Construction Management

School of Construction
Management
Global Construction Industry
2nd largest industry after Agriculture

2
Source: World Construction Report 2012 by Davis Langdon, an AECOM company
Construction Output as % of
GDP

Source: US Census Bureau, www.census.gov, CSO India, http://mospi.nic.in, http://www.stats.gov.cn

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4
 Construction Industry in
India
$110 Billion 35 Million people
8% of Indias 16% of working
GDP population in
India

75 large
40% of all
companies
development
28000 organized
investments of last
companies
50 years
>5000 years of
construction history 5
 Overview of Indian Construction
Industry
Table: India Construction and Infrastructure Industry,
2011 - 2020
2011/1 2012/ 2013/1 2014/ 2015/1 2016/ 2017/1 2018/1 2019/ 2020/2
2 13 4 15 6 17 8 9 20 1
Constuction Industry
6,682 7,713 8,830 10,002 11,272 12,639 14,111 15,763 17,572 19,493
Value, INRbn
Construction Industry
Real Growth, % 4.0 7.2 8.2 8.3 7.7 7.1 6.6 6.7 6.5 5.9
Change y-o-y
Construction Industry
7.9 7.9 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.8
% of GDP
Total Capital
26,784 30,864 35,986 41,376 47,355 53,949 60,951 68,607 77,080 86,194
Investment, INRbn
Total Capital
31.5 31.7 32.4 33.1 33.7 34.2 34.4 34.5 34.6 34.6
Investment, % of GDP
803,76 818,27 832,85 847,14 860,94 873,80 886,22 898,38 910,55 922,84
Total Workforce, 000
9 3 1 1 8 3 9 9 2 6
Infrastructure
Industry Value As % 47.4 48.1 49 49.3 49.8 50.2 50.5 50.8 51.1 51.3
of Total Construction
Residential and Non
Residential Building
52.6 51.9 51 50.7 50.2 49.8 49.5 49.2 48.9 48.7
Industry Value As %
of Total Construction
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 Overview of Indian Construction
Industry

Share of construction
spending by sector 2012 (%)

Market size and growth prospects

by major construction sector
12
 Top Indian Contractors

Larsen&Toubro
ENR 47, 28

ENR X,Y (Rank as International contractor, Rank as Global Contractor)

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SWOT Analysis On Indian Construction
Industry

STRENGTH WEAKNESS

Cheap labor Small companies High cost of finance

Large number of engineers

Complicated tax str Low efficiency

PPP enabling environment Low ratio 14

 SWOT Analysis On Indian Construction
Industry

OPPORTUNITIES THREATS

Massive scope of Sustainability Land acquisition

construction
Foreign direct
Large number of investments, real LOW INVESTMENT
estate investment Little regard for
construction systems
trusts, infrastructure
companies investment trusts 15
Performance of Construction
Projects in India

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Performance of Construction
Projects in India

Around 56% projects have cost overrun (totaling 20% cost) 49% have time
overrun
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Performance of Construction
Projects in India
Major reasons of the Project Failure are
Delays in preconstruction activities,
Regularity hurdles & land acquisition
Inadequate project formulation & poor
planning
Improper contract administration and
poor performance of contractors
Lack of project management during
execution

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 Objectives & Functions of
Construction Project

Management
Contract Management &
Maintaining profitability
In time project delivery
Customer Satisfaction
Accident Prevention
Sustainable Construction
Compliances
Human Resource
Management
Project Planning,
Monitoring and Control
Financial Management
Resource Management &
Site Execution
Equipment Management
Material Management
Labor productivity
Coordination,
Communication &
Documentation

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 Project Manager
Responsibilities & Functions
Responsible to upper Select, build and retain
management for team. Lead team to
profitability achieve goal
Achieve project Planning, Monitoring,
parameters (time, and Control
cost, quality, safety, Decision-making
sustainability) (Technical, Financial &
Administrative)
Delivery of contractual
liabilities Co-ordination and
liaison with agencies
Compliance of
Mobilization, Allocation
statutory and tort and Management of
liabilities Resources

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 Project Contracting
All major construction projects are one off
jobs done through work contracts
The contractor goes to another persons
land and does something which becomes
permanently attached to the other persons
land & hence becomes the other persons
property
The contractor becomes unsecured creditor
(nothing is hypothecated/mortgaged)
Hence the contract becomes a critical
instrument for project implementation
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 Project Contracting
Agreement between competent parties
enforceable at law

Formation of Contract:
Object
Proposal / Offer
Acceptance
Consideration
Reciprocal promise

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 Typical Parties for Works
Contract
Owners
Public Owner (Government bodies)
Private Owner (also include quasi-public bodies)
Architect/Engineers (A/E)
Prime/General Contractor
Project Management Consultants / Construction
Managers
Sub-contractors
Suppliers
Banks & Financial Institutions
Specialized Service Agencies
Labor
Regulatory agencies
General Public
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 Project Delivery Models
Design Bid Build (Traditional)
Design Build (EPC / Turnkey)
Design Build Operate (Concession)
Construction Management (Design-
Manage / CM @ risk)

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 Types of Contract
Measurement Contract
Item Rate
Percentage Rate
Fixed Price
Lump Sum
Guaranteed Maximum Price
Cost Reimbursable
CPPF
CPFF
CPIF
Concession
BOT, BOOT, BOLT........

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 Typical Documents Comprising the Contract

Bidding documents consisting of the Invitation to Bid, the

Instruction to Bidders, and the Bid Form

General Conditions of Contract

Special Conditions of Contract

Specifications

Drawings

Reports of investigations of physical conditions 26

 Critical Areas of Contract
Administration & Management
Scope of Work
Measurement & Payment Terms
Quality Control & Handing Over
Guarantees and Warranties
Time Provisions
Delays & Extension of Time
Incentives & Liquidated Damages
Change Orders
Differing Site Conditions
Escalation Payments
Suspensions & Termination
Dispute Resolution

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 Project Organization
Major Clients
Residential Sector : Real Estate Developers
(Ranging from Godrej to neighborhood
promoter)
Infrastructure Sector : Government Agencies
like CPWD, PWD, NHAI, Rail, AAI etc.
Non Residential Sector : PSUs like ONGC,
IOCL, etc. &Major Industrial Houses like Tata
Construction Contractors
200 corporations
120,000 Class A registered contractors
Numerous small contractors
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 Construction Business
Organization
Firms
Sole Proprietorship
Partnership
Limited Liability Company (LLC)
Private Limited Company
Public Limited Company
Government Enterprises
Joint Ventures

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 Functions of Construction
Organization
General administration
Estimating
Managing contracts and personnel
Design
Engineering, Planning and Control
Purchasing/procurement
Accounting & Finance
Managing Field Construction
maintaining project parameters
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 Structure of Construction
Organization
Basic Structure Line & Staff
Frequently used forms
Functional
Feudal
Matrix

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 Factors For Organizational
Forms
Structure keeps on evolving,
depending on
Project / Contract size, features and
requirements
Organizational Experience
Resource Availability
Technological and Financial Complexities
Risk, Competition, etc.

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Owners Project Organization
(Sample)

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Architects Project Organization
(Sample)

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Contractors Project Organization
(Sample)

35
Contractors Project Organization
(Sample)

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