Lecture # 1

INTRODUCTION

Instructor:
Dr. Mohamed Ibrahim

23CIVL23H
Construction Contract Procedures
2023/2024 Semester 2
 Lecture’s Objectives
2

1. The Construction Industry & Its Challenges

2. The Construction Project, Its Categories & Lifecycle

3. Project Participants & Organization

4. Project Design/Execution Sequence

 The Construction Industry
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 The construction industry is heterogeneous and enormously complex.

 The construction industry is unique in several ways:
1. Contractors strive to finish the job quickly as the faster they perform, the sooner
they will be looking for another project to build.
2. The products of this industry are, in most cases, one-of-a-kind that
were individually designed and built.
3. The majority of the construction projects are awarded on a bid basis, through
either open or selective tender procedures.
4. In most cases, the winning constructor underbids his competitors.
 Challenges of the Construction Industry
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 The Construction Project
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 A construction project is defined by the following characteristics:

1. Unique one-time event.
2. Has a defined goal or objective.
3. Has specific definable tasks that are not routinely performed
4. Has a defined beginning & end.
5. Has defined deliverables.
6. Consumes resources.
 Categories of the Construction Projects
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Project Categories

Residential Building Infrastructure Industrial

1- Individual Homes 1- Office Buildings 1- Highways 1- Factories

2- Apartment Complexes 2- Shopping Malls 2- Tunnels 2- Oil Refineries
3- Condominiums 3- Schools 3- Utilities 3- Steel Mills
4- Dams
 Construction Project Lifecycle
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 A typical project lifecycle consists of SIX different phases.

Planning Tendering Close-

Initiation & & Construction Commissioning Out
Design Procurement
 Construction Project Lifecycle
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 Project life cycle versus project’s time and cost:

 Construction Project Lifecycle
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1- Initiation Phase
 This is the first phase of the project, or in other words, the project’s idea.
 During this phase, the project’s definition, objectives, and scope are set.
 Conceptual analysis is performed
1. Technical analysis: Architects, engineers & quantity surveyors interpret the
owner’s requirements and provide cost estimates
2. Feasibility study: Includes market, technical & financial studies.
3. Environmental Impact Report:
 Construction Project Lifecycle
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2- Planning & Design

 Prepare the necessary production information, including working
drawings and specifications and to complete all arrangements for
obtaining tenders.
 The design phase is divided into:
1. Preliminary Design: Architectural concepts, evaluation of technological process
alternatives, size & capacity decisions, and comparative economic studies.
2. Detailed Design: In the form of a set of explicit drawings and specifications
that will tell the constructor how to build the structure in site.
 Construction Project Lifecycle
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3- Tendering & Procurement

 Involves two major activities:
1. Contracting and subcontracting for services of general and
specialty construction contractors.
2. Obtaining materials and equipment required to construct the
project.
 Construction Project Lifecycle
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3- Tendering & Procurement Bidding Documents

 Invitation to bid.
 Instruction to bidder
Bidding and Award:
 Bid Form.
Usually, a contractor is selected
 Agreement.
through a tender or direct order.
 General Conditions.
 Tender types:  Supplementary Conditions.
1. Open Tender.  Work included in contract.
2. Selective Tender.  Drawings.
3. Negotiated Tender.  Specifications and Bill of Quantity
4. Series Tender.  Addenda
 Construction Schedule*
 Construction Project Lifecycle
4

4- Construction
 It involves:
1. Physically erecting the project and putting the materials and
equipment into place.
2. Providing the manpower, construction equipment,
materials, supplies, and supervision necessary to accomplish
the work.
3. Constructing the building within the agreed limits of cost and time
and with the targeted quality.
 It is the costliest phase of the entire project
 Construction Project Lifecycle
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5- Commissioning
 In this phase, the project’s equipment, systems, and facilities are tested
to ensure that everything works as planned.
 It also involves a warranty period during which the designer and
contractors can be called back to correct problems that were not
immediately evident upon initial testing.
6- Close-Out
 This is the end of the project, in which the contractor finalizes his
work and get paid the final amount.
 During this phase, as built drawings are produced
 Project Participants
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Owner

Project Manager
Architect/Engineer/Consultant
Prime/Main Contractor

Concrete Electrical Mechanical

Subcontractors
 Project Participants
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1- Owner
 The owner, also called the client, is the entity that will pay for the
project as well as receive the ultimate benefits of the finished project.
 Can be either a public or private party, an individual or an entity.
 The owner is responsible for determining:
1. What the project will include (also called the scope of the project),
2. When the project can begin and must end (the schedule),
3. How much he or she can afford to spend (the budget)
 Project Participants
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2- Project Manager
 The project manager organizes, plans, schedules, and controls the field
work and is responsible for getting the project completed within the
time and cost limitations.
 Acts as the focal point for all facets of the project and brings together
the efforts of all organizations.
 Oversees the architect/Engineer and the contractor.
 Project Participants
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3- Architect
 The major role of the design professional is to interpret or assist the
owner in developing the project scope, budget, and schedule and to
prepare construction documents that will be used by the contractor
to build the project.
 Ensures that the construction is carried out according to the design.
 Approves the contractor’s payments.
 Project Participants
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4- Main Contractor
 Is the firm that is in contract with the owner for the construction of
a project.
 Carry-out the construction activities according to the plan.
 Procure all the necessary material & equipment.
 Manage sub-contractors.
 Project Participants
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5- Subcontractor
 Are specialized contractors that the main contractor hires to do specialty work.
 There is no contractual relation between the owner and the subcontractor.
 The main contractor will subcontract for the following reasons:
1. Works in which the main contractor do not have the expertise or the required equipment.
2. Increase the production rate.
3. Resolve the problem of negative cash flow.
4. Increase liquidity from monthly payment.
5. Reduce risk.
 Project Participants
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5- Subcontractor
 A nominated subcontractor or supplier can be chosen by the owner for a
special quality or experience.
 Extensive subcontracting can complicate project operations and coordination,
create disputes, and reduce the contractor’s profit margin.
 Project Participants
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6- Other Parties
 Many other project stakeholders exist that have some type of effect on projects,
such as:
1. Banks
2. Governments providing regulations and a legal, political and economic
environment for the project
3. Labour organizations, media, the community, …etc
 Project Organization Structure
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 The most common organizational structures for a construction project are:

1. Functional Structure.
2. Projectized Structure.
3. Matrix Structure.
 Project Organization Structure
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1- Functional
 The organization is grouped by areas of
specialization within different functional
areas (e.g., accounting, marketing and
manufacturing).
 Operates well in design-then-construct
projects.
 Works best when overall managers are
skillful, people-oriented & can help avoid
internal conflict with other functional
groups.
 Project Organization Structure
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1- Functional
ADVANTAGES DISADVENTAGES
Easier management of specialty jobs More focus on the specialty than over the
concern for the project success
Team reporting to one supervisor No career path in PM

Similar resources are centralized and PM has no authority

grouped by specialty
Clear career path in areas of specialty

Job security is guaranteed

 Project Organization Structure
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2- Projectized
 The entire organization is run by projects.
 The Project Manager has total control
of projects.
 Personnel are assigned and report to a
Project Manager.
 Project Organization Structure
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2- Projectized
ADVANTAGES DISADVENTAGES

Project Manager has the power and full No career path in areas of specialty
authority over the project’s resources

Communications are easier and faster. No job security

 Project Organization Structure
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3- Matrix
 This form is an attempt to maximize
the strengths and weaknesses of both
the functional and project forms
 Project Organization Structure
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3- Matrix
ADVANTAGES DISADVENTAGES

Increase communication and cooperation Each employee reports to two or more

among departments because project managers which can result in conflicts.
managers will need to coordinate their
actions with those of department managers
Provide quick responses to technical problems Power struggle among managers
and customer demands

More coordination effort is needed

 Project Organization Structure
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 Project Design/Execution Sequence
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 The most common construction project’s design/execution sequence are:

1. Traditional (Linear) Construction.
2. Phased Construction.
3. Fast-track Construction.
 Project Design/Execution Sequence
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1- Linear
 All construction works start after all
design works have been
completed.
 This approach results in longest overall
project duration
 Project Design/Execution Sequence
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2- Phased
 Design & construction
phases overlap for project,
but for each discipline
design ends & then
construction starts.
 Shorter overall duration
 Project Design/Execution Sequence
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3- Fast-track
 For each discipline, construction
starts before design is finalized.
 Used when:
 Pressed for time
 Cost-related issues (more revenues
if project completed early)
 Complex project with many
processes involved (design period
too long)