CHAPETR ONE

GENERAL INTRODUCTION

1.1. Construction Project

A construction is a process of constructing something by man for one purpose or another. It may be a
road, bridge, a dam, a dwelling place, an airport, a commercial building, etc. In planning for the various
types of construction, the methods of procuring professional service,awarding construction contracts, and
financing the constructed facility can be quite different. The broad spectrum of constructed facilities may
be classified into different categories, eachwith its own characteristics:

A. Residential Housing Construction:

Includes single-family houses, multi-family dwellings, and high rise apartments. The residential housing
market is heavily affected by general economic conditions, tax laws, and the monetary and fiscal policy.

B. Institutional and Commercial Building Construction:

Encompasses a great variety of project types and sizes, such as schools and universities, medical clinics and
hospitals, recreational facilities and sport stadiums, retail chain stores and large shopping centers,
warehouses and light manufacturing plants, and skyscrapers for office and hotels. Because of the higher
costs and great sophistication in comparison with residential housing, this market segment is shared by
fewer competitors.

C. Specialized Industrial construction:

Involves very large scale projects with a high degree of technological complexity, such as oil refineries,
steel mills, chemical processing plants and nuclear plants.

1.2. Construction Industry

Construction Industry is an industry which is involved in the planning, execution and evaluation of all types
of civil works. Physical infrastructures such as Building, Communication and Energy related construction
works; Water supply and Sewerage works and etc. are some of the major projects/programs in the
construction Industry.

The Construction Industry can be categorized into three major sectors; namely:

 Transport and Communication (Road, Railway, Airway, and Telecommunication related physical
works);
  Water and Energy Works; and

 Buildings and Other Physical Infrastructures.

Accordingly, their capital budget requirements vary extensively depending on the focus economical trend
requires for the nation development. Construction Industry is among the leading industry in producing
employment and contributes to the overall national development. It is the most important enabler for social,
economic and political development of countries.

1.3 The main players in the construction industry

The Client: The client is the initiator and owner of the project some of the obligations of client are:-

 Appointing of the engineer to administer the contract

 Provision of the site

 Provision of information, permits, and approvals

 Providing funds and making payments in accordance with the contract

 Participation in consultations with the engineer to agree matters on claims or conflicts between
parties.

The Consultant/Engineer: The consultant transfers the wish of the owner into realizable form and makes
the study, design and possibly the supervision. Some of the obligations of consultant are:-

1. As the employer’s agent:

a. Administration of the contract – dealing with the procedures, provision of information and
interpretations, issuance of variations, approval of samples, etc.

b. Cost accountancy and payments

2. As a supervisor: The engineer must ensure that the work is being performed to fulfill the contract
documents.

3. As a certifier: The engineer is required to certify or approve the payments that should be paid by the
employer to the contractor. Those payments should be made periodically, mostly on monthly basis, and
should depend on the quantity of works finished by the contractor.

4. As a determiner: The engineer must act as a mediator to help the parties towards agreement in issues
such as claims for reimbursement of costs or extension of time.
 5. Issuance of instructions and variations Include: issuance of additional or modified drawings, actions in
relation to defective works, issuance of clarifications, giving approval, and ordering variations.

The Contractor: The contractor is the one who performs the work.Some of the obligations of contractor
are:-

1. Execution and completion of the works and remedying

2. Provision of:-

 Labor, materials, plant, and equipment needed

i. Works program for execution, and updating it whenever required

ii. Sign the contract when he is called to do so

iii. Obtain and submit securities, guarantees, and insurance policies

iv. Ensure that his representatives will be available on site at all times

Insurance Companies:

A Contractor is required to provide bid bonds as a condition of being allowed to bid, and then they must
provide insurance for Performance bonds and payment bond prior to award of the contract. Insurance
companies provide bid bonds, performance and payment bonds, and they also service the liability and
property insurance needs of contractors.

Banks: Banks provide the working capital contractors need to build the project. Banks also provide bonds
for bid and performance.

Suppliers: The quality of a construction project is very dependent on the quality of the suppliers used by
individual contractors.
Permitting Agencies: represent the interests of public safety. They administer publicly funded construction
projects, and they ensure private construction projects comply with zoning laws and building codes.

Public: The public is impacted by every construction activity. Impacts are both good and bad.

1.4 Resources for the Construction Industry

For most of the construction projects, the resources to look into are the following;

 Human Resources / Labor or Workmen

 Financial Resources / Fund

 Information Resources

 Physical Resources such as Materials, Equipment and Other Assets

 Services and Management.

From the above resources, physical and service resources require intensive procurement procedures and thus
are worth mentioning.

Physical Resources:

Materials: The very large portion of a project cost is gone to material cost. As the material cost component
of the construction industry covers between 55-70% of the total construction cost.

Equipment: These days various plants, equipment, tools etc., are used very often in constructionactivities.
Depending on the types and nature of construction, machinery at site includes batchingplant, mixers, trucks,
tractors, excavators, dampers, cranes, vibrators, pumps etc.

Services and Management:

Services: Services such as acquisition of land, provisions of water supply, electric power,communication
systems, etc., are very much necessary in the construction industry. Without acquiring such services, it is
too hard to implement construction activities successfully. Therefore, well thought and due consideration
shall be given to services and shall be considered as one of the resources required for civil works projects.

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1.5 Project Life Cycle

The project life cycle of a construction project may be viewed as a process through which aproject is
implemented from cradle to grave.

Figure1.1. Project Life cycle

1.6 Stages in Construction

The following are the common formal stages for a construction project:

 Inception and feasibility:

At this stage the owner puts his visions and wishes and with this as the starting point, the various groups
(professionals) try to conceptualize the project and prepare a conceptual design. At this stage the owner will
heirs a consultant to formally design and develop the concept into a practicable project.

 Planning and Design stage

Planning is a function of devising the cause for future with a vision, formulated for the future state of the
organization or project. At this stage the consultant plans and designs the project based on the owner’s
requirement and the possible constraints.

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  Tendering stage:

At this stage contractors are invited to offer their best technical and financial offers as per the conditions and
specifications depicted in the contract documents. Usually a 2% of bid bond is required so as not let him
disappear. Bid Evaluation / Evaluation of Tenders. The bids are evaluated based on:

 Compliance with the contractual terms and conditions,

 Correction of bid prices,

 Detailed analysis.

 Award of Contract

After the negotiations have been successful, the contract will be awarded to the successful contractor. The
formal Steps might include:

 Write a letter of acceptance

 Write the letter to proceed with the works

 Performance bond: 10% a guarantee that he will do the job as per agreed

There are different methods & types of construction contracts. The owner generally makes the selection. The
type selected depends on the kind of work being performed and the conditions under which it is being
performed.

 Construction Stage

Here is where the actual execution of the works takes place as per scheduled.

 Commissioning and Acceptance

Commissioning is a process whereby the contractor makes sure that all installed mechanical or electrical
parts are operational. During commissioning, therefore all such parts are run in the presence of the client
or his representative as per the conditions agreed. Acceptance has tostages:

 Provisional acceptance:

In this acceptance, the client accepts the completed works on provisional basis for a period one year. During
this period all payments except the retention money are paid.

The other option is to release the retention money and require for a bank or insurance security.

Final acceptance:
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At this stage the owner completely accepts the works executed and the retention money is released to the
contractor. But if the client found out some construction default during thisperiod, he can oblige the
contractor to work out that default or the client himself worked it out from the retention money. The
contractor is assumed to have completed his contractual obligation from this time on.

1.6. Construction Project Management Process

Project management is the Planning, Organizing, Monitoring and controlling of all aspectsof a project,
to achieve the project’s objective.

Fig 1.2 Construction Management Process

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