Nenez"e'a
p'ant& there was an item o- @2 mi''ion -or site
preparation an trave' which is not t.pica' -or simi'ar
p'ants.
2. The variation o- sizes o- the re=neries can %e
approCimate %. the eCponentia' 'aw with m X 3.,.
3. The inGation rate in *.4. o''ars was approCimate'. 2Q
per .ear -rom 1200 to 1213.
#. An aj"stment -actor o- 1.#3 was s"ggeste -or the
project to acco"nt -or the increase o- 'a%or cost -rom
!aracas& Nenez"e'a to :ew Or'eans& $A.
+. :ew air po''"tion e)"ipment -or the :ew Or'eans& $A
p'ant cost @# mi''ion in 1213 o''ars Enot re)"ire -or the
!aracas p'antF.
,. The site conition at :ew Or'eans re)"ire specia' pi'ing
-o"nation which cost @2 mi''ion in 1213 o''ars.
11. The tota' cost o- a sewage treatment p'ant with a
capacit. o- +3 mi''ion ga''ons per a. comp'ete 1211 -or a
new town in !o'orao was @#.+ mi''ion. /t was propose that a
simi'ar treatment p'ant with a capacit. o- 13 mi''ion ga''ons
per a. %e %"i't in another town in :ew 8erse. -or comp'etion
in 121+. For aitiona' in-ormation given %e'ow& ma7e a
screening estimate o- the cost o- the propose p'ant.
1. /n the tota' constr"ction cost in !o'orao& an item o-
@333&333 -or site preparation is not t.pica' -or simi'ar
p'ants.
2. The variation o- sizes -or this t.pe o- treatment p'ants
can %e approCimate %. the eCponentia' 'aw with m X
3.+.
3. The inGation rate was approCimate'. +Q per .ear -rom
1211 to 121+.
#. The 'ocationa' inices o- !o'orao an :ew 8erse. areas
are 3.2+ an 1.13& respective'.& against the nationa'
average o- 1.33.
+. The insta''ation o- a specia' e)"ipment to satis-. the
new environmenta' stanar cost an eCtra @233&333 in
121+ o''ar -or the :ew 8erse. p'ant.
,. The site conition in :ew 8erse. re)"ire specia'
-o"nation which cost @+33&33 in 121+ o''ars.
12. *sing the ENR %"i'ing cost ineC& estimate the 121+
cost o- the gro"ting sea' on a 'an='' escri%e in (Camp'e +;
2& inc'"ing the most 'i7e'. estimate an the range o- possi%'e
cost.
13. *sing the "nit prices in the %i o- contractor 2 -or the
)"antitites speci=e %. the engineer in Ta%'e +;2 E(Camp'e +;
3F& comp"te the tota' %i price o- contractor 2 -or the roawa.
project inc'"ing the eCpenit"re on each item o- wor7.
1#. The rate o- wor7 progress in percent o- comp'etion per
perio o- a constr"ction project is shown in Fig"re +;12 in
which 13 time perios have %een ass"me. The cases A& 9
an ! represent the norma' mo%i'ization time& rapi
mo%i'ization an s'ow mo%i'ization -or the project& respective'..
!a'c"'ate the va'"e o- wor7 comp'ete in c"m"'ative
percentage -or perios 1 thro"gh 13 -or each o- the cases A& 9
an !. A'so p'ot the vo'"me o- wor7 comp'ete vers"s time -or
these cases.
Figure /'1$
1+. The rate o- wor7 progress in percent o- comp'etion per
perio o- a constr"ction project is shown in Fig"re +;13 in
which 13 time perios have %een ass"me. The cases A& 9
an ! represent the rapi mo%i'ization time& norma'
mo%i'ization an s'ow mo%i'ization -or the project& respective'..
!a'c"'ate the va'"e o- wor7 comp'ete in c"m"'ative
percentage -or perios 1 thro"gh 13 -or each o- the cases A& 9
an !. A'so p'ot the vo'"me o- wor7 comp'ete vers"s time -or
these cases.
Figure /'1)
1,. 4"ppose that the empirica' moe' -or estimating ann"a'
cost o- ro"tine maintenance in (Camp'e +;10 is app'ica%'e to
sections o- the Penns.'vania T"rnpi7e in 121+ i- the ENR
%"i'ing cost ineC is app'ie to inGate the 12,0 o''ars.
(stimate the ann"a' cost o- maintenance per 'ane;mi'e o- the
t"nrpi7e -or which the traKc vo'"me on the roawa. is
0+3&333 (4A$ an the age o- the pavement is # .ears in 121+.
10. The initia' constr"ction cost -or a e'ectric rower 'ine is
7nown to %e a -"nction o- the cross;sectiona' area A Ein cm
2
F
an the 'ength $ Ein 7i'ometersF. $et !
1
%e the "nit cost o-
constr"ction Ein o''ars per cm
3
F. Then& the initia' constr"ction
cost P Ein o''arsF is given %.
P X !
1
A$E13
+
F
The ann"a' operating cost o- the power 'ine is ass"me to %e
meas"re %. the power 'oss. The power 'oss 4 Ein 7whF is
7nown to %e
where 8 is the e'ectric c"rrent in amperes& < is the resistivit. in
ohm;centimeters. $et !
2
%e the "nit operating cost Ein o''ars
per 7whF. Then& the ann"a' operating cost * Ein o''arsF is
given %.
4"ppose that the power 'ine is eCpecte to 'ast n .ears an
the 'i-e c.c'e cost T o- the power 'ine is e)"a' to>
T X P Z *H
where H is a isco"nt -actor epening on the "se-"' 'i-e c.c'e
n an the isco"nt rate i Eto %e eCp'aine in !hapter ,F. /n
esigning the power 'ine& a'' )"antitites are ass"me to %e
7nown eCcept A which is to %e etermine. /- the owner wants
to minimize the 'i-e c.c'e cost& =n the %est cross;sectiona'
area A in terms o- the 7nown )"antities.
9ac7 to top
/.14 Footnotes
1. This eCamp'e was aapte with permission -rom a paper&
BForecasting /n"str. <eso"rces&B presente %. A.<. !ros%. at the
/nstit"tion o- !hemica' (ngineers in $onon& :ovem%er #& 1211.
E9ac7F
2. This eCamp'e is aapte -rom a cost estimate in A.$. To'man& A.P.
9a''estero& D.D. 9ec7 an J.6. (mrich& 9uidance (anual for
(inimi,ing "ollution from 2aste 'isposal $ites& M"nicipa'
(nvironmenta' <esearch $a%orator.& *.4. (nvironmenta' Protection
Agenc.& !incinatti& Ohio& 1201. E9ac7F
3. 4ee B*tah /nterstate Forges On&B ENR& 8"'. 2& 1210& p. 32.E9ac7F
#. This an the neCt eCamp'e have %een aapte -rom P.M.
9ertho"eC& B(va'"ating (conom. o- 4ca'e&B 3ournal of the 2ater
"ollution %ontrol 6ederation& No'. ##& :o. 11& :ovem%er 1202& pp.
2111;2111. E9ac7F
+. 4ee 6.T. 8ohnson an <.4. Hap'an& Relevance /ost4 -he Rise and
6all of (anagement #ccounting& 6arvar 9"siness 4choo' Press&
9oston& MA 1210& p. 11+. E9ac7F
,. This eCamp'e is aapte -rom Mc:ei'& 4. an !. 6enric7son& BA
4tatistica' Moe' o- Pavement Maintenance (Cpenit"re&B
-ransportation Research Record :o. 1#,& 1212& pp. 01;0,. E9ac7F
0. This eCamp'e is aapte -rom 4. Mc:ei'& -hree $tatistical (odels
of Road (anagement 0ased on -urnpike 'ata& M.4. Thesis&
!arnegie;Me''on *niversit.& Pitts%"rgh& PA& 1211. E9ac7F
Previo"s
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Ta%'e o-
!ontents
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:eCt
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