Construction Project

Administration

• Lecture 6

Dr. Abubakar Sharafat

PhD in Civil Engineering
with Major in
Construction Engineering & Management

1
Course topics and schedule
1) Introduction of projects terminology, Project management framework, Project life cycle.
2) The construction industry. The structure of the industry and national economies. Industry
problems. Introduction to construction project management
3) Project stakeholder analysis and management, project delivery systems
4) Project manager and project organizations. PM roles and responsibilities. Demands on project
managers, Project teams, project management office.
5) Value engineering. The value concept. Value engineering job plan. VE techniques. Application
of VE job plan to construction. VE organization in the construction industry. Future directions
6) Feasibility analysis.
7) Construction resource mobilization. Pre-contract activities. Project organization. Site facilities.
Site layout planning. Approvals.
8) Construction materials and workmanship, Materials management. Materials requirement
planning. Procurement procedures. Stores and stock control. Materials handling on site. Waste
control.
9) Communication and project management information systems. Functions of communication.
The communication process. Barriers to effective communication. Group decision making. Site-
2
office communication. Communicating with workforce. Communication systems.
Preconstruction Activities/Operations?

Preconstruction operations can generally

be grouped into five phases:

1. Advertise and award phase (including pre-bid

meeting and site visitation)
2. Development of quality control program or
construction surveillance and inspection plan on
CQC projects
3. Field office organization phase (planning)
4. Preconstruction conference
5. Establishment of a field office at the
construction site for the administration and quality
assurance of the work for the owner

3
Constructability Analysis?

4
Processes of Procurement Management
• Plan Procurement:
– The process of documenting project services purchasing decisions,
specifying the approach and identifying potential Contractors.
• Conduct Procurement
– The process of obtaining contractor’s responses, selecting a Contractor
and awarding a contract.
• Administer Procurement
– The process of managing procurement relationships, managing contract
performance and making changes and corrections as needed.
• Close Procurement
– The process of completing each project procurement

5
Processes of Procurement Management; overview

6
 Planning
Process
.Plan
Procurements
Group

First
Process
Is P.P
Closing Procurement Steps
Process Close
Procurement
Group
Conduct
Procurements

Administer
Monitoring & Procurements
Executing
Controlling
Process
Process Group
Group
7
Project Procurement Management Processes;
some tools & Techniques and out puts
• Make or Buy Decision
Plan • Procurement Documents
Administrations • Source Selection Criteria

• Advertising
• Seller Selection
Conduct
Procurements • Proposal evaluation Techniques
• Procurement Contract Award
• Negotiation
• Inspections & Auditing
• Performance Reporting
Administer
Procurements • Claims Administration
• Payment Systems
• Change Requests
Close
Procurements • Procurement audits
• Negotiated settlements

8
PREPARING THE BID PACKAGE
Chapter 2 of CM Book (Halpin/Senior)
Chapter 12 of CPA book (Edward R. Fish)

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Ø Establishing Need
Ø Formal Need Evaluation
Ø Conceptual Drawings and Estimates
Ø Preliminary and Detail Design
Ø Notice to Bidders
Ø Bid Package
Ø General Conditions
Ø Supplementary Conditions
Ø Technical Specifications
10
Ø Addenda
Ø Decision to Bid
Ø Prequalification
Ø Bid Bond
Ø Performance and Payments Bonds
Ø Cost and Requirements for Bonds

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Establishing Need

Contd…
12
Establishing Need

Contd…
13
 PROJECT DEVELOPMENT CYCLE

Approval of Preliminary Bid

Need Conceptual
conceptual & final package
established design
design design complete

Bid period Decision

Notice Advertise
Select & receipt of to
to notice to
Contractor Proposals release
proceed bidders
for Bid

Inspection
Construction &
period acceptance
of Project

14
 • FORMAL NEED EVALUATION,
CONCEPTUAL DRAWINGS/ ESTIMATES, AND
PRELIMINARY/DETAILED DESIGN

15
Formal Need Evaluation

16
Conceptual Drawings and Estimates

17
Preliminary and Detail Design

Contd…
18
Preliminary and Detail Design

Contd…
19
Preliminary and Detail Design

Contd…
20
Preliminary and Detail Design

21
•NOTICE TO BIDDERS

22
Notice to Bidders

23
Notice to Bidders

24
Contd…
25
26
•BID PACKAGE

27
Bid Package

Contd…
28
Bid Package

Contd…
29
 BID PACKAGE DOCUMENTS
General conditions
Technical specs

Proposal
Form
Notice
to bidders

Plans
and
drawings
Special conditions

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•GENERAL CONDITIONS

31
General Conditions

Contd…
32
General Conditions

Contd…
33
General Conditions

Contd…
34
General Conditions

Contd…
35
General Conditions

36
•SUPPLEMENTARY CONDITIONS

37
Supplementary Conditions

Contd…
38
Supplementary Conditions

Contd…
39
 Supplementary Conditions

Commencement, Prosecution and Completion of Work

Liquidated Damages
Contract Drawings, Maps and Specifications
Construction Drawings
Physical Data
Rates of Wages
Variations in Estimated Quantities
Government Furnished Property
Water
Electricity
Layout of Work and Surveys
Payments for Mobilization and Preparatory Work
Damage to Work
Contd…
40
Funds Available for Payments
 Supplementary Conditions
Additional Supervision of Subcontracted Work

Scheduling and Determination of Progress

Watchmen and Danger Signs

Sequence of Operations

Acceptance of Work

Insurance Policies to be Furnished to Government

Payment

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•TECHNICAL SPECIFICATIONS

42
Technical Specifications

Contd…
43
Technical Specifications

Contd…
44
Technical Specifications

45
•ADDENDA

46
Addenda

Contd…
47
Addenda

Contd…
48
Addenda

49
•DECISION TO BID AND
PRE-QUALIFICATION

50
Decision to Bid

Contd…
51
Decision to Bid

Contd…
52
Decision to Bid

Contd…
53
Prequalification

54
Contd…
55
•TYPES OF BONDS

56
Bid Bond

Contd…
57
 Bid Bond

Oblig
Principal
ee (contractor)
(owner)

Surety
(bonding
company)

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Performance and Payments Bonds

Contd…
59
Performance and Payments Bonds

60
Cost and Requirements for Bonds

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 •STUDY ASSIGNMENT
(Selected Research Paper from
Construction Management
E-Journal)

• ARE FOXES WATCHING THE OWNER’S HEN

HOUSE?
(An Examination of the Architect’s and Construction
Manager’s Roles in Managing and Administering the
Design and Construction Process)

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Contractor’s Actions

63
 WORK HUNT

The construction industry is full of opportunities. The

construction organizations has to identify, analyze and exploit
these opportunities. The first step is to HUNT the work.
Following are few sources to be checked for construction work
opportunities.
Ø Media (both print as well as electronic media)
Ø Consultants
Ø Peer Architects & Engineers
Ø NGOs
Ø Government Agencies and their information desks
Ø Pakistan Procurement Regulator Authority (PPRA)’
website
Ø World wide web
Ø Words of mouth
Ø Contractors 64
 REGISTRATIONS

The first step is to prepare organization profile and to get it

registered with authorities concerned. Some of these
registrations needed to be renewed every year.

Following may be the few authorities with which the

organization are needed to get registered for construction
works

Ø Pakistan Engineering Council (PEC)

Ø Federal Bureau of Revenue (FBR)
Ø Line Departments (NHA, CDA, RDA etc)
Ø Chamber of Commerce
Ø Securities & Exchange Commission of Pakistan
(SECP) etc
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CONSTRUCTION WORKS PROCUREMENT FLOW CHART

Prequalification of
Contractors as required

Invitation of Bids
(ITBs)

Review of Bidding
Documents

Submitting Bids

Bids Evaluation
Major evaluation criteria:
Cost

Contract Award

Contract Administration

Contract Close66
 PRE - QUALIFICATION
Many organizations (both public sector & private sector) in
construction industry asks for the prequalification of the
contractors before issuance of tender documents for
constriction project.
The construction work awarding agencies ensure that bids are
submitted only by the firms that have the necessary
qualification generally in terms of:
Ø Eligibility
Ø Experience
Ø Financial capacity
Ø Pending Litigation etc.
to undertake the work for which bids are to be invited. It is
made sure that only technically and financially capable firms
having adequate managerial capability are invited to submit
their bids. 67
 INVITATION OF BIDS / NOTICE INVITING TENDERS

The prequalified Contractors are invited to submit their

proposals along with issuance of Tender Documents.
These tender documents provides all instructions
necessary to submit the bid by the pre-qualified
contractor and generally consists of bill of quantities
(BOQ)
After the issuance of the Bid Documents, the contractor
has to submit the proposal with in certain time frame
(usually minimum 15 days time is allotted).

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 A WORD ON
RFI, RFQ, & RFP IN CONSTRUCTION

69
 RFI – REQUEST FOR INFORMATION
• The construction documents (agreement, drawings and
specifications), developed by the Engineer, document the
conditions agreed upon between the Owner and the
Contractor.

• These documents reflect the understanding that each party

has with regard to constructing the Project they represent.

• If every set of Construction Documents were clear,

unambiguous, and complete, interpretation would be
unnecessary, as the intent and understanding of the parties
would be self evident.
• Unfortunately, this is not always the case.

Contd…
70
 RFI – REQUEST FOR INFORMATION

• In most Construction Documents, it is inevitable that the

agreement, drawings, and specifications will not
adequately address every single matter.

• There may be gaps, conflicts, or subtle ambiguities. The

goal of the Request For Information (RFI) is to act as a
partnering tool to resolve these gaps, conflicts, or subtle
ambiguities during the bidding process or early in the
construction process to eliminate the need for costly
corrective measures.

Contd…
71
 RFI – REQUEST FOR INFORMATION

• Should the response to the RFI lead to additional work

during the construction process that represents added
value, which cannot be reasonably worked out in the early
stages of the performance of the work, than a formal claim
can be made.

• This procedure is used in the construction industry in cases

where it is necessary to confirm the interpretation of a
detail, specification or note on the construction drawings or
to secure a documented directive or clarification from the
architect or client that is needed to continue work.

Contd…
72
 RFI – REQUEST FOR INFORMATION

• An RFI is primarily used to gather information to help make a decision on what

steps to take next. RFIs are therefore seldom the final stage and are instead often
used in combination with the following: Request for Proposal (RFP), Request for
Tender (RFT), and Request for Quotation (RFQ).

Contd…
73
 RFI – REQUEST FOR INFORMATION

• In addition to gathering basic information, an RFI is often used

as a solicitation sent to a broad base of potential suppliers for
the purpose of conditioning suppliers' minds, developing
strategy, building a database, and preparing for an RFP, RFT,
or RFQ.

• Who submits it: General Contractor.

• Who Responds to it: Engineer shall respond to all RFI's.

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 RFQ – REQUEST FOR QUALIFICATION

• Such a solicitation is sent to gather potential bidders and qualify them on their
qualifications (experience, bond-ability, insurance(s), financials and current
licenses as applicable).

• A request for qualification allows vendors and contractors to provide quotation on

a specific product or service that is intended to be procured, or obtained.

Contd…
75
 RFQ – REQUEST FOR QUALIFICATION

• Unlike a number of other requests, RFQ's are not solely based on the price at
which the vendor or contractor provides in order to perform the service or
provide the product. RFQ's are based off of various aspects of the type of job to
be performed or product to be supplied.

Contd…
76
 RFQ – REQUEST FOR QUALIFICATION

• For example, if an RFQ was to be released for a new building

to be constructed, the material by which the developer will use
to construct the building, the length it will take the developer to
complete the project, the price per items that will be used and
much more is taken in to consideration before awarding the
contractor/vendor that wins.

77
 RFP – REQUEST FOR PROPOSAL

• A request for proposal (RFP) is a solicitation, often made

through a bidding process, by an agency or company
interested in procurement of a commodity, service or valuable
asset, to potential suppliers to submit business proposals.

• Unlike a request for qualifications (RFQ), which emphasizes

firm and team member experience related to the specific
project and provides only limited financial information, an RFP
often includes estimates of costs and fees associated
with a given project.
78
 OTHER TYPES OF REQUESTS

• A request for quotation (RFQ) is used when discussions with

bidders are not required (mainly when the specifications of a
product or service are already known) and when price is the
main or only factor in selecting the successful bidder. An RFQ
may also be used prior to issuing a full-blown RFP to
determine general price ranges. RFQ represents an
opportunity for potential suppliers to competitively cost the
final chosen solution(s).

• (RFT) – Request for Tender : An opportunity for potential

suppliers to submit an offer to supply goods or services
against a detailed tender.

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 EVALUATION OF BIDS
Bid evaluation Agencies prepare a detailed report on the
evaluation and comparison of the bids. Evaluation is carried out
as under:
ØThe bids are checked arithmetically.
ØThe bids are being received through wide publicity in press and
NHA website.
ØThe bids as a whole or the rates quoted for a individual items
are reasonable.
ØThe bids conform to the provisions of tender documents as
responsive. Non-responsive bids are rejected as per provisions
of documents.
ØThe lowest bid is reasonably in line with the Engineer’s
Estimate.
Ø Methodology of execution of work proposed in bid is in
conformity.
Some times bid evaluation is followed by negotiations.
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 CONTRACT NEGOTIATION

Ø Responsibilities and authorities

Ø Application terms and law

Ø Technical and business management approach

Ø Contract financing

Ø Price

81
 Five Stages of Contract Negotiation

• Protocol
• Get to know each other (Tender Issuance)
• Probing
• Each party identifies issues of concern (Pre Bid Meeting)
• Scratch bargaining
• Bargaining occurs, concessions are made (Proposals Opening)
• Closure
• Two positions summed up and final concessions made (Meetings on
Contract Price)
• Agreement
• Both parties have identical understanding of agreements (Contract is signed)

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 AWARD OF WORK

If the negotiations are successful and the proposal is up to

the satisfaction and requirements of the client, then the work
is awarded to the organization. Hence both parties go into
agreement

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 What is a Contract?

It is a legal document between a buyer and a seller. It provides a mutual

binding agreement that obligates the seller to provide the specified
product, service or result and obligates the buyer to provide monetary or
other valuable consideration.

A procurement contract will include terms and condition also. A contract

can be an agreement, an understanding, a subcontract or a purchase
order.

84
 Types of Contracts

• Fixed-price or lump-sum contracts: This category of

contracts involves setting a fixed total price for a defined
product or service to be provided. Fixed-price contracts
may also incorporate financial incentives for achieving or
exceeding selected project objectives
• Cost-reimbursable contracts: This category of contract
involves payments (cost reimbursements) to the seller for
all legitimate actual costs incurred for completed work, plus
a fee representing seller profit.
• Time and material contracts: are a hybrid type of
contractual arrangement that contain aspects of both cost-
reimbursable and fixed-price contracts.
85
 Fixed Price Contracts
• Firm Fixed Price Contracts (FFP): The most commonly used contract type is the
FFP. It is favored by most buying organizations because the price for goods is set
at the outset and not subject to change unless the scope of work changes.

• Fixed Price Incentive Fee Contracts (FPIF): This fixed-price arrangement gives the
buyer and seller some flexibility in that it allows for deviation from performance,
with financial incentives tied to achieving agreed to metrics. Typically such
financial incentives are related to cost, schedule, or technical performance of the
seller.

• Fixed Price with Economic Price Adjustment Contracts (FP-EPA): This contract
type is used whenever the seller’s performance period spans a considerable
period of years, as is desired with many long-term relationships. It is a fixed-price
contract, but with a special provision allowing for pre-defined final adjustments to
the contract price due to changed conditions, such as inflation changes, or cost
increases (or decreases) for specific commodities. 86
 Cost Reimbursable Contracts

• Cost plus fixed fee (CPFF): The seller is reimbursed for all
allowable costs for performing the contract work, and
receives a fixed fee payment calculated as a percentage
of the initial estimated project costs.
• Cost plus incentive fee (CPIF): The seller is reimbursed for
all allowable costs for performing the contract work and
receives a predetermined incentive fee based upon
achieving certain performance objectives as set forth in the
contract
• Cost plus award fee (CPAF): The seller is reimbursed for
all legitimate costs, but the majority of the fee is only
earned based on the satisfaction of certain broad
subjective performance criteria defined and incorporated
into the contract.

87
 DECISION TO BID
The Construction organization decides whether to go for bidding or not
basing on the following but limited to
Ø The Project is aligned with the Mission, Objective and goals of the
Organization
Ø The Organization has all the resources or has the ability to acquire the
needed resources
Ø The Finances are available to carry out the job
Ø The Organization has the construction processes assets to take up the job
Ø The site is accessible and the Client will ensure the access.
Ø The Client is reputed and pays on time.
Ø The workability and constructability analysis shows that the project may
be taken up.
Ø The organization employees are ready to work at construction site
Ø The location is provided with all the amenities for project team deployed
there
Ø The Project is profitable or the project will add value to organization
Ø The future dimension of business acquiring & retaining is there
Ø The competition asks for it to get introduced to new investor in88 the
market
 SITE ANALYSIS

Even before the award of work, preliminary study of site is very

helpful in

Ø Preparation of realistic Bid

Ø Preparation of Budgets
Ø Preparation of Schedule
Ø Preparation of project risk plan
Ø Preparation of stakeholder management plan
Ø Understanding the need of extra ordinary resources well
before time on that specific project
Ø Preparation of utilities need list well before the execution

89
 ENGAGING SUPPLIER & SUB- CONTRACTOR

Before actual start of construction, placing of orders for sub-

contractors and suppliers and their contracts are made.
Following few requirements are assessed for scheduling
Ø schedule of labor requirement
Ø schedule of materials requirement
Ø schedule of plant and equipment
Ø sub-contractors and suppliers schedule

90
 CONSTRUCTION PROJECT ORGANIZATION
The Constructing Project organization is the one which actually take
up the construction works. The project team under the leadership of
project manager carries out following tasks
Estimate and prepare bid proposals Handle requisitioning, scheduling, and expediting

Plan and schedule Document all work performed

Stay alert to future work prospects Prepare and check payment estimates

Maintain preconstruction liaison with joint Document costs and extra work
venture partners
Review subcontract proposals Document subcontract performance and payment
estimates
Prepare budget control estimates Prepare reports of costs and construction
activities
Develop construction methods Issue progress reports: daily, weekly, monthly

Maintain contract relations Draft contract modifications, change orders, and

claims
Lay out the work Provide assistance in contract settlements 91
CONSTRUCTION PROJECT ORGANIZATION

92
 PROJECT MANAGER
The project manager is the key
person who provides direction to the
project team.
The Project Manager leads the
project team through the creation
and implementation of the project
plan, obtains formal approval for it,
The Project monitors and reports on the
Manager is progress of the project in relation to
(Usually) the project plan and initiates action
Ultimately to ensure that the project stays on
Responsible for track, and responds for requests for
the Project‘s changes to the project plan.
Success or
Failure! 93
 THE PROJECT TEAM
The project team is right in the front-
line of the project‘s planning and
implementation. Project teams can be
of the cross-functional, self-managed
and virtual type.

Project teams can be The individual project team members

cross-functional, self participate in the project planning
managed and virtual.
Through team effort process and provide technical
and collaboration, expertise, ideas, input and
synergy is evolved motivational support that can help the
which is the driving
force behind the entire team create quality
project. deliverables within the allocated
budget and according to schedule.
THE ENGINEER AT SITE

95
 PROJECT PLAN

Project Integration Plan

Project Scope Plan
Project Communication Plan
Project Cost Plan
Project Time Plan
Project Quality Plan
Project Risk Plan
Project Human Resource Plan
PMI Standard
Project ProcurementPlan
96
 ESTABLISHEMENT OF SITE CAMP

After complete Planning at office, the project team establishes

the site camp which facilitates the

The Project Team & Project Manager

The Project Personnel
The Project Labor
The storage and handling of construction materials
The storage and operations of equipment and machinery

97
 PRELIMINARY SITE SURVEY

As the site office is being established, the preliminary site

survey is started to understand the locality and construction
site.

The importance of such surveys increase manifold when it

comes to road construction projects or large infrastructure
development projects.

It is necessary at times to calculate the work done. E.g. the

preliminary land survey in road construction projects will set a
baseline for bulk of work in later stages

98
 End Note
“Imagine life as a game in which you are juggling some five balls in the air. You
name them – Work, Family, Health, Friends and Spirit and you’re keeping all of
these in the Air.
You will soon understand that work is a rubber ball. If you drop it, it will bounce
back.
But the other four Balls – Family, Health, Friends and Spirit – are made of glass.
If you drop one of these; they will be irrevocably scuffed, marked, nicked,
damaged or even shattered. They will never be the same. You must understand
that and strive for it.”
WORK EFFICIENTLY DURING OFFICE HOURS AND LEAVE ON TIME. GIVE THE
REQUIRED TIME TO YOUR FAMILY, FRIENDS & HAVE PROPER REST” Coca Cola CEO
Bryan Dyson

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Any Questions?

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