1

PROJECT MANAGEMENT
(CENG 6101)

BY
TADESSE AYALEW
LECTURER , EIABC, AAU

MSc. IN CONSTRUCTION TECH. & MANAGEMENT, BAHIRDAR UNIVERSITY

MURCH 2013
2 2. Construction Project Phase
Content of the chapter
 Overview of project life cycle
 Pre-project phase
 Planning and design phase
 Contractor selection phase
 Contract formation
 Project mobilization phase
 Project operations phase
 Project closeout and termination phase
3 6 Project Operation

All of the previous planning, design, tendering and mobilization

is the prerequisite to the actual performance of field operations.
While some activities described in the previous chapter, such as
procurement and staffing, are likely to continue during the early
stages of the project operations phase, now the emphasis is on
monitoring and controlling various aspects of the project,
managing resources effectively and coordinating the vital
documentation and communication activities.
6.1 Monitoring and control

 The project programme represents the plan for the schedule of

the work. Likewise, the budget is the plan for the cost aspects of
the work.

 In a similar way, the contractor will have plans for the

management of quality, safety and environmental concerns.

 During project operations, it is essential that actual performance

be compared with planned performance in all of these areas
and action taken to remedy any indicated deficiencies.
Cont…

 This responsibility is termed monitoring and control, where

monitoring refers to methods for comparing actual with planned
performance and control denotes the actions taken to attempt to
bring deficient aspects of the project into conformance.
 6.1.1 Producing and Updating Schedule
6

 Periodically, perhaps monthly, the

contractor will compare schedule progress
with that shown on the project programme

 The purpose is to determine whether the

various activities that were planned to be
active during the previous period were
actually active, the extent of their
progress and, especially, the anticipated
project completion date based on
progress to date.
Cont…

 Another purpose of the update is to incorporate any new

information about already planned activities, to add information
about any new work not previously planned and to determine
their impacts on other activities and on the overall project
completion date.
 Project time management/Schedule Development
8

Project Time Management includes the processes required to

accomplish timely completion of the project. The Project Time
Management processes include the following:
 Activity Definition – identifying the specific schedule activities that
need to be performed to produce the various project deliverables.
 Activity Sequencing – identifying and documenting dependencies
among schedule activities.
 Activity Resource Estimating – estimating the type and quantities of
resources required to perform each schedule activity.
 Cont…
9

 Activity Duration Estimating – estimating the number of work

periods that will be needed to complete individual schedule
activities.

 Schedule Development – analyzing activity sequences, durations,

resource requirements, and schedule constraints to create the
project schedule.

 Schedule Control – controlling changes to the project schedule.

 1. Activity definition
10

 Defining the schedule activities involves identifying and documenting

the work that is planned to be performed. The Activity Definition
process will identify the deliverables at the lowest level in the work
breakdown structure (WBS), which is called the work package.
Project work packages are planned (decomposed) into smaller
components called schedule activities to provide a basis for
estimating, scheduling, executing, and monitoring and controlling the
project work.
 Cont…
11
 2. Activity Sequencing
12

 Activity sequencing involves identifying and documenting the logical

relationships among schedule activities. Schedule activities can be
logically sequenced with proper precedence relationships, as well as
leads and lags to support later development of a realistic and
achievable project schedule.

 Sequencing can be performed by using project management

software or by using manual techniques.
 Cont…
13
 3.Activity Resource Estimating
14

 Estimating schedule activity resources involves determining what

resources (persons, equipment, or materiel) and what quantities of
each resource will be used, and when each resource will be
available to perform project activities. The Activity Resource
Estimating process is closely coordinated with the Cost Estimating
process
 4. Activity Duration Estimating
15

 The process of estimating schedule activity durations uses

information on schedule activity scope of work, required resource
types, estimated resource quantities, and resource calendars with
resource availabilities.

 The inputs for the estimates of schedule activity duration originate

from the person or group on the project team who is most familiar
with the nature of the work content in the specific schedule activity.
 Cont…
16
 5. Schedule Development
17

 Project schedule development, an iterative process, determines

planned start and finish dates for project activities.

 Schedule development can require that duration estimates and

resource estimates are reviewed and revised to create an
approved project schedule that can serve as a baseline
against which progress can be tracked.
 Cont…
18
 6. Schedule Control
19

 Schedule control is concerned with:

 Determining the current status of the project schedule

 Influencing the factors that create schedule changes

 Determining that the project schedule has changed

 Managing the actual changes as they occur.

 Schedule control is a portion of the Integrated

 Cont…
20
6.1.2 Cost control

 The three purposes of construction cost systems are;

 providing a means for comparing actual with budgeted
expenses and thus draw attention

 It helps to develop a database of productivity and cost

performance data for use in estimating the costs of
subsequent projects and

 to generate data for valuing variations and changes to

the contract and potential claims for additional payments
Cont…

 In this section, we focus on the first of these purposes, the monitoring

and control of costs during the construction operations phase,

 Two related outcomes are expected from the periodic monitoring of

costs:

 Identification of any work items whose actual costs are

exceeding their budgeted costs, with subsequent actions to try to
bring those costs into conformance with the budget and

 Estimating the total cost of the project at completion, based on

the cost record so far and expectations of the cost to complete
unfinished items.
 How can we establish a cash flow diagram to
control cost ?

 Projection of Income and

expenses during the life of
the project

 To facilitate this several

time scheduling are used by
contractor
Cash Flow

Activity Days Cost ($) Cost/day

A 2 200 100
B 5 500 100
C 2 200 100
D 7 500 71.4
E 1 100 100
F 2 100 50
 Cash Flow
Daily Expenses
180

160

140

120
Activity Days Cost ($) Cost/day

Cost ($)
A 2 200 100 100

B 5 500 100 80

C 2 200 100 60
D 7 500 71.4 40
E 1 100 100 20
F 2 100 50
0
Day Activity Cost of day Total cost 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1 A 100 100 Day
2 A 100 200
Cumulative Expenses
3 B 100 300
4 B 100 400 1800

5 B 100 500 1600

6 B 100 600
1400
7 B 100 700
8 C,D 171.4 871 1200

9 C,D 171.4 1043

Cost ($)

1000
10 D,E 171.4 1214
800
11 D 71.4 1286
12 D 71.4 1357 600

13 D 71.4 1428 400

14 D 71.4 1500
200
15 F 50 1550
16 F 50 1600 0

Source: Dr. L. K. Gaafar

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
 Example 1
26

Month Budget Cost in Month (Birr) Cumulative Cost at end of month (Birr
January 500,000 500,000
February 1,000,000 1,500,000
March 2,000,000 3,500,000
April 2,000,000 5,500,000
May 2,500,000 8,000,000
June 3,000,000 11,000,000
July 4,000,000 15,000,000
August 4,000,000 19,000,000
September 3,000,000 22,000,000
October 2,500,000 24,500,000
November 2,000,000 26,500,000
December 1,500,000 28,000,000
January 1,000,000 29,000,000
February 500,000 29,500,000
March 500,000 30,000,000

Total for Year 30,000,000 30,000,000

 Chart
27

Chart 2: Comparison of Planned & Actual Time based on Budget Costs

35000000

30000000

Budget Cost of Work at

Planned Time (Table 1)
25000000
Cumulative Costs: Birr

20000000
Measure of Project Time
Slippage at Each Stage

15000000

10000000 Budget Cost of Work

Completed (Table 2)

5000000

0
0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

Months of Project
 Chart
28

40000000
Chart 3: Comparison of Budget & Actual Costs Based on Actual Timing

35000000
Actual Cost of Work
Completed (Table 3)

30000000

25000000
Cumulative Costs: Birr

Measure of Cost Overspend of

Work Completed at Eash Stage

20000000

Budget Cost of Work

15000000
Completed (Table 2)

10000000

5000000

0
0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

Months of Project
 All together
29

Estimate of Final Cost (Contract Sum)

Curve 1; Budget Cost of

Work at Planned Time

Amount Behind Schedule

Cumulative Cost/Value

Curve 2; Planned Cash Payments

Curve 3; Budget Cost

of Work Completed

Current Date

Maintenance
Construction Period
Period
 6.1.3 Quality management

 The American Society of Civil Engineers (ASCE), in its much-lauded Quality in

the Constructed Project: A Guide for Owners, Designers and Constructors

(American Society of Civil Engineers, 2000) defines quality as ‘the fulfillment

of project responsibilities in the delivery of products and services in a

manner that meets or exceeds the stated requirements and expectations of

the owner, design professional and constructor, quality management involves,

 Quality planning

 Quality assurance and,

 Quality control
 6.1.4 Safety management

 Although they are not part of the project manager’s ‘big three’
objectives of schedule, budget and quality, the monitoring and
control of safety and environmental impact are major issues in all
construction operations.

 There fore the contractor has to establish a means to ensure safety

at construction projects
6.1.5 Environmental management

 The impact of construction on the environment appears in many forms.

These include the selection of environmentally safe materials and
products to be incorporated into the project; the planning and design
work that can alter landforms, drainage, vegetation and wildlife; and
the long-term impact of projects, such as silting of dams, their effects
on fish and other animals etc

 A balanced treatment here, as we consider the various phases of the

project life cycle, might call for more attention to environmental
impacts of activities during planning and design and project
operation, in addition to on-site construction.
6.2 Resource management

 If the construction manager’s job during project operation is

about monitoring and control, it is also about the management of
resources.

 Halpin and Woodhead (1998), in their introduction to

construction management, state that ‘construction management
addresses how the resources available to the manager can best
be applied’

 They suggest that the four primary resources to be managed are

the ‘four Ms’ of manpower, machines, materials and money.

6.2.1 General

 As we have seen in network scheduling, the basic inputs to

critical-path analysis are the individual project activities, their
durations, and dependency relationships.

 Accordingly, the forward-path and backward-path

calculations determine the start and finish times of activities.

 The CPM algorithm, therefore, is duration-driven. Activities’

durations here are function of the resources that are required
(rather than available) to complete each activity.
Cont…

 The CPM formulation, therefore, assumes that all the resources

needed for the schedule are available. This assumption,
however, is not always true for construction projects.
 Under resource constraints, the schedule becomes impractical,
cost and time are not accurate, and resources may not be
available when needed.
 In order to deal with such issue, a proper management of
available resources is required to adjust the schedule
accordingly.
6.2.1.1 Resources definition

 The first step in resource management is to decide exactly what

resources are considered important enough to be managed.

 While the most resource used is people or workers (such as welders or

carpenters), it may also include other resources such as machines (such
as an excavator or loader), space on a project where space is
restricted and where this restriction limits the amount of other
resources which can be deployed at any one time, financial resources
(money) that are needed to perform the required work, or materials
needed to accomplish different activities.
Cont…

 The most important resources that project managers have to plan and
manage on day-to-day basis are people, machines, materials, and
money.

 Obviously, if these resources are available in abundance then the

project could be accelerated to achieve shorter project duration.

 On the other hand, if these resources are severely limited, then the
result most likely will be a delay in the project completion time.

 In general, from a scheduling perspective, projects can be classified

as either time constrained or resource constrained.
6.2.1.2 Resources allocation

 Resource allocation, also called resource loading, is concerned with

assigning the required number of resources identified for each
activity in the plan. More than one type of resource may be assigned
to a specific activity.
 For example, fixing steel plates on a certain foundation may require different
types of resources such as: welders, laborers and a certain type of welding
machine.

 From a practical view, resource allocation does not have to follow a

constant pattern; some activities may initially require fewer resources
but may require more of the same resources during the later stages
of the project.
6.2.1.3 Resources aggregation
 After each activity has been assigned its resources, the next step is to
aggregate the resources used by all activities.

 Resource aggregation is simply the summation, on a period-by-

period basis, of the resources required to complete all activities
based on the resource allocation carried out previously. The results
are usually shown graphically as a histogram. Such aggregation may
be done on an hourly, daily, or weekly basis, depending on the time
unit used to allocate resources.

 When a bar chart is used, the resource aggregation is fairly simple

and straightforward. For a given bar chart, a resource aggregation
chart can be drawn underneath the bar chart.
 An example is shown in the following
figure, where, for a particular
resource, the required resource units
for each time period are written on the
bar chart.
 The total number of resource units for
each time period can then be summed
and a resource aggregation or load
chart can be produced as presented
underneath the bar chart.
 Thus, having a project scheduling is
necessary to facilitate the bar chart
drawing.
6.2.1.4 Resources leveling

 A project is classified as time constrained in situations where the

project completion time can not be delayed even if additional
resources are required.

 However, the additional resource usage should be no more than what

is absolutely necessary.

 Accordingly, the primary focus, for purposes of scheduling, in time

constrained projects is to improve resource utilization. This process is
called resource leveling or smoothing.

 It applies when it is desired to reduce the hiring and firing of

resources and to smooth the fluctuation in the daily demand of a
resource, as shown in the following figure.
 In this case, resources are not limited and project duration is not
allowed to be delayed. The objective in this case is to shift non-
critical activities of the original schedule, within their float times so
that a better resource profile is achieved.
Cont…

 As shown in the following figure,

the problem of resource
fluctuation appears after the
initial scheduling of the project
without considering the
resources.

 The peaks and valleys in the

resource profile indicate high
day-to-day variation in the
resource demand.
 Cont…

 Resource smoothing is the process that attempts to determine a resource

requirement that is "smooth" and where peaks and valleys are
eliminated.
 Given that the resource requirements of those activities on the critical
path are fixed, some order or priority needs to be established for
selecting which activity and which particular resource associated with
this activity should be given priority in the smoothing process.
 Resource leveling shift non-critical activities within their float times so as
to move resources from the peak periods (high usage) to the valley
periods (low usage), without delaying the project
 Figure 5.1: Resource Requirements (early start)

Activity Project Time (days)

No Description 1 2 3 4 5 6 7 8 9 10 11 12 13
3 3
1 Upstream clearing
3 3
2
45 Downstream clearing
5 5 5
Excavation Abut 1
3
5 5 5

4 Excavation Abut 2
2

5 Blinding Abut 1
2

6 Blinding Abut 2
2 2 5 1

7 Foundation Abut 1
2c 2c 2c

2sf 2sf

1 2 5 1

8 Foundation Abut 2
2c 2c 2c 2c

2sf 2sf

2 2

9 Backfill Abut 1
2 2

10 Backfill Abut 2

Labourers 11 11 5 7 7 7 7 2 4 7 1 2 2 73

Carpenters 2 2 2 2 2 2 2 14

Steelfixers 2 2 2 2 8

Formwork 1 1 1 1 1 1 1 7

Backactor 1 1 1 1 1 1 1 1 1 1 10

Pump 1 1 1 2 2 2 2 2 2 2 1 1 1 20
6.2.2. Materials Management

 Materials management is an important element in project planning and

control.

 Materials represent a major expense in construction, so minimizing

procurement or purchase costs presents important opportunities for
reducing costs.

 First, if materials are purchased early, capital may be tied up and

interest charges incurred on the excess inventory of materials. Even
worse, materials may deteriorate during storage or be stolen unless
special care is taken.
 Cont…

 Second, delays and extra expenses may be incurred if materials

required for particular activities are not available.

 Accordingly, insuring a timely flow of material is an important

concern of project managers.
6.3.2.1 Inventory Control

 The general objective of inventory control is to minimize the total cost

of keeping the inventory while making tradeoffs among the major
categories of costs:

(A) purchase costs,

(B) order cost,

(C) holding costs, and

(D) unavailable cost.

 These cost categories are interrelated since reducing cost in one

category may increase cost in others.
A) Purchase Costs

 The purchase cost of an item is the unit purchase price from an

external source including transportation and freight costs.

 For construction materials, it is common to receive discounts for bulk

purchases, so the unit purchase cost declines as quantity increases.

 Because of this, organizations may consolidate small orders from a

number of different projects to capture such bulk discounts, in some
cases; this is a basic saving to be derived from a central purchasing
office
 B) Order Cost

 The order cost reflects the administrative expense of issuing a

purchase order to an outside supplier.

 Order costs are usually only a small portion of total costs for
material management in construction projects, although ordering
may require substantial time.
C) Holding Costs

 The holding costs or carrying costs are primarily the result of capital costs,
handling, storage, obsolescence, shrinkage and deterioration.

 Capital cost results from the opportunity cost or financial expense of capital tied
up in inventory.

 Handling and storage represent the movement and protection charges incurred
for materials.

 Storage costs also include the disruption caused to other project activities by large
inventories of materials that get in the way. Obsolescence is the risk that an item
will lose value because of changes in specifications.

 Shrinkage is the decrease in inventory over time due to theft or loss. Deterioration
reflects a change in material quality due to age or environmental degradation.
D) Unavailability Cost

 The unavailability cost is incurred when a desired material is not

available at the desired time.

 In manufacturing industries, this cost is often called the stock out or

depletion cost.

 Shortages may delay work, thereby wasting labor resources or

delaying the completion of the entire project.
 Cont…
53

The objectives of this model is

therefore to determine an optimum
order quantity (EOQ) denoted by Q*
such that total inventory cost is
minimized.

TVC=Ordering cost + Carrying (holding cost) TVC = D Co + Q Ch

Q 2
2 DCo
Q* =
Ch
= Economic order quantity (EOQ)
6.2.3. Personnel supervision and labor productivity

 Other important knowledge the construction manager

must know is on-site personnel management which
includes the methods by which people are hired and
maintained.
 A qualified workforce is essential to successful
construction management.
 To achieve this we have to understand and practice the
human resources function both at organization and
project level ,
HRM functions

 Human resources functions can broadly classified into

managerial and operative function. The managerial
functions include planning, organizing, directing and
controlling the human resources
 Operative functions on the other hand include
operational/routine activities in which the human resources
department will be doing as day today activities such as
human resources planning, job analysis, employee
motivation, performance management and training and
development etc.
Operative human resources function in brief

 Human resources planning

 Job analysis design
 Recruitment and selection
 Performance appraisal
 Training and development
 Compensation and remuneration
 Motivation, welfare, health and safety
 Industrial relations
 6.2.4. Equipment /Machinery management

 Construction of various facilities requires the utilization of

construction equipment.

 Because of this Learning the fundamental concepts and analyses of

the planning, selection, and utilization of construction equipment is
essential and it requires understanding;

 The total construction process, from inception to construction

and start up- this will enable some one to know the nature of
the work for which the equipment is being used, and

 How construction equipment should be selected and used to

produce the intended quality in the most cost-effective manner
Some of the factor that should be considered in selection
construction equipment

 Use of available  Unit Cost of Production

equipment  Country of Origin
 Suitability of Job
 Availability of Spare
Conditions
parts
 Uniformity in types
 Selection of Manufacturer
 Size of Equipment
 Suitability of local labor
 Use of Standard
 Adaptability for future use
Equipment
6.3 Documentation and communication

 The on-site management of a construction project involves great

amounts of paperwork, even for relatively small projects.

 The purpose, of course, is to communicate directions, questions,

answers, approvals, general information and other material to
appropriate members of the project team, so that the project can
proceed in a timely, cost-effective and quality manner.

 We discuss in this section some of the documents necessary for

the execution of the contract, primarily from the contractor’s point
of view
Sample classification
General
 Contacts. A list of all persons and organizations with whom the contractor
corresponds during the life of the project, with relevant contact information.
 Programme/schedule. The master project schedule, including the original
baseline and all updates, together with any supplementary related
information such as detailed sub networks, resource studies and analyses of
schedule trends.
 Accident reports. A report for each accident, plus summary data and
related analyses.
 Punch lists and other project closeout documents. Lists of deficiencies
identified during inspections as the project nears completion; certificates,
warranties and record drawings.
Contract documentation
 The contract itself, as amended by variations (change orders) during the
project.

 Drawings. Design drawings from the design professional, as revised

throughout the project, with any supplementary sketches that may be issued.

 Specifications. Technical specifications, plus general and special conditions

and other parts of the project documents manual.

 Subcontracts. Copies of agreements with all subcontractors.

 Insurance. Certificates of all insurance carried by the contractor, as well as

certificates for insurance required to be carried by all subcontractors.

 Bonds. Similar to insurance; contractor’s copies of its performance and

payment bonds, plus proof that subcontractors have furnished surety bonds, if
so required.
Communication records

 Meeting minutes. Records of all meetings held at the jobsite or

elsewhere if pertaining to the project; regularly scheduled
general and safety meetings; other special meetings of any kind.

 Telephone records. Brief records of all telephone calls placed or

received at the jobsite.

 Conversation records. Often simply a memorandum to the file to

record an understanding resulting from a conversation that was
less formal than a meeting.
Project status documentation

 Daily reports. A standard report that includes weather

conditions, work in progress, number of direct employees and
subcontractor personnel on site, visitors, equipment on site,
material deliveries and special issues.
 Weekly and/or monthly reports. Summary of accomplishments
for the period, comparison of actual with planned schedule
progress, cost status, change orders and special issues.
 Progress photography. Periodic still and video photography
that records project progress.
Correspondence

 Letters. All letters written by the contractor, as well as those received at

the jobsite office; should include a record of correspondence conducted
at the home office if related to the project.

 Field memos. Various types of correspondence, less formal than letters,

issued at the jobsite to subcontractors and other individuals; job
directives, safety issues and disciplinary matters.

 Requests for information (RFIs) issued from contractor to design

professional or owner for clarification of design information or to present
any other questions
Materials management

 Purchase orders. Issued to material suppliers, as explained in an

earlier section.

 Expediting and delivery information. Status of manufacturing,

shipping and delivery of each material item, with comparisons against
project schedule. Receiving information for delivered items.

 Material inventory status. Inventory of all stored materials, with

quantities and dates when items were added and withdrawn.

 Quality control reports. test reports for various materials.

 Invoices. Also part of cost system. All requests for payment of

materials,
Financial management

 Requests for payment. Prepared by contractor to request periodic payments

as the project progresses, as explained earlier; based on measurements and
progress to date.

 Cost and budget tracking reports. Comparisons of actual costs to date

against planned costs, for individual work items and the project as a whole;
analysis of cost trends.

 Variation requests and approval. Requests from the owner for proposals for
changes in the work and their approval;

 Variation proposals. Prepared by the contractor for the owner, in response

to variation requests
Thank you